Lakehomes: Current Inventory for Alexandria, MN. April 2011

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Currently there are 216 lakehomes listed in Douglas County, MN. That number is up 10% from 10 days ago.

Again, last year we only sold 100 lakehomes in Douglas County, MN. That represented about a third of total listed inventory.

It’s looking similar to last year. Second half will tell the story.

Source: Greater Alexandria, MN Area Association of Realtors Multiple Listing Service

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Inflation? And How to Make a Million Dollars!

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Inflation ImpactAgain, one of the best places to be is in real estate if/when inflation occurs. The “herd” has moved from a borrowers position to a cash position in this economy. If/when inflation occurs a cash position is not the place to be. The erosion of purchasing power puts the cash person in a reduced position after an inflationary period.

Going INTO this recession you should have been in a cash position.

Going INTO an inflationary period, you should be in a levered position.

Keep an eye on the “herd”, it is usually a wise position to do the opposite of what they are doing if profit is your motive. People are leaving/avoiding real estate now, when they should be buying/acquiring real estate. Prices and terms are phenomenal.

Once the masses start to buy real estate, that’s when one should think about possibly selling or whatever…basically, I’ve always been a buy and hold guy.

Again, Now is the time to buy real estate…the signs are clear. Buy as much as you can afford. Look for value, let’s not try to flip it, okay? Buy it, figure out how you are going to pay for it…and I mean pay for it as in, paying it off…free and clear, okay? That has always been my tack, it has worked well for me.

I gotta tell you one quick story before I go; I was first licensed at Century 21 Viking Real Estate here in Alexandria, Mn. My first broker was Ward Sonsteby. I was 26 years old and had a negative net worth. I was never afraid of hard work, it’s just that hard work never seemed to make you any money. You just got tired. I asked Ward one day what he thought the best way was to make a million dollars? (In 1982, that was a lot of money) Ward said, “the best way he knew how to make a million dollars was to go and borrow a million dollars and then work like heck to pay it off.”

With real estate, that’s easy…hard work…but doable.

Avoid the “double down” theory as in gambling. I never liked that approach.

Building Blocks…think of real estate as building blocks! Just keep adding blocks to your portfolio. Over 10 to 20 years your families will have assets to capitalize on.

Source of article: National Association of Realtors

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Existing Home Sales Rise in March

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This is a report from the National Association of Realtors. The sales in Alexandria, MN did not show a rise for the first quarter. Actually, the report was about a 30% drop. See blog report from early April for 1st quarter residential sales.

You should read this report, I see good activity…

(click on the report below the photo. “Blog.4.28.11.NAR”)

Source: National Association of RealtorsBlog.4.28.11.NAR

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Alexandria, MN Commercial Property Report

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Although commercial sales in Alexandria, MN have lagged from better past years, it appears that there is some light shining at the end of the tunnel. Bug-A-Boo Bay is opening under new ownership this week. Old Broadway is opening next week. Times Square is almost under new ownership. Mark Juettner bought the Automaxx building. I posted eleven sales on my board in Alexandria, MN city limits for 2010 compared to nine sales for 2009. One of the local bankers told me yesterday that he is working on a start-up company and another loan for $600,000 in equipment for a local manufacturing business. Both of these mean new jobs for Alexandria. The recently opened restaurant businessess were all closed and all had to hire new help. Good Old Alexandria…always comes through the worst of storms.

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Boston Condo Market…1989

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Boston Condo Market.4.27.11

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Shadow Inventory.Part Three (A Must Read)

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Foreclosing on 2010If you read the other two parts, you may want to finish with this story. Bottom line? Read the last page.
Again, I would say that the microcosm of the world, known as Alexandria, MN is fairly similar to the rest of the places in the United States. Yes, we have foreclosures…I know that it is hard to believe. If you search my blog on FORECLOSURES, you will find that I track that data quite diligently. Nonetheless, there is an end in sight…do you remember how many housing units we have in this country? I inserted that data into the blog on January 27th, 2011. You may want to check that out.

Source: National Association of Realtors Economic Research Division

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Existing Home Sales Statistics.NAR Research Division

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ExistingHomeSales.4.26.11This is the summary of Existing Home Sales through March 2011. Although Alexandria, MN is a microcosm of the world, this data is still relevant to the now very small world in which we live. Thanks for reading.

Source: National Association of Realtors Economic Research Division

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Shadow Inventory.Part Two

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Shadow Inventory.Part Two
Now this guy thinks that we will hit up to seven million in “shadow inventory” on the market. A lot of this doom and gloom will be relegated to certain markets. I don’t see that necessarily being the case here in Alexandria. Nonetheless, it does have a significant negative effect on the mind, much like the news media does do to your head when you watch their mental programming.

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Shadow Inventory.Part One

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Blog.ShadowInventory.Pt1
If you read about “shadow inventory”, it appears that there could be somewhere from one to two million homes coming on the market sometime soon. I wish that Obama had released them so that we can get this inventory freaking gone. If you have been reading my blog, you would have seen that there are a total of around 130,000,000 housing units in this country. We currently are selling about 5 million units a year. Looks like there won’t be any new construction for awhile. Oh well.

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Market Date…April 22, 2011

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I pulled this from Bloomberg News on April 19, 2011:
…Historically, homes have been a safer investment than equities. During 2008, the worst year of the housing crisis, the median U.S. home price declined 15 percent, compared with a more than 38 percent plunge in the Standard & Poor’s 500 Index.

Amercians stay in their homes for a mediean of eight years, according to the National Association of Realtors in Chicago. Someone who bought a home in 2002 and sold in 2010 saw a 4.8 percent increase in value, based on the annualized median price measured by the group. The average annual gain in the past 20 years was 4.2 percent.
Falling prices have made real estate the best buy in at least four decades. Housing affordability reached a record in December, according to National Association of Realtors data that go back to 1970. The group bases its gauge on property prices, mortgage rates and the median U.S. income.

The median U.S. home price tumbled 32 percent from a 2006 peak to a nine-year low in February, data from the Realtors show. The retreat surpassed the 27 percent drop seen in the first five years of the Great Depression, according to Stan Humphries, chief economist of Zillow, Inc., a Seattle-based information company.

About 11 million U.S. homes were worth less than their mortgages at the end of 2010, according to CoreLogic Inc., a Santa Ana, California-based real estate information company. An additional 2.4 million borrowers had less than fiver percent equity, meaning they’ll be underwater with even slight price declines, according to the March 8 report. The two categories add up to 28 percent of residences with mortgages.

The share of Americans who said they plan to purchase a home in the next 6 months tumbled 23 percent in March, according to the Conference Board research firm in New York. The National Association of Realtors probably will say tomorrow that existing-home sales were at a 5 million annual rate in March, up 2.5 percent after a 9.6 percent plunge in February, according to the median estimate of 74 economists surveyed by Bloomberg.

Work began on 549,000 houses at an annual pace in March, up 7.2 percent from the prior month, figures from the Commerce Department showed today in Washington. The gain failed to make up for ground lost in February, when starts fell to the lowest level in almost two years.

The drop in homebuyer confidence may be temproary. Home sales probably will rise 4.1 percent to 5.1 million in 2011, with the biggest increases in the second half of the year, the Mortgage Bankers Association said in an April 14 report. In 2012, sales may climb 5.9 percent to 5.4 million, the highest pace since 2007, the Washington-based trade group estimated.

A rebound in home sales depend on the availability of jobs, the mortgage association said. The unemployment rate probably will decline every quarter of this year and the next, falling to a 7.9 percent by 2012’s end, the trade group said. It was 8.8 percent last month, the lowest in two years.

“We expect that purchase activity will pick up slowl as the improvement in the job market eventually leads to greater willingness to buy,” the mortgage bankers group said.

Borrowing costs are at historic lows. The average U.S. rate for a 30-year fixed mortgage was 4.69 percent last year, the lowest in annual data going back to 1972, according to mortgage financier Freddie Mac, based in McLean, Virginia. The rate in March was 4.84 percent, the company said.

By 2012’s fourth quarter, the average fixed rate may rise to 6 percent, according to the Mortgage Bankers Association.

“If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing time to purchase real estate,” said Robert Stein, a senior economist at First Trust Portfolios LP in Wheaton, Illiniois, and the former head of the Treasury Department’s Office of Economic Policy. “There are going to be a lot of people kicking theselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates.”

Cheap financing hasn’t done enough to boost home sales in part because lenders are being more selective with applicants, according to Federal Reserve Chairman Ben Bernanke. Fed policy makers have described the housing market as “depressed” in statements following their last eight meetings.

“Although mortgage rates are low and house prices have reached more affordable levels, many potential homebuyers are still finding mortgages difficult to obtain and remain concerned about possible further declines in home values,” Bernanke said in Congressional testimony last month.

The share of banks reporting tighter mortgage standards in the first quarter of rose to 16 percent, the highest since 1991, according to the Fed’s Senior Loan Officer Survey.

Federal regulators are proposing rules that may make lending even more stringent, including a requirement that banks and bond issuers keep a stake in home loans they securitize if the mortgage borrowers have imperfect credit and down payments of less than 20 percent. Borrowers who don’t meet the criteria would pay higher rates to compensate lenders for risk.

As mortgage requirements rise, rates could follow as Congress and the Obama administration consider phasing out government-controlled Fannie Mae and Freddie Mac. The companies hold federal charters mandating they increase the availability of mortgages through securitization. In Fannie Mae’s case, that order goes back to the Great Depression, when it was created as part of Presidnet Franklin D. Roosevelt’s new Deal.

“There are a lot of unsettled policy issues on the table right now that, if they’re not handled right, could further set back the housing market,” said Richard DeKaser, an economist at Parthenon Group in Boston. “Fannie and Freddie have historically lowered interest rates, and eliminating will increase the cost of home ownership.”

The U.S. home ownership rate dropped to 66.5 percent in the fourth quarter, the lowest in more than a decade, according ot the Census Department. The rate probably will retreat another percentage point by 2013, according to Meyer, of Bank of America Merrill Lynch, and Lea, the finance professor. That would put it back to a 1997 level.

“People will still aspire to own their own homes,” Lea said. “They’ll just be a lot more practical about it.”

Source: Bloomberg News 4.19.2011

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