An opportunity for homebuyers

Downtown St. Paul

Yesterday I wrote about the low and mostly falling inventory of homes for sale in the Twin Cities Metro area. With a high demand for homes, there are numerous opportunities for sellers.

There are some opportunities for homebuyers too, especially in the downtown areas. Both downtown St. Paul and Minneapolis have at least a 4 month supply of homes for sale, where the rest of the metro area has 1 or 2 month supply.

There are some great opportunities in the downtowns where it is still possible to buy a condo without getting into a multiple offer situation. It is even possible to buy for less than the asking price.

The downtowns are still experiencing a seller’s market but it is weakening. There are opportunities in every housing market.

downtown condo inventory
4+ months supply of downtown condos

Consider the roof

Last year we had the house re-roofed. The roof was 31 years old and repairs were made to it, flashing was added, vents were added but eventually, the roof just wasn’t up to the job. When it rained outside it also rained inside.

Nothing like a new roof to make a house look nice and tidy and almost newish. That is the thing about old houses, they can be retrofitted and preserved.

Roofs are expensive and they aren’t as much fun as interior type projects that we can see and appreciate every day. They are essential and protect the house from rain and snow.

The first thing I do when I look at a house is look at the roof. My home buyer clients will tell you that I always comment on the roof .

Shopping for a roofing contractor is a special kind of hell. The people who do the best work are the worst at returning phone calls or answering emails.

Over the years our old house has been updated and retrofitted many times. It was built before there was indoor plumbing. There was an outhouse instead of a bathroom. It now has two bathrooms and a kitchen sink and one in the basement, a washing machine, and a hot water heater.

It was built before the telephone was invented and used to have telephones in it. At one time it had cable TV too but I won’t go into that. It has had Wifi for many years.

The house did not have electricity in it until it was at least 30 years old. It was well over 100 years old when we added central air. It would have been hard to add central air before the house had electricity.

Sure there are times when I think that a new house would be wonderful but I know they don’t build them like they used to and building a house is very expensive and not as environmentally friendly as recycling and retrofitting.

If you like old houses you will love St. Paul, Minnesota!

It isn’t OK to overspend on housing

I recently read an article about how home buyers will go over budget for a house with enough space in the “right” neighborhood.

dormer
Dormeneighborhood. For most people, part of what makes a house perfect is the location.

Spending too much on a house has a long-lasting impact. We call it being house poor and being house poor will color every aspect of your life.

Overspending a little happens. Those who overspend by a lot regret it.

People who buy more affordable houses have some flexibility and an easier time to get through job losses and life changes.

Houses need to be maintained which can be hard to afford when the budget is already stretched.

Set a limit when house hunting and stick to it. Your older self will thank you for that. There is no perfect nieghborhood or location or house.

Active home buyers are out in force

Here is a chart from Showingtime that shows appointments to see houses that are for sale. ShowingTime is widely used for appointments throughout the region and the data is always interesting.

showingtime chart – click on the chart to enlarge

Activity is up from last year and the chart shows the dip in March and May due to the stay at home orders. Year over year the numbers are up and as I showed last week home sales are strong.

As an interesting statistic homes that sold in March and April got an average of 6.5 showings before selling. Current averages are 7.6 showings per home.  Year over year showings are up and so are home sales.

Housing cost burden by income

Yesterday I was reading the Metropolitan council housing policy plan. It tells me what I know already and that is that we do not have enough affordable housing. The demand will continue to grow as more people earn less money.

• People are paying too much for housing: At present, more than 282,000 low- and moderate-income households in the region are paying more than 30% of their household income on housing costs. Nearly 144,000 of those are paying more than half their income on housing.

• Needs are growing: Between 2020 and 2030, the region will add 37,400 low- and moderate-income households who will need additional affordable housing. For comparison, in the first three years of this decade, the region added just under 3,000 new affordable units, far under the need.

metro area housing costs
Housing costs in the metro area

There is a shortage of housing in general. The population has grown in the last decade and construction has not kept up with it. Some changes in zoning laws and deregulation may help ease the situation. Building more affordable housing in the suburbs might also help.

Also, see The number of people without housing continues to rise

 

Buy low sell high

Right now is a spectacularly bad time for most people to buy residential real estate.  Home prices are at historic highs as home buyers outbid each other until they reach new heights. There is a raging pandemic and an economic recession.

I say “most” people because there are exceptions. There are always people who have to move and sometimes it does cost more to rent.

Too many people are making decisions based on the pandemic. They are assuming they will have jobs and that they can work from home long term. Most jobs and conditions of employment are not long term but mortgages are for 10 to 30 years.

There has been a shortage of homes for sale for the last several years and the pandemic has made it worse.  The demand is high and the supply is low and prices are often too high.

It truly is a fantastic time to sell a house. I am not sure there has ever been a better time to sell a house.  Houses sell quickly and they sell for top dollar.

Homeowners can take advantage of a once in a lifetime event and make a nice profit even if they have only owned the home for a few years.

It is also a great time to own real estate, especially real estate without a mortgage. It might be a good time to refinance depending upon your current interest rate and how much you owe.

A better time to buy might be mid-2021 or maybe early 2022. By 2026 the housing shortage may ease up a bit as the oldest baby boomers turn 80.

If you are planning on buying or selling real estate I am here to help. I’ll be here in 2026 too.