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: email@example.com
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
“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
The few houses that are on the market are selling fast!
According to NAR’sRealtors Confidence
Index, properties were typically
on the market for 26 days.
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
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!
what a few industry experts have to say about the current inventory crisis:
“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.”
“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.”
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.”
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.
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.
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.
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,
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.
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.
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.
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.
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.
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.
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.
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, firstname.lastname@example.org. 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.
Every morning I wake up with my head exploding with brilliant Instagram images on rehabbing houses. It’s not an easy work, it takes a village. There are project plans, the decor has to be gorgeous, crew lined up, and buyers vetted. Hair and wardrobe make or break the image. What should I wear swinging a sledgehammer or showing a dingy basement? The look has to be professional and glamorous, yet with homey relatable images.
At 10 AM I meet the new couple at my office. They’ve been vetted by the casting team, contracts are signed, budget is set, and they’ve already bought one of the three houses we’ll show. They are so excited!!! We go over the script, and plan the day’s shooting. I’m ready, cameras on, let’s roll.
In the opening shot we’re doing introductions and I’m asking them everything about what they’re looking for, what would be their dream home? She goes on with the litany of, “I want, I want, I want, I want…” Listening attentively I nod my head, “You want four bedrooms, a gorgeous master spa bath, custom kitchen with a mile and a half of granite countertops, an outdoor entertainment center for under $200,000? Is that all?” Of course she does, I smile cheerfully. Let’s go see some houses!
The first house is a tiny bungalow with deferred maintenance for $120,000 begging for an $80K remodel to make it livable. Let’s call it The Witch is Dead Gingerbread house. Next, a spacious two story in need of coming out of the 1900s built on a hill with 300 steps. We’ll call that one Goat Hill. The third house is a brick 1.5 story with an unfinished 1/2 story and basement. Lots of naked space. It’s within the budget, they like the neighborhood, not far from schools and a hop to work. This one is Head Start. No brainer right? No wait, they want to think about it? I whip out my iPad showing 3D floor plans where we are moving walls, opening up the back with sliding glass doors, building a patio with beautiful grape vines, acres of granite in the kitchen and adding a couch with nautically themed pillows. They love it, let’s write an offer. Whew, we won the bidding, had to go over list price which means we cut back on the pillows.
The next morning we huddle over the iPad blueprints. We make color selections, cabinets, and finalize the design in 20 minutes. I’m wearing overalls and a hardhat prepared for demo. Most Realtors don’t do demo. I don’t either but my producer says that buyers want engagement and love to see Realtors in action. We already closed on the house, so we can head over for an early start. The crew is coffeed up, they’ve started without us. The buyers are excited, they get to knock out a wall. I grab a sledgehammer, give it a swing, and OMG it hit a water line. There is water all over the place! The buyers are watching bug-eyed with their mouths gaping. The producer yells, “Somebody get a plumber!” I’m soaking wet, my hair is dripping down my face, my right shoulder is screaming at me, and I’m not video ready. Can we cut PLEASE? Things happen. We joke that this kind of thing can happen to anyone. God, I hope that they don’t sue.
While I went to the emergency room our videographer got some good footage of the buyers ripping out cabinets and taking out a demi wall. Only one ugly surprise, flattened dead squirrel was found under the fridge (apparently he was hiding, but couldn’t escape.)
I met again with the buyers with my arm in a sling for a photo op just to show that this is not a job for wimps, I’ve got grit, and it’s an Instagram moment. We’re all together at base camp smiling. The crew takes over sheet rocking, wiring, plumbing. I’m taking a couple weeks away to work on my Instagram for my online store, Fantasy Fixes, everything you need for a rehab for pennies on the dollar. Only a phone call away.
The phone rings Saturday night. Mrs. Buyer just walked through a Restoration Hardware, she wants to change the theme as she fell in love with a $5K couch. I pour myself a vodka, straight. She’s crying, she insists that the couch will change her life. I’m crying, she is ruining mine. Thinking of 14 ways to asphyxiate her with the nautical pillows or get her to change her mind I purr into the phone, “Don’t worry, you sound so stressed. Why don’t you take a hot bath (scalding), relax, and we’ll meet at the house in the morning to work it out.”
The next morning we met at the house, which is nearly finished. Mrs. Buyer is excitedly placing the $5K couch along a load bearing wall of her mind. We measure, measure again. The couch is ginormous, but the house is not. It would take up over half of the living room, it won’t even fit in through the front door. The husband stands quietly glassy-eyed, he knows when he can’t win. “Well, what is it that you love about THAT couch?” She loves the creamy linen and the charcoal piping. We picked out a deep blue velveteen. “What if, just what if we have a cream linen slipcover with charcoal piping made for the couch that looks like the RH couch, but can fit in this room? That way, you get both a summer and a winter look, and stay on budget?” She stopped, rolled her eyes left, then right, sighed, looked at her husband, and back at me with a huge grin, “Alright!” We all breathed deeply in unison.
After that, things moved along uneventfully. The buyers weren’t allowed anywhere near, but I think that they sneaked around at night. Finally, the day for the big reveal. The slipcover for the couch is done, the kitchen glows with sunlight, we even came in $25 under budget. It’s a win for all sides. My producer blindfolded the buyers, I’m their guide dog and lead them down the path. Cameras are rolling, “ARE YOU READY?”
Of course, they are ready. Smile, and call it a day.
Whether you’re selling a house or buying a new home in the Minneapolis, MN, area, turn to Mary Jo Quay with RE/MAX Results for quality real estate assistance. Contact her at (612) 384-1360 or visit the website to learn more about her services or browse local real estate listings.