Super low interest rates

Mortgage interest rates hit another new low. It is now possible to get a 30-year mortgage for under 3%. This is down from the 3.3% I wrote about at the beginning of July.

Mortgage Interest rates

That means that every 5K a buyer has to go over the asking price to have the highest bid will increase the monthly payment by $21 dollars a month.

When we bought our first house we got the bargain basement special rate of  8.4%. The lowest rate we ever got on a mortgage was 7%.

Buyers get ready

spare change

In the last week, I had three clients decide to start looking at houses again. They had put their home search on pause due to COVID-19.

If you have put your home search on pause and plan to continue it at some point it is important that you keep a current pre-approval letter handy.

More than 40% of houses on the market will get multiple offers the first day they are on the market. There isn’t a lot of time to get an updated pre-approval letter before the house is sold.

An offer without a pre-approval letter is like no offer at all.

June is national homeownership month

There is no place like home.

This announcement was made by HUD yesterday is their gift to some homeowners and renters:

“The Federal Housing Administration (FHA) announced a two-month extension of its foreclosure and eviction moratorium through August 31, 2020, for homeowners with FHA-insured Single Family mortgages. This extension provides additional security and peace of mind to homeowners that they will not lose their homes while they are trying to recover financially.

The pandemic and recession are sure to affect homeownership rates in a negative way just like the last recession did.

The homeownership rate in St. Paul, MN is 49.3%, which is lower than the national average of 63.9%.

We have very little affordable housing in the metro area. Affordable new construction is not being built. Housing has not kept up with population growth.

The path to homeownership starts with a good education. Even though St. Paul has but one school district the schools are not funded equally.

After that great education, comes a job with decent pay.

We have a history of housing discrimination which has caused a homeownership gap.

It is wonderful to understand the history but it would be even better if we could do something now so that more people could own homes and so that we could one day get all the way up to the 63.9% US homeownership average by increasing homeownership among people of color. It isn’t going to be easy because there is also the pay gap and the wage gap that has to be overcome.

Homeownership gap

For now all I got it a link to some resources for down payment assistance. I have had the link on this site for years and I have had clients use it and get downpayment assistance and that assistance helped them become homeowners.

Those former clients are still homeowners. Some of them have college degrees and others do not. Most of them were single when they purchased the home and most were women.

If you own a home and are concerned about making mortgage payments, visit the Minnesota Homeownership Center. 

Sales down prices up

FernHere are the latest national housing numbers from the National Association of Realtors:

Single-family home sales sat at a seasonally-adjusted annual rate of 3.94 million in April, down 16.9% from 4.74 million in March, and down 15.5% from one year ago. The median existing single-family home price was $288,700 in April, up 7.3% from April 2019.

Minnesota gets lumped in with the Midwest as part of a housing region:

Existing-home sales decreased 12.0% in the Midwest to an annual rate of 1.10 million, down 8.3% from a year ago. The median price in the Midwest was $229,200, a 9.3% increase from April 2019.

Homes are still selling quickly in the metro area.

Homebuyers are waiting for prices to go down. They are likely to continue to rise this year due to high demand and low supply. Next week I’ll have some numbers for home sales in St. Paul.

April Home Sales by neighborhood  in St. Paul 

What is a clean house?

Clean often becomes an issue for home buyers. They want to move into a clean house but when they do the final walkthrough they discover the house isn’t clean.

The word clean doesn’t mean the same thing to everyone. During our current pandemic clean has taken on a whole new meaning. REALTORS do not agree on the meaning of clean.

At the very least belongings should be removed from the home and the floors swept for the new owners. The refrigerator, stove, and microwave should be cleaned inside and out. Toilets, tubs, sinks, and showers should be cleaned too.

We often assume that because someone owns a home that they know how to clean it. I haven’t found that to be true.

Sometimes the sellers say they cleaned the house and the buyer says they didn’t and they are both right.

Buyers can ask for a specific level of cleaning in the purchase agreement. They can ask to have carpets shampooed and can ask to have a professional cleaning service to perform a “move out cleaning”.

That doesn’t mean that the house will be clean enough. Your best bet is to ask to have it cleaned and then plan on having the home professionally cleaned before you move in or plan on cleaning it yourself.

I have never moved into a house or apartment without cleaning it first.

If I were to sell my home I would clean it or have it cleaned. I know from experience that if a home is clean buyers are less likely to want to go to court if there is a problem with the house shortly have they move in.


Real Estate Hot Spot

Stay at home orders have been in effect in Minnesota for almost two months yet home sales have remained strong. Homes on the market are getting fewer private showings but they are still selling quickly and prices are still rising.

Median home sale prices have risen more in St. Paul than they have in the rest of the Twin Cities metro area. The data used in the graph is from the NorthstarMLS which is deemed reliable but not guaranteed.