Holmes Group Magazine - Issue 21

Riding out the Market Shift

Family, Friends, Clients & All

What a year this has been!! 2022 has marked many changes in the world of real estate and the change keeps coming. Thank you to all who have supported us through the years with your personal business, referrals, friendship and more. We’ll add some fun pics of this past year's Saints games and give some shout outs along the way.

Have a wonderful holiday season and Happy New Year. Cheers to 2023!

Joe Holmes

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HOLMES ON HOMES

Housing slump ahead?

I’m not sure where I heard this, but somebody once told me that the only thing consistent in life is change. Oh, the irony!! Nothing could be truer with the change that came in 2022. We started the year on the tail-end of an unhinged crazy market fueled by 3% interest rates and record-low inventory. We’re now going to end the year with 6% ++ interest rates and buyer demand pumping the brakes and the outlook ahead of a slumping real estate market.

In this edition of Holmes on Homes we’ll dive into the past year as a whole, talk about our current shift in the real estate market and make some predictions for the year ahead. So, kick back and put your feet up and enjoy this winter edition of your favorite real estate mag. Off we go!

Spring of ’22 was off to a start that we expected. We had 3,000 listings in the 7-county metro area and interest rates that started to tick upwards into the 4% range. Think about that for a moment.. 3,000 listings for the 7-county metro area. There are 3.1M people in the 7-county metro area and we had only 3,000 listings (new construction not included) for them to choose from. That’s an insane amount of imbalance in the market. Even with interest rates on the uptick, it was a great spring market that didn’t slow buyers down. Maybe it was the mad dash of buyer activity before it got worse… maybe it was the typical spring buzz.. either way, it was a busy spring market.

Rates hit 5% in April and although that’s a big difference, buyers were still buying. 5.626% in June.. buyer’s still buying. 6.5% in September.. buyer’s slowing down. 7% in November and the proverbial brakes have been slammed. As I type this (November 30th) rates were quoted to me yesterday

by none other than Thomas Jussila at 5.75% on a 30-year fixed. That, ladies and gentlemen, is a crazy ride at the cost of money and that ride isn’t over yet.

Along the way, we’ve seen a shift in the real estate market. This was a blessing for buyers and certainly caused some anxiety with sellers. Sellers were used to getting their way –offers in days to weeks, multiple offers, no inspections and so on. However, the shift in the market is in full swing and it’s a seriously GREAT TIME TO BUY A HOME! .. wait.. what was that? Great time to BUY a home?

The average days on market for an active listing to go pending is at 41 days. This is up from 32 days just a few weeks ago and 17 days in the height of the buying frenzy in the last 2 years. Simply put, it takes longer to sell a home today and on average takes 41 days to find your buyer. That is no doubt a shift in our market but don’t want to cause concern for all our sellers out there and please don’t go running to hit the panic button. Our pricing isn’t plummeting and we’re not heading to a real estate bust. This trend is a mix of typical MN seasonality (snow & holidays slowing down buyers) as well as buyer fatigue with rates & terms.

Take a look at graph 1 (inset on next page) of pending sales on average for the last 5 years – this is what increased rates + MN Seasonality look like!

As for our buyers out there – this is a short-lived window of opportunity to really crush it. Why is that? Because you can get the terms you want. You will most likely be the only offer (not always the case but most often), you can add inspections and actually negotiate the results, and of course you can get offers

What’s going on with this market and how to manage the chaos moving forward.

approved for less than list price – all while rates have snuck below 6% again. When buyer demand goes up again in the spring, you’ll certainly see more competition and you might see stiffer pricing as well. My advice if you’re out shopping –get it done before this little window of opportunity changes.

So is this shift going to continue? Will it turn into a full-on slump in the housing market? Those are the million-dollar questions we get asked all the time. Are we in for an ’08-like bust in real estate? While there is no doubt a flattening in pricing, this is in no way similar to 2008. That was a credit bust and today our shift is a supply vs. demand change. In order to see a downturn or “bust” in real estate pricing, we need two things to happen in correlation with each other. First you need demand to slow down considerably. Second, you need supply to increase considerably and they need to happen in relatively similar times. Let’s take a look at each.

Demand – yes, it’s slower now than it has been in years but there are pretty normal reasons for that. We’re experiencing MN seasonality at its finest and something we’re not used to… ah how soon we forget. The last couple of years of the buying frenzy ripped straight through MN seasonality and made it insignificant. You know.. the snow flies, holidays are here and not many people are out buying – that’s MN seasonality. Well, it’s back and pretty normal to see. Interest rates went up quite a bit over the year and made the cost of living harder to swallow. We were at 7% interest rates for a short period and that alone made the buyer demand slow considerably. While we’re back to 5.75% - we’re also smack dab in the middle of MN seasonality. Don’t stress the demand factors though as that will pick up quite a bit after the first of the year and gain the usual steam into a busy spring market.

Supply – this is the whammy on why we’re not going to see a bust in real estate pricing. Regardless of the ebbs and flows of demand, our supply isn’t going to rebound anytime soon. Right now as I type this (Dec. 1st) we currently have 6,053 listings in the 7-county metro area and down from 6,500 listings just 9 days ago. We peaked this year at about 7,000 listings which is crazy low compared to our 20-year average peak of about 17,000 listings. Stop and consider that again – normal annual peak is 17,000 listings. Last year’s peak – 7,000. And there you have it.. that simple fact alone is why pricing at worst will flatten or detract slightly. That will change based on the ebbs and flows of buyer demand –down right now as we noted above but will increase in the spring. It wouldn’t surprise me at all to see pricing actually go UP next year despite the last few years of appreciation.

GRAPH

1 GRAPH 2

35K Twin Cities Region

30K

651-379-1581 10K

www.holmesgroupmn.com 15K

Office: 20K

www.holmesgroupmn.com 25K

Office: Homes for Sale Twin Cities Region 1-2005 1-2006 1-2007 1-2008 1-2009 1-2010 1-2011 1-2012 1-2013 1-2014 1-2015 1-2016 1-2017 1-2018 1-2019 1-2020 1-2021 1-2022 5K

Take a look at graph two (inset above) on the available home for sale in our area for the last 17 years! We have a long way to go on our inventory rebound!

Again, to see pricing go down and to go down significantly to “bust-like” numbers, we need to DOUBLE the amount of inventory while cutting the buyer demand in half. Ladies and gentlemen – that’s why I don’t see a bust coming at all in our near future. However, that doesn’t mean that it’s not possible. You’ll have to read why that is on our continuation of this conversation - tune into pages 14 & 15 to find out more.

FEATURED BUILDER

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Their goal is to deliver a unique & personal approach to each build. Caitlin manages the design process and takes the customer from start to finish with layout & architectural choices to final selections. Nick is the Construction Manager for each build and is onsite for all homes making sure your vision comes to life.

Build styles can be described as Transitional Craftsman with an emphasis on traditional design elements with modern twists. Some of their showcase features include cedar accented porch ceilings, exposed beams & reclaimed wood, marble showers, shiplap or board & batten walls all while maintaining common sense function.

Floorplans are in hand and a walkthrough of former projects is encouraged to tailor any project to suit the customer’s needs. They currently have 2 lots available in Victor Gardens of Hugo with full basement or slabon-grade options and 1 lot is available in Mahtomedi with a lookout or full basement option. Home sizes vary and final pricing is generally $600,000 and up.

For more information on Prairie Homes or to tour their past projects, give us a call anytime!

prairiehomes-llc.com/ Custom builder located in Hugo

Savannah Model

Savannah Model Charleston Model

Fantastic townhome in the heart of Golden Valley. Enjoy amenities & updates inside and out. The inviting entry opens to your main floor living space with 9' ceilings, luxury vinyl floors, gourmet kitchen and more. Main floor highlights include tile surround gas fireplace with mantel, courtyard views, informal dining & breakfast bar perfect for entertaining, smart thermostat and freshly painted. Your gourmet kitchen features stainless appliances, undermount sink, breakfast bar, quartz tops and new addition of back bar with wine storage. The

upper level features a remodeled bathroom, loft, and an over-sized primary suite with courtyard views. The exterior is inviting with walkways and paths, generous landscaping and private patio. With heated underground parking & walking distances to bars, restaurants and shops, this home has it all. Don't miss this one!

Schedule a tour today before it’s gone!

Pumpkin Pie

So easy, kids can do it!

The Great Pumpkin Pie Recipe

Ingredients

Sugared Cranberries

1 cup Fresh Cranberries

2 cups granulated sugar

1 cup water

Pumpkin Pie

Homemade Pie Dough OR pre-made pie dough (the kids use the pre-made!)

Egg wash: 1 large beaten egg with 1 Tbsp Milk

1 (15) oz can pumpkin puree

3 large eggs

1 1/4 cups packed light or dark brown sugar

1 Tbsp cornstarch

1/2 tsp salt

1 1/2 tsps. Ground Cinnamon

1/2 tsp Ground Ginger

1/4 tsp Ground Nutmeg or freshly grated

1/8 tsp Ground Cloves

1/8 tsp freshly ground Black Pepper – oh yeah.. trust us!

1 cup heavy cream

1/4 cup milk

Scan the QR code to watch the boys make this recipe!

Instructions

Step 1: If garnishing with sugared cranberries, make those first: Place cranberries in a large bowl; set aside. In a medium saucepan, bring 1 cup of sugar and the water to a boil and whisk until the sugar has dissolved. Remove pan from the heat and allow to cool for 5 minutes. Pour sugar syrup over the cranberries and stir. Let the cranberries sit at room temperature or in the refrigerator for 6 hours or overnight (ideal). You’ll notice the sugar syrup is quite thick after this amount of time. Drain the cranberries from the syrup and pour 1 cup of sugar on top. Toss the cranberries, coating them all the way around. Pour the sugared cranberries on a parchment paper or silicone baking mat-lined baking sheet and let them dry for at least 2 hours at room temperature or in the refrigerator. You’ll have extra, but they’re great for eating or as garnish on other dishes. Cover tightly and store in the refrigerator for up to 3 days.

Step 2: Roll out the chilled pie crust: Remove 1 disc of pie dough from the refrigerator. On a lightly floured work surface, roll the dough out into a 12-inch circle. Make sure to turn the dough about a quarter turn after every few rolls. Carefully place the dough into a 9-inch deep dish pie dish. Tuck it in with your fingers, making sure it’s tightly pressed into the pie dish. Fold any dough overhang back into the dish to form a thick rim around the edges. Crimp the edges with a fork or flute the edges with your fingers. Brush edges lightly with egg wash mixture.

Step 3: Par-bake the crust: Line the pie crust with parchment paper. Crunching up the parchment paper is helpful so that you can easily shape it into the crust. Fill with pie weights or dried beans. (Note that you will need at least 2 standard sets of pie weights to fit.) Make sure the weights/beans are evenly distributed around the pie dish. Par-bake the crust for 10 minutes. Carefully remove the parchment paper/pie weights. Prick the bottom of the crust all over with a fork to create steam vents and return crust (without weights) to the oven for 7-8 more minutes or until the bottom is *just* starting to brown. If you’re garnishing with crust cut-outs.. cut out shapes with the crust and cook those off now.

Step 4: Make the pumpkin pie filling: Whisk the pumpkin, 3 eggs, and brown sugar together until combined. Add the cornstarch, salt, cinnamon, ginger, nutmeg, cloves, pepper, heavy cream, and milk. Vigorously whisk until everything is combined.

Step 5: Pour pumpkin pie filling into the warm crust. Only fill the crust about 3/4 of the way up. Bake the pie until the center is almost set, about 55-60 minutes give or take. A small part of the center will be wobbly – that’s ok. After 25 minutes of baking, be sure to cover the edges of the crust with aluminum foil or use

a pie crust shield to prevent the edges from getting too brown. Check for doneness at minute 50, and then 55, and then 60, etc.

Step 6: Once done, transfer the pie to a wire rack and allow to cool completely for at least 3 hours before garnishing and serving. Decorate with sugared cranberries and pie crust leaves. You’ll definitely have leftover cranberries… they’re tasty for snacking. Serve pie with whipped cream! Yeah baby!

Recipe: sallysbakingaddiction.com/the-great-pumpkin-pie-recipe/

Continuation of Holmes on Homes

No Crash Today...but what would it take?

What will it take to bust a real estate market? We already know this - a large supply with little demand. So let’s do a deeper dive on that and see if we can make some predictions on if or when that will happen. To queue up this story, we need to give some background on a few topics first and see if those worlds will collide.

THE RETURN OF NEW CONSTRUCTION

Ah yes...one of our culprits in the lack of current inventory is that builders stopped building after the ’08 bust. Through no fault of their own of course as it’s hard to build homes when you’re out of business. You know this storyline from our past articles but in short – it took

until 2019 to get to a normal/average amount of new construction starts. That was 10 straight years of below average inventory creation. While we’re at a normal level of construction starting today, we’re still well below the amount of homes needed. So it’s going to take some time but new construction is back and on track.

RECORD NUMBER OF SALES

So this is an overlooked detail in our housing inventory in years to come. Think for a moment about the normal trend of buying and how long people stay in that home. We generally start to see turnover on the early side around 4 to 5 years and on the long end 8 to 9 years. Not to say that anything is normal after covid

but generally speaking people don’t sell a home right after they buy it. There’s going to be some lag in the time it takes for that home to become available for sale again. Take that concept and let’s add another layer… a record number of people bought homes in ’20 and again in ’21. Take a peek at the chart of closed

high-density buildings, corporate America is coming after single family homes and they’re doing it quickly. Of course they are.. with rents as crazy high as they’ve been, it was only a matter of time before corporations wanted in. They can bundle 1,000 single family homes across the country and treat it the same as a 1,000-unit building. I’m sure you’ve read articles or listened to the news with a similar message and it’s no secret.. they’re out to replace the mom’s and pop’s investor. I read an article recently that BlackRock put a fund together for $1B (that’s B for billion) for residential home purchases. That’s a lot of money but they’re also the world’s largest asset manager with $10T (yes, trillion) under management. So what’s a couple billion in homes.. ah.. no biggie.

Not only did a record number of people buy homes but they did so with all-time low interest rates of 3% and sometimes even lower. I can’t imagine that this record number of ownership changes is going to culminate in listings anytime soon. With interest rates bouncing between 5% to 7% in the last 6 months and uncertainty in the cost of a purchase, it would make sense that people will want to stick around a bit. Of course, life circumstances, wants and needs will always dictate the need for a new home eventually. So it’ll take some time but those record numbers of buyers will eventually sell. Can you see the picture building here? New construction gets inventory back on track and building. You have a record number of buyers that will want to sell at some point in the next 5-10 years and wait, there’s more…

CORPORATE AMERICA

You’ve seen us chat occasionally on this topic and it’ll be interesting to see how this plays out for the long term. Corporate America is buying homes at an unbelievable and never-seen-before rate. Instead of buying and holding commercial real estate or large

So they’re coming for single family homes and they’re a huge part of single family ownership. My question is – what will happen when they’re done with residential real estate? What will happen if rents flatten or go down.. what will happen if it’s less profitable in the future? Do you think Corporate America will think twice about selling assets that are not profitable or less profitable than before? No, of course not. So it begs a simple question – what would happen if the largest home owner in the country wants to sell their homes? And we’re talking about tens of thousands of homes all across the country.

This is an x-factor that’s going unnoticed and not talked about – the future potential of one owner selling a massive amount of homes. Now we’re talking massive shift potential in the market!

So what happens if these worlds collide? Simply put – inventory would be back and more than ever! New construction can get us caught up eventually. Slowly but surely, that will happen. You have a record number of buyers in the last 2 years that will eventually want to sell. It’ll take 4-5 years but that will start to happen. And the x-factor of Corporate America – if they jump on board of selling instead of buying, which will happen at some point – it could lead to the largest shift in inventory ever and that’s something that demand will never be able to manage… no matter how low rates go.

Will that happen? To be determined of course if they’ll collide together but all 3 of those factors will happen independently. Let’s just hope not all at once!

BLUEPRINT FOR HOME

Design pros share ideas and inspiration for how homes in the Twin Cities are being reimagined, reshaped, and refreshed for the way we live today

Hindsight 2020: Two years ago, we reported on the expected impact COVID-19 would have on how Twin Citians might rethink their homes. Although we were just a few months into the pandemic, many of the themes that emerged were already afoot.

Flexible floorplans, study stations for the kids, work-from-home zones with Zoom-friendly backgrounds, and outdoor gathering spots were top of mind. Today, those ideas are still at play, alongside many of the same woes we had then, too—supply chain slowdowns, labor shortages. Those headlines unfortunately haven’t changed much either.

But what we did discover in putting together this year’s list and interviewing more than a dozen local home and design professionals, is the manifestations of the what-ifs. How some went from the dreaming to the doing, whether with a highly personalized kitchen, an expanded outdoor room, or having one or even two or more workfrom-home spaces.

“The biggest thing is people are realizing they want to stay where they’re at,” says James Julkowski, president of Housing First Minnesota, who cited home offices, workout rooms, and “just more free space” as examples of top remodeling projects. Here are a few of our favorites:

OUTDOOR OASIS

The initial pandemic push for improved outdoor spaces has continued to explode ever since, with even more creative and personalized features emerging. Pools still top wish lists locally, says Jim Sweeney, owner of Mom’s Design Build, but other “creature comfort” features are extending the outdoor season well beyond summer. “People aren’t necessarily looking for bigger homes,” Sweeney says. “They’re looking for something unique, something they don’t have. To connect outside in a more transformable space is super important.”

INNOVATIVE FRIDGE

SMART LIGHTING CONTROL

We’ve all been there, pressing unidentified buttons or mindlessly flipping switches hoping the right light turns on. An all-in-one keypad takes away that guessing with la bels—Welcome Home, Entertain, Pathway, All Off—and controls multiple lights and levels throughout the home, says Kristin Reinitz, co-owner of Admit One Home Systems. Bonus: The sleek design removes the old-school bank of light switches, or what Reinitz calls “wall clutter.”

Part of LG’s Signature Kitchen Suite, the 48" French door refrigerator (which won gold at the Kitchen and Bath Industry Show earlier this year) boasts precise food preservation.

Available at: All Inc. 185 Plato Blvd. W., St. Paul 651-227-6331 | allinc.com

"People aren’t necessarily looking for bigger homes. They’re looking for something unique, something they don’t have."

- Jim Sweeney

CURRENT LISTINGS

107 Belmont Road

Apple Valley, MN 55124

$375,000

The Holmes Group Keller Williams Premier Realty

4725 4th Street NE

Columbia Heights, MN 55421

$259,000

The Holmes Group Keller Williams Premier Realty

29207 Scenic Drive

Chisago City, MN 55013

$485,000

Dwight Zaudtke Keller Williams Premier Realty

Fantastic opportunity to own in a great Apple Valley neighborhood. Enjoy the open layout with tons of potential and heated outdoor pool and private backyard. The upper level features three bedrooms and primary bedroom with 3/4 bath. With both formal and informal dining, brick surround wood burning fireplaces and walkout to your large patio and backyard inground heated pool - this home is a must see. The backyard features a tiered patio, concrete apron pool surround, privacy fence, irrigation system and ready for your finishing touches. Conveniently located near parks& rec, schools and highway access. This price leaves tons of equity for you to make this home your own. Needs some cosmetic touches and your personal vision. Seller is open to all financing options and contract for deed terms with rates better than traditional lenders.

Fantastic three-bedroom home in great condition with amenities inside and out. This home features hardwood floors, a large dining room, freshly painted and new carpets, a rear patio and private backyard. The lower level is finished with a family room and office with room for more. Don’t miss the oversized two car garage and extra parking spaces. Conveniently located near parks and rec, shopping and easy access to Minneapolis and more.

A great location! Easy access to Hwy 8 - just 10 min. to Forest Lake and the Chisago Lakes area. Rural but close to everything. This onelevel walkout is filled with updates including newer appliances, maintenance-free deck with lighting, zone wifi irrigation, professional landscaping and a patio with custom pavers. Finished lower level walkout. Enjoy sitting on the covered front porch, Main level living with an open floor plan. Walking paths and parks within the neighborhood. Immaculate and ready for you to move into.

5320 45th Avenue S Minneapolis, MN 55417

$289,000

Fantastic one-story home in the heart of Minnehaha of South Minneapolis. This home features an open floor plan with three bedrooms on the main floor and one bedroom with private bathroom finished in the lower level. With gorgeous hardwood floors, stucco & brick exterior - this home brings old world charm. Very well maintained and ready for any buyer! The unfinished lower level is wide open for your finishing touches and instant equity. With a private fenced back yard, one-car garage and extra parking, this home is a must-see. Perfect location and conveniently located near Minnehaha Falls, bike trails, restaurants, shops & the VA.

8050 Golden Valley Road Golden Valley, MN 55427

$379,000

The Holmes Group

Keller Williams Premier Realty

CURRENT LISTINGS

8633 Indian Boulevard S Cottage Grove, MN 55016

$350,000

Debbie Wiome Keller Williams Premier Realty

Fantastic townhome in the heart of Golden Valley. Enjoy amenities & updates inside and out. The inviting entry opens to your main floor living space with 9’ ceilings, luxury vinyl floors, gourmet kitchen and more. Main floor highlights include tile surround gas fireplace with mantel, courtyard views, informal dining & breakfast bar perfect for entertaining, smart thermostat and freshly painted. Your gourmet kitchen features stainless appliances, undermount sink, breakfast bar, quartz tops and new addition of back bar with wine storage. The upper level features a remodeled bathroom, loft, and an over-sized primary suite with courtyard views. The exterior is inviting with walkways and paths, generous landscaping and private patio. With heated underground parking & walking distances to bars, restaurants and shops, this home has it all.

Welcome to this beautifully updated and meticulously maintained Cottage Grove home. You will love all the updates these 4 beds, 2 bath home has to offer including an updated eat-in kitchen with SS appliances, granite counters, mosaic tile backsplash, breakfast bar, SS hood vent, updated bathrooms with a large, oversized tub in the upper-level full bath, LL family room with a brick wood burning fireplace and wet bar. The spacious bedrooms give space for everyone and there is a bonus den space in the upper level for additional living space, playroom or perfect for an office. The 4-car tandem garage is perfect for storing all your extra toys! All this is nestled on a large lot with a fully fenced back yard, close to parks, walking and biking trails, schools, shopping and restaurants. This stunning property truly has everything you’re looking for.

The Holmes Group Keller Williams Premier Realty

Joe answers questions he received from clients. Feel free to submit your own question.

Email us: joeholmes@kw.com

What’s a rate buy-down?

That’s a great question! A rate buy-down is a fee that you can pay to obtain a lower interest rate. Sometimes rate buy-downs are simply part of the rate being quoted. We saw this recently with large rate hikes. At one point we saw quotes of a 30-year fixed at 6.5% with 1.5% in points. The “points”are the rate buy-down and the fee in that scenario is equal to 1.5% of the loan. So if your loan is $400,000 - the fee would be $6,000. In that scenario you’d have to pay $6,000 for the pleasure of your 6.5% interest rate.

Other times, buy-downs are optional. An example of this would be in same as above but 7% would cost $0. If you do the math on that, it’s best to take the rate buy-down as you’ll win over time. However, if rates are going to go down, you may want to hold off on that and just go with the higher payment in the short term.

&What is a good return on a real estate investment?

Fantastic question and will change depending on any particular investor’s needs. There are 4 streams of profit on any investment property. 1). Cash flow - typically the most prevalent and guarded. 2). Debt reduction - that’s right, you have a tenant paying down your mortgage. This is a nice addition to profitability but keep in mind you can only access this value if you sell or refinance - the debt reduction isn’t something you can go spend like cash flow. 3). Tax savings - yes indeed you get tax benefits with mortgage interest deductions, capital improvements and other odds and ends. A deep dive in this one will take an accountant. 4). Appreciation - another benefit that is substantial but you can’t access this value unless you refinance and pull cash out OR sell the property. Cash in pocket are cash flow & tax savings, while future gains are locked up in debt reduction or appreciation. So back to the question - what’s a good return? I don’t see many investors buying properties unless the annual cash on cash return is around 5%-10% of your down payment. We have seen that go down with rising interest rates and crazy high rental rates. But the goal isn’t to wait long until you hit the 10% cash on cash return range and I’m speaking here on residential properties. Commercial property is a bit different.

Have you ever played the game whack-a-mole at an arcade? Yeah.. it’s kind of like that. One issue pops up after another.. After another.. After another. We’ve had buyer’s back out of their offers (on our listing/not our buyer) because they simply didn’t like their payment - and that was 8 hours after their offer was accepted and signed. We had one listing with an offer from an investor that backed out - they didn’t realize their interest rate was in the 7% range. In general, the rates went up so fast that some people weren’t prepared. We saw the lack of preparation with buyers AND realtors. Other changes affect the offer negotiations. We see offers below list price, adding in inspections and being able to negotiate inspection results! How about that for a change in pace for the last couple of years!

What’s the market going to do in 2023?

Well isn’t that the million dollar question!? I don’t think interest rates in the mid 6’s and 7’s are here to stay. I think they’ll go down by mid 2023. I follow Barry Habib (mortgage guru) and his prediction is rates in the low 5’s and maybe below 5% by the end of ‘23. We’ll see. That seems hopeful but I do agree with the analysis that inflation has peaked this fall and that should start to go down. Recessions (if we do hit one) means a drop in interest rates as well.

Can a seller back out of a home sale before closing?

Yes, although very unusual to see this and have only had to manage that a couple of times in my career. Typically that doesn’t go well for a seller if they default prior to a closing. The buyer may be entitled to liquidated damages and in the end, the seller may be forced to sell. Liquidated damages could include housing, moving expenses, storage expenses and so on. If it’s a true default by the seller, it can get expensive for them and in the end, forced to sell. That’s why we don’t see that very often.

What’s on Joe’s Christmas list?

Ho Ho Ho! Merry Christmas.. What do I want for Christmas? A Red Ryder BB Gun of course. Did I just date myself there? Yeah.. that movie is old!

The age-old debate: is Die Hard a holiday movie?

Really? This is a real estate mag.. C’mon people! Ok.. I’ll dive in since it’s been asked. I have to err on the side of caution and say yes it is but I’m not a Die Hard aficionado. It takes place during christmas.. There are holiday songs throughout the movie.. And I believe Bruce Willis’ character is wearing a santa hat as he’s running around barefoot saving people. What could be more “holiday” than that? So, there you go.. It’s a holiday movie! It’s not my favorite holiday movie though. I think I’d have to save that spot for something Grinchy.. Not the Jim Carrey Grinch movie. I’m more into the old-school cartoon version. There I go again dating myself!

How have the rates impacted the market besides the obvious slow down of buyer activity?

CROSSWORD SUDOKU

Bread topping

Diarist Frank

Smaller amount

Behind the times (2 wds.)

Phonograph records

Tailed celestial body

Deck's kin