Prices are up, everything else is down

table and graph of local home sales
Local market update for February 2018

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.

Happy house hunting!

For more local real estate numbers please see Local Market Conditions & Home prices

How much is my one bedroom condo worth?

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.

Average value and appreciation of one bedroom condos

Is this house a good investment?

blue house
small house

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.

Buying real estate is a long-term investment. When compared with renting long-term homeownership builds wealth and renting does not.

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?

Climate migration to the bold north

MN Capitol
Minnesota Capitol building

Some folks consider the idea of climate change to be political and others do not believe the climate is changing.

Climate change is kind of like gravity, in that it will exist for everyone even if those who don’t believe in it.

Last week I was contacted by a couple of home buyers who want to move to Minnesota because they believe that it will be a great place to survive climate change.

As one caller pointed out we are not on the coast so rising oceans are not a concern and neither are hurricanes or earthquakes.

Houses are more affordable here than they are in many other places.

We have water in Minnesota, and blue skies and lots of green after the white goes away.

We have jobs. In fact, the unemployment rate in Minnesota is generally lower than the national average. Our economy is strong and diverse.

For people who have money, there are good schools and good medical care in Minnesota.

There are plenty of recreational activities because of the more than ten thousand lakes. Fishing, camping hiking, biking, snowmobiling boating, sailing and so much more.

We rarely see temperatures over 90 degrees but -30 isn’t unheard of.

The state of Minnesota appears at the top of the lists of states that are well run and on solid financial footing.

Yes, we have theaters and art galleries and concert halls in Minnesota. In St. Paul we have art crawls and music in the parks.

People who come to Minnesota from other places often comment on how clean our cities are.

Everything in an old house can be made new

Gravity Furnace – isn’t she a beauty?

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.

Also, see Younger buyers want technology  Homes can be retrofitted with smart home technology.

searching for a decent neighborhood

tree
On the river bluff – Cherokee Heights neighborhood

Home buyers are out in full force looking for that perfect home in a “decent” neighborhood. I St. Paul we have seventeen neighborhoods to choose from. Within those 17 neighborhoods, there are more than 100 sub-neighborhoods. Each neighborhood has a district council. One way to learn about the neighborhoods is to visit the district council website for the neighborhood.

If a decent neighborhood is an area with a low crime rate the best place to learn about crime in St. Paul is from the Saint Paul Police Department’s website.

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.

There are private schools in St. Paul and public magnet schools. Parents have choices. To learn more about St. Paul Public Schools.

When choosing a neighborhood write a list of what is important and do some research. Drive through the neighborhood or walk through it when the weather is nice and people are outside again.