Chad & Sara Huebener

It has been long predicted that another wave of foreclosures is expected to hit our housing market in the near future. The Southern Twin Cities Association of REALTORS recently reported the following:

Some economic observers are predicting another wave of foreclosures will occur later this summer or in the fall. That's because lenders that have held off on foreclosures as part of President Obama's plan will now move aggressively to clear the backlog of troubled mortgages.

Rising foreclosures will further depress home values, says Mark Zandi of Moody's Economy.com, who calculates that 15.4 million homeowners (one in five of those with first mortgages) will be underwater.

Seth Wheeler, a senior adviser to Treasury Secretary Timothy Geithner, says the government is "unlikely to implement another moratorium." But Wheeler says the government plans to put in place some programs that encourage lenders to try some alternatives to foreclosure.

And trying alternatives to foreclosure they are doing! Banks are trying some interesting techniques to keep people in their homes and prevent a short sale, even when the homeowner no longer wants to own the property.

Most recently, some banks have given sellers the option that unless they sign an agreement whereby the seller agrees to make partial payments on their home for a set period of time, the bank will refuse to look at any offer on the property (in a short sale situation). This scenario really holds a seller against a wall. They cannot sell their home without bank approval, and the bank won't approve the short sale unless the seller agrees to sign the partial payment plan. It's non-sensical. In cases where the seller is far in arears on the mortgage payments, the bank is simply delaying the inevitable.

All we can do as realtors is continue to try to market short sale properties and work diligently with the bank to get the offers approved. Depending on the bank and the amount still owed on the mortgage, this task is often times nearly impossible. But miracles do happen, and until the housing market turns around, or at the bare minimum, reaches the point to where it once was before the decline, we will continue to do our best to help sellers avoid foreclosure by listing and marketing short sale properties.

More information on the status of short sales in relation to the market can be found on this video. For a list of homes we currently are offering for sale, including short sales, click here.

The market is HOT right now, at least in some price brackets! We have seen a dramatic upswing in the number of active listings and active buyers. While these increases are typical of spring market, the recent FHA modification to the $8,000 First-Time Homebuyer Tax Credit allowing buyers to use the tax credit as a downpayment (when financing with an FHA loan) has had a tremendous impact on buyer activity in entry-level housing.

For our West Savage neighborhoods, total listings have remained unchanged. The slight drop in pending activity has translated into more closed sales in our marketplace, as sales have closed on paper. Overall, we are seeing price reductions each week scattered throughout our West Savage neighborhoods. We are finding an interesting trend has developed: The homes that are selling in our West Savage market meet one of two criteria: a) They are in pristine, tip-top shape compared to the competition and are listed at market price, or b) they are priced far below market value. The homes that that fall "in the middle" - i.e. they are priced at market value and are of average condition - see lengthy market times. (*Note the CDOM category on the enclosed report - this indicates Cumulative Days on Market - the total length of time a home has been listed for sale without having sold.) Homes in these price points need staging updates or price reductions paired with aggressive marketing approaches to become competitive in this marketplace.

Savage as a whole has seen a significant increase in single family inventory and a decrease in townhouse inventory, perhaps as many townhomes are being purchased by first-time buyers and/or investors, and some people are retaining these properties for use as rentals.

Our West Savage absorption rate has increased to 9.44 months. This means that if zero new homes come on the market, it will take 9.44 months to sell the existing inventory.

By Chad & Sara Huebener

Progress is certainly being made in our marketplace. We can chalk it up to either the typical happenings in a spring market, or perhaps a more positive outlook on our economy.... regardless, what we are seeing is pretty positive stuff.

West Savage is seeing more listings come on the market, more pending transactions, and more closed sales. Current listings and new listings have increased as those needing or wanting to sell take advantage of the increase in showing activity that spring market tends to bring. And rightly so, as pending sales have increased 67% since last month and sold listings have tripled. Prices, however, continue to fall, as foreclosures, short sales, and lengthy market times drive down prices.

Savage as a whole has seen a modest overall increase in inventory. Single family inventory has increased while townhouse inventory has dropped. Perhaps this is due to the First-Time Homebuyer Tax Credit, as townhomes are rapidly being scooped off the market. Scott County, too, is seeing a slight increase in inventory.

Our West Savage absorption rate has dropped to 8.11 months. This means that if zero new homes come on the market, it will take 8.11 months to sell the existing inventory. Fortunately, this number is falling, as we are seeing signs of returning to a more balanced market. Although we do not expect to see appreciation again for a number of years, signs of a balanced market on the horizon provide peace of mind for some. We hope these indications prove to be correct.

By Sara Huebener

It is amazing the number of questions we are getting these days about people wanting to know about housing swaps! It appears to be the latest craze in real estate ideas, and I suspect much of it is brought about by HGTV. I love the channel, though sometimes I think it adds confusion to the public regarding the reality of the industry. Have you seen "My House is Worth What"?

Housing swaps are essentially just what they appear to be. Two sellers "swap" houses via real estate transaction. Much of the craze does not take place with local properties, rather, properties in differing states are swapped. It is essentially a new form of bartering, a home-matchmaker type arrangement.

We have actually seen one housing swap transaction take place, and that was sometime in 2004 between a couple of friends here in the Twin Cities. In the real world, where these swaps are being coordinated online, buyers must be wary of what they are obtaining in the swap, because much of what is being relied on is done via photographs and online documents. A real sense of trust must be present. It is best to consult a real estate attorney and a realtor, make sure both parties are using the same title company, and that both transactions are closing at the same time (so one party does not get stuck with two mortgages). Also, be wary of liens.

This is one trend to watch. We suspect it will be more "noise" than reality. In the long run, I think it would be easier to find a buyer for a listed property, and have those sellers turn around and find a house they love, as opposed to trying to find a seller who has the house you want and also wants to buy your house. If that makes sense......

By Chad & Sara Huebener

It's March, and fortunately it is starting to feel like spring! The market is reflecting that as well.

West Savage inventory is virtually unchanged from last month. There were 8 new listings this month, compared to 7 last month, and there are currently 22 total listings, down from 23 last month. However, there is a significant change that is good news - pending sales in West Savage have tripled in the past month. An increase in showing activity, offers, and sales are a normal reflection of spring market. We expect to see this number continue to rise in the next few months as relocation clients moving to and from our area will begin to sell (and seek) homes in alignment with the school year.

Foreclosures and short sales continue to be a driving force in the pricing of current inventory. Lower-priced homes in these categories are flying off the market as first-time homebuyers and investors snatch them up, while higher-priced homes in these categories remain a bit more stagnant. This is because of something we liken to a domino effect. The sellers on the lower-priced properties are banks, and not homeowners looking to upgrade. Therefore, the transaction essentially "stops" once the purchase is made. In cases with a buyer and a traditional seller, a "new buyer" for the marketplace is created once the seller vacates the home and purchases another. In this scenario, the dominos continue to fall.....

Our current absorption rate for West Savage is 8.46 months. This means that if zero new homes come on the market, it will take 8.46 months to sell the existing inventory. Sellers must continue to remain agressive in their pricing and condition of the home if they expect to see an offer in a reasonable amount of time.