Savage, MN

By Chad & Sara Huebener

The market is cooling in West Savage, both in terms of active listings and sales. Total listings are down to just 13 - sitting at about 43% of the typical supply. This is amazingly low. 15% of these active properties are short sales or foreclosures. Fortunately this number is far below the metro market average of about 50%.

Even more noteworthy, for the month of October, the most fascinating statistic lies in The Pointe neighborhood - a neighborhood of 242 homes which, for most of the month, had only one home on the market. There are now two active listings in The Pointe, and 50% fall into the short sale/foreclosure category.

The absence of For Sale signs has become an interesting trend. 31% of West Savage inventory, including 100% of the inventory in The Pointe, Hamilton Hills, and Hamilton Hylands, have no yard signs. One property in Hamilton Hills has been converted into a rental, but remains on the market with no sign. Residents should be aware that some homes with For Sale signs are no longer active on the market, but the signs remain posted.

What to watch for: It will be interesting to observe the effect of the new $6,500 Tax Credit for existing homeowners. The tax credit applies to those who have lived in their homes for at least five years and will purchase a new primary residence, with a binding Purchase Agreement secured by April 30, 2010, closing no later than June 30, 2010. We predict we might see an early spring. In real estate terms, this means we think sellers will enter the market (and buyers begin looking for homes) sooner rather than later, in order to get their Purchase Agreements solidified before the tax credit expires.

Inventory is down for Savage as a whole and Scott County. This is typical of this time of year, and we expect to see this remain steady through the winter.

Our West Savage absorption rate is 4.5%. That means if zero new homes come on the market, it will take 4.5 months to sell our existing inventory. This is a nice, low absorption rate!

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By Sara Huebener

Some popular news is being discussed in the real estate industry these days. Chris Galler, a highly respected former colleague of mine from my days at the REALTOR Association, frequently puts out information to local REALTORS covering timely topics. Here is one that might be of interest to ALL West Savage homeowners:

The First Time Homebuyer Tax Credit is set to expire on November 30 of this year. Right now, the House and the Senate are modifying the tax credit to include the following alterations. Stay posted to our blog where we will be notifying homeowners if and when these changes get approved.

PROPOSED CHANGES INCLUDE:

1. The $8000 First Time Homebuyer Tax Credit would remain in effect for those purchasing their first home.

2. Existing homeowners who have lived in their home for at least 5 years would be eligible for a $6,250 tax credit if they choose to sell their home and purchase another home.

3. The tax credit would be extended from December through April 30, 2010.

4. The tax credit would not have a hard close date like the current tax credit does. Currently, first time buyers must CLOSE on the property on or before November 30, 2009. The new plan would allow first or existing homeowners to secure a purchase agreement by April 30, 2010, allowing 60 days to close on the home after the purchase agreement has been secured.

Again, these details are not yet set in stone and are still moving through the House and Senate. Keep watching www.WestSavageBlog.com for status updates!

By Chad and Sara Huebener

The following is a 60 Minutes video that is interesting. When watching the video, the initial feeling might be somewhat depressing. However, keep in mind a number of factors:

1. The video pertains to the housing market on a national level. It discusses inventory on the rise. In our pocket of West Savage, inventory has dropped steeply. As of November 2, 2009, inventory in West Savage is down 50%.

2. The video predicts another wave of foreclosures coming in 2010 and 2011. This is something we have long been discussing in communications with West Savage homeowners. We expect that many of the ARMS will be resetting in these upcoming couple of years. Knowing that, many lenders are offering loan modifications to troubled borrowers. While the long-term success of these programs is yet to be discovered, we know that from an initial standpoint, it has staved off a few of the foreclosures that would have otherwise hit our local market. It can be expected that some of those who underwent loan mods will eventually default on those as well. The rate of this is still to be determined.

3. The video discusses that home prices will continue to fall. On a national scale that is most certainly true. And we really cannot predict what will happen to us locally. We can state that, at least in this part of West Savage, the steep drops in inventory have helped slow the pricing fall. What winter will bring is anybody's guess. But right now, here in West Savage, we are seeing a stabilizing of pricing, as we head into winter. We hope that trend will continue through Minnesota's coldest months.

So then, why are we posting this video? We think it contains some interesting points of value on a national scale. Homeowners with any plans for selling in the future should be aware that these ARMS are going to resetting in large waves. How they are dealt with (i.e. refinancing, loan modifications, foreclosure, etc.) is anybody's guess at this point. And how many will affect our local market, no one knows.

WATCH THE 60 MINUTES VIDEO HERE.

By Chad & Sara Huebener

If you know of someone buying a home in the price range below $120,000 (or if you are looking in that range for investment purposes), they (or you) are going to have to move fast. The Southern Twin Cities Association of REALTORS reports there's only 2.9 months of supply in that range, which places it in the extreme seller's market category. The reason for the tight inventory picture? There's been a huge upsurge in home buying activity-sales are up 127.5 percent in that category over the last twelve months.

Our Association also reports that the number of new construction properties available for sale continues to shrink rapidly as builders pull back from creating new inventory. The current inventory of 2,426 listed new construction properties in the MLS system represents a drop of over 1,200 units from a year ago. Unfortunately for builders, new construction home sales have also rapidly declined, falling by 18.8 percent (over 800 units) in the last twelve months.

We have certainly seen the flood of homebuyers scooping up properties because of the $8,000 tax credit, as well as investors taking advantage of steals of deals when the market was in a deep state of stagnancy - particularly last winter. Heck, we took advantage of it as well, and picked up another rental property for dirt cheap.

The statistics above are changing things considerably: First time homebuyers in the $175,000 and under price range have very little wiggle room for negotiating on the basis of price. When the state of the market in that price range is that hot, seller's in that price range don't need to sell at a discount any longer.

Additionally, FHA has a flipping rule in place prohibiting FHA buyers from purchasing properties that sold less than 90 days ago. Although controversial, we can lend some credence to investors who buy "junk homes", fix them up and turn around and sell (or "flip") them in turnkey condition to buyers. FHA will not insure these loans based on the no flipping rule. Since most first time home buyers are FHA approved, and as a general rule, FHA-approved buyers cannot purchase homes that need extensive repairs due to FHA requirements, this restriction narrows their housing supply pool even more.

So what might all this information mean for West Savage? Sellers in the lower-range price point can move up to the price ranges we have in West Savage. And if people are opting not to build, that keeps more buyers in the pool looking for existing properties. (Personally, we have seen the opposite - more and more people -even first time homebuyers- looking to build homes, and this affects existing sellers, particularly those in our West Savage price range.

We need to take the continuous changes in our housing market one step at a time, and right now, the true test of how West Savage will be impacted first requires following what happens with any extension of the tax credit, followed by getting through the winter.