What Ted Said

What Ted Said

If you’re exhausted with media hurtling dire economic forecasts with a political agenda, you want to know What Ted Said.

If you don’t know who Ted Jones is, you might want to listen up. He is the chief economist for Stewart Title, internationally known as an applied real estate research expert, and gives 150 talks a year to major real estate organizations. There is a long, rich, resume in the fine print.

He was in town for two presentations, I attended on Tuesday, 11/19.

All of us are plagued with pundits whose opinions have an agenda to keep us on edge for political gain. What Ted Said quells the false storm. Key indicators are jobs and cheap energy.  We have both.

So, what did Ted say?

  • THERE ARE NO INDICATORS OF RECESSION. Recession is defined as 2 + quarters of negative growth. It isn’t happening, nor does it seem to be looming over 2020.

Retail sales are 68% of the GDP, and it’s up 4.5% YoY September 2018-2019. That’s the highest rate that they have ever been. Old Navy announced plans to open 800 new stores in 2020. Online sales jump 36% when linked to brick and mortar, storefronts aren’t going away. Unemployment is at the lowest point in 50 years, 3.5%. In Minnesota, it is 2.4%. Wages increased by 1.8% in the last 12 months, the highest in 10 years. Hospitality and Leisure jobs surged +2.4% year over year to meet demand. Leisure spending shows consumer confidence.

  • Real estate gained 6% in sales YoY. There were 521,000 sales in October 2018 and 552,000 as of October 2019. That’s a +6% gain. Average home prices also increased to $272,000 a +6% gain. Interest rates are forecasted to slide into the 3-4% range. There will be 1.5 million new households in 2020, adding more pressure to find affordable housing. Boomers and Millenials are looking for the same thing, smaller, low maintenance, and affordable homes. McMansions are a thing of the past.
  • The i Buyer slice of sales is about 1%. I buyers are not new, “We Buy Ugly Houses,” Hedge funds like Blackstone (bought 1200 homes in MN during the recession), and investors have been around for a very long time. What’s different is the institutional buyer on a bigger scale. Even if Zillow reaches its goal of buying 5000 homes a month, it’s still only 1% of the market. It boils down to how much people are willing to pay for convenience. So far, the cost vs. benefit isn’t wildly appealing for most homeowners.
  • Minnesota economy is strong, with a few weak spots. Out of the 52 states, MN is ranked #45 in tax friendliness. Texas does way better, they have a 3% real estate tax, that’s it. The Texas Constitution doesn’t allow spending more than it takes in. Isn’t that an exciting thought? MN lost 14,000 jobs, and we have a 17% spike in mortgage delinquency. Farmers are being squeezed, but the tech and medical sectors are very growing.

Politics and economics are two separate entities, but politicians use the economy to scare you, threaten you, or even bribe you. Follow independent thinkers who offer information without a bone to pick. Ted Jones isn’t the only economist with a perspective, but one you might pick up a nugget or two. Check out the blog: http://blog.stewart.com, or his twitter account drtcj.

Give me a jingle if you’re thinking of making a move, or if you have friends or family that might need some help. Ph: 612 384 1360 Email: mj@maryjoquay.com

Will Your Current House Fit Your Needs in Retirement?

Will Your Current House Fit Your Needs in Retirement?

As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement.

According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.1

1. Affordability

“It may be easy enough to afford your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.”

Would moving to a complex with homeowner association (HOA) fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?

2. Equity

“If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.”

The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $16,300 in equity last year.

3. Maintenance

“As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline.”

As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind in knowing that you do not have to do the maintenance work yourself?

4. Security

“Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind.”

As scary as that thought may be, any additional security and an extra set of eyes looking out for you always adds to peace of mind.

5. Pets

“Renting won’t do if the dog can’t come too! The companionship of pets can provide emotional and physical benefits.”

Evaluate all of your options when it comes to bringing your ‘furever’ friend with you to a new home. Will there be necessary additional deposits if you are renting or moving in to a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?

6. Mobility

“No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility.”

Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn’t mean that down the road you won’t need your home to be more accessible. Having to install handrails and make sure that your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.

7. Convenience

“Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!”

How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.

Bottom Line

When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, let’s get together to evaluate your ability to sell your house in today’s market and get you into your dream retirement home!

The #1 Reason to Put Your House on the Market TODAY!

The #1 Reason to Put Your House on the Market TODAY!

The National Association of Realtors (NAR) released the results of their latest Existing Home Sales Report which revealed that home sales declined 0.6% to a seasonally adjusted annual rate of 5.38 million in June from 5.41 million in May, and are 2.2% below a year ago. Some may look at these numbers and think that now is a bad time to sell their house, but in fact, the opposite is true.

The national slowdown in sales is directly tied to a lack of inventory available for the buyers who are out in the market looking for their dream homes! In fact, the inventory of homes for sale had fallen year-over-year for 36 consecutive months before posting a modest 0.5% gain last month and has had an upward impact on home prices.

NAR’s Chief Economist Lawrence Yun had this to say,

“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels. Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”

The few houses that are on the market are selling fast! According to NAR’s Realtors Confidence Index, properties were typically on the market for 26 days.

Bottom Line

If you are one of the many homeowners who is debating listing your house for sale this year, the time is now! Let’s get together to discuss the specifics of our market!

Demand for Homes to Buy Continues to Climb

Demand for Homes to Buy Continues to Climb

Across the United States, there is a severe mismatch between the low number of houses for sale and the high demand for those houses! First-time homebuyers are out in force and are being met with a highly competitive summer real estate market.

According to the National Association of Realtors (NAR), the inventory of homes for sale“has fallen year-over-year for 36 consecutive months,” and now stands at a 4.1-month supply. A 6-month supply of inventory is necessary for a balanced market and has not been seen since August of 2012.

NAR’s Chief Economist Lawrence Yun had this to say,

“Inventory coming onto the market during this year’s spring buying season – as evidenced again by last month’s weak reading – was not even close to being enough to satisfy demand.

That is why home prices keep outpacing incomes and listings are going under contract in less than a month – and much faster – in many parts of the country.”

Is There Any Relief Coming?

According to the CoreLogic’s 2018 Consumer Housing Sentiment Study, four times as many renters are considering buying homes in the next 12 months than homeowners who are planning to sell, “which is the crux of the available housing-supply imbalance.”

As more and more renters realize the benefits of homeownership, the demand for housing will continue to rise.

Do homeowners realize demand is so high? With home prices rising across the country, homeowners gained over a trillion dollars in equity over the last 12 months, with the average homeowner gaining over $16,000!

The map below shows the breakdown by state:

Many homeowners who have not thought about listing their homes may not even realize how much equity they have gained, or the opportunity available to them in today’s market!

Bottom Line

If you are one of the many homeowners across the country who hasn’t quite found their forever home, now may be a great time to list your house for sale and find your dream home!

Lack of Listings Slowing Down the Market

Lack of Listings Slowing Down the Market

As the real estate market continues to move down the road to a complete recovery, we see home values and home sales increasing while distressed sales (foreclosures and short sales) continue to fall to their lowest points in years. There is no doubt that the housing market will continue to strengthen throughout 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory!

Here’s what a few industry experts have to say about the current inventory crisis:

Lawrence Yun, Chief Economist for the National Association of Realtors

“Inventory coming onto the market during this year’s spring buying season…was not even close to being enough to satisfy demand, that is why home prices keep outpacing incomes and listings are going under contract in less than a month – and much faster – in many parts of the country.”

Sam Khater, Chief Economist for Freddie Mac

“While this spring’s sudden rise in mortgage rates [took] up a good chunk of the conversation, it’s the stubbornly low inventory levels in much of the country that are preventing sales from really taking off like they should… Most markets simply need a lot more new and existing supply to cool price growth and give buyers enough choices.”

Alexandra Lee, Housing Data Analyst for Trulia

This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters…Despite the second-quarter gain, inventory was down 5.3% from a year ago. Still, this represents an easing of the double-digit drops we’ve been seeing since the second quarter of 2017.”

Bottom Line

If you are thinking about selling, now may be the time. Demand for your house will be strongest while there is still very little competition which could lead to a quick sale for a great price.

Cost Across Time [INFOGRAPHIC]

Cost Across Time [INFOGRAPHIC]

Some Highlights:

  • With interest rates still around 4.5%, now is a great time to look back at where rates have been over the last 40 years.
  • Rates are projected to climb to 5.1% by this time next year according to Freddie Mac.
  • The impact your interest rate makes on your monthly mortgage cost is significant!
  • Lock in a low rate now while you can!
Should I Stay or Should I Sell?

Should I Stay or Should I Sell?

Elliot Eisenberg, The Bow Tie Economist, told me that 40% of homes in the US are free and clear of the mortgage. If not totally free and clear there is a whopping 45% who have over 50% equity.  Who would those people be?  They’re probably Baby Boomers who’ve lived in their home 15+ years or investors. 

Every homeowner considers selling at some point. The question is why would they sell?  The National Association of Realtors says 80% of homeowners considered remodeling. There are lots of questions in deciding to stay or to sell.

Most people who have been in the home for 10+ years love their neighborhood and have a relationship with her neighbors. First, they’ll consider a few upgrades that immediately morphs into creeping scope. If you check posts on NextDoor, everyone asks for “a reasonable handyman for just a small repair,” the roof, a leak, a tiny carpentry repair. If I find one, I would marry him. Most homeowners don’t understand that a tiny repair is usually in front of a big fat one. What’s starts out as the kitchen remodel turns into a kitchen/Bathroom/Basement makeover. Once the kitchen is underway the rest of the house looks shabby. So while you’re working on the kitchen plumbing, why not add a bathroom? The real question is how much time money, and energy does it take for this transformation to happen? Will it turn my home into a dream home, or will it leave you wanting?

There is no right or wrong answer. Sometimes the layout works perfectly with a few updates. Other times, the layout is the problem. Last year I sold two homes because each of the sellers had knee operations. Their homes has second floor bedrooms, and they couldn’t do stairs. Moving was their only option. If you need a main floor bed and bath, and your current home has all of the bedrooms upstairs, that’s a major overhaul. Cost is another important factor. Most people under estimate what it costs and how long it takes for that transformation to happen. Since we are all trained by HGTV to think that is project should be completed in an hour under budget without surprises, we’re headed for a bumpy ride. Where are you going to live for 6 weeks with all the banging and pounding going on? How do you plan on paying for the remodeling?

A successful remodel is much easier with both the professional designer or architect and a contractor. Contractors do not design, they hire subcontractors to lay floor, do plumbing, do electrical and paint. Unlike reality TV, they don’t decorate either.  You want to be clear at the beginning exactly who does what, get a sworn statement and leave a little cushion for surprises. Surprise is a bad word in real estate, but we can’t always prevent them from happening.  A contractor estimates your project, and will come up with a final number. Then he’ll give you a sworn statement of cost that shouldn’t vary in the process.

If you decide that remodeling isn’t your best option, here are a few tips you need to know. You want to know how much your home is worth in today’s marketplace and what you need to do to make it market ready. Online evaluations lie. They don’t mean to, but it uses cold hard data of location, square feet, # of bedrooms.  Data hasn’t seen your home, the charming character, the fond memories, or the DIY sweat you put into it. Data doesn’t know that every buyer is trained by HGTV expecting that the Property Brothers crew ran through and pulled it together. They also expect that sellers are Marie Kondo devotees (Tidying Up with Marie Kondo) and intend to leave the home like a pristine Shinto temple.

Now comes the hard part, getting your home ready. Everyone under estimates how much stuff they have at home. I hear it over and over again, “Where did all this come from? How did it get into my house, did I really buy this?” For this reason I love Marie Kondo and hope she will save Americans from themselves. We are collectors, we are keepers, and eventually somebody has to deal with our stuff.  Some of it is emotional of scant monetary value, and the rest of it has way less value than we hope. You’ll have to take a hard look and make decisions about what to keep, and what goes. Three piles; #1 KEEP, #2 THROW, #3 DONATE. Divesting will be liberating and you’ll find that your vision of a new life starts to come alive.

You’ll also want an estimate of how much you’ll walk away with from the sale of your home, and the best use of that money. You want a real estate agent that tells you the truth, what the value is its current condition, and what could be if you make some repairs. A lender will help review loan options. Your financial planner should be on board with how much to invest and how much should go towards a down payment on your next home.Putting all the proceeds from the sale of your current home into a down payment might not be your best strategy.

Selling and buying takes a plan. No one gets excited about selling until they have a vision of where they want to go. While you are prepping your home for sale you are keeping an eye on what’s available for your next step. You can write an offer contingent on the sale of your home with the understanding that your house has to be market ready, and not every seller will accept contingent offers, Your questions  to yourself are; do I want to stay in the neighborhood, move someplace with warmer winters? How about single level new construction, a townhome, or a downtown condo? You want to know options for each scenario before you can get cracking on your new life.

That’s what I do, help your vision become a reality and move you into your new life and new home.

Top 8 Upgrades to Make Buyers Flock to Your Door

Top 8 Upgrades to Make Buyers Flock to Your Door

We live in a word of reality TV, and home improvement shows are 24/7.  Every buyer is HGTV trained, and they drool over the cosmetic appeal. What can a homeowner do on a budget to have buyers stampeding your door?

  1. Kitchens sell homes. Without having to do a whole kitchen remodel, what’s important? All the flips advertise granite countertops and new appliances. Granite is losing favor because it scratches, stains and cracks. There are a plethora of laminates with a Hi-Definition photo quality without the extreme price. Freshen kitchen cabinets with a coat of paint. There are water-based paints just for that, they don’t streak, leave brush marks and clean up easily for about $30 a gallon. You shouldn’t need more than a gallon. Update cabinet hardware for a more modern look.
  2. Your front door welcomes guests and buyers. If the door is rough, think about replacing it. If it’s a great door but needs help, freshen it up with a coat of colorful paint. Hang a floral wreath, or have a pot of colorful foliage to entice a buyer to look inside. The entry should be clear, open, and ideally, have a small bench where someone can scootch to take off their shoes before dancing all over your freshly polished floors. Make sure that the front door lock works easily, or replace it. I’ve been locked out by sticky old locks, and the buyer missed an opportunity to see the home that could have been ‘the one.’
  3. The master bedroom should spell R E L A X. Think hotel.  Neutral coverlets with a pile of pillows, clear dressers with one or two cosmetics, beckon buyers to cozy up. Old flat pillows, rumpled poorly made beds say that you don’t care and maybe the rest of the house needs work too. I had a client who left a body pillow under the quilt along the middle of the bed. It startled me because it looked like someone was asleep under the covers. Walking in on a sleeping body is very uncomfortable. It left.
  4. Equally, bathrooms should whisper, “This is your alone time.”  Fresh fluffy towels, cosmetics cleared out, hairdryers, razors and toothbrushes hidden from view. Tubs and showers should glisten. No ducks or fish shower curtains, even the kid’s bath should be fresh and cheery without looking like SeaWorld.
  • Let’s assume that your closets have gone full Marie Kondo. You’ve divested the clothes that don’t fit, you never really liked, and haven’t worn in 5 years. “I have nothing to wear,” means that you don’t love what you have, and it doesn’t make you look stunning. Clothes that you bought on sale thinking that you’ll wear someday, you won’t. They are cluttering your closet and your mind. Keep only what looks great, chuck, donate or send the rest to a consignment shop.  Buyers are looking for storage space, give closet breathing room.
  • Light and lighting play an important part in how your home looks. Burnt out bulbs, heavy drapes, closed blinds make spaces look closed in. A bright light filled room looks more spacious and welcoming than dark spaces. Even the utility room should have lights on to see what’s there. It’s annoying to have to search for light to see anything in the basement and leaves the impression that there could be hidden problems.  Let the sunshine in!
  • Whether the basement is finished or not, it should be cleared and open, floors cleaned, storage highlighted. If it is unfinished, buyers are hoping that at least part of it is easily finishable. They expect you to have things stored, so we’re calling Marie Kondo again to organize it.  Make sure that windows are uncovered and there is enough light to see comfortably.
  • Landscaping is often overlooked. Complicated high maintenance gardens frighten buyers because most are looking for low maintenance. A charming arrangement by the front door is welcoming. If you’re selling offseason, have photos from last summer so they can appreciate it in full bloom, and see themselves enjoying it. If you have snow or leaf-covered decks and patios, summer photos help clarify size, and how much fun you must have had without the snow.      

There are a few things that are buyer turn-offs for buyers as well. Too many Glade air freshener plugins mean a cover-up.  Cosmetics cluttered all over the bedroom or bathrooms, animal smells (no dog owner smells their own dog), leftover cooking smells, closets crammed with ‘stuff’ signal the buyer to move on.  Every buyer is looking for a new lifestyle with a home that meets how they imagine they want their new life to be. You want to invite buyers in saying, “This could be you, and you can have all of this.”

10 Tips to know about the Minneapolis Truth in Housing Report

10 Tips to know about the Minneapolis Truth in Housing Report

What is a Truth in Housing report, and why is it important? TIH is designed for the safety of ‘other people,’ and focuses on code items. Most homeowners know that all single-family and duplexes are required to provide a TIH report to buyers to review. Condos and triplexes, 4plexes are exempt.

I sat down with Luis Alcaraz of Inspectucasa who is a 15+ year veteran inspector of city required inspections in Minneapolis, St Paul, and most other surrounding suburbs. Here’s Luis’ heads up for homeowners on what inspectors look for, and homeowners overlook.

  1. Smoke and carbon detectors have to be less than 10 years old and working. It’s common that homeowners think that smoke detectors live forever, and never replace them. There needs to be a smoke detector on each level, including basements and walk-up attics, and carbon detector within 10 feet of all the bedrooms. Combo detectors cover both. The lack of becomes an automatic RR.
  2. The city always calls for backflow preventers on laundry faucets and outdoor spigots. It’s a $6 investment that allows water to flow in only one direction, prevent drinking water from contamination. Homes usually need only 2, one at the laundry, one outdoors,
  3. Exposed light fixtures, meaning dangling and uncovered bulbs. The city and FHA appraisals require that they are covered by a bowl or protective bulb cover. The city doesn’t require that all outlets be covered with a plate (but will report it as a suggested correction (SC). Appraisals will require outlets to have a cover so no one accidentally sticks in a finger.
  4. Provide access. Inspectors are required to look at the attic if there is one, check outlets, and review the garage. It’s always frustrating when they can’t access the attic because the homeowner has furniture or boxes blocking it. The same holds true for outlets and forgetting to unlock the garage. No access becomes an automatic RR, Required Repair, and the inspector has to make a 2nd and a 2nd feet for the trip back when it’s clear. When either the furnace, boiler, or water is turned off it becomes an automatic RR with the permit. Inspectors can’t turn on the gas or water, you will need both on and functioning.
  5. The main drain needs to be open, have a ball in place to drain properly. Homeowners don’t always pay attention, the cover is dirty, and there is no ball. They aren’t expensive, and it’s probably a good idea to have it cleaned out. Because it’s on the basement floor it will clog up with dirt and debris over time.
  6. The attic needs ventilation to the outside of the roof as do bathroom and kitchen vents. Sometimes a kitchen or bath vent is incorrectly installed to air into the attic which causes steam and vapors to be trapped in the attic and create soggy moldy insulation.
  7. The kitchen stove requires an anti-trip bracket secured at the back of the stove to prevent it from tipping over while you are pulling the Thanksgiving turkey out to serve your family. It costs $5-$8 and saves dinners from sliding onto the floor, pulling the gas line out of whack, and general hysteria. Not part of TIH, but buyers will call it.
  8. DIY plumbing; it’s a tip-off when P traps under the sinks or toilets are glued together with different materials. Minneapolis allows the homeowner to do their own plumbing repairs if it doesn’t involve gas. However, not all the DIY projects are done correctly, and it can lead to plumbing failure so you have to call a real plumber.
  9. Adding a new dryer but leaving the old gas shut off valve. A new dryer requires a new shut off valve installation. The entire assembly must meet code, gas shut off and vent.
  10. DIY homeowners think that they add electricity by double-tapping the electric panel. Double-tapping overloads the panel and can cause a short circuit, fire, and lines to implode. TIH is a visual inspection, but buyer inspection opens the panel and will call for it to be corrected. Swapping out a 2 prong socket for a 3 prong without grounding outlets can cause electrical fires, risk of shock, short circuit appliances. Adding a saddle clamp at the water supply is an illegal clamp, it will always leak. Some things are best left to plumbers or electricians.

A TIH inspection isn’t the same as a buyer’s inspection. While a TIH inspector reviews the structure, he will make comments but rarely call for Required Repair. He may mention cracks or water seepage, but will not call for a correction. A home inspector for the buyer has different criteria. If there are structural issues including bowing walls, or major cracks in the foundation, either a buyer’s home inspector or an appraiser could call for a structural engineer to evaluate the foundation. 

As you might imagine, not all inspectors are equal, every report is an opinion of the findings. Inspectors aren’t licensed but they are certified. The most comprehensive training, American Home Inspectors Training, ASHI, requires 250 supervised inspections, two national tests. They are also required to complete 18 continuing education credits annually. You can count on Luis to do a thorough job, and explain any issues that come up: Luis Alcaraz, 612 743 8228, inspectucasa@yahoo.com. I only recommend professionals that I’ve had good experience with over the years, and who treat my clients like family.

If you are selling/buying a home in Minneapolis give me a call at (612) 384-1360 for expert advice from a 20+ year real estate veteran who knows that your move is life-changing. I move you home. 

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