Affordability At Record Highs for Home Buyers!

Rates Rise A Bit After Fed Meeting, Affordability At Record Highs for Home Buyers!

Mortgage rates held steady during the first half of the week, until Wednesday's Fed meeting. As expected, the target for the Fed Funds rate remained unchanged, close to a level of zero. Heading into the announcement, the biggest question for investors was whether the Fed would begin to purchase Treasury securities in addition to mortgage-backed securities (MBS) to help support the financial system. Hoping for a decisive plan, many investors were disappointed that the Fed merely indicated that it was ready to purchase Treasuries if "evolving circumstances" justify the action. Yields on Treasury securities rose significantly after the announcement, and in order to compete for investors, mortgage rates moved higher as well.
Also applying upward pressure on mortgage rates, a large fiscal stimulus plan moved closer to passage during the week. An $819 billion fiscal stimulus package passed a vote in the House, and the Senate is expected to consider its $900 billion version next week. The combined government spending for this new package, along with the TARP program, the MBS purchase program, and a proposed bank cleanup plan, will total trillions of dollars. An enormous amount of new debt will be issued to pay for all the government programs, and interest rates offered on all bonds may need to increase to attract investors. One positive note is that foreign investors continued to show strong demand for US bonds during the week.

In the housing sector, December Existing Home Sales rose 7% from November. Inventories of unsold homes dropped to a 9.3 month supply from 11.2 months in November. According to the National Association of Realtors, lower prices persuaded many buyers to step in. Existing Home Sales cover more than 85% of total home sales, so this report was very welcome news for the housing market. December New Home Sales didn't perform as well, dropping 15% from November. This window of low interest rates and current supply level of homes, could make today one of the best opportunities to buy real estate that we may see for some time.

Mortgage Applications Back on the Rise

Mortgage Applications Back on the Rise

Mortgage applications climbed last week in response to falling interest rates, according to the Mortgage Bankers Association weekly mortgage applications survey.

The index increased 2.9 percent to 841.4 from 817.7 the previous week on an adjusted basis. On an unadjusted basis, it also increased 2.9 percent and was up 37.3 percent compared with the same week a year ago.Most of the activity was in refinances, which increased to 76.9 percent of the total. "It doesn't solve the problem for people who owe more than their home is worth, but for the significant majority who are able to refinance, it is quite a boon," said Bob Walters, chief economist at Quicken Loans in Livonia, Mich.Interest rates were down last week compared with the previous week, and are expected to decline still further in response to the Federal Reserve cutting its benchmark rate to a record low this week.Last week’s already low rates continued to decline:

30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent;
15-year fixed-rate mortgages decreased to 4.93 percent from 5.08 percent
1-year ARMs decreased to 6.63 percent from 6.76 percent.Source: Mortgage Bankers Association and Reuters News, Lynn Adler (12/17/2008

For Sale in Richfield Minnesota

6907 Logan Ave S - $499,900

Walk up a landscaped concrete walk to a gorgeous country style wrapped porch with cedar post and recessed lighting, spacious enough for entertaining! Cedar shake façade with white trim, hip roof, and maintenance free siding on sides and back!

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Main floor living area is open to kitchen area and boasts, neutral carpeting with gas fireplace surrounded with black granite. Ample space above gas fireplace for flat screen Television and stereo components. Room is wired for surround sound. Recessed lighting in knockdown ceilings, double hung windows with views of backyard.

Large open kitchen with gorgeous Maple cabinets, roll out drawers, extra top storage cabinets, pantry cabinet, built-in wine rack and custom hardware. Custom laminate countertops with accent granite countertop on breakfast bar area. Newer black appliances and black sink with brushed nickel hardware. Beautiful hardwood floors and oak trim. Recessed and designer pendant lighting in knockdown ceilings. Connected kitchen deskette with custom laminate counter tops, maple cabinets and phone and cable jacks. Access to front porch, lower level and sliders to deck and backyard. Kitchen is very gracious with countertop and cabinet space!

Main floor full bath with laminate flooring, white wainscoting and designer paint. Pedestal sink, tub with ceramic tile surround, knockdown ceiling, designer lighting and mirror, 2-panel entry door and hall linen closet with custom hardware.

Main floor bedroom with 2-panel entry door, neutral carpeting, lighted ceiling fan, custom blinds, newer windows, separate smaller closet and 2 huge closets with sliding doors and storage above.

2nd Main floor bedroom with neutral carpeting, closet custom blinds and is currently being used as a main floor office.

Large upper level hallway with frieze carpeting open oak railing with white spindles, recessed lighting in a knock down ceilings.

Upper level laundry and utility room with washer and spill catch/drain, dryer, and separate furnace zoned for upper level. White top cabinets and ceramic tile flooring.

Upper level bath with ceramic tile flooring, double Maple vanity with doors, drawers, and custom hardware, double sinks with chrome fixtures. Separate maple linen cabinet, huge mirror with designer lighting, recess lights in knockdown ceiling, tub with fiberglass surround and 2-panel entry door.

Upper level bedroom 1 with neutral frieze carpeting, Marvin Integrity windows, knockdown ceilings with designer lighting, oak trim, large walk-in closet with shelves and rods, and a 2 panel entry door.

Upper level bedroom 2 with neutral frieze carpeting, Marvin Integrity windows, knockdown ceilings with designer lighting, oak trim, large step-in closet with shelves and rods, and a 2 panel entry door.


Mater bedroom with neutral frieze carpeting, Marvin Integrity windows, custom blinds, transom window over bed, vaulted tray knockdown ceilings with recessed lighting and lighted ceiling fan, oak trim, large walk-in closet with shelves and rods, 2 separate hall closets with bi-fold doors, and a 2 panel entry door. Master bathroom with ceramic tile flooring, separate toilet room with privacy pocket door, whirlpool tub with ceramic tile surround and glass block accents, lighted separate walk-in shower with ceramic tile and glass block accents, oversized maple vanity cabinet with drawers and doors, single sink top with chrome hardware and designer lighting above.

Lower level family room with ceramic tile run to neutral Berber carpeting, pine base trim, recessed lighting, extra deep space for exercise equipment or desk.

Lower level non conforming bedroom/storage area with neutral carpeting, recessed lighting in knock down ceilings, supplemental baseboard heating with separate thermostat, double closets with bi-fold doors, huge separate closet / storage area with door. This room just needs an egress window to become a legal bedroom.

Lower level ½ bath with custom designer tile floor and base, white stool and pedestal sink, knock down ceilings and custom vanity lighting.

Lower level utility / storage area with newer high efficiency furnace zoned for basement and main levels, oversized hot water heater, plenty of storage area for boxes etc.

Oversized 2-car garage with matching cedar shake front and maintenance free sides and back, hip roof line. Separate front entry door on garage, extra parking pad to side of garage - great for boat or trailer, backyard shed, rock and mulch landscaping with plants.

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Weekly Market Activity Report

Weekly Market Activity Report

There is further evidence that home sellers (both traditional and lender-mediated) in the Twin Cities housing market are becoming more successful in attracting buyer interest by pricing their properties attractively from the get-go. This is having the bonus effect of limiting further extension of market time and reducing the number of price concessions. For instance, the Average Days on Market Until Sale in October was 141, down from last year by 0.8 percent. This is the first year-over-year decline in market time since we began tracking the figures in 2006.

Similarly, the Percent of Original List Price Received at Sale in October sat at 91.3 percent. While still down from last year, it is only down 1.9 percent, compared to the more robust drops of 4 percent or higher seen during most of 2008. In other words, the market is still tilted in the buyer's favor, but sellers and banks are responding with more realistic prices at the time of first listing.

For the week ending November 1, there were 21 percent fewer new listings than there were at this time last year, and 1.4 percent fewer pending sales. This is the first downward year-over-year movement in pending sales since June.

The Housing Affordability Index has increased slightly in November to 161, while November's Months Supply of Inventory shows a drop to 9 months.

Click her for Market Report Details - PDF

Weekly Market Activity Report

Weekly Market Activity Report

After spending weeks hypothesizing what role the sunsetting FHA seller-funded downpayment assistance was having in stimulating the recent jump in home sales, we may have our first indication this week. For the week ending October 4—the first week we've measured in which the program was unavailable to prospective Twin Cities home buyers—pending sales were ahead of the same week last year by only 3.5 percent. While this is still an upward annual trend, it is about a 15 percent decline in buyer activity as compared to the activity of each of the previous four weeks.
Now that the FHA program is gone, time will tell if home sales will continue to surpass 2006 levels, as seen over the past several weeks. While one week of a relative downturn is too small a sample size to be predictive of the future, our changing financial climate bears close scrutiny in the weeks ahead.
Listing supply continues to draw down, as new listings declined by 12.0 percent for the same time period comparison and the total number of homes for sale is 9.1 percent lower than it was one year ago.

Market Activity Report - PDF