Home Sweet Home, Insider-Tips on Minnesota real estate.

An Upside to Plunging Home Prices

John Lonski, CEO of Moody's Capital Markets Research Group, discusses the latest decline in home prices. He tells WSJ's Kelly Evans that although it highlights plunging home prices and the deterioration of mortgage-backed securities, it's promoting the stabilization of home sales.

Click here for the video presentation.

Famous persons' homes

Actor Nicolas Cage has cut the price on a Los Angeles house where singers Dean Martin and Tom Jones once lived. It's now $19.75 million, down from $25 million and 44% less than his original listing price in October 2006.

Just two years after former Democratic presidential hopeful John Edwards sold his Washington home for $5.2 million, its current owners are trying to sell it, renovated, for almost twice as much.

The former North Carolina senator, John Kerry's running mate in the 2004 race, sold the early 19th-century Georgetown four-story townhouse (left) in December 2006 as he was embarking on his race for the '08 Democratic presidential nomination. He and his wife, Elizabeth, bought the home in '02 for $3.8 million.

The current sellers, asking $9.95 million. Among other renovations include: an open kitchen, adding a billiard room and a gym; they installed a hot tub, fire pit and fountains in the garden and renovated the carriage house, according to the listing.

More than a year after listing his Los Angles house for $27.5 million, Hollywood producer Brian Grazer has taken it off the market.

Former New England Patriot quarterback Drew Bledsoe has lowered the price on his 5,500-square-foot house to $1.625 million, slightly less than the $1.7 million he paid for it new in 2005. He listed it a year ago 

The house where television personality Ryan Seacrest filmed reality show "Momma's Boys" is for sale in Santa Barbara, Calif., for $21.8 million, 45% below its original listing.

Freddie Mac Increases Fees on Some Mortgages

Freddie Mac posted on its Web site late Friday higher fees that will raise costs for some home mortgage borrowers.

The move by the government-backed mortgage investor follows similar fee increases by its main rival, Fannie Mae, in December. A series of such increases over the past 15 months has drawn protests from the National Association of Realtors and the National Association of Home Builders. The trade groups say Fannie and Freddie are adding costs that deter home buying or refinancing at a time when the housing market badly needs a boost.Freddie's announcement cited growing risks of mortgage defaults as home prices continue to drop. It noted that prices are down more than 30% from a year ago in some areas and said "all industry indicators" point to further declines in 2009.

Freddie's higher fees affect mortgages that finance condominiums; loans that allow borrowers to pay only interest in the initial years and defer principal repayments; refinance loans that allow the borrower to cash out some of their home equity, and loans with certain combinations of low credit scores and down payments.

Fannie and Freddie don't deal directly with consumers but have a big influence on the rates and fees they pay. For mortgages up to a limit of $625,500 in the most expensive areas of the country, the two companies acquire or guarantee loans that have been originated by lenders. For a growing number of loans, Fannie and Freddie reduce the price they will pay (through "delivery fees" or "loan level price adjustments") to compensate for what they see as higher risk characteristics. These surcharges typically are passed on to consumers in the form of higher loan fees or interest rates.

For instance, Freddie announced a fee of 0.75% of the loan amount on certain mortgages for condos on which the loan amounts to more than 75% of the estimated home value.

What more should you know?  BUY, BUY, BUY today because the cost of buying is getting more expense!

11 items needed for a short-sale.

Considering selling your house by asking your lender to accept a short-sale?  Where exactly do you begin? One of the key factors in the outcome of a short sale is the Short Sale Package. This package is so important; acceptance from the lender depends on it.

Listed below is the paperwork required to successfully negotiate a short sale:

1. Authorization that your Realtor can Negotiate on your behalf
2. Signed Listing/Sales Contract
3. Broker Price Opinion
4. Preliminary HUD-1
5. Hardship letter; why you need a short-sale
6. 2-3 months of bank statements (W2, 1009, tax returns, etc.)
7. Budget: list of expenses and income
8. Photographs of interior and exterior of house
9. Repair estimates
10. Most recent comparables: Actives, Expireds, Pendings and Solds
11. Local headlines related to current market conditions.

Predictions for 2009 by Tom

Where Will Housing Prices Go Next?

LETTER TO  THE BANK  

Dear Sirs,

In view of current developments in the banking market, if one of my checks is returned marked ‘insufficient funds', does that refer to me or the bank?

How long will it take for home values to zoom back up?  Some prognosticators predict decades. Others say there is a brighter picture! You be the judge, here are some historic measures:

· Rent. In the last 50 years, homes have on average sold for 20 times what it costs to rent them for a year. In 2006, at least in some places, they were selling for 32 times annual rent.

· Income. From 1950 to 2000, home values sold for three times average household income. In 2006, average household income was $66,500, which should have put median home prices at $200,000. Instead the median was $301,000.

· Appreciation. Existing home values rose 0.5 percent annually, adjusted for inflation, from 1950 to 2000. From 2000 to 2006, they rose at the annualized rate of 8.2 percent above inflation and peaked with a 12.3 percent rise in 2005. After years when the housing buble inflated everything was brought back to earth in 2007.

Selling? The Wall Street Journal reports that home prices won’t hit bottom until the second half of 2009 and maybe later. Sellers will continue to face lower home values because they’re competing with banks that are slashing prices to sell the large inventory of foreclosures and distressed sales at discounted prices.

And longer term? Over the next 10 to 20 years, economists expect housing prices will rise again -- but, on average, probably not nearly as much as they've averaged over the past decade; just a little faster than inflation and historical household income. That isn't to say that some places won't experience booms (and busts). Interest rates will remain low, but those with the best credit will get the best mortgage rates!

Buying? The New York Times reports, “Opportunity Knocks!” If low-cost mortgage money and property prices provide the fuel to power strong housing sales, we just might be on the verge of a takeoff, at least a modest one. Then those that sat too long will kick themselves for not taking advantage of unprecedented opportunities! Buy! Buy! Buy!

Everything you need to know about buying, selling or financing, browse homes for sale or keep just up-to-date on market conditions, go to: www.tomslupske.com

Everything you need to know about buying, selling or financing, browse homes for sale or keep just up-to-date on market conditions, go to: www.tomslupske.com

 

My business continues to grow by referrals from friends, family and clients like you!

Thank you for recommending me!

Monthly Skinny: January 09

Click here for this month's video "Skinny"

Existing Home Sales Rise on Record Price Slump

Jan. 26 (Bloomberg) -- Sales of previously owned homes in the U.S. unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged.

Resales of single-family homes increased 7 percent to an annual rate of 4.26 million. Sales of condos and co-ops rose 2.1 percent to a 480,000 rate.

For the complete article click here  or go to Bloomberg.com

Could Your Home Value Be Impacted By Rising Oil Prices?

When the Baby Boomers were younger (1960-90), families with children made up more than 50% of all households. By the time we got to 2000 this figure had declined to 33% and by 2025 it is estimated to be around 25%.

As a result the suburban boom in housing prices that we experienced will in all likelihood slow down considerably and shift to a more urban environment. No one is predicting that suburban life is dying nor will it be replaced. Merely that as the demand cycle shifts (retiring baby boomers, different needs for Gen X & Y, rising oil costs, etc.) there will also be a shift toward different types and designs of homes as well as where those homes will be located. There are many families that will continue to prefer bigger houses and car-based lifestyles, but at the end of the day they will become a smaller group. By Stefan Swanepoel

Year-End News Release for 2008

 

After two-plus years of a faltering market, a recent upswing in Twin Cities homes sales during the second half of 2008 is cause for some measured optimism heading into 2009. In the Twin Cities 13-county metro area, total pending sales for 2008 ended at 44,067, up 1.2 percent from 2007. This is the first year-over-year increase in pending sales since 2004. There were 38,746 closed home sales in 2008, down only 3.5 percent from 2007. 

In the second half of the year, sales picked up momentum and haven't let up since due to tumbling mortgage rates and increased affordability. Since July, there have been 15.7 percent more pending sales than there were during the same time period last year, and the most recent month saw a year-over-year increase of almost 30 percent.

Home prices continued to decline, as expected. The overall 2008 median sales price was $195,000, down 13.3 percent from last year's mark of $225,000.

Reasons for this decline can be found by dissecting two unique segments in today's housing market: lender-mediated and traditional. In 2008, the median sales price of lender-mediated foreclosure and short sale properties was $145,000, a drop of 13.4 percent from 2007. The median sales price for traditional properties was $223,000, which was a much quieter decline of 4.1 percent from last year. In all of 2008, 31.7 percent of closed sales in the region were lender-mediated, up from 10.4 percent in 2007.

The number of new listings on the market during 2008 decreased by 10.9 percent compared to last year, a drop of over 10,000 listings from last year and the lowest showing since 2003. This has helped stem the tide of oversupply our market has been experiencing in recent years.

The number of new foreclosure and short sale listings in the fourth quarter of 2008 was actually 4.3 percent lower than the third quarter, which is the first downward quarterly movement in new lender-mediated listings since 2003.

See charts

It's National Hugging Day!

January 21st is National Hugging Day!  Grab a friend; if you're lacking those standing outside with a "Free Hugs" sign usually does the trick.