Will you have a mortgage when you retire?

According to Zillow, 37% of Americans own their homes free and clear. The number went up by 5.5% after the great recession. In 2017 41% of baby boomers owned their homes free and clear. For seventy-year-olds, an estimated 68% are mortgage-free.

I have read tons of advice over the years that suggests paying off a mortgage isn’t a good idea. It makes sense that if paying off a mortgage means using up savings and retirement accounts it probably isn’t a good idea. Other debts should be paid off first especially credit card debt.

Wealthy people may have ways to invest money so that it can earn more interest and they may be getting tax breaks by having a mortgage. For the rest of us, homeownership might be the best way to build wealth.

I can see a lot of advantages in not having a mortgage in retirement. The biggest advantage is not having to make mortgage payments which can lower monthly expenses. Homeowners still have to pay property taxes and insurance and all of the other expenses that come with homeownership.

There are some psychological benefits of not having to make house payments. It can be liberating. Something to consider when planning for retirement.

Is writing 2020 overhyped?

It is Friday and Fridays are for fun. Unless you live in a closet where there is no television or internet access and not even an amazon echo or a flip phone you have probably seen advice about how to write the year “2020”.

People who write “20” instead of “2020” rum the risk of having someone fraudulently add two more digits onto the year which could mess up a contract or even a check. Let’s say you use checks and you wrote one on February 2 and dated it 2/2/20.

Someone could change the date to 2/2/29, which would . . . I guess I have no idea why someone would do that to a perfectly good check. Would the bank still cash it?

I always use 4 digit years on legal contracts. I am pretty old school that way. I actually saw computer code back in the 1900s that used two-digit dates and there were some problems with sorting data and other issues that caused large companies to spend a lot of money having the problem fixed so that everyone could have a good laugh if the year 2000 when almost everything worked.

If a contract to purchase a house is dated 3/1/20 and someone changes the date to 3/1/2021 that could really hose things up. Again it is unclear to me how someone might benefit from that but maybe they could.

It is also possible that in say 2022 someone will insist that a date on a document was supposed to be 2020 but someone added the “22” to a document that used a two-year date of 20. That could get complicated especially on birth certificates and driver licenses.

If I see “20” as the year on a document I might assume that the full date is 1920. That could really make things interesting. It is harder to forge but how can a person prove that the “20” is for the year “2020” and not for “1920” or “1620” for that matter.

Maybe I am overthinking it or maybe not.

How much does it cost to heat?

We will experience some January cold here in the next few days. It will be cold but I will call it kind of cold because it can get a lot colder. We

Statue of Marcie in rice park
Marcie – Rice Park

should hit -10 over the weekend. We can get temperatures in the -20 to -35 range in late January.

Before buying a house it is a good idea to find out how much it costs to heat. St. Paul homeowners can get some averages by calling Xcel energy customer service, or by looking at their billing and usage history online.

It is also helpful to find out how many people are living in the house. A household with one or two people will generally use less energy than a household with four or more people.

The efficiency of the furnace or boiler makes a difference and so do windows and the amount of insulation in the attic. New windows might reduce heating costs but it takes a long time to save enough in energy bills to pay for them.

Look for energy star ratings on appliances. We had an old dehumidifier that was a real energy hog.

Using less electricity can be a matter of turning off lights or maybe using some timers. Use energy-efficient light bulbs and motion detector switches in basements and outdoors.

The City of Minneapolis now requires a Truth in Energy report to go along with the truth in housing reports that homeowners need to have before they sell their house. Homeowners will not be required to make repairs.

St. Paul home buyers should talk to their home inspector about the condition of the heating plant and how the home uses energy.

Here are some energy-saving tips I found on the Xcel Energy website.

Call your agent before you look at new construction

New construction

There isn’t a lot of new construction in the area but there is some and I like to remind homebuyers that they can and should buy new construction with the help of their REALTOR.

The nice agent in the model home is representing the seller. Sure they will work with you and they really know the project better than your own agent does but why not work with an agent who has experience and one who represents you and not the seller? Buyers do not get discounts for working without their own agents.

The salesperson at the model should ask if you have an agent and is required by Minnesota law to explain agency and have you sign an agency disclosure at the first substantive contact. It is the agent’s job to help buyers who come into the model, that is what they are there for. Even buyers who have signed contracts with buyer agents.

The easiest way to involve your agent is to include their name when you sign in at the model home.  Better yet go with your agent to the model home. We always have time to tour homes with our clients.

Often buyers report having somehow ended up in a model home and before they realized what happened they made an offer. Buying real estate should be intentional, not accidental.

Recommending a neighborhood

tree
On the river bluff – Cherokee Heights neighborhood

It is a common misconception that a REALTOR can recommend a neighborhood. Recommending a neighborhood is a fair housing violation.

Often home buyers will ask if a house is in a “decent” neighborhood. REALTORS can not answer that question, and “decent” is pretty vague. There are people who tell me that a neighborhood is “bad”.  Like “decent”, “bad” can mean just about anything.

There are homebuyers who choose neighborhoods based on what they can afford or how close it is to where they work or to family or to a place of worship.

There are people who want to live in walkable neighborhoods but I have found that definitions of walkable vary considerably.

REALTORS can not “steer” people into a neighborhood or recommend a neighborhood.

REALTORS can and will answer specific questions about neighborhoods. Some will even recommend restaurants and know a lot about neighborhood amenities.

There are plenty of resources and maps of the internet that provide useful information that can help home buyers choose a neighborhood. Driving, biking or walking through a neighborhood can help buyers narrow the search. Some homebuyers research schools before choosing a neighborhood while others look at crime rates.

The City of St. Paul web site has neighborhood information. Each neighborhood has a district council. Learning more about the neighborhood council is a great way to learn more about the neighborhood.

When choosing a neighborhood is important to consider housing stock in that neighborhood. People looking to buy a rambler should not be looking in the downtown area and people looking for a Victorian-era Queen Anne style might find one in Highland Park but there are so few that the likelihood of finding one on the market is slim.

Some buyers choose a neighborhood only to discover that there aren’t any affordable houses available in the area. People with more money have more choices.

Home prices and sales for December 2019

Monday is my favorite day to roll out some home sale numbers. Here are the home prices and sales by St. paul neighborhood because real estate is that local.

Home sales were as brisk as they could be in December considering how few homes were on the market.  The low number of homes for sale will continue to keep home sales down in 2020. Median and average prices are up from last December and it took 4 days longer to sell a home in December of 2018 than it did in December of 2019.

The average sales prices that I have in red are higher than the average asking price. We see that happen a lot in the spring and early summer in fact last year there were months where the average sale price for homes in St. Paul was higher than the average list price.

The numbers are telling me that prices are still rising and that the strong seller’s market continues.

chart showing sale prices by neighborhood
St. Paul, MN home sales by neighborhood

The data used to create the chart was extracted from the NorthstarMLS and is deemed reliable but not guaranteed. Once extracted the data is imported into a spreadsheet where it is gently sorted, never stirred or shaken.

If you would like to know how much your home might sell for please contact me for a free no-obligation analysis. If you would like to look at more local real estate numbers please see Local Market Conditions & home prices. I have been publishing these numbers once a month for the last 15 years.