Farmington, MN

If you want a dry martini, it takes about one part dry vermouth and eleven parts vodka or gin. Stir or shake depending on your beliefs, and drown two olives. Eleven to one is what makes the martini dry.

So you don't want to make a martini? You want to buy a home? Eleven to one is also what home buyers should remember when they are trying to decide whether they should buy now or wait a while. If the interest rate on your home loan increases, the price of the home must decrease at an approximate ratio of eleven to one to keep the same monthly payment. If rates increase by 1%, your buying power dropped about eleven percent. So, that $200,000 home you like would need to drop in price to under $180,000 just to compensate for the increase in interest.

Right now, interest rates are about as low as they can get. They may remain the same or close, but it's not likely that there will be substantial rate decreases. It would not be particularly surprising to see a 1% increase in rates in 2012. Will the price of homes you like drop by 11% this year?

If you're trying to decide whether to buy now or wait a while, keep in mind that, even if home prices were to drop, there's a fair chance that you may have to pay more to own that lower priced home. It takes more luck than knowledge to predict the future accurately, but your plans will be affected by the home price change to loan interest change ratio. While you're trying to sort things out, keep that dry martini in mind. Eleven to one.

Do you need some information to help with your lifestyle upgrade decision? For market-specific information about your neighborhood of choice, your choice for a style of home, and your choice for a price target, call or email now. If you would like to arrange a convenient time for a home buying strategy consultation, call me now. There is no charge or obligation for this consultation.

James Surowiecki is a writer for the highly regarded financial publication The New Yorker. He was interviewed on CNBC's Squawk Box this morning, and he feels that more people need to consider strategic default as a solution to their underwater home loans. He cites the fact that American Airlines is strategically defaulting on their debt as support for his position.

Mr. Surowiecki may be a thoughtful writer, and he may be on to something with his comparison of Joe Sixpack to American Airlines. He may however be comparing apples to oranges, and I don't think it's possible to get orange juice by squeezing apples. In the interview, one of his main points was that you probably won't be the object of any type of collection action after the foreclosure, at least if you live in a non-recourse state. This sounds to me like barber shop legal advice, and it's probably a good thing that Mr. Surowiecki does not need a license to write stuff. What happens to licensed real estate professionals when thay give legal advice? At the minimum, they become unlicensed real estate professionals.

The comparison of a person to a corporation is perhaps a little unrealistic. If I own a corporation and it defaults on its debt and goes bankrupt, I can simply create another corporation and start over. Try that with a human who has destroyed his credit through strategic default. Let's see, Joe just walked away from his home and he is in financial distress. Let's just wipe him out and create a new Joe. Of course it's not that simple, and the old Joe may not be happy about being removed from this planet. The old Joe needs to go through years of poor credit history and slowly rebuild his credibility with lenders.

If you're considering walking away from your home because the debt level is too high, you need to get some professional advice before making your decision. While The New Yorker may be a nice magazine, you should probably seek advice from other sources. If you're having serious financial problems, you need qualified legal and financial advice from real experts. While not cheap, qualified advice could help you avoid disaster.

Farmington MN 2011 home sales exceed 2010 totals

Sold home totals in Farmington have passed the total units sold in 2010. According to Regional Multiple Listing Service of Minnesota data, total homes sold in Farmington in 2010 were 382, and the year to date total is 390. 2011 has been a great year for both sellers and buyers in Farmington.

Sellers who price their homes close to market value are finding that there are sufficient numbers of willing and able buyers searching for homes in Farmington. If you're thinking about a lifestyle upgrade that involves the sale of your home, all indications are that now would be a better time to go on market rather than waiting until 2012. Call or email for help with the information you need to make a decision.

If you're fed up with making your landlord's mortgage mortgage payment and want a better life for yourself and your family, why not join the smart homebuyers who have chosen to make that upgrade now? If you want help planning your home buying strategy, call or email. It costs nothing to consider your options.

Tonight's Republican debate will focus on the economy with emphasis on housing

Tonight's Republican candidate debate may be worth a look. One of the moderators, CNBC's Steve Liesman said this morning on Squawk Box that he and the other moderators will be asking some specific questions about the candidates' positions on the housing depression.

Having watched the moderators in action, it will be interesting to see if the candidates can get by with their often off topic responses to difficult questions. My guess is that it will be difficult to answer a question about how to fix housing with a statement that the candidate is against gay marriage, and that everything bad on earth is Obama's fault. I hope and expect that the moderators will insist on real answers.

With the promo tag line,

He may be a lunatic, but he's got you making his mortgage payment every month. Your landlord understands the value of home ownership. That's why he owns your home, and he's getting rich in the process. He may be crazy, but he sure isn't stupid, is he?

Interest rates continue to remain low, and home prices are as attractive as they have been in at least a decade. Now is the time to pursue options including whether a new home makes sense for your individual situation. Start with a free home buying strategy session. If you have about an hour and a half, and if you don't live too far from my Eagan office, why not invest the time (and no money) learning a few things that will help you decide whether you should fire the landlord? Our country celebrated its independence a few days ago. Maybe it's your turn now. Call to arrange a convenient time for us to get together.