Trends come and go

Every year we read about the new home fashion trends for the year. The idea is to get people to get rid of what they already have and buy something new. People need to make a lot of money so that they can keep buying stuff for their already too-expensive house.

We need to rethink that idea. There are over 8 billion people on this planet and how we use our resources matters.

Consider continuing to use last season’s throw pillows and rugs. Gently used items can be donated to various charities so someone else can use them. When choosing colors and designs keep it neutral so that the decor doesn’t look dated a year later.

Whites are out this season but pastels are in. That means off-white should work for this season and probably for the next decade.

No, you do not have to redecorate every season or every year. Tasteful decor never really goes out of style. You do not need to redecorate to sell a house. Consider doing some staging, cleaning, and decluttering instead.

17 years of Metro area home sales

Sometimes it is interesting to look at the big picture. We can see that the number of home sales is trending down but the numbers are way above what we saw during the crash.

The housing market peaked during the pandemic, it is reminiscent of the peak in 2006. Going forward the unemployment rate and mortgage interest rates will influence where the housing market goes from here.

Graph closed sales
Closed home sales in the twin cities metro area


Mortgage interest rates easing up

Graph of interest rates going down
Mortgage rate survey Freddie Mac

Mortgage interest rates will likely go down a little more but I don’t think we are going to see rates below 5% any time soon.  Home prices in the Twin Cities metro area are not falling but rising much more slowly.  Houses are still selling quickly but the number of new listings is down and so is the number of home sales.

The slightly lower interest rates make houses just a little more affordable. Mortgage interest rates reached a 20-year high last October.

In other news, rents have been going down after going up last spring and summer.

The slow weeks during the holidays

We are well into the slow time in the real estate market. The holidays, lots of snow, and cold weather mean fewer home sales and fewer homes on the market. Experts predicted home sales would start to slow and the inventory of homes for sale would accumulate. They were wrong.

The inventory of houses is not accumulating because fewer homeowners have decided to sell. There seem to be plenty of home buyers even with the higher interest rates. We are starting to see buyers put their home search on hold due to job loss. The unemployment rate is very low but there have been layoffs in technology jobs.

In about the middle of January, things will start to pick up. What we call the spring real estate market is usually in full swing by the end of February.

Right now is probably the best time of the year to buy real estate, especially for cash buyers. Sellers tend to be motivated this time of year and home buyers are less active.

Happy Holidays.


Altruistic Real Estate Companies?

Last week I read some advertising about a real estate company that claims to be altruistic. Maybe they don’t understand that making a profit from housing isn’t altruistic. The company may also be “rent trapping” people so that they can never save up enough to buy a house.

As the housing market slows and as home prices sore there are all sorts of businesses that want to help home buyers. Some of them will buy a house and rent it back for a few years. Apparently, some of the rent money can be used toward the purchase.

In most cases, it would be less expensive to rent and then later buy a house. The rent to eventually buy companies charge a lot of rent and there are other fees too.

Always read the fine print. The companies that buy up houses are in it to make a profit, and by buying the houses they are driving up housing costs. When corporations buy single-family housing units they are depriving individuals and families of the opportunity and competing with home buyers.

There is also a company that is “making homeownership affordable” by buying up houses and by allowing people to co-own them with others. Yet another way to squeeze more money out of real estate.

None of that is altruistic. We need more housing. It needs to be built and affordable too. There are too many people living in cars and in tents.

Affordable housing – it has been displaced by a dog park

Real estate agents don’t set housing prices


Every now and then I read an article about how real estate agents are setting housing prices so that they can make more money.

Over the last twenty years of working with hundreds of homeowners, I can say for sure that real estate agents do not set or determine home values or prices.   Homeowners often have a price in mind but they don’t control prices either.

If the price they have in mind is too high the house stays on the market for a long time and they often end up selling for less than the market value. Buyers are suspicious of houses that have been on the market for more than a month or so.

Home values and prices are market-driven and anyone who is borrowing money to pay for a home will find that their lender will have the property appraised because they too are stakeholders.

Prices are driven by supply and demand. Banks make more money when interest rates are higher but they don’t have control over the rates.

A real estate agent is going to get paid about $250 dollars more for every 10K that is paid for a house. Houses that are well-priced sell faster. Most agents would rather have a quick sale because the longer a house is on the market the more expensive it is for the agent.

Agents don’t get paid anything until after the sale closes.

Real estate agents make more money selling higher-priced houses. Often it is the lowest-priced houses that require the most work.

Do real estate agents make houses more expensive? That is hard to say because agents have it both ways. They let the homeowner know that by using the service of a real estate agent they will get more money for their house.

At the same time, agents tell home buyers that they will save money by working with a real estate agent.