By Matt Mullins on April 9, 2013
Today’s article from Time Magazine highlights an ongoing issue regarding housing and the economy. Undoubtable the housing market crash was one of the primary catalysts for the economic downturn. But housing also creates jobs and can fuel economic recoveries. New construction has a trickle down effect..from construction workers, realtors/brokers, morgtgage lenders, title companies, engineering firms, to the manufacturing sector that provides raw materials such as lumber, carpet, etc. to household goods such as appliances. The lack of housing can also be a deterrant for some communities as they look to attract economic development and new employers. If a community does not have adequate housing stock for the workforce..chances are the company won’t relocate in that community.
Can Housing Power the Economic Recovery?
Economic recoveries usually begin at home. Even though the housing construction has historically only
accounted for roughly 5% of America’s economic activity, that number
tends to rise following recessions, placing a disproportionate burden on the housing sector to lead the economy to recovery.
Why is this? There are several reasons. First of all, since a new home is usually the biggest purchase any of us will make, we tend not to do it during recessions. Recessions cause housing demand to become pent up and then released once a recovery begins. Secondly, investment in a new home usually necessitates many other big ticket purchases like furnishing and appliances. Finally, construction is a a great source of relatively high-paying jobs for lower-skilled workers — the sorts of jobs that we’ve been sorely missing since the financial crisis. And just as housing construction creates demands for different consumables, it also has a trickle-down effect on employment, creating the need for real estate brokers, landscapers, and lawyers, just to name a few. Continue reading “Which comes first..housing or jobs?”
Posted in Buyers, Market Stats, Misc., Mortgage/Finance
By Matt Mullins on March 20, 2013
No doubt about it, buying is cheaper than renting today in the Twin Cities if you have good credit and funds for a downpayment. The rental vacancy rate across the Metro Area is about 3%; indicating a tight rental market and increased rents from landlords. Nearly all of the new rental construction today has rents of at least $1.75 per square foot or more..most more than $2.00 per square foot. Based on these PSF fees, an average one-bedroom can easily run over $1,500 plus all utilities (heat, electric, garbage, water) and parking at $50 to $100 per month. With today’s record low interest rates and current list prices..buying a home is cheaper than rent for many householders today.
Buying a Home 44% Cheaper than Renting Despite Rising Home Prices
Low mortgage rates have kept homeownership less expensive than renting in all 100 large metros
Even though asking home prices rose 7.0% in the last year, outpacing rent increases of 3.2%, the gap between buying and renting has narrowed only slightly. One year ago, buying was 46% cheaper than renting. Today’s it’s 44% cheaper to buy versus rent. In fact, homeownership is cheaper than renting in all of America’s 100 largest metros. That’s because falling mortgage rates have kept buying almost as affordable, relative to renting, as it was last year. According to Freddie Mac, between February 2012 and February 2013 the 30-year fixed rate dropped from 3.9% to 3.5%, though rates have been rising in March. Continue reading “Buying is cheaping than renting in the Twin Cities”
Posted in First Time Home Buyers, Rental Housing
By Matt Mullins on February 27, 2013
No doubt about it; the Twin Cities real estate market is in recovery mode. There is no shortage of buyers who are competing for a small inventory of homes available. Inventory continues to be down by about 30%, resulting in a competitive market for homes priced right and appealing to first-time home buyers. The first-time home buyer market has been increasingly competitive with today’s low interest rates, improvements in the economy, and has resulted in bidding wars in move-in ready homes that are priced right. With the spring and summer selling season around the corner, the market will continue to be competitive…especially if sellers continue to remain on the sideline.
Twin Cities housing recovery gains steam
- Article by: Jim Buchta
- Star Tribune
- February 26, 2013 – 9:51 PM
A flurry of reports suggests that the housing recovery in the Twin Cities is outpacing the nation’s.
On Tuesday, the Case-Shiller home price index for the Twin Cities metro increased 12 percent during December — the fifth-largest annual increase among the 20 metro areas tracked by the group. Other reports also showed continuing improvement in market fundamentals, including a larger-than-expected increase in new home sales, plummeting inventory and steady declines in the number of people who can’t pay their mortgage.
“The worst seems to be behind us,” said Craig Lazzara, a senior director at S&P Dow Jones Indices, which conducts the Case-Shiller survey.
Lazzara said it was the first annual increase in the Twin Cities since 2005. He said that a diverse economy and a lower-than-average unemployment rate is helping accelerate the recovery in the Twin Cities.
December’s Case-Shiller index stood at 126, which means that prices are now 26 percent higher than they were in January 2000. A composite of 20 metro areas tracked by the group showed only a 6.8 percent increase from a year earlier. The biggest gainer, Phoenix, saw a 23 percent increase. New York was the only metro area to show a decline. Continue reading “Twin Cities Real Estate Market continues to recover”
Posted in Buyers, First Time Home Buyers
By Matt Mullins on February 3, 2013
No doubt about it, the apartment sector has driving the real estate recover over the past year. Although the Mullins Group estimates there are upwards of 20,000 apartment units in the pipeline throughout the Metro Area, many of these developments will stall out or be cancelled. However, 2013 looks to be a record year for the number of new apartment units that will be brought on-line. We project that some of the projects that are expected to be opened in 2014 or 2015 could revert to condo homeownership units as there has been no new condo development since 2007/2008.
Twin Cities apartments getting snapped up as fast as they’re built
- Article by: JIM BUCHTA
- Star Tribune
- February 2, 2013 – 11:28 PM
Apartments in the Twin Cities are filling up as fast as they become available, sparking a wave of new rental development unlike anything the metro area has seen in decades.
Though hundreds of new apartments were built last year, the average vacancy rate remained largely unchanged at a scant 2.9 percent, according to Marquette Advisors, a national research firm. Rental prices climbed slightly to an average of $957, suggesting that peak demand is still ahead.
“It can’t get any better,” said Kelly Doran, a developer who owns several hundred apartments in Minneapolis. “Everything we have is 100 percent occupied.”
The rental market is in the midst of a historic expansion that’s being driven by broad demographic and economic changes. With the memory of the housing crash still fresh, some would-be home buyers are worried about the risks of taking on a mortgage, while others are having trouble getting one. Many baby boomers, in turn, are in search of simpler lifestyles, swapping homeownership for the flexibility and ease of rentals. Continue reading “Twin Cities Apartment Boom…”
Posted in New Construction, Rental Housing
By Matt Mullins on November 16, 2012
Mortgage rates fell again this week..sending to a new record low. According to Freddie Mac, the average 30-year fell to 3.34% and the 15-year to 2.65%. Rates continue to drop due to the concern over the fiscal cliff and demand for government bonds. Since the presidential election, investors have pulled from the stock market and invested into safer treasuries. We highly recommend refinancing now, even if you did so in the past year or so as these rates are absolutely at rock bottom.
Posted in Buyers, Mortgage/Finance
By Matt Mullins on September 27, 2012
Good article about cutting costs on new construction. As builders have come out of the recesson, labor costs other effieciences have been implemented to bring home costs down. In particular, depressed land costs have been a substantial cost savings to new home buyers as the savings has brought the total package price down. In many cases buyers have allocated funds from land costs savings back into the home and have gotten more home for the dollar. Although new construction is still typically higher than previously occupied housing, the price per square foot of new construction has come down considerably and today is an excellent time to be in the market for new home construction.
7 Ways to beat the high costs of home building
By Richard Taylor | Zillow – Tue, Sep 25, 2012 6:03 PM EDT
All this time you’ve assumed that you can’t afford the home you really want: The cozy, comfortable house with all the neat features that you want to get your hands on, stuff like slate countertops; the island range with the stainless steel hood; the rustic beams on the ceiling.
Oh, and some really cool lighting fixtures and a tiled shower with two shower heads.
And you know you can’t afford that house because you’ve looked around and nobody’s building that cool house for less than a biodiesel-powered truckload of Krugerrands.
You know that the only way to hold down construction costs on a house is to strip all the niceties away. The only reasonably priced homes for sale in your area are disposable vinyl and Styrofoam junk or ugly piles of brick and drywall.
You’re half right. A typical builder’s “spec” home price gets into the stratosphere when you add all the goodies. But, the good news, you’re half right, too! The reason most houses get ridiculously expensive is that they’re pretty poorly planned.
Continue reading “New Construction..on a budget”
Posted in Buyers, First Time Home Buyers, New Construction
By Matt Mullins on September 23, 2012
Big news.. the Mullins Group has a new website and blog! Please check back regularly as we plan to have updated blog entries at least once a week on important real estate issues.
http://mullinsgroupinc.com/blog/
Posted in Misc.
By Matt Mullins on October 18, 2011
Like the last Census, Minnesota continues to lead the country in homeownership rates. See article below:
10 states ranked by high, low homeownership rates
Share ranges from 53% to 73%
By Inman News
By 24/7 WALL ST
The dream of owning a home has become increasingly unattainable for many Americans, and the situation is not likely to improve soon, as the collapse of the housing market and the recession continue to take their toll.
That is the disturbing conclusion to be drawn from the U.S. Census Bureau’s newly released report, “Housing Characteristics: 2010,” an overview of the national home market at the end of the last decade.
One of the highlights of the report is a list of the states that have the highest and lowest percentage of homes occupied by their owners.
A review of the data by 24/7 Wall St., which offers analysis and insight for equity investors, found that homeownership rates were high in thinly populated states and those with low home prices, while homeownership was low in states with expensive homes and large cities.
5 states with highest homeownership rates
1. West Virginia
2. Minnesota
3. Michigan
4. Iowa
5. Delaware Continue reading “Minnesota – 2nd Highest Home Ownership Rate in US”
Posted in Market Stats |
By Matt Mullins on September 19, 2011
Today’s Star Tribune article explains the recent changes to Minnesota State law that will effect nearly all property owners in the State. Unfortunatley when our governor and legislature compromised on a budget deal, the property tax issue was a piece of the deal that was not readily understood until just recently. The bottom line.. property taxes are going up in a down economy that will affect most homeowners, something none of are happy about in a recession.
Across Minnesota, tax bills and confusion about to rise
Nearly all Minnesota homeowners will pay more property taxes next year, even before factoring in what happened to the value of their homes and before their city, county or school district decides how much they will tax for 2012.
The increase results from a tax shift — approved in the state budget deal reached in July — that is so broad and complex that counties expect a flood of calls from confused property owners when they receive truth-in-taxation notices in November.
Those notices will include a carefully worded explanation, which officials are still crafting, of what has changed. Continue reading “Minnesota Property Taxes rising in a down market”
Posted in Buyers, Investment Real Estate, Mortgage/Finance |
By Matt Mullins on July 26, 2011
Bankrate.come just released a closing cost estimate by state. Out of the 50 states, Minnsota has the 17th highest closing costs based on a hypothetical example of a $200,000 priced home and 20% down. New York has the highest closing costs in the nation.
http://www.bankrate.com/finance/mortgages/2011-closing-costs/closing-costs-by-state.aspx
Posted in Buyers, Mortgage/Finance |
