Monday, June 22, 2015

Minneapolis, Minnesota (June 11, 2015) – With the sole exception of inventory, every market metric showed continued improvement during May. The number of signed purchase agreements in the 13-county Twin Cities increased 19.5 percent to 6,228. That marks the highest May pending sales count since 2005. Sellers, however, were only slightly more active than last year. New listings rose 0.3 percent to 8,590 for the month. Excluding April 2015, that’s the highest number of new listings for any month since the home buyer tax credit period of April 2010. Homes also sold in less time and sellers yielded a higher share of their list price.
The May 2015 median sales price of all MLS home sales increased 6.7 percent to $224,000. That’s within 3.6 percent of the May 2006 level and 6.3 percent of the record high seen in June 2006. Price per square foot offers a different perspective, as it accounts for the increasing square footage of homes selling. The average price buyers paid per square foot rose 3.5 percent to $128.
“Though it’s not the only important measure by a long shot, many factors have enabled prices to once again approach these levels,” said Mike Hoffman, Minneapolis Area Association of REALTORS® (MAAR) President. “It’s taken nearly 10 years just to get this close to break-even and this time the fundamentals are better, our population has grown and industry professionals and consumers are more cautious.”
Persistent rent hikes, low mortgage rates, solid job growth and some noticeable wage growth are all encouraging consumers to seriously consider homeownership. But sellers and builders have been reluctant to list and build at the same levels they did when demand was this high 10 years ago. That has kept us in a seller’s market for some time. The number of days a listing spends on the market also reflects this. Those selling their homes are waiting a median of 35 days before accepting an offer at a median of 99.5 percent of their current list price. May months supply of inventory fell 12.2 percent to 3.6 months. Markets with between five and six months of supply are considered balanced.
Over the last 12 months, buyer activity increased the most in the townhome segment, where properties are also selling the fastest. Condominium prices increased the most of any property type over the same period. New construction pending sales for May increased at about half the rate of previously-owned properties. The number of homes on the market in May fell for all property and construction types.
The finance environment remains attractive. Mortgage rates are hovering around 4.0 percent, compared with a long-term average of 7.0 percent. The Twin Cities housing affordability index increased 2.7 percent since May 2014. An educated and literate workforce combined with a healthy and diverse economy helps Minnesota compete for top talent and businesses on an international scale.
“Many brokerages are seeing record volume even as prices move toward 2006 levels,” said Judy Shields, MAAR President-Elect. “Buyers in a variety of segments in our wonderful region are eager to make homeownership a reality. Prospective sellers should take note—they’re likely to receive top dollar for their property.”
All information is according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from NorthstarMLS. MAAR is the leading regional advocate and provider of information services and research on the real estate industry for brokers, real estate professionals and the public. MAAR serves the Twin Cities 13-county metro area and western Wisconsin.

Home Upgrades with the Lowest ROI

Published: August 26, 2013 by NAAR
File these six upgrades under wish fulfillment, not value investment.
Of course, home owning isn’t just about building wealth; it’s also about living well and making memories -- even if that means outclassing your neighborhood or turning off future buyers. So if any of these six upgrades is something you can’t be dissuaded from, enjoy! We won’t judge. But go in with your eyes wide open. Here’s why: 
1.  Outdoor Kitchen
The fantasy: You’re the man -- grilling steaks, blending margaritas, and washing highball glasses without ever leaving your pimped-out patio kitchen.
The reality: For what it costs -- on average $12,000-$15,000 -- are you really gonna use it? Despite our penchant for eating alfresco, families spend most leisure time in front of some screen and almost no leisure time outdoors, no matter how much they spend on amenities, according to UCLA’s Life At Home study. And the National Association of Home Builders' 2013 What Home Buyers Really Want report says 35% of mid-range buyers don’t want an outdoor kitchen.
The bottom-line: Instead, buy a tricked out gas grill, which will do just fine when you need to char something. If you’re dying for an outdoor upgrade, install exterior lighting -- only 1% of buyers don’t want that.
Related: How to Buy a Gas Grill
2.  In-Ground Swimming Pool
The fantasy: Floating aimlessly, sipping umbrella drinks, staying cool in the dog days of summer.
The reality: Pools are money pits that you’ll spend $17,000-$45,000-plus to install (concrete), and thousands more to insure, secure, and maintain. Plus, you won’t use them as much as you think, and when you’re ready to sell, buyers will call your pool a maintenance pain.
The bottom-line: If your idea of making it includes a backyard swimming pool, go for it. But, get real about:
  • How many days per year you’ll actually swim.
  • How much your energy bills will climb to heat the water ($760-$1,845 depending on location and temperature).
  • What you’ll pay to clean and chemically treat the pool ($20-$100/month in-season if you do it yourself; $75-$165/month for a pool service).
  • The fact that you'll likely need to invest in a pool fence. In fact, some insurance carriers require it.
Less expensive option: an above-ground pool
Lower maintenance option: natural pools
If you do put in a pool, you can save money by installing a solar heater.
3.  In-Ground Spa
The fantasy: Soothing aching muscles and sipping chardonnay with friends while being surrounded by warm water and bubbles.
The reality: In-ground spas are nearly as expensive ($15,000-$20,000) as pools and cost about $1 a day for electricity and chemicals. You’ll have to buy a cover ($50-$400) to keep children, pets, and leaves out. And, like in-ground pools, in-ground spas’ ROI depends solely on how much the next homeowner wants one.
The bottom-line: Unless you have a chronic condition that requires hydrotherapy, you probably won’t use your spa as much as you imagine. A portable hot tub will give you the same benefits for as little as $1,000-$2,500, and you can take it with you when you move.
Related: What You Need to Know About Installing a Spa
4.  Elevator
Your fantasy: No more climbing stairs for you or for your parents when they move in.
The reality: Elevators top the list of features buyers don’t want in the NAHB “What Buyers Really Want” report. They cost upwards of $25,000 to install, which requires sawing through floors, laying concrete, and crafting high-precision framing. And, at sales time, elevators can turn off some families, especially those with little kids who love to push buttons.
The bottom-line: If you truly need help climbing stairs, you can install a chair lift on a rail system ($1,000-$5,000). Best feature: It can be removed.
Related: 4 Easy-Living Tips for Aging in Place
5.  Backup Power Generator
Your fantasy: The power in your area goes kaput, but not for you. You were smart enough to install a backup power generator. While the neighbors eat cold hot dogs by a flashlight beam, you’re poaching salmon in your oven and pumping out Red Hot Chili Peppers tunes.
The reality: Power outages may seem to go on forever, but they don’t. Fifty dollars worth of batteries can power portable lights, radios, and TVs; a car adaptor will charge your cell phones and iPods; and some dry ice will keep freezer food cold for at least a couple of days.
The bottom-line: If you live in areas where power shortages are the rule, not the exception, spend the money for reliable backup power: Your still-frozen steaks, home office fax, and refrigerated medicine will thank you. But if the power goes out rarely, then installing a standby generator is overkill.
Nationwide, homeowners recouped 52.7% on their average $11,410 investment in a backup generator -- one of the lowest ROIs on the annual Cost vs. Value Report. If you need occasional emergency power, a gasoline-powered portable generator ($200-$650) probably will suffice.
Related: What I Learned About Portable Generators One Dark and Stormy Night
6.  New Windows
The fantasy: Brand new windows that don’t stick, and slash energy bills.
The reality: A $10,000 vinyl window replacement project will recoup about 70% of your investment at resale, and if they’re Energy Star-qualified, they can save you around $300 in energy bills per year.  So, plan to live in your house about another 10 years to recoup the cost of new windows.
The bottom-line: We get it -- new windows are sturdy, pretty energy savers. But unless old window frames are thoroughly rotten, most windows can be repaired for a fraction of replacement costs. And if you spend about $1,000 to update insulation, caulking, and weather-stripping, you’ll save 10%-20% on your energy bill.

June 2015 Skinny

May 2015 Skinny