Looking for bargain priced foreclosures?

I have talked to a few people who are waiting for foreclosures to hit the market. There are a few out there but even though the pandemic caused job loss homeowners are getting caught up

home
Home

on mortgages and there are forbearance programs that extend the length of the mortgage.

This isn’t like the last recession or like the housing market crash. There are a few differences. Most importantly more homeowners have a lot more equity. That means people who are behind on payments may even be able to sell before they go into foreclosure.  Home prices are going up.

During the great recession, home prices went down and there were many people who could not make payments but the value of their home was going down and they ended up owing more money on it than they could sell it for.

The foreclosures I have seen are not what I would consider “bargains”.

I don’t think the pandemic will result in a foreclosure crisis at least not in owner-occupied residential real estate.

There is a glut of commercial real estate and I am starting to notice more rental properties coming on the market.  It is possible that being a landlord isn’t as attractive as it once was due to various eviction moratoriums and in St. Paul, there are stricter standards for evicting tenants.

Rental property owners also have equity and now is a great time to sell any type of residential real estate.

Downtown is a buyers market

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months supply of houses for sale

In most of St. Paul, we are experiencing a strong seller’s market. There is less than a two-month supply of housing which means it would take about a month and a half to sell all of the houses on the market. At the same time, downtown St. Paul is experiencing a buyers market. It is a weak buyers market but it is possible to buy a downtown condo after it has been on the market for several days without having to compete with a dozen other buyers.

Prices in the downtown area have been stable. Historically the housing market downtown has been out of step with the rest of the city. During the pandemic, some of the things that make downtown attractive went away. The sporting events and concerts stopped and the restaurants that stayed opened offered curbside pick-up instead of in-door dining.

It will be interesting to see what it all looks like by next year. Right now about a third of the homes on the market in St. Paul are downtown with prices ranging between $93,000 and $900,000

Quick home sales continue this spring

About 19% of the homes listed for sale in St. Paul this year were on the market for less than two days before the seller accepted an offer. About a third of those were on the market for zero days.

Many of the homes were listed as “coming soon”, which gives potential buyers a chance to drive by and to look at photos of the property. Over the Easter holiday weekend, a small affordable house in the North End neighborhood got 18 offers after two days on the market and it appears that at least one of those offers was for about 15% more than the asking price.

We are seeing instances where the house appraises for less than what the buyer offered.  As part of the mortgage approval process, the buyer’s lender orders an appraisal. In some cases, the buyer proceeds with the purchase and kicks in some more cash, and in other cases, the sale price is re-negotiated.

My gut hunch is that a buyer can pay too much for a house. If the buyer can stay in the house for many years it probably doesn’t matter much.  If for some reason the buyer needs to sell in a few years and interest rates go up slightly the buyer may have trouble even breaking even after selling.

This is a wonderful time for homeowners who wish to sell a house. Houses in the cities and in the suburbs in most price ranges are selling quickly and for top dollar.  Homebuyers can expect to pay a premium and face a lot of competition. Buyers who pay cash or who have large down payments have an advantage.

 

River Center and Roy Wilkins during the pandemic

xcel center
Herbie

There is some life in downtown St. Paul these days as people use the large testing site and the new vaccination site at River Center and Roy Wilkins. Yesterday there were so many people out in the area it almost looked like the before time.

Normally in the spring, there are high school tournaments and in the winter there is hockey. I have noticed that the restaurants and bars along West 7th street have been getting a lot more traffic too.

I was worried that the vaccine would not come to St. Paul. There isn’t a Walmart or a Hyvee in the city limits. None of the local Walgreens or CVS stores were giving vaccinations the last time I checked.

Neighborhood groups on social media

It is Friday and Fridays are for fun. I belong to a couple of neighborhood groups on Facebook and on NextDoor.  I don’t advertise in any of the groups. They are a news source and a chance to share information when I have it.

One of the most common posts I see in neighborhood groups are from people asking if anyone heard the loud bang, explosion, or gunshots. On any given day there is at least one such inquiry in at least one group or page that I participate in.

The second most common post is when the neighbor displays a video of a package or mail thief in the act of thieving. We rarely know for sure where the crime is being committed and even though these criminals are caught on video I don’t think they are ever arrested and have never heard of anyone getting their packages or mail returned to them.

All I can say is there are always loud noises in the area and they are rarely gunshots or explosions. Most of the time the loud noise season peaks around July 4th.  It would be nice if neighbors could work together and identify the neighbor responsible for the noise but that never happens.

As for the packages, cameras don’t seem to be a deterrent. If they were a deterrent we wouldn’t be seeing so much video of people stealing packages.

People also ask for advice in neighborhood groups. I don’t ask for advice or give it but those postings are an endless source of entertainment.

Join a neighborhood group on social media today. I promise you will get a bang out of it.

National real estate trends

Cash is still king. According to Realtor®.com reporting, 36 percent of home sales across the nation were cash sales last year which is about a 3% increase from 2019. 

Remote workers are moving further away from work. Like 50 miles away. I have been watching this trend for a year. It will be interesting to see how it all works out when people change jobs or when employers decide they want to open offices again.

There is also a trend of using tiny houses as offices. A tiny house may have 100 to 500 square feet of living space. My own office is about the size of a small tiny house with 144 square feet of space. Personally, I like the idea of using a tiny house as a she shed.

Accessory dwelling Units or ADU’s as they are called are allowed in St. Paul and they would make great offices assuming they can be adequately heated during our annual polar vortex.