The Holmes Group Magazine - May

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MINNESOTA THE FUTURE OF REAL ESTATE? HOME PRICES IN MIDWEST ON THE RISE AS MILLENNIALS MOVE IN

HOLMES ON HOMES THE MARKET IS HOT BUT FOR HOW LONG?

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Holmes on Homes - Is the Market Hot? Our Featured Listing - North Oaks Home Home & Style - Craftsman Homes Millennials - Let’s Go to Minnesota Listings Q&A Crossword & Sudoku

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THE MARKET IS HOT BUT FOR HOW LONG? If you watch the news, get online or read the newspaper you’ve no doubt heard the real estate market is crazy hot. I’ve been asked many times over the recent months what that means and how long it will last. So we’ll dive into that and more in this edition of Holmes on Homes.

First thing’s first: what market are we talking about? Are we talking about a single-family home at $250,000 in White Bear Lake, a $1,000,000+ home in North Oaks, or a $300,000 condo in Minneapolis? Each one is in a different market and each has different market trends. If I were to make a blanket statement of the Twin Cities I’d say that the lower to mid-bracket pricing is certainly hot for single family homes & townhomes. This would mean that a first-time buyer price around the Twin Cities is moving fast as are price points a few steps above. This trend, however, stops towards the middle to higher priced brackets. Generally speaking, $500,000 and above is a bit slower and more of a normal market and when you get to $750,000+ it’s actually a buyer’s market!

Now don’t take that blanket statement for every neighborhood and city. $750,000 gets one heck of a house in Eagan, and would be a longer list time with leverage to the buyer, but $750,000 on Lake Minnetonka would be a steal and would sell very quickly with leverage to the seller.

Now that we’ve established the fact that all price points, neighborhoods & home styles have different markets; let’s look at what drives the price or how “HOT” it really is. This is based on a simple economic principle: supply vs. demand. What people are saying by a “hot market” is that there’s a large demand for a product in short supply.

At times, we’re selling homes before they even go on the market and the ones that do hit the market may have multiple offers within a few days. So, is there low inventory or do we have inflated demand similar to the debacle of 2007-’08?

Not to worry... we don’t have overinflated demand like we did 10 years ago. That mess was from inflated demand created by alternative lending products that allowed people to become home buyers that maybe shouldn’t have been buyers.

The issue today is a low supply or simply put fewer homes on the market. So why are people not listing their homes for sale in these markets that are so hot? There are far too many answers to that question to list. One of the contributing factors is that only some markets are now getting back to the pricing of the pre-crash years of ’06’08. There were a lot of buyers from those years that want more proceeds from a sale then what they’ll get.

When you couple that with inventory challenges and the fact it’s actually hard to be a buyer in some markets, some people are choosing not to sell and make that next move.

Don’t worry... market trends are not that stable. You could say that we’re always in a shifting market. When prices continue to increase and homeowners can reap larger proceeds, more homes will come on the market. Combine that with increasing interest rates that move buyers out of markets or lower demand, you have a balancing effect.

This is already happening but not quite to the point where it’s noticeable or affects us much. This will inevitably change!

The question is – how quickly? My advice is to watch interest rates and common sense pricing. If you find yourself saying “I can’t believe that house sold for that much”. You’re seeing the beginning of this shift. If you’re one of the many that’s waiting for peak market to sell your home, you may want to think about doing that sooner than later!

our

General Home Features

FEATURED HOME

Wirsbo heated floors Poured concrete foundation with spancrete floor – creates no load bearing interior walls In-Floor Zone heating w/ multiple thermostats – 1 for each room Rounded edge interior corners Security system New led lighting in main floor Anderson low-e high performance windows & doors Surround sound Speakers Exposed wooden beams 9’ - 20’ ceilings Tiled & hardwood/carpet floors 400 amp service High density spray foam insulation (3) air handlers (3) ac/heat pumps (3) air exchange systems Radon system Interior and exterior drain tile system Heavily waterproof foundation Well – new constant velocity pump Hot water recirculation loop

Welcome to 11 Mallard Rd in gorgeous North Oaks. This is a beautiful home customized to fit your every need. From a home-theater room off of the master suite, to a multi-level 9 car garage perfect for the car enthusiast. Enjoy the breathtaking grounds with family on the weekends, or relax quietly by the private pond with your favorite book. This home has it all!

List Price: $1,695,000

Living Room 20’ high large vaulted Ceilings with Exposed Wooden Beams & custom Lighting Built in entertainment center Rear views of pond, fire pit & extensive landscaping

Kitchen Walk-in pantry Birch cabinets & trim Wine fridge & wet bar Silestone countertops Custom backsplash Trash compactor Prep sink disposal Breakfast bar Stacked dishwasher Commercial grade appliances Double oven Sliding glass door to both decks Sun room with private western rear view of entire estate

Lower Level Tray ceilings with custom lighting Pool table and entertainment room with views of car showroom & rear landscaping Birch wooden trim & finishes Walk out to car showroom Hardwood floors 4 car garage & 2 car showroom Wirsbo heated floors Wet Bar with Fridge, Granite tops and Custom Lighting 600 – BottleWine Cellar

Lower-Level Garage/Showroom

Exterior Features Tranquil pond with custom landscaping Large fenced-in yard Private Walking paths Paved driving paths for lawn equipment Irrigation system Over-sized custom built-in shed/closets Pergola deck w/ garage access Cedar shake & stone exterior Wood burning fireplace off main floor deck & kitchen entrance Fire pit Extensive landscaping Custom fencing Copper gutters

Call us at 651-379-1581

4 car garage & 2 car showroom Wirsbo heated floors Woodshop dust collection unit with 3 floor ports & bench ports Epoxy floors 5 horse/220 volt air compressor with magnetic start Split ac 220 ac outlets TV mount Utility sink Powder coated garage door tracks Lift master openers Floor drains High density foam insulation Walk out entry to lower level of home Fire proof glass in car showroom 8’ garage doors

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HOME & STYLE Craftsman Homes

houses — uniquely American creations that began to appear around

1905

in

Southern

They charm us with an intimate scale

California and are considered

and intricate wooden details gently

modern

layered over stucco, shingles, stone

They’re a fusion of wooden Asian

and bricks. Their porches turn back

architectural details, the English

time while providing a gentle transition

Arts and Crafts movement and

between the outside world and cozy

an innovative California spirit.

spaces inside. These are Craftsman

eclectic

architecture.

revival, among revivals of many other types, Mastered by the Greene brothers, whose landmark Gamble House still stands as a masterpiece of the ideals that the Craftsman style promoted, the fashion translated to

blossomed in the late 20th century and continues today. The range of configurations probably contributes to the adaptability of this architecture to newer houses.

all scales of home building. These houses became extraordinarily popular throughout the U.S. during the first 30 years of the 20th century.

Pattern

books

and

periodicals

furthered the study of the architecture; even kits to build an entire house could be ordered and delivered to building sites.

Originals can be found in four primary roof shapes: front gabled, cross gabled, side gabled and hipped roof. The details of the porch posts and rails, rafter tails and eave brackets allow significant variation. Also, brick, stone, stucco and wood siding of many different types is used in this style, resulting

Other revivals — and midcentury modern architecture, including ranch — replaced the Craftsman style after the 1920s. Its own

in almost every example’s taking on its own unique identity.

LET’S GO TO

States in the Midwest will see a heavy increase of Millennials moving into their cities

MINNESOTA

While many young people have traditionally headed for the coasts after college, an increasing number of millennials are choosing to settle down and buy homes in the Midwest, Smoke said.

In particular, Realtor.com predicts millennials will settle in Madison, Wisconsin; Columbus, Ohio; Omaha, Nebraska; Des Moines, Iowa; and Minneapolis, Minnesota, Smoke said.

“I don’t think it’s so much about millennials moving to those cities. It’s more about millennials deciding to stay and deciding that this is where they want to buy a home,” Smoke said.

These markets are close to large universities, offer well-paying jobs and are generally more affordable for young homebuyers, he said.

Boston, New York City, San Francisco and Los Angeles may get most of the limelight, but millennials looking to buy their first homes may turn away from such cities.

Jonathan Smoke, chief economist at Realtor. com, predicted Generation Y​ ‘ers will turn toward the Midwest in 2017, as the region offers some of the most affordable cities on the market. In fact, Realtor.com asserted Midwestern cities such as Madison, Wisconsin; Omaha, Nebraska; Des Moines, Iowa; Columbus, Ohio and Minneapolis will take the cake when it comes to millennial homebuyers.

Why the Midwest?

Millennials are those aged 18 to 34, meaning

a significant portion of them are at the stage of their lives where they want to buy a home and settle down, taking advantage of moneysaving tips and financial opportunities to obtain a mortgage.

But why the Midwest? Smoke maintained the region offers financial flexibility.

“It’s easier for millennials to buy in more affordable markets like in the Midwest,” said Smoke. “We’re also seeing large numbers of millennials buying in Midwestern markets with or near big universities. So part of this is an effect of recent graduates with good jobs being able to settle down in these more affordable markets.”

Compared to NYC or LA, it doesn’t seem like Omaha would be too attractive to millennials, or at least not to those who have just flown the coop and renting in exciting, high-pace environments. Bostinno spoke with Ishay Brinberg, president of Rental Beast, who explained millennials are less likely to buy in Boston because the price range is out of their reach. In addition, many are still exploring professional opportunities.

The older half of millennials Although those in their early- to mid-20s are probably not ready to buy, people in their late 20s or early 30s are likely researching ways to finance their new homes. In fact, the majority of millennials (74 percent) said they’re saving for down payments, according to a survey from TD Bank. However, the survey didn’t specify how soon such individuals are looking

to purchase their first homes.

TD Bank’s study suggested an air of urgency among millennials. For example, one-third of respondents said they wanted to pay off their mortgages over a 15-year period. The three most important factors within this demographic is to save a down payment, pay off the debt and obtain a steady job.

Do Midwestern cities offer the environment millennial homebuyers are looking for? According to a study from Bloomberg, Des Moines is the most affordable city on the market. The news source found that a person needs to earn a minimum of $20,000 a year to own a home there, but the metropolitan area’s median household income is around $70,000. This suggests Des Moines offers the economic opportunity and housing affordability millennial, first-time homebuyers seek.

the U.S., and is second only to New York in terms of live theatre per capita.

With low rents, and mortgages compared to other major cities, the Twin Cities are extremely desireable to young people looking for a place to call home. Whether they are renting or buying now, they will be buying and selling homes at some point.

As this large generation ages, you can be sure to see it change the rate of home value increase.

The appeal of cities like New York, and Chicago are a densely populated urban setting with plenty of shops in walking distance, and a rich night life. Minneapolis/St Paul boasts this type of setting, but without the massive population, and incredibly high cost of living. As public transportation options grow, like the Light Rail, and Northstar Line that goes far out of the city, the suburbs will be very appealing to saving conscious millennials across the country.

As per Bloomberg’s study, the case is much the same in areas such as Kansas City, Minneapolis and Omaha. It’s possible the largest generation in the country may flock away from bi-coastal America.

Why Minnesota?

Median rent $774 Unemployment rate 5.10%

Minneapolis is the second largest economic center in the Midwest. It also boasts a fairly low unemployment rate and and low median rent.

Minneapolis has the third largest theatre market in

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11170 142nd St, Stillwater 5 bed / 2 bath Twin Home 3,900 Sq Ft, 3 car garage

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9400 Jareau Ave S, Cottage Grove 4 bed / 2 bath SIngle family home 1,860 Sq Ft, 3 car garage

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joeholmes@kw.com or visit us at:

4 bed / 3 bath Single family home 3,275 Sq Ft, 2 car garage

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1,500 Sq Ft, 3 car garage

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Q&

Joe answers questions

he received from clients. Feel free to submit your own questions. Tweet us @HolmesGroupMN

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How is the real estate market right now?

This is a loaded question and touched on it in our feature article. I wanted to address it again as it’s the # 1 question we get. To answer the question, we need to know in turn what market is in question. Examples would be: the condo market in St Paul or Mpls, multi-unit investment properties, luxury homes, entry-level/first time buyer properties, move up buyer

A or mid-bracket pricing. The list goes on and of course each city or suburb is different too. So the next time you ask a realtor, how’s the market.. You may get the response “what market are you in?”

What steps should I take to prepare my home for sale?

There are a lot of ways to answer this and I’ll hit the major points. #1 – know your finances. If you’re selling and buying, an accurate assessment of

the value and sales proceeds as it relates to your next home is a great starting point.

Ask yourself what the monthly payment is that you’d like for your purchase and work the equation backwards for today’s rates, your down payment, estimated taxes and insurance. #2 – remove objections from buyers before they even get there. We like to bring in a staging & design consultant as improving presentation is paramount. We also offer listing packages that include preinspections, home warranties, pre-paid HOA dues & more.

in some circumstances. Take for instance the appreciating market we’re in. We have multiple buyers on several listings that offer 5%, 10% and more above a list price. Although that shows what the market is willing to pay, it can differ from the appraised value. Word of caution – the highest offer isn’t always the best offer.

Remember we are always here to

What should I disclose to potential help in any way we can! buyers?

Joe Holmes 651-379-1581 In a nutshell.. everything within reason. There’s no need to disclose that Tanner peed on the tree in the backyard last summer (checking to see if you’re still reading!) but you should disclose anything that “may affect the buyer’s use and enjoyment of the home”. The seller disclosure forms will guide you through this.

It’s ok to disclose issues with a home – every home has them. What pairs well with that is also letting the buyer know what you did to fix the issue and if it’s occurred since.

What is the difference between appraisal and market value?

This is a great question! An appraisal is a valuation

from the perspective of a lender to validate a sales price and the funds the lender will issue.

This can be wildly different than market value

joeholmes@kw.com

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3555 Willow Lake Blvd. Ste. 100 Vadnais Heights, MN 55110

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41. Section for investors Across 1. Circle parts 5. Rib order 9. Accumulation of fluids 14. High time?

15. Club in a bag

44. Sports complex 45. Neither nuts nor crackers 46. Hit the road 47. ___ to go 49. Monk’s garb

16. What happens here stays here

51. Where beauty is, to the beholder

17. Request for a tailor?

52. Beginning on

20. Apotheoses

54. Type of male bird that hatches eggs

21. Light gas

56. Inventor’s cry

22. Look or must adjunct

59. Dinghy or dory

23. Heal, as a radius 25. Red figure 27. Director Howard 30. Wee workers 32. One usually found on the couch?

61. Buck feature 65. Cry to a DJ, perhaps 68. Villain’s expression 69. Ran like the wind

36. Crest

70. Droughtlike

38. Praise highly

71. Test type

40. One who exhorts

72. Chinese coin 73. Solidifies

Down 1. Prefix with knock

19. Complete circuit

2. Abbey or Tobacco

24. Some car roofs

3. Refined coal

26. Backbreaker, in a proverb

4. Pussyfoot

27. Clerk of the 4077th

5. Lambastes

28. Juilliard major

6. Works on a wall?

29. ‘’When pigs fly!’’

7. McCarthy aide

31. Poison ___

8. Prepare to use a prie-dieu

33. Concur

9. Levels

34. Diminutive

10. Place for thieves

35. Pontificate

11. Baker’s dozen?

37. City near Dayton

12. Check chaser

39. Enrico Caruso, for one

13. 1975 Wimbledon champ

42. Angela of TV and films

18. Human bone

43. City at the mouth of the Quinnipiac

48. Sticky stuff

60. Commandment word

50. Noted monologuist

62. Draw in

53. Comic Arbuckle

63. Give off

55. Topmost cervical vertebra

64. Cincinnati nine

56. Semicircular room

66. Princess’s annoyance

57. Attila’s army

67. Notable time

58. Iowa State’s home

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3555 Willow Lake Blvd Ste. 100 Vadnais Heights, MN 55110 651-379-1581 joeholmes@kw.com