Minneapolis Mortgage Market Update
by Alec Grebis - Cornerstone Mortgage RATES: Rates have been holding steady and current 30 year fixed rates are 6.00% (with 5% down and good credit). Predicting what will happen to rates in 2008 is challenging as many of the signals we rely upon point in opposite directions. This may mean some big swings in 2008. Overall, the economy seems to be slowing down-in a large part due to the housing market. Normally this leads to lower interest rates because mortgage rates hate inflation and a slow economy means lower inflation. BUT, the recent jump of oil to $100 a barrel represents a risk because of the overall cost of everything will increase (inflation) which can lead to higher mortgage rates. Rates should stay between 5.75-6.5%, unless the bottom falls out of the economy or oil prices shoot through the roof (both of which could happen) and each pulls rates in opposite directions. MARKETPLACE: The New Year started the same way 2007 ended-with a sea of change. Several large lenders just changed their rules about Home Equity Lines of Credit (HELOCs), capping them at 90% of a home's value vs. 100% that has been allowed for almost a decade. This is important for 2 reasons, the first is that it's a sign banks are concerned about property values dropping, and the second is that it can impact your financial freedom. I believe that everyone should have a Home Equity Line of Credit on their home-I'm not saying you need borrow on it; you just need to have it. Why? Because the time when you need to access your equity the most (job loss or disability) is the time when it would be most difficult to get at your equity. Why? Because a bank can't borrow you money unless you can show you have the income to repay it-and if you lost your job or you're hurt, you wouldn't. We see this happen several times a year, and it's gut-wrenching to talk with someone who is so close to a solution to their financial problems (they're living in it!), but they can't get at it without selling their home. Don't allow yourself to get stuck in this spot-if you don't have a HELOC in place we can get one set up for you very quickly. This loan will become more and more difficult to get in the coming months. On a positive note, with the recent rate reductions by the Federal Reserve, the interest rates on these loans have begun going down, after rising consistently over the past two years.
Minneapolis Real Estate Market Update
The New Year 2008..... Thank God! 2007 left many real estate professionals feeling like the "little engine that could". I think I can... I think I can......but unfortunately many couldn't. We lost about 20% of our fellow brethren in 2007. What caused this demise? 2007 saw inventory in the Twin Cities grow to 35,000 homes on the market (up 21% vs. 2006 and up nearly 50% vs. 2004). Foreclosures were at an all time high with over $4 trillion in adjustable rate mortgages coming due. Home values fell 2% to 15% depending on the area of the Twin cities in which you live, and average market time grew to 148 days (vs. 34 in 2004). The real problem for sellers was that in many cases they owed more on their home than the home is worth. Too many of us used our homes as an ATM - pulling out equity assuming that appreciation would continue as it had for so many years. Unfortunately, it did not! So here we are moving into to 2008 with 28,062 active listings (up 17.2% vs. Jan '07). 461 homes went under contract last week (down 9.3% from the same week last year), and there are 11 homes listed for every active buyer (vs. 6 last year). Will 2008 be better? Only time will tell. The good news as always is if your home is in a good area, shows well, is priced right, and is listed with a good aggressive Realtor, it will sell. I swear it absolutely will sell. The good old days of having an overpriced home on the market that will eventually get an offer are gone. The silver lining is that there has never ever been a better time to buy. Also, there has never been a better time to make that step-up purchase. If you have some equity in your current home and you buy into a higher price range, the discount you will have to offer on your home in order sell it will be small compared to the discount you will receive on the higher priced step-up home.
Taxes, Home Staging, Remodeling
On Increased Minnesota Property Taxes:As obnoxious as they are, taxes are a reality that we all have to deal with. We had a caller with a question about increased homeowners taxes. Some taxes are being raised because homes are being appraised higher than their actual value. The answer we got from our tax expert Greg Nelson is to call the county and argue that the value of your home has not gone up. It's a chore, but it's about the only thing you can do if you think your taxes have been illegitimately raised. On the positive side, keep these things in mind when filing your 2007 taxes: - Mortgage insurance is tax deductible.
- There is a $500 lifetime credit for homeowners. Check into it to see if you're eligible!
If you need help for year-end planning, please go to otcpas.com. You will find a planning guide there that can be very useful. On Staging:Rule of thumb: If your home is vacant, NEVER leave it empty - especially in winter. Homebuyers want to feel warm and welcome. When they walk into a prospective home, it should not feel like an empty, cold, house. Mentally move people into your home. Keep in Mind: - Bringing in a new eye can help create a more welcoming environment.
- Consultations are inexpensive and can be done without commitment.
Want a consultation or have questions? Call Heather at ReVamp It at 612.387.8966 or go to revampitinc.comOn Home Remodeling:Some things that will easily raise the value of your home: - PAINT - When putting a home on the market, paint the entire house the same color. It may seem boring, but it also makes your home appear larger. Fresh paint also helps the home to smell newer. You will get a 100% return on a paint investment in the sale of your home.
- REMODEL THE KITCHEN AND BATHROOMS - Upgrading the appliances, countertops, and sinks is a relatively inexpensive way to catch the eye of the buyer. You will get a 130% return on these projects in the sale of your home.
Questions? Call Gary at Paragon at 763.438.331
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