Good Morning Alexandria, MN! (my thoughts for the day)

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A couple of things…The Consumer Conference Board’s measure of confidence is due out next Tuesday. In August, the Consumer Confidence climbed to 53.5 from 51.0. Although it may be up from last February 2009 when it was at 26.0, the confidence index NEVER dipped below 60.0 during the last recession. The Consumer Confidence Index to me is the key truth detector. Once it gets over 60 and stays there and continues to steadily rise, then I believe that my real estate business will be “out of the woods”. Keep an eye on the Index. I think that after the election in November, we will start to see a steady rise in the index. I also believe that the American people are not happy with the spending and that they are afraid of any more taxation by the Federal Government. Once those concerns are addressed by an election, I believe that the Index will go up, and henceforth the real estate market will show steady signs of improving. By spring, I look for the Index to be above 60. I think that the index will moderately rise, but don’t look for readings over 100 for quite some time. To quantify…maybe 5 years or more? Again, my opinion, but these are my thoughts, thought I’d share…anyone care to comment?

The housing market, like I’ve said before, needs to distance itself from the Tax Credit. The next time Washington says they are going to help your industry…tell them to be a little more creative. Throwing money at the industry to artificially stimulate the market was, in my opinion, a bad idea. Markets will rise and fall as inventory and demand dictate. As we have gotten further from the Tax Credit, our market appears to be stabilizing. It fell off a cliff after the Tax Credit ended, people are trying to adjust their thinking without any outside stimulation from Washington. In doing this business for 28 years, I had never seen anything like the Tax Credit. I got along just fine. Alexandria is such an island of prosperity though, our market would not have suffered to the extent that some markets did because it was not overbuilt. I believe that this market would have stabilized a year ago, if Washington hadn’t introduced the tax credit to the marketplace. It only cost the taxpayers $20,000,000,000 as an experiment. Hopefully, some other markets found it beneficial to survival. Alexandria has always and will continue to grow and prosper because of it’s diversity. I wouldn’t want to live anywhere else…nor invest.

The housing reports coming in nationwide are starting to show signs of bottoming and bouncing upward. Again, I have said and believe that 2010 will show the bottom of this recession for us. Pricing will take some time to recover as sellers have been hammered hard on their equity. Buyers are looking for value, as they have always done. New construction, once recovered, will need to provide more value to buyers then before. The housing of the future is about to enter another new chapter. Keep your eye on the pendulum.

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Record Low Mortgage Rates, Still Few Buyers

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I am copying this comment from the Wells Fargo Securities weekly report dated September 17, 2010:

Record low mortgage rates have not yet produced much of a lift for home sales. Sales of both new and existing homes appear to have risen modestly following their sharp declines in July in the wake of the expiration of the homebuyer tax credits. However, no significant improvement in sales or construction is expected to take place until the spring homebuying season. By then, the economy should have put up a fairly lengthy string of modest private-sector job gains, which should bolster confidence and household formations.
New home construction is being limited by the still enormous supply of vacant homes for rent and for sale. We continue to believe this measure is the best gauge of the oversupply of housing on the market. The current inventory totals 4.4 million vacant homes for rent and 2.0 million vacant homes for sale. The normal inventory would be around 3.2 million vacant for rent and 1.3 million vacant for sale. As sales recover over the next two or three years, this excess supply will gradually dissipate. During this period, new home construction will likely remain constrained relative to job growth and household formations.
The threat of foreclosures is again taking center stage, with anecdotal reports showing a surge in foreclosures occurring in August. The large number of homes currently in foreclosure and the high percentage of homes with negative equity and/or seriously delinquent mortgages are keeping homebuyers and builders on the sidelines until they better understand the impact of this shadow inventory on prices, appraisals and mortgage underwriting. States like Nevada, Arizona, Florida, Michigan and California, which tend to lead the nation in foreclosures and the share of homes with negative equity, are most at risk for additional price declines during the second half of the year. The prospect of additional price declines is making the appraisal process more perilous and may freeze up the sales process in many challenged markets.

Source: Wells Fargo Securities

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Housing Starts Rose in August

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HousingStartsRoseInAugust2010Surprisingly good news…keep your eye on the pendulum.

Source: Wells Fargo Securities

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First Time Homebuyers.Less Expensive Homes

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1stTimeHomebuyers.LessExpensiveHomesFrom the National Association of Home Builders came this report. Very interesting.

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Commercial Real Estate Chartbook: Quarter 2

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CREChartbook – Q2.2010
This is from Wells Fargo Securities, thought that it was good, enjoy.

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Alexandria, MN Market-Current Inventory

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Inventory levels are still excessively high. It appears that the month of July has set a new record in this market for inventory levels when there were (on July 15th, 2010) 594 listings of residential properties in Douglas County. Total listings in the MLS were 688 listings at the peak. Both numbers are at the very peak of the data. If you research my blog (just search the word “inventory”) you can see that these are the highest number of listings at any one given time. In 2006, 2007, 2008 we skyrocketed in inventory from the 2005 levels. In those years we averaged around 660 listings, then in 2009 it dropped almost 10% to 608 listings with 545 residential listings in Douglas County.

Currently, there are 651 listings in the Residential section with 554 listings in Douglas County.

Source: Greater Alexandria Area Association of Realtors Multiple Listing Service

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Douglas County and Minnesota Population Projections

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Go to this website: www.demography.state.mn.us/resource.html?Id=19171 (or click on this article as it is linked to the State’s website for demographics) for complete upload on the State and Douglas County demographic info. The County IS growing and IS expected to continue to grow. This is where you want to buy real estate for the future…positive demographics!

Source: Minnesota State Demographic Center

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Population Projections for Minnesota and Douglas County

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SKMBT_C25210091006260
I have uploaded from the State Demographic Center the current data. The one thing most interesting is the aging of the population. The western borders will lose people, the metro areas will gain people. Douglas County is expected to grow consistently. Good demographics for this area for the future.

Source: Minnesota State Demographic Center

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Three-Phase Power Grid for Douglas County

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Three Phase Power Grid for Douglas County
Enclosed is the Three-Phase Power Grid for Douglas County. If you may ever need to know where that might be for business/industrial use…I thought that it was cool…just storing it here in my blog for all.
Anyone reading my blog…anything that you would like to see…what can I add for information?

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$3,500,000,000,000 (Trillion) Dollars

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I was scanning the TV channels last week and came across Dick Morris speaking. He was Bill Clintons political strategist. He said something that made me think. He said that since the time that George Washington took the office till the time that Barack Obama took the office that this country had borrowed 9 trillion dollars. In the last 19 months, we have borrowed 3.5 trillion dollars. The thought that occurred to me, is what affect this will have on the future of real estate. Because again, everything does have an affect. I sure am glad that I live here in Alexandria. Keep your eye on the pendulum.

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