February, 2010

 

 

 

 

Hello,

 

For over 30 years we have shared our real estate thoughts in our State of the Residential Real Estate Market letter. Every year is different with various factors affecting the value of residential real estate. As we enter 2010, we are faced with some unique issues. In this letter, I will point out some that may be of interest to you.

 

With the exception of upper bracket properties, we have a generally improving residential real estate market. Prices are stabilizing and improving for homes below $300,000. As prices rise, the market gets less and less stable with prices generally falling.

 

There were 52,000 homes sold in 2009 in our metro area, which was an increase of 18% over 2008. The number of homes listed for sale at the start of 2010 was about 19,000 which is a drop of 22% from one year ago. These factors lead to a more balanced market. We anticipated a “bottom up” recovery in the residential real estate market. Prices are stabilizing at the lower prices before the higher priced properties. It is a positive sign for the market that this recovery has already begun.

 

Along with attractive home prices, there are several factors currently motivating buyers. One is the historically low mortgage interest rates. As I write this, mortgage rates are less than 5%, with some adjustable rate products in the 3% range! A strong note here – these low rates will not last. The soaring deficit will absolutely result in higher mortgage rates. These low interest rates should continue to give buyers a sense of urgency over the next few months.

 

Another motivating factor is housing affordability. A gauge which we watch closely in our metro area is the Housing Affordability Index or HAI. This index takes into consideration three factors: home prices, mortgage interest rates and median family income. The HAI now stands at over 200. Between January of 2002 and January of 2009 it seldom exceeded 160.

 

In addition, the $6,500 “move up” tax credit and $8,000 first time homebuyer credit is available until the end of April for those who qualify.

 

In short, with lower home prices, historically low mortgage rates and tax incentives for certain buyers, homes have become more affordable. We see excellent buying opportunities for first time homebuyers and for people buying up. With more expensive properties declining in value and interest rates currently very attractive, some wonderful opportunities exist. 

 

As I enter my thirty-sixth year in this industry, never have I seen a time where competent, well trained and well supported residential real estate agents are more essential to consumers. This letter does not begin to explain the effect of factors such as property types, new construction vs. previously owned, location variations, price range dynamics, etc… For more specific information regarding this complex market, I urge you to contact your Roger Fazendin agent.

 

In 2010 we are celebrating our 45^th year of business. Andy Fazendin, our President, is the 3^rd generation of Fazendins involved in our family business. We are deeply grateful to all of you who have placed your trust in us and allowed us to represent you in selling and/or buying your homes. Thank you for your support and confidence.

 

All of us at Roger Fazendin REALTORS^®, Minnetonka Title and Minnetonka Mortgage wish you the very best throughout 2010 and would count it a privilege to be of service to you.

 

Sincerely,

 

 

 

Dan C. Fazendin

Owner/Broker