Twin Cities Residential Real Estate 2009

Or what happened to my equity?

The good news

• 38,730 Homes were sold in 2008• Home prices are up 30.5% since 2000• Mortgage interest rates are at a 50 year low

of 5%• Homes haven’t been this affordable since

2003• FHA loans have down payments as low as

3.5%

Not so good news

• The number of homes sold decreased 33.5% from the 2004 peak

• Average sale prices have decreased 13.1% from the 2005 peak

• Qualifying for a mortgage has gotten much tougher, especially for self employed people

• 31.7% of all 2008 sales were lender mediated versus a historical 2%

What went wrong?

• Easy Credit• Low or zero down• ARM and/or Buydown

loan programs• 2nd Mortgages of over

100% of appraised value

• Expectation that home prices only went up

Lender Mediated Sales

Short sales• Sale proceeds do not

cover existing mortgage(s) and selling expenses

• Seller must prove “hardship”

• Bank takes less and gives clear title

Foreclosures• Pre-foreclosure

– Prior to Sheriff’s sale

• Redemption period– Generally 6-12 months– May be owner

occupied– Tenants

• REO (bank owned)

All Real Estate is Local

• Minneapolis (North, Camden, Phillips) and Brooklyn Center all had 59%+ Lender Mediated sales

• Edina had 8%, Minneapolis-Southwest had 12%, St Paul Mac/Groveland had 7.8%

• Price per square foot: Mpls-North $40, Mpls-Central $246, Metro avg of $121

Market Recovery

• $8,000 Tax Credit for 1st time buyers

• Mortgage workouts to reduce foreclosures

• Cities buying blighted properties

• City Ordinances regarding vacant buildings

Homes for sale

Fun Facts

• Highest asking price– $53,500,000

• Highest Sold price in 2008– $4,500,000

• Number or $1M Sales– 360 in 2008

– 461 in 2007

– 473 in 2006

– 502 in 2005

Craig and Susan’s Results

• 261 Listings to date• 298 Sales to date• Average of 40

Transactions per year (national avg is 11)

• Sale Price to List Price of 98.1% Lifetime

What’s new in the Biz?

• Virtual Tours• YouTube Video• Social Networks

– Facebook/MySpace– Linked In/Plaxo– Twitter

• Blogging• Texting/Mobile Web