The report is from the Minnesota Association of Realtors and it shows that in the 7 county metro area new listings and home sales are down. The length of time it takes to sell a house is down. Prices are up. On average sellers got 1.6% more than the asking price in February. That means that prices are rising.
Year to date sellers got an average of 1.4% of the asking price. This shows that prices are still going up.
Some buyers are making offers on houses without looking at them because houses sell so quickly.
The value of real estate is affected by location, condition, and size. If I take the same one bedroom condo and place it in four different areas the price will be different. Not only will the price be different but appreciation also varies by area and property type.
The table shows the average price of a one bedroom condo in 2018. The percentage is the average amount a one bedroom condo in each of the areas has appreciated since 2013.
Blanket statements about appreciation or real estate values are just a guide. The location and number of bedrooms, size, and condition of the property have a significant impact on value and future value for that matter.
Is this house a good investment is a great question and the answer has more to do with the situation of the person buying the house than it does with the house.
First, let’s assume that the real estate buyer is smart and savvy and pays fair market value or less for the property. We don’t know for sure if the value of the home will go up or down. Historically Minnesota real estate has appreciated . . . except for that one time when it dropped like a rock.
However, if a person has a choice between buying a home or using the money to start and build a business the business might be a better investment. Right now the tax breaks for businesses are bigger than tax breaks for homeowners too.
Owning a home for a short period of time can be more expensive than renting. Buying a home might not be a good investment for someone who needs to move often to take advantage of job opportunities.
For my family buying a house has been a great investment but we took a risk. We bought a house in an area that was experiencing some urban decay. Interest rates were sky high and people had trouble selling their homes.
The neighborhood has turned around and I guess we are on the way to gentrification. We bought low and yes it has been a very good investment. It wasn’t easy in the early days.
The question should be: Is this house a good investment for me at this time? Do I want to invest in a house or is there a better use of my hard earned money? Do I want to spend my money on stuff or on experiences or both?
Just about everything on the inside or the outside of a house can be rebuilt or replaced. An old house can have a new roof and new windows too.
There are old houses and there are old houses. Sometimes home buyers are intimidated by the house that was built in the 1890’s when it is the house that was built in the 1980’s, or 1990’s. that they should be concerned about.
Houses built in the late 1990’s may still have the original roof. Replacing a roof is expensive and some only last 20 years. A 20-year-old forced air furnace is a scary thing. Plumbing doesn’t wear out as quickly but I know from experience that plumbing for toilets and faucets and valves wear out and they can be expensive to replace.
Our home was renovated in the late 80’s and we have replaced almost every faucet and valve in the house and upgraded toilets and replaced a few sinks. The plumbing, in general, is in much better shape than what I find in houses that are almost a 100 years newer. The fixtures and plumbing in the kitchen are just a couple of months old.
Our furnace is now three years old and the water heater is about six years old.
I strongly encourage home buyers to have a complete home inspection before buying a home of any age. While house hunting pay close attention to the age of the systems inside and outside the house rather than the age of the whole house.
If a home as been newly renovated ask for warranties on the work, make sure permits were pulled and that they have been closed. Local government entities that rehab and sell houses will sometimes refuse to provide any kind of warranty on the work making a complete home inspection even more important.
Most of the housing in St. Paul is old. There isn’t a lot of new construction and it is very expensive. Houses are definitely reusable and upgradable. The oldest houses in St. Paul were built without plumbing or electricity. That was all added later.
The idea of a decency in a neighborhood is vague and subjective, yet most home buyers are looking for a “decent” neighborhood. In addition, to “decent”, the neighborhood needs to be “safe”.
This year we are celebrating the 50th anniversary of the passage of the 1968 Federal Fair Housing Act.
As a real estate agent and broker, I can not recommend a neighborhood or even state that a neighborhood is decent or safe. I can not steer anyone into a particular neighborhood because that violates fair housing laws. Fair housing discrimination does not need to be intentional to be illegal. To learn more about fair housing rules and laws in Minnesota, visit the Fair housing basics web site.
For most people, it is the amount of money they have that will determine where they live. The most expensive homes are near the best schools. Great schools drive property values up. Higher property values mean property higher taxes which in turn means more money is spent on education.