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Market Statistics for Dakota County May 2011
2010 2011 % Change
663            828                +24.9% New Listings
494 468        -5.3%  Closed Sales
$190,950  $155,000      -18.8%  Median Sales Price
$208,332  $181,209      -13.0%  Average Sales Price
94.7%  91.8%       -3.0%  % Original $ Received
120  147      +22.0%  Avg Days on Market
3044  2731      -10.3%  Inventory of Homes
7.0  7.5      +7.8%  Months Supply of Inventory

 

The May market statistics look pretty dire but remember these numbers include ALL transactions. If we broke out traditional or non-bank mediated sales from shorts and foreclosures, we’d see significantly higher median and average sale figures for the traditional sales. Nonetheless, the numbers are what they are and we have to live with them. Over these next 18 months or so, we should see the last of the 5 and 7 year ARM mortgages reset and that will likely signal the end of the foreclosure flood. It won’t be the end of short sales and foreclosures (we’ve always had and always will have them) but the waters will recede to normal levels. Remember…these figures are impacted by the flurry of activity we had in the first four months of 2010 because of the first time home buyer federal tax credit incentive. These year-to-date figures through May are largely impacted (negatively) by the anomaly of last year’s incentive. One of the best bits of data above is the year-to-date closed sales. Only a marginal 1.9% drop in closed sales! Sans a tax incentive, the market is actually (thanks to low interest rates) pretty active.

Real Estate Quote of the Month

“Don’t wait to buy real estate. Buy real estate and wait.”

                                    Author Unknown

RE Investor’s Corner — Tip of the Month

What is a 1031 Tax Deferred Exchange?

A tax deferred exchange allows you to sell a piece of investment property, buy a new investment property with the profit from the sale and not owe taxes on the “gain” of the sale immediately. If you eventually sell the new piece of property, you would owe taxes at that time. Generally, all gains and losses on sales of real estate are taxable, but an exception lies where the property sold is traded or exchanged for "like-kind" property. The new property is seen as a continuation of the original investment, so taxes are not due at the time of the sale. The process has timing parameters for how long you can wait to identify your exchange property and how long you have to close on its purchase. No extensions are possible. While the rules on how you can qualify for an exchange are a bit tricky, the tax savings can make it all worthwhile. Always check with your tax professional.

When you get ready to do a tax-deferred exchange, you will need the services of a qualified 1031 service provider. Coldwell Banker Burnet’s parent company, NRT, has a division providing such services and I’m happy to provide you their contact information.

Bad News Bears – Traditional Media Bums Me OUT!

Negative. Negative. Negative. Traditional media continues to hammer their readers/listeners/viewers with negative news about the real estate market. They seem bent on the "glass half empty" approach. Falling values, rising foreclosures, blah, blah, blah. When any market tumbles from inflated highs, its a bummer for those who bought at, approaching or just past the market peak. We get it already!

The stock markets, commodities markets, precious metals markets all suffer similar gains and losses over time and are accordingly reported. But, it seems, unlike the real estate market, the media always seems to report a silver lining to those clouds. C'mon guys! Equal time with a positive slant would really be appreciated here! How about spending time reporting the positive effects of these historic, incredibly low interest rates that are making homes affordable for a whole segment of the population who otherwise could not possibly qualify for a payment on a house to meet their needs? Joyful news! Why not report on how many of our local custom home builders have cut their gross margins so much that the price of building a new home is at historic lows? Jubilation abounds! What could it hurt if the media would examine the tremendous depth and variety of inventory and report the fantastic selection from which buyers can choose. Jumpin' Jehosophat!

Okay, okay. I'll stop picking on traditional media. They can't help it. Disasters, crashes and crimes sell newspapers and get folks to tune in. But, next time you see or hear negative news about the local real estate market (and, as you may know, ALL real estate is local), remember there are plenty of positives, too!