Market Update Report

December, 2011

 

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Historical Housing Inventory 

Levels

 

“Supply of available homes in the metro hits six-year low” read the StarTribune Sunday headline.  That is good news if you are selling and not-so-good news if you are buying. Sellers like the idea of fewer competitors vying for the attention of the buyers. Buyers are frustrated with the “limited selection” (compared to the peak of the market) from which to choose. In certain price ranges – particularly lower cost investment properties – multiple offers are quite common. Seasonally, we are typically low on inventory as the year comes to a close. But, in just one year’s time, there are dramatic changes. The number of homes for sale in November of ’10 in Apple Valley was 341 versus 249 in ’11. Lakeville was 400 in the same month last year and 306 this year.  Inventory drops of 24% to 27% are significant to say the least. Unfortunately, prices continue to drop as demand across all price points has yet to prove its strength.

Many economists see indications the Twin Cities real estate market is “healing.” Experts speculate the much anticipated swell of foreclosures expected to hit in 2012 won’t be as dramatic here as it will be in other hard-hit sun-belt and rust-belt markets.

There is no doubt on the Dave Oswald Homes Team, as we experienced a 23.7% sales increase in 2011 over our previous record-high 2010, the ultra-low interest rates drove buyers. Some of our clients were downright giddy with excitement over the rates they secured.

We need three things as I see it: continued decreases in supply as people return to work and find ways to pay their mortgages, increases in demand across all price points as ownership trumps rentership and interest rates that continue to hover below (or, as today, way below) 5.5%. We will know more as 2012’s Spring turns to Summer!

 

Five Real Estate Tips from

Warren Buffett,

“The Oracle of Omaha”

 

“The Basic Premise Of Home Ownership – That Homes Increase In Value Over Time – IsSound”

Buffett says the premise “over time” is sound but that doesn’t mean values will always go up, year after year. That irrational thinking coupled with what he calls “liar’s loans” led to the housing crash.

“Buy Low” 

He points to record-high affordability. The median income household can afford the median priced home.

“Don’t Wait Too Long” 

Economic markets are volatile and impossible to conclusively predict. Waiting could prove costly. Buffett warns “if you wait for the robins, Spring will be over.”

“The Smart Way To Own A Home Has Three Elements” 

Fixed mortgage, affordable payments and long-term hold. A fixed, monthly payment within a sensible percentage of income held for a long time makes sense. Buffett still lives in the same home he bought 52 years ago for $31,500.

“Buying Your ‘Dream Home’ May Lead To Nightmares” 

Having a “whatever it takes” approach to financing to compensate for an imbalance between purchase price and monthly income creates an unsustainable situation and a living nightmare. He says “Our country’s goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

 

Quote of the Month

 “Your attitude, not your aptitude, will 

determine your altitude”

Zig Ziglar