Housing Softening: MPLS Leads the Way in Price Cuts. (Eden Prairie: home, buying)

[golfgal]

Originally Posted by MN-Born-n-Raised

You have the right concept. How many points it takes to pay all of the fees will depend on how much higher a rate you have to take. For instance, let's say you have a $10,000 mortgage. The fixed costs like appraisals will eat up any benefit. For bigger mortgages (>$100K), the fixed costs are less of an issue and the variable costs make the total amount of points that you need to buy it UP smaller. So depending on the loan amount (>$250K for instance) it could be only a 1/2% difference with ZERO total fees.

So just because it is "free" doesn't mean you should forget about shopping for lower origination fees etc. The lower the fees, the less points you need to buy it UP and the lower the mortgage rate. Any credits that you can get by using the same title company etc all help. So when I was refinancing three times in one year, I could re-use the appraisal and got credits on the title insurance.

I'm not in this line of work but I'm a savvy numbers guy. DM me if you want an expert at Edina Realty / mortgage.

If you don't hit the ratio's, kick in the extra so that you can take advantage of the lower rate. At the end of the day your saving $$'s. There are also ways of making it happen without hitting the ratios. As I said, PM me if you want a name.

My brain was thinking buying DOWN points to lower your interest rate...

[tijlover]

Originally Posted by moving123456

Yes. Just because somebody else here pointed it out as a really great deal earlier this summer at $169,900 and I disagreed.

Living in Forclosure City, USA (Las Vegas) I've heard this tune too many times: really good deal! When the $200,000 townhouses, in my complex, started their slippery slide to, first, $150,000 (Neighbors were told: good time to buy!), then to $100,000 (This time: buy 2!), then to $50,000 (This time: buy 3, how can you lose!!!) and now seeing them go for auction at $25,000, what has this created!

Yup! Tier I, Tier II, Tier III, and even Tier IV foreclosures! I've been hearing we've reached bottom for 4 straight years here, good deals, good deals everywhere, all the way down the slide! IMO, we'll never get out of this foreclosure mess here!

Some of my sucker neighbors got sucked in at $100K and now they're in foreclosure!

How can anyone predict, in this unpredictable world and economy today, what's a screaming good deal!!!

[MN-Born-n-Raised]

Originally Posted by track2514

Lease option and rental rates are definitely part of the conversation because many people are currently buying real estate as an investment rather than to live in as their homestead. For the person buying a home for the purposes of renting it out, what has happened to the rental rates in the Twin Cities? My house went up because I bought a fixer upper in the right location and put alot of sweat labor into the place.

Lease options and rental rates were never part of the 20 page conversation. Nice try. The question was if the MPLS housing market was going to drop in price and it did. I was right and you were wrong.

Your house might of gone up (I have no way of verifying that). But you worked for free (a.k.a. sweat equity). While you were "sweating" for months or years, the overall value was dropping from June 2010. Furthermore, your specific home doesn't have anything to do with the conversation unless you bought it in July of 2010 and sold it in February of 2012 and picked up a gain without "fixing it up". As the linked article pointed out, MPLS values were on a slide (and it continued).

Originally Posted by track2514

we can both agree that similar to much of the U.S. many areas of the metro have experienced losses, however, much of this is due to an extension of the market correction and unrealistic sellers.

What does "unrealistic sellers" have to do with anything other than the total homes on the market that are not receiving offers? What do you mean by "the extension of the market correction"?

In the end, the only question that needs to be asked is how much value your neighborhood dropped from July 2010 until now. It could be more or less in Eagan versus Eden Prairie.. For that matter, a townhome in Eagan could of dropped more or less than a single family home on a golf course in Eagan. But the probability is they all dropped to a certain degree.

Going forward, I predict that a lot of the homes will be gobbled up this spring and the values will at least stabilize and some areas and price points will appreciate. The economy in MN is improving. It's not great but better than it was in 2010. While there are still risks of further corrections, I don't think people are seeing that in the next six months.

[TimtheGuy]

Originally Posted by golfgal

Our rate is at 5.675%. So, instead of taking the 3.75% or whatever it is today, we take 4.75%, for example, pay no closing costs, no out of pocket expenses to close the mortgage at all?---keep in mind that we might not appraise out at what our mortgage is today...

That is correct. We are doing lots of $0 closing cost refis. All the costs are paid by the lender. By accepting a higher interest the lender makes enough to cover the 3rd party costs (appraisal, title, county) and to make their profit. If you do a no closing cost refi and lower your interest rate you are basically 'ahead of the game' in month 1.

[Clifford63]

Originally Posted by tijlover

Some of my sucker neighbors got sucked in at $100K and now they're in foreclosure!

How many of them went to foreclosure by choice because they are upside down vs flat out not able to pay? This seems to be a big part of the issue. If they had 20% skin into the property, my guess in people would not be so quick to walk away. I was up in Hugo one day and stopped at one of the townhomes they are building up there and they are still able to finance with 3% down. That surprised me some.

[trackstar13]

"Through the first nine months of last year, investors bought more than 26 percent of single-family homes and condominiums sold in 167 U.S. markets, indicate data tracked by Burns. That's up from 21 percent in 2007."


"As with any real estate buy, good timing is key.
Jason Huerkamp, 35, a Coldwell Banker real estate agent in Minneapolis, got especially lucky.
He and his wife, Brooke, cashed out some stocks in 2006 to buy rentals in their former college town of Mankato, Minn. Nothing panned out, and home prices started what's turned into a five-year fall.
"That was dumb luck," Huerkamp says.
In 2009, the couple bought their first rental. "That was probably premature," he says, as home prices dropped further still.
Since then, the couple have bought four rental homes, plus a duplex. They paid $310,000 for the properties and spent $90,000 to fix them up.
Now, they take in about $7,100 a month in rent and clear about $2,700 after expenses, including financing costs."


News Headlines

[MN-Born-n-Raised]

Here is some of your advice from last year.

Originally Posted by track2514

According to Zillow (I know Zillow is not the best, but it is a decent tool) this house is currently worth somewhere between $200,000 and $283,000 and this is as of today. Also, as of today, the average price in this zip code is about $280,000. In 2000, which was either right before the bubble or right as the bubble was starting, this house was worth $169,000. Wow that is kind of interesting since that is the list price. Oh and I tried to search comparable sales from the past 3 months within a 1 mile radius and I had trouble even finding anything that was 3 bedrooms and 2 baths that sold for under $300,000. Here is the Zillow link:

5720 France Ave S, Edina, MN 55410 MLS# 3935437 - Zillow

So what have we learned from this one example? Even in Edina some houses are listed for pre-bubble prices and there are some great deals out there. I find it sad that some people can't see the investment potential of this real estate market. I am not saying we are going to be seeing real estate bubble prices anytime soon, but good luck trying to predict the bottom. Oh and in the meantime I will keep investing. Maybe I should buy this place and rent it out until the market turns. I couldn't live there of course since I don't like to eat cake very often.

As a final lesson of the early morning before I get some sleep, all of you waiting for housing prices to fall even more, you better hope there are no positive economic signs in the near future, because there are many sellers out there who are fed up and are just waiting for the tide to turn. The slightest sign of hope is going to give sellers a new life and after this long down period there will be an interesting market. Remember, this is of course coming from a guy who bought recently and has no intention of selling in the near future. If you buy at the right price, in the right location, and are willing to live in a house for longer than a few years, there is never a bad time to buy and I can't imagine a better time. Maybe one way to do this would be to use the above example and try to buy a house in the right area for a pre-2000 or bubble price. I am just trying to help and some of the real estate prognosticators on this board make me a little sick sometimes since I was one of the people who was priced out during the last uptick, simply because I took advice similar to theirs and waited.

Do you remember this advice from 2010??? As we learned, you would have bought it for $169K and it would have been worth $109K!!

[MN-Born-n-Raised]

See Minneapolis Real Estate – St. Paul Real Estate – 2012 Going to Be The Turn Around? : Minneapolis Real Estate, Minneapolis Homes For Sale, Minneapolis Home Values, Travis Erickson RE/MAX Realtor, MN and watch the video. While there still could be some further correction in specific areas and price points, I think Cari Linn (MPLS Association of Realtor) has a pretty good overview of what to expect in 2012.

Like many parts of the country, MN has seen a large drop in the supply of houses. I was closely watching the Phoenix housing market and bought in January of 2011. I predicted a turn around (and posted accordingly) and there was a turn around. I predicted MPLS to fall and Phoenix to rise and that's what happened. According to Case-Shiller, Phoenix was the only major market (as an aggregate) to turn around.

IMHO, a turn around will be the trend for many other markets including the Minneapolis metro area.

[golfgal]

Originally Posted by TimtheGuy

That is correct. We are doing lots of $0 closing cost refis. All the costs are paid by the lender. By accepting a higher interest the lender makes enough to cover the 3rd party costs (appraisal, title, county) and to make their profit. If you do a no closing cost refi and lower your interest rate you are basically 'ahead of the game' in month 1.

Tim--what is the typical rate you are doing the $0 closing cost loans at?

[MN-Born-n-Raised]

Originally Posted by golfgal

Tim--what is the typical rate you are doing the $0 closing cost loans at?

The zero closing cost rate will vary dramatically depending on the the loan amount and the loan duration.

Tim, if you could post several loan examples that would be helpful (both 15 and 30 year). Assume a LTV ratio were no PMI is needed and excellent credit.