Our economy is doing well but. . .

If our economy is doing so well how come I see people living on the streets? I have heard all kinds of reasons.

I did a little research and the number one cause of homelessness is the lack of affordable housing. It is possible to have a couple of jobs and not be able to afford a small apartment. Losing a job or having hours cut can lead to homelessness.

Chemical dependency and mental illness can cause people to lose housing.

More people without homes are staying out of formal shelters.  People experiencing homelessness is up 10% from 2015. It should be going down but is higher in Minnesota than it was during the great recession. Nearly a third of homeless adults have jobs. According to the latest research from the Wilder Research 

 

homeless in St.. Paul
Homeless camp
  • The number of people not in a formal shelter increased by 62% between 2015 and 2018.

2019 has passed the halfway mark

I’ll have some home sale numbers for June 2019 at the beginning of next week. We are halfway through the year so I thought I would take a quick look at the total number of home sales.

There have been fewer home sales than last year. We are down by 6.3% The median sales price went up about 4.5% from 210,000 to 220,000 as of July first, 2019.

Interestingly the median number of days on the market was 17 during the first half of 2018 and 19 for the first half of 2019 which is a slight slow down.

The reason home sales are lower this year isn’t due to lack of buyers but due to the lack of sellers. This trend isn’t just in St. Paul but is metro-wide and not unique to Minnesota.

daisy
From my garden

Putting your best offer forward

The median number of days on market for houses in St. Paul is around 12 days. Considering inspection periods are often ten calendar days long that means that half of St. Paul homeowners are accepting offers after their house has been on the market for two or three days.

There are houses that stay on the market for a few months before the seller accepts an offer. Often those homes are priced too high.

It is a frustrating time for home buyers, especially during the spring which is when there are more people buying houses.

There are a few things that make offers appealing to sellers

  1. Offers that are at least full price. (make sure the house is priced right)
  2. A pre-approval letter from a lender
  3. Large downpayment or all cash.
  4. Short inspection period
  5. Conventional financing
  6. Flexibility on the closing date
  7. Offers that are not contingent on the sale of another house.
  8. Short inspection period (I can not recommend skipping the inspection)
  9. Earnest money

Houses for sale get the most attention from buyers in the first few days on the market.

There are more houses on the market now than there were a few months ago but we still have a shortage of homes for sale. During the great recession, we flipped to a city where there are more renters than homeowners.

Home buyers should be prepared to make a few offers.  Being the first to make an often means that the seller will let all interested parties know there is an offer and it will be leveraged to get more offers quickly.

Sellers who just listed their house are often reluctant to accept a full priced offer the first day. They are always wondering if an even better offer is just around the corner. Asking too much for a house usually results in the house being on the market for months.

Local Housing Data

I have been writing about the shortage of housing for a couple of years. In the metro area, there isn’t a lot of new construction. A new luxury apartment building here and there and some large expensive homes and even a few affordable housing units.

At the same time, the population and the need for housing have grown.

A large number of current homeowners are not ready to sell. They are older and more likely to stay put than to move. The end result is that there are not very many homes available and that is driving prices up.

Here is some data from the Met Council:

Metro housing data
Data from the Met Council

Most of the growth is in Minneapolis and St. Paul. The math is simple in that the population is growing faster than the supply of housing.

I think the situation will ease up a bit in the next decade unless we people start moving out of the area or we start building affordable housing.

 

Housing by generation

Monday is a good day for data. Today I have an infographic that shows some generational trends of recent home buyers and sellers.

It is never a good idea to make assumptions based on generation but it is helpful to understand current trends if you are planning on buying or selling a home.

It shouldn’t be a surprise that the Millennial generation is the largest group of homebuyers. It is the largest generation and they are entering prime home-buying years.

inforgraphic

Generational home buying trends

We have OLD houses in St. Paul

If you own a home in St. Paul don’t get too excited about the “instant offer” programs out there. They are often not available in St. Paul zip codes. It is because our houses are old. The median age is around 80 years.  I mention this because Zillow instant offers just came to Minnesota.

When the promise of an instant no hassle offer has fine print that says: “restrictions apply”,  age of the house is sometimes a restriction.

There are companies that buy old houses for cash.  They have been around for decades but were almost invisible during the housing market crash.

Right now it is fairly easy to sell a house and it is up to the seller if they want to clean, paint and or have open houses. Houses that need repairs can be sold. Offers are not instant but it doesn’t take long and in most cases, the seller can call the shots when it comes to terms like the closing date.

People with newer houses in the suburbs will have an easier time with some of the new internet-based programs for buying and selling residential real estate.

old house
Old house