Cheri Kuhn and Waters Realty present

Many different things affect housing affordability including interest rates, sales price, the current employment market, and in todays market, the federal tax credit to name a few.  In real estate, REALTORS use an index to measure how affordable any given market is at a certain point in time. Traditionally, this is called the Housing Affordability Index or HAI.  Currently the HAI is higher than at any other point in history.  The higher this number the more affordable a market is.  Historically the HAI is usually around 150.  When it goes above 150 it is considered a strong buyers market and when the index goes below 150 a strong sellers market.  Today the Twin Cities is enjoying a HAI of 212!!!  This number will continue to be high as long as interest rates remain low and appreciation on homes continues to stagnate or fall.  Making this a once in lifetime time to buy!    The Twin Cities Market will rebound at what point it is difficult to say but with the current conditions, it makes sense to take advantage and consider buying a home!  To find out more please visit Waters Realty.

The EPA has officially launched a new label for Green homes that concentrates on indoor air quality issues such as mold, radon, carbon monoxide, and toxic chemicals.   This new label called the Indoor airPlus complements the already established Energy Star label.   Making the differentiation of Green Homes even easier to understand and see.   The new label is part of the Indoor Air Plus Program from the EPA.   It was established through a collaboration of the EPA, home builders, energy raters, utility companies, public health professionals and indoor environmental organizations.   Their main purpose is to encourage home builders to employ a variety of construction practices and technologies in their new homes.

If you would like more information on this or other Real Estate topics visit Waters Realty.

If you are a first time home buyer and closed on your home after January 2^nd  2009 you may qualify for 8,000 tax credit.     This tax credit is one that doesn™t have to be repaid as opposed to last years 7,500 tax credit that had to be repaid in 500.00 increments over 15 years.   To qualify for the 8,000 tax credit, you must earn less than 150,000 in adjusted gross income for couples filing Jointly.   Assuming the home is your is your primary residence, you must stay in home for three years or there may be some payback requirement.  

The stimulus package also increased $500 lifetime tax credit for building improvements to 1,500 for improvements such as: installation of energy-efficient windows, insulation, doors, and mechanical systems.     With this increase you can also take an additional 30% tax credit for every dollar spent on improvements such as: Solar heaters, fuel cells, and heat pumps.  

In order to answer this question we need to understand the current market conditions.   Is it all doom and gloom as the headlines show or is there a silver lining that is becoming more apparent as the days pass?   I tend to follow the later camp.   There are many positive things happening in the market place that affect a buyers ability to purchase a home.   There are three key areas that affect a buyers ability to purchase.   They are interest rates, real estate prices, and a buyers income.

First of all but by no means the most important are interest rates.   Our federal reserve is working hard to keep interest rates low.   Although I am uncertain how much lower they could actually go.   Right now interest rates are averaging about 5.5 to 6% depending on which mortgage vehicle you are looking at.   The rates are exceptionally low and will probably begin to edge up as the economy begins its slow recovery.   This is good news for both sellers and buyers because it makes buying a home easier now than it will be as the rates start to rise.   Although the market is slow there are buyers prepared to purchase and sellers who are in a position to sell.

The unfortunate part for many sellers is the decline in a homes value.   However if you purchased your home 10 years ago or more you are in fine shape to sell.   If purchased at the top of the market it will take some time before the market will catch up to what you purchased your home for.   The main culprit is the appreciation levels in first half of this decade.   The appreciation levels were continuously in the teens this is unsustainable.   Homes traditionally appreciated 3 to 4% in a good year and this made buying your home a sound investment to hold for a period of time.   The sellers that have held their home through the real estate boom are sitting in a great spot to sell.   Although they will not be able to get as much as say in 2006 they should still have considerable equity built up.   Although many homes delinced in value and on average home prices in the Twin Cities fell approximately 13% in 2008 alone.     This is may be hard for some people to swallow but it is great news for a purchaser.

The last thing to affect housing affordability is a persons income.   the median income for an American worker has not risen significantly since the late 1990′s.   As the real estate market took off people salaries did not follow suit make the Housing Affordability Index (HAI) in the Twin Cities as low as 123 in July 2006.   The average HAI in the Twin Cities is historically around 150-160.   We trail behind both coasts which average closer to the 123 we reached in 2006.   Right now because of the indicators explained above we are reaching an HAI of close to or slightly above 200 taking into account lender mediated properties.   This makes housing more affordable now than it has ever been and we will likely not see numbers as favorable in the near future.

If you like more information on the real estate industry visit Waters Realty.

On February 20th Mayor R.T. Rybak approved funding for the Minneapolis Advantage Program.  For those of you not familiar with this program.  It is a special funding program the city sets aside for potential home buyers to qualify for a mortgage.  The purpose is to help rebuild key neighborhoods hit by the recent foreclosure crisis.  This beneficial program is geared towards first time home buyers and makes owning a home in Minneapolis a reality.   The program was piloted last year with a lot of success and helped a number of people purchase who otherwise could not.  In addition the program aims to help turn around neighborhood blight! With this funding and the $8.6 million the city received yesterday from the federal government for foreclosure programs should go along way in turning things around.  One of the hardest hit areas is North Minneapolis where on auction many of the homes sell for next to nothing.  The next hardest hit area is Northeast Minneapolis which is a quaint section of the city that borders the U of M on the south.  The homes in this neighborhood are averaging at auction approximate $80,000.  Some parts of both of these neighborhoods are included in the Minneapolis Advantage Program.  If you have questions please feel free to visit Waters Realty.

The Twin Cities appears to have been hit hard in some neighborhoods by the foreclosure market. With the new numbers out last week for homes that closed in January.   We are really seeing two markets working.   59% of the homes sold last month in the Twin Cities were lender mediated properties.   Although this is good from an inventory standpoint it really shows the struggles home owners are experiencing with the competition from these properties.   The average price of owner occupied homes was $215,000 but the average price of lender mediated properties was only $122,000.   As you can see with 59% of the homes sold being foreclosures and the average price being as low as it is.   This is continuing to have a negative affect on home values in general.

Unfortunately for a seller, appraisers usually do not look to the average price of homes sold based on the circumstances of the sale.   They look at the market as a whole.   The other phenomenon that seems to play with the market is lenders tend to put large blocks of these foreclosed properties on the market at a time and make it difficult to acurately price a home.   It is especially difficult when you are looking to sell your home because the price can vary relatively quickly depending on the sale prices of homes near you.   In the coming months the Twin Cities is expected to experience another onslaught of bank owned properties this is good news for buyers looking to purchase but it continues a difficult situation of today’s home sellers.

If you would like more information on the state of the Twin Cities real estate market of other real estate questions.   Please visit my website at www.watersrealtymn.com or email me at cherikuhn@watersrealtymn.com

In this uncertain time is it really a good idea to buy a home?   This is a common question asked by consumers.   I think it is important for everyone to keep in mind that interest rates are at historic lows, housing prices have fallen approximately 10% in 2008 in the Twin Cities market, and down payment assistance programs popping up everywhere.   The conditions are ripe for buying.   Don’t miss the opportunity that today’s market provides.

The following are just some of the things to keep in mind:

1) The spring market will bring an influx of Real Estate Owned or Bank Owned properties.

2) There will be many opportunities to buy properties in this market that are already need of repair and with Energy Efficient Mortgages or FHA construction loans to repair and upgrade with green features.   These upgrades will save you money and still be able to maintain an equity position in your home.

3) Mortgage standards are tighter but not impossible.   A lender wants applicants to have a good credit score, low debt to income ratio and a down payment.   With the increase in down payment assistant programs in the market today, it makes at least one of these requirements are easier to obtain.

If you like to know more.   You can visit www.watersrealtymn.com.

It is now 2009.  I am feeling very excited about the prospects of a great year in Real Estate.  Yes the market will be slower but the opportunities are endless for today’s buyer.  One of the most exciting aspects of the market from an EcoBroker’s perspective is the ability to really help the consumer make smart choices about the homes they live in.  The foreclosure market, although a sad fallout of our industry, opens up many opportunities.One area, with some great upside for buyers is the ability to buy a foreclosure or real estate owned property.  With this type of property which is generally in need of updating and repair a buyer can use an  energy efficient mortgage or FHA construction loan to retrofit the house with sustainable upgrades.  This market niche is one of the fastest growing areas of real estate and presents a great upside for our economy and the neighborhoods where these properties are located.  So let’s welcome the New Year with excitement and possibilities instead of fear and hopelessness.  

I subscribe to “E the Environmental Magazine”.   I highly recommend this magazine for anyone looking to reduce their carbon footprint!   In the recent edition (May/June 2008) they had an awesome article about Berkeley California.   As one can imagine Berkeley is a hot bed for environmental change and thinking outside the box.   This article focused on the new program that has been initiated by the city.   The city is now offering to pay for homes to obtain solar power through loans that are then added to their property tax bill!   This offers an affordable way for people to conserve energy, save on their utilities, and overcome the price hurdle of switching to solar power!

I was amazed at the ingenuity of this program and how not only does it offer an affordable way to handle the upfront costs of solar but it also makes going solar affordable for everyone.   Now if only we can get Minnesota Cities to follow suit!

For more information or to view up to date real estate news, please visit www.watersrealtymn.com or you can call or email Cheri Kuhn at 612-865-9150 or cherikuhn@watersrealtymn.com, your local EcoBroker!

The federal governments attempt to spur the housing market is long overdue.   The National Association of Realtors has worked hard to many years to have FHA loan limits raised as housing became more expensive.   It is unfortunate that it has taken this long for these limits to be raised.   The increase in the limits and the Energy Efficient Financing that FHA offers make it a perfect time to purchase.

 The higher loan limits will help people qualify for a government insured mortgage through the Federal Housing Administration.   This will allow more people to purchase a home under less risky obligations than the debunked sub prime financing vehicles.   This will be beneficial to almost all the buyers in the market.

These higher limits in FHA financing will not allow buyers to purchase there homes with zero down, you will still need a down payment.   In many cases FHA financing will require you to have at least 3% of the homes purchase price as a down payment.   When clients ask me about financing I usually advise them that for the best deal it is a good idea to have 10 to 20 percent of the home’s purchase price for a down payment!

If you have questions or would like to learn more.   Please feel free to call Cheri Kuhn of Waters Realty LLC.   You can also visit our website at www.watersrealtymn.com