Chad & Sara Huebener

By Chad Huebener

Homeowners who have good credit and are thinking about upsizing have good reason to consider trading up in a down market, particularly if they have equity in their home. What we have in this current market is essentially the "perfect storm" for buying a larger home. Here is why:

1. There is more demand for what you are selling than what you are buying (i.e. more people are buying $200,000 homes than $400,000 homes). This means that right now, you won't have as much difficulty selling your home in this market compared to high-end sellers.

2. Lower interest rates put affordability at an all-time high. People with excellent credit scores are seeing 30-year fixed mortgage rates as low as 4-7/8% with no points.

3. Home values are back to 2002-2003 prices. Anyone who was saving for a home in 2002 or 2003 probably found that values were soaring faster than incomes, and faster than a savings account could be built for a downpayment. Now, those prices have returned, and with lower interest rates to boot. So now you can buy a larger home with less money than you could have even just a couple years ago.

4. Sellers are doing what it takes to sell. Sellers are using price reductions, rate buydowns, and offering other concessions such as paying off the buyer's remaining rental payments in order to get a home sold. These offers are more predominant with high-end sellers because they are finding smaller buyer pools for their properties.

5. What might be a lesser sale price than could have been obtained years ago is made up for, and surpassed, in the larger purchase. While starter homes have declined in value, they have not declined as much as mid-and upper-priced homes. So even if you need to sell your home for a break-even amount, you may still find yourself in an even better financial position seven years from now because you can acquire that larger home for far less money.

Here are the figures on why it is a good time to upsize when equity exists in the current home. Let's say that John and Susan bought a home in 2000 for $275,000. Their family also grew, and they are finding they need a larger home.

In the years 2004 and 2005, John and Susan's home was valued around $415,000. But they did not sell their home in 2004 or 2005. (If they had, they could have seen $146,000+ in appreciation.) Now, the home has returned to 2002 pricing, and is valued around $320,000. Although it is not what it might have been had they sold a few years ago, John and Susan still find that they have $45,000 in equity in the home. Essentially, they are down 22.8% from 2004/2005 pricing.

John and Susan want to buy a larger, custom home. The larger, custom home was built in 2005 for $800,000. In our market, larger homes have declined in value in larger percentages than smaller homes. Regardless, for the sake of being conservative, I will use the same numbers for declines in value. If the larger home is also down in value by 22.8%, we can expect it is listed around $617,600. John and Susan are essentially saving $182,400 off the original purchase price.

By making the larger purchase, they gain far more in value on the buy side than they lose on the selling side. They may be losing $101,000 in appreciation on the smaller home, but are gaining $182,400 on the larger home, for a $81,400 gain in value. Once our market fully recovers, John and Susan will realize this value.

Food for thought for those in need of a larger home...

Here is what Scott County says about how declines in property values impact property taxes. This is taken directly from the Scott County website. We also provide some information on how to appeal your property tax valuation below:

Chad

The news media, including: television, radio, newspapers, magazines, and the internet, report on the real estate market decline with stories on increases in foreclosures, fewer sales, and falling prices of housing.

What does this mean for the valuation of your property? County and city assessors are required, by Minnesota law, to value property at 100 percent of its market value. While this may seem like a moving target, the specific date of valuation is January 2 of each year, and market value is determined, in part, by reviewing sales during the year prior to January 2. The January 2, 2008, valuation is based on 2007 sales, and will affect the taxes you pay in 2009. This lag in time between valuation and taxes payable has been established by the State to allow adequate time for taxpayer appeals.

Will property valuations decrease for 2008? Not necessarily. If a property is found to be valued at just 80 percent of its market value, it should receive an increase in valuation. Again, State statute stipulates that properties are valued at 100 percent of their market value. The Department of Revenue is charged with enforcing this law, and has a general guideline of 90 percent to 105 percent of market value as acceptable. The Scott County Assessor's office follows the market as accurately as possible, and makes annual adjustments as the market indicates.

Keep in mind that not all areas are declining in value. The real estate market is very neighborhood-specific. Values in some neighborhoods, or for some types of property, may be falling while other areas may have stable or even slightly increasing values.

What effect does the increase in the number of foreclosures have on valuation? The Department of Revenue does not allow assessors to use foreclosure sales to determine market value (they are considered to be unqualified sales), however, a large number of foreclosures or "short" sales do impact the market. This impact should be reflected in the selling prices of other homes in the area, and those "arms-length" sales are used by assessors in analyzing market value trends.

The Notice of Valuation and Classification tells you the value and class of your property as of January 2, 2008. These will be used, along with the local tax levies, to calculate your taxes for 2009. Also listed are the dates of your Local Board of Appeal and Equalization Meeting, or Open Book Meeting, and the date of the Scott County Board of Appeal and Equalization Meeting. These are important dates if you want to appeal your valuation or classification.

What can you do if you think your property valuation is too high? Start by doing a little research. Why do you think the value is too high? Are there sales of similar properties in your area that indicate a lower value? If you believe your property value is too high or low, call the number listed on your notice. This will put you in contact with the Assessor for your area, who can explain how your property valuation was determined. The Assessor will suggest an appointment time to come out and review your property. Please note that if you refuse to allow the Assessor to inspect the interior and exterior of your property, you lose the right to appeal your property valuation. The Assessor's Office will work with you to find an acceptable time and date for an inspection.

If, after following these steps, you still think your property valuation is incorrect there is a three part formal appeal process. First, you can appear at your city or township Local Board of Appeal and Equalization or Open Book Meeting. The date of this meeting is listed on your valuation notice. Alternatively, you may also send a designated representative to the meeting, or send a letter prior to the meeting.

Second, you may appear at the County Board of Appeal and Equalization. This date is also listed on your notice. Please note that you cannot appear at the County Board meeting unless you have first attended the Local Board of Appeal meeting, if your city or town has one.

Third, you may appeal to the Minnesota Tax Court, either the small claims division or regular division.

For more information, see www.taxcourt.state.mn.us, or contact Minnesota Tax Court, Minnesota Judicial Center, Suite 245, 25 Rev. Dr. Martin Luther King, Jr. Blvd. St. Paul, Minnesota 55155; or by telephone, 651-296-2806 (voice); 1-800-627-3529 (TDD users ask for 651-296-2806).

Questions may be sent to info@taxcourt.state.mn.us . All claims must be filed on or before April 30 of the year the tax becomes payable. You may also chose to appeal directly to the Tax Court, without attending local and County board meetings.

By Sara Huebener

Spring market is upon us! Market activity has picked up to prove it. Showings are picking up and inventory is beginning to increase. First-time homebuyers and those who are upsizing have some of the best opportunities we have seen in years. And then there are some who, if selling, simply cannot recoup what they paid for the home and/or owe on the mortgage. So now what? As simple as this sounds, I say - Enjoy your house!

I have always been one of those people who are always looking for something new and better, though I rarely take the plunge unless necessary. Housing is no exception. I've been asked many times if being in this industry makes me want to move all the time. Yes and no. Personally I like the idea that a new house equals many new projects I can putz with. I could work on various house/garage/garden projects from sunup until sundown if time allowed. I often joke with Chad that we need to move because I have simply run out of places to create new perennial gardens.

In reality, I love where we live. I think it is fair to say that most people can find something about their house they would have done differently. And a new house will never solve that problem completely. So, if you find you are in a position where you need to "stay put", well....ENJOY your house!

We are in the same shoes as most other people who bought or built homes in 2004 and 2005, and expect it will be a number of years before we can sell (if we ever wanted to). So for now, we are enjoying the wonderful things our home has to offer, and making it better wherever possible.

We have seen too many people add upgrades to their home at the time they are putting it on the market, because they need to do so in order to make it show better. My philosophy is to add upgrades while you are living in the home so you can enjoy them. Put in hardwood floors, tile or new carpet, upgrade your countertops, or finish the basement. My favorite picks for inexpensive updates are paint, a kitchen backsplash, and tiled bathrooms. No matter what you choose to do....LOVE where you live!

Hi everyone,

This really sums up what we are seeing in our housing market today...If you have a couple minutes, we think it is worth a look. It is published by the MPLS Assn of Realtors and was a nice summation of our current housing market.

Click here.

Then scroll down to the article called The Best of Times - The Worst of Times - "The Skinny".....

Thanks for checking our blog!

Chad & Sara

By Chad Huebener

The opening date for Spring Market is February 1, and we are seeing the market come to life in Scott County and Savage as a whole. We are beginnign to see heavier showing/open house activity as buyers begin searching for homes.

In our West Savage community, inventory is virtually unchanged from last month. There has been no increase in the percentage of new listings in the last 45 days compared to January 2009. Total listings in West Savage are down by 4%, which is good for sellers because it equates to less competition. Pending sales have also remained unchanged since January 2009, and total sales (closed listings) have declined as the pre-holiday sales finally closed on paper. In West Savage in recent months, we are seeing an average of two homes sell each month. The question potential sellers must ask themselves is: Will my home one of the TOP TWO choices for buyers in terms of price, location and condition?

Scott County and the City of Savage (as a whole), on the other hand, are seeing patterns common to spring market. Inventory of single family homes in Savage is up 5% since last month, and single family inventory in Scott County is up 2%. As predicted, last month's declines in housing inventory did not last long.

Our current absorption rate for West Savage is 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.

We look forward to tracking West Savage inventory as spring market heats up. Keep watching our site for updates!

More info can be found on our blog at http://www.WestSavageBlog.com

Chad