Will housing prices go down?

There are only two things that could happen that will bring housing prices down:

Lower demand

Higher supply

Tax credits or rebates will not bring housing prices down and neither will lower Realtor commissions. Housing prices keep rising because the demand is high and the supply is low.

We are seeing some relief in multifamily housing due to all the recent new construction of apartment buildings. The supply is higher which means rents are not going up as much.

During the great recession and the housing market crash builders stopped building new houses.  The population continued to grow and that drove up demand. There is a lot more new construction now than there was a few years ago. In general there isn’t enough of that middle and lower income housing.

Housing costs contribute to inflation. When inflation rises the federal reserve raises rates which in turn causes mortgage interest rates to rise which makes housing more expensive and that rising cost contributes to inflation. It is a cycle that we don’t seem to be able to get out of.

There is a lot of finger pointing but so far that hasn’t made housing more affordable. The laws of supply and demand can not be ignored.

Housing prices generally do not go down but if they stopped going up that would help the economy and home buyers too.

Everyone is a little drunk

It is Friday and Fridays are for fun. This coming Sunday is St. Patricks day which means this year it is a three day event starting today. The parade will be tomorrow March 16th starting at noon  and will begin at Rice Park, travel down 5th St. E, and end at Mears Park. For those who are not from around here Rice Park is in downtown St. Paul. It will be sunny and in the low 40’s for parade time which is not warm but not too cold either.

2018 St. Patricks Day parade
2018 Saint Patricks Day parade- Kid friendly

Celebrate the luck of the Irish responsibly and get a free ride on Metro Transit on Saturday, March 16, 2024, from 6 p.m. to end of service on all routes–buses and light rail. No fare, no coupons; simply hop on and take a seat for free.

dogs in parade
Pet friendly

I am never even the smallest amount Irish but I do enjoy photographing parades.

Happy Saint Patrick’s Day!

Throwback to March weather

March can be a brutal month weather wise in Minnesota. Sometimes we have spring like weather followed by second, third and even fourth winter. We could still have a blizzard and a cold snap but as of now there isn’t any snow in the forecast and the coldest temperature predicted is 24 degrees.

In case anyone has forgotten what winter looks like in Minnesota in March, here is a photos I tool on March 10. 2019.

Snow - Alexander Ramsey House
Alexander Ramsey House St. Paul, MN

The dues are high but are they more than what you already pay?

coins

Before deciding that the monthly association dues for a condo or townhouse are too high, find out what they cover and do some comparisons.

I don’t pay association dues, but it costs about $110 a month for homeowners insurance and another $25 for trash pick-up but that doesn’t include the part we pay through our property taxes. Water is about $53 a month. Add that up and we are already at $188 a month for items that are typically included in association dues.

We had the place reroofed a few years ago that cost several thousand dollars and is typically paid for with association dues. There are other items that are covered like snow removal and lawn care.

Some associations cover heating, cooling, cable and internet which can easily add up to another $300 a month.

People who live in condo buildings with underground heated garages pay for it through their association dues.

Some condos owners enjoy shared amenities like balconies, decks, swimming pools, party rooms, and exercise rooms with equipment. There might also be a library, a craft room and maybe a guest apartment.

Owners also pay for security access, professional management, mail rooms, laundry rooms and elevators. It all adds up.

People who do not want to pay for all of the amenities might be able to find a condo with fewer amenities and lower dues. Either way it is important to understand what the dues are paying for and to make some comparisons before deciding that association dues are too high. It is even possible that living in an association will be less costly than owning a house or renting an apartment.

Lock your bike twice

Bike trail
Bike trail – Pickeral lake – late summer 2018

I just got my bike back from Lowertown Bike Shop. It needed a tune-up but more importantly it needed a new chain. We have already had a few days that have been warm enough for biking and are likely to get a few more. I am not into winter biking; I bike when temperatures hit 45 degrees or better.

Bikes are a high theft item. They disappear quickly and we never see them again.

The best practice for securing your bike is to lock it in a garage or shed or enclosed area and also lock the the bike. Mine is locked in a shed and I use a U lock to lock it to a beam. I have had the same bike for six years and would like to hang onto it for a few more years. St. Paul is a wonderful place to bike with plenty of trails.

Sure, I have the serial number and could file a police report if the bike is stolen but that isn’t the same as getting the bike back.

Please keep your bike locked up when not in use. Keep it locked up and behind locked doors and if possible, away from any windows and out of sight.

If rates are too high swipe left

brick and brownstone turret
Turret with brick, brownstone, and granite.

Mortgage interest rates are too high and so are home prices, which rose due to high demand and low rates.  Some real estate professionals are advising their clients to buy a house even though rates are 7%ish.

“Marry the house, and date the rate”.  This catchy phrase has become popular advice and a catchy phrase since the Spring of 2022 when mortgage rates increased to 20-year highs.

The phrase “Marry the house, and date the rate” means you’re committing to a long-term relationship with the house you love.  But you can dump the interest rate when you refinance.

Not so fast. Rates will remain high for a few years and it will take a few years just to build some equity at today’s prices. In fact, you can’t really date a rate. Well maybe you can but you don’t get to just decide when to date another rate.

When a borrower refinances to a new rate they start all over making mostly interest payments. People who have been laid off generally can not refinance. There are fees and closing costs too. In most cases, a borrower would need to own the house for at least three years and rates would have to go down by 2%. Good luck with that.

When my husband and I bought our first house rates were over 8.5%. At the same time houses were less expensive back then and our monthly payments were just a little more than rent.

We can not assume that home values will always rise and that rates will go down soon.  Housing prices can go down or stay flat and rates can go up.  In fact, sometimes renting makes more sense than buying. A home buyer could date an apartment and eventually marry the right house at the right price.

Typically the real estate agents promoting this phrase “Marry the house, and date the rate” either don’t know any better or are a bit sketchy.

Instead of dating the rate, swipe left.