Lakes Sotheby's International Realty SHIPMAN + KOLKMAN PARTNERS

New construction in urban neighborhoods is a hot, hot, trend and I predict will continue to be for many years. Social and economic forces are driving buyers into the city, into the best first ring suburbs and city neighborhoods. New construction, or “like new” remodels are finding a very warm reception this spring, as long as they are priced according to neighborhood price ceilings and offering the appropriate features and amenities for the area.

Don’t confuse these homes with the existing inventory of new construction sitting on the market, nor with new homes in 2nd and 3rd ring suburbs. I tour almost every new listing in Edina, Southwest Minneapolis, Golden Valley and St. Louis Park and the one thing I see selling faster than any other is New Construction. We still have new homes sitting on the market however, some from lest year and more! The market rejected these homes, and they will only sell once the owner, or the bank, takes the losses that they have coming. It’s the New New Construction you should watch if you want to see the action in this market.

Buyers and Sellers at all price points can take advantage of this tend. It’s simply a matter of taking a Buyers needs and wants and fitting that into the new market. Sellers have to understand where their home fits in the new market; many could re-position their homes as new by partnering with the right realtor and builder. Making a choice about the best strategy to pursue, of course, is always based on your home, its neighborhood, and your needs and wants.

In spite of the media's talking points, multiple offers, over list price, and homes sold in just days are not uncommon today. Really it’s true.

What!? It can't be true...Yes it is. Not at every price point, but, by and large, for the vast majority of areas and price ranges, the same facts hold true...there are TONS of LOW QUALITY or OVER PRICED homes sitting out there, but a dramatic SHORTAGE of QUALITY HOMES.

The result: As really nice homes come on the market buyers who have been stewing, and waiting, and looking, for months all pounce on the good home. Multiple offers, over list price, sold in days. Not at all uncommon.

I've been working with buyers over the past 12-18 months and found this to be true. One of my buyers has made 7 very good offers, over the past year, and has been beaten every time. While at the very same time, average market times, and average sale prices are falling.

My advice: 1) Get to know your market, take the time to learn what you get for your $ in the area you're looking. 2) Have your financing all figured out and keep your lenders phone number handy. 3) Review new listings daily. 4) When you find a great home price right, make the best offer you're comfortable making immediately.

If you're trying to buy contingent on the sale of your home, you'll get stuck with one of those low quality or over priced homes that are just sitting around out there waiting for someone, anyone to show interest.

If you're trying to get the deal of a lifetime, that's fine, good luck. But realizes that really any home, in a good area is a good deal, prices are down and will go up, but don't judge the quality of the deal, but the desperation of the seller. You'll just end up buying a home that no one else wanted, what kind of a deal is that?

Our most desirable neighborhoods are at a cross roads. And home buyers and sellers can take advantage of it.

Our "best" neighborhoods are feeling growing pains, caught between preservation & modernism, keeping things as they were & market forces. As our population grows, the number of people in the upper 20-25% of income grows (this group is actually growing faster than the population as a whole). The size of our "best" neighborhoods grows as a direct result.

Areas once considered "above average" are increasingly being assimilated into the "best" areas as more and more upper income families enter the market. It's here in this transition zone that home buyers and sellers at all price ranges can profit.

There is no debate about the demand for a safe, affluent, urban neighborhood is great. Great urban neighborhoods have always been a "gold standard", appreciating steadily over time, never declining in value, even today. However, only the 20% of the population can afford to live in these areas.

As demand grows, change occurs. Demand grows as the top 20% of income earners is a growing population, and the "back to the city" new urbanism movement, both fuel demand for nice homes in nice neighborhoods in the city, and first ring suburbs. Locally, this includes Edina first and foremost, then St. Louis Park, Southwest Minneapolis, and Golden Valley as a second tier for various reasons. The change that occurs is in the "nice" but not "great" parts of these areas that are getting assimilated or included into the "great" parts.

Anyone can benefit from this process. Regardless of price range, buyers and sellers can profit by making wise investments in their housing and acting in these transition areas. Home values in these transition zones may vary from $150,000 (functionally and structurally obsolete home, in an area that's not "hot" today) all the way up to $3-5 million (new or fully renovated homes in the hottest area).

It's the knowledge of development trends, land values that make buyers money. Knowing the most profitable square footage range and finish levels, make sellers money. But, it's a lot trickier that it sounds. This is no game for rookies. Determining the right trends, values, and sizes requires scientific discipline and rigorous research, and even then, the market changes, and we must always keep ahead of the curve on changing market dynamics. That's where we come in; working with Shipman + Larson + Kolkman part of the Replacement Housing Consortium you're guaranteed to be working with the most knowledgeable practitioners in the business.

Most real estate news today is bad, but rising sales volume is great news, and often seen skeptically in the media. While falling average prices is important, it's not nearly as accurate as it seems. Home owners would be well advised to understand the media's coverage of real estate is usually dead wrong in the way it thinks about your specific home's value.

I take issue with most news stories on two points 1)The importance of rising sales volume, and 2)For not pointing out that averaging sale data, reflects the large volume of bank mediated sales, and don't accurately predict values of individual homes.

Point 1) Rising sales volume is one of the most important metrics in our current market. We have a supply side issue (among others). As the number of homes offered for sale declines, supply and demand come back into balance. Minnesota Independant recetly said, in an otherwise good artical, that the number of homes sold is a "meaningless" and "futile" metric. Revealing a widly held, and fundamental, misunderstanding of the market.

Point 2) Value statistics (i.e. "Home Price Decline 38%") take all sales into account, and the increased volume of bank mediated sales artificially lowers these stats. Bank sales occur at all price points, but the majority are below the median price range. Investment buyers are very active in this market, and are behind a lot of the rise in sales volume. A relocation, or move up buyer, with a new baby on the way, may not be able to consider bank sales due to time and condition requirements. Bank sales come with additional risk, long timelines, typically poor condition, and are most common in lower price ranges. Unless you own an "average home" (which doesn't exist) then the average stats are only useful in a general sense, they don't predict specific home values in any way at all.