HOLMES GROUP MAGAZINE
ISSUE 15
IS THE HOUSING INVENTORY DRYING UP? We go over the changing housing market and predict what will happen with the inventory over the next year
HOLMES ON HOMES Joe discusses the housing inventory lull in theTwin Cities
TH S SSUE 3-4 5-8 9-10 11-12 13-14 15-16 17
Holmes on Homes - Disappearing Inventory? Featured Home - Beautiful home in Cottage Grove Is the housing inventory nation-wide drying up? Home and Style - French Country Style Homes Current Listings Q&A Crossword & Sudoku
DISAPPEARING INVENTORY?
HOMES
HOLMES
ON
Well here we are again talking about the low listing inventory in the Twin Cities. As you know, there’s a shortage of homes available for sale in our Twin Cities MLS. To put the current number in perspective, we’ll have to look at the last several years. Our peak listing count generally happens in June with the bottom being in January. As you could imagine, there’s some seasonality to Minnesota home sales. In June of 2014, there were 17,533 homes for sale in our Twin Cities MLS. This is adjusted with new construction taken OUT of the mix as I only want to compare existing construction. Since then, we’ve had a 6-year run of declining
inventory and in May of this year we had 7,570 listings for sale. I know I know.. but what about Covid? Although our battle with Covid hasn’t helped the inventory shortage, we’re still experiencing extremely low inventory. Even if we had 20% more inventory – that still puts us well below 10,000 listings. To put that into perspective, the highest list count ever recorded was in 2007 with over 31,000 homes for sale in the month of July. Let that sink in for a minute. So why is this happening? Will it continue and what does this mean for real estate in the Twin Cities. Why this is happening is still tough to determine. There are a lot of factors in play and some that quite frankly aren’t going to change. Take for example the price of a home and available rates. In 2012 we had the bottom of pricing after our 2008 debacle. Couple those great prices with rates at 3.5% and it upended the home buying cycle. People that bought in 2012-’14 are hard pressed to find a deal like they had then and are more comfortable sticking with what they have. And how can you blame them? With home prices as high as they are – it’s easy to stick with a payment based on home prices from 6-7 years ago! As for rates, I don’t expect to see a rate over 4% for a long time. There’s talk of rates going even lower in the year ahead. Will it continue? Yes – there’s no doubt the inventory shortage will continue. I thought like most people we’d see a correction by now or at least the start of one. What’s becoming more clear is that the only thing consistent in our world of real estate is change. The typical home buying/selling cycle has changed. Views of home ownership have changed as well. Millennials are certainly a piece of that with a slower adaptation to home ownership. It could be that they face a more competitive job market or simply content in the lack of committing to a home but either way – it’s a change. What does this mean for real estate in the Twin Cities? It most certainly means a continuation
in unusual levels of appreciation. I’ll preface that with a reminder that it’s market specific – you can’t compare a $300,000 home in White Bear Lake to a $1M home in Edina. A few weeks ago we listed a home in White Bear Lake for $359,000 and sold it for $376,000 (closed today June 22nd actually). If we would have listed it in January or February, it would have most likely been listed around $330,000. That jump in value was based solely on the additional shortage of listings due to Covid. New construction has also benefited from the low inventory of existing homes. Of course it has – when there aren’t enough existing homes for sale, new construction takes their place. The amount of new construction in the Twin Cities has doubled since 2012.. DOUBLED! Unfortunately, the cost of new construction is on the rise as well with lumber and labor prices skyrocketing. At some point, we’ll see a balance again but it’s far more difficult to predict the current ebbs and flows. It will no doubt take some time and a bit more confidence from sellers with our current pandemic issues as well. One thing is for certain – it’s a great time to sell a home!
CALL ME TODAY! 651-491-2151
OLMES ROUP Real Estate Solutions
DESTROYING THE
COMPETITION
11433 Kingsborough Trail Cottage Grove, MN 55116 Endless amenities and detail with soaring views of the Mississippi River and Golf Course. Over 5,000 sq ft with 6 car upper and lower garage on1.5 acres – new construction doesn’t compare. Barrel-vaulted entry leads to exquisite main floor with all living facilities. Enjoy endless details inside and out with open living spaces, 13’ tray ceilings, highest quality finishes, fun spaces for entertaining and more. Private rear golf course views, extensive patios and landscaping, deck with pergola, heated garages – the details are endless. Please see supplements for a full list of Home Highlights and don’t miss this opportunity!
5,112 Sq Ft
$849,000
Golf Course Living - located on the 2nd Fairway of the River Oaks Golf Course in ‘rural’ Cottage Grove Minnesota. This is the prime lot on the golf course!
The layout allows plenty of space to be utilized no matter what your needs are.
The kitchen boasts gorgeous counter-tops, with walkout directly to porch. If you enjoy cooking at home, this kitchen is perfect with you, and great for spending time with your family and friends!
‘Next Gen’ Quarters - private bedroom / bathroom ‘lock-off’ with private access and garage for a nanny or personal caregiver.
Home Theater - integrated into the whole house A/V system.
Wet Bar - entertain with the cherry wood & granite, fully functional bar, complete with all kitchen utilities, to include: dishwasher, garbage disposal, refrigerator, freezer with ice maker and electric cooktop. ‘Smart Home’/ Security System - web accessible access to security cameras (4), system records ‘motion’ – integrated with a whole house A/V system, includes speakers and controls in: each main floor room, both upper and lower garages, and 3 outside porches.
Wine Cellar - stone façade walls with modular bottle storage and setup for wine refrigerators.
Call us at 651-379-1581
OLMES ROUP Real Estate Solutions
is the inventory
DRYING UP?
A LOOK AT WHAT IS HAPPENING WITH THE HOUSING MARKET AND WHAT WE CAN EXPECT TO HAPPEN WITH THE INVENTORY IN THE COMING YEAR
BY JOE HOLMES A lot has changed in the country the last few months, and a lot more will change in the coming months. Real Estate has seen some major changes in the ways we buy and sell homes. A worldwide pandemic has altered our way of life immensely, on top of a housing market that already saw dramatically low numbers in inventory across the country. But first let’s talk about the 5 factors that drive the housing market:
DEMOGRAPHICS This is a long term factor and is not altered by Covid, or mass protests or any “temporary” factors. This has more to do with age groups. There are two large age groups in this country: Baby Boomers and Millennials. Baby Boomers own roughly 53% of all homes in the USA. Also they own the largest houses they have ever owned in their lives on average. This is significant because as they reach the point where they will be selling these large homes (we will get into why a little later in this article) we need someone to buy them. Generation X, a much smaller demographic than Boomers or Millennials do not make up enough
of the population to swoop in and buy up the giant homes Boomers will be selling. Millennials are the 2nd largest group, and in the next 10 years or so will be the largest group, are not nearly as excited about buying homes as Boomers and GenXers were at a young age. This is due to a massive amount of debt in student loans, along with the other factors we will be discussing. Suffice it to say: they are not in a great position to buy large homes that Baby Boomers will be selling.
INTEREST RATES These are at a record low, as low as UNDER 3%. This is historically unheard of. This and other incentives add to a massive debt bubble that has been growing over the last 10 years.
ECONOMIC HEALTH The stock market is currently being driven by the Federal Reserve, and not by the market. This is not the signs of a healthy economy. They are injecting over 100 billion dollars a day in printed money which is adding to the debt. This is what is propping up the stock market, and is not a true reflection of what is happening in our economy. What is reflective is whether or not people have jobs. The official unemployment is over 40 million people. This is not to mention underemployed people. Currently nearly 10% of all mortgages are in forbearance with another 10% making partial or no payments.
Businesses are being shut down temporarily, and some permanently. The Wall Street Journal anticipated that about 42% of all jobs lost will never return.
CONSUMER CONFIDENCE This tackles how people feel about spending money and taking on debt. Well the state of economic health is an indicator that it is probably not going to be extremely high, and it is not. 70% of our GDP (Gross Domestic Product) is consumer spending which has decreased immensely since the pandemic began and will continue as jobs are lost and debt rises. A home is a massive debt to undertake.
GOVERNMENT INCENTIVES The government offers tax deductions when you buy a home. You can write off a large chunk of your interest for instance. This is a huge incentive for people to buy homes, and this is not likely to change or be affected by Covid. Now that we have discussed the 5 factors that drive the housing market we can look ahead at what MIGHT happen. Right now we have a massive demand for houses and the last few years a shrinking inventory that is now quite low. We have seen sellers adjusting to the fear of the pandemic with virtual tours to show their homes. But it remains a hot market for sellers in many areas. Our fall and winter market is right around the corner and we expect the inventory to be somewhat steady through that time period. We normally see Minnesota seasonality dip our listing numbers a bit but with a spring market marred by covid and protests, there’ll be some push to get those homes listed and sold that we would have normally listed this spring. Keep in mind we also have a presidential election coming up and sure to be an interesting one! The 2020 election will have far less impact on real estate than in past years. I think there’s plenty of consumer fatigue
over what’s already happened this year for people to be too concerned with who’s in the White House next year. About 10% of homeowners are in a 6 month forbearance of their mortgages and TBD on how that will recover. There could be foreclosure coming at the end of that or possibly another forbearance period. This could ultimately mean inventory that comes to the market in 2021 or maybe there’ll be additional loan forgiveness programs or otherwise. No matter what they do to adjust for that – a recovery on mortgage forgiveness can only be corrected by employment. Minnesota’s unemployment rate is at 8.1% and better than most states but this is still something to watch. As for an aging boomer generation – they certainly are a group to watch. As baby boomers sell and move to smaller more convenient living spaces, we’ll see this inventory on the rise in years to come. It won’t turn on like a switch but that inventory is there. We see a large number of detached villas and other one story new construction projects all over the Twin Cities. As that continues, we’ll see the current inventory this older generation owns becoming available. It’s best to have the market chase you – not you chasing the market. With the limited amount of listing inventory through our Twin Cities in all price ranges – now is certainly a good time to sell. HAVE QUESTIONS? GIVE US A CALL!
JOE HOLMES 651-491-2151
HOME & STYLE FRENCH COUNTRY HOMES If there’s one design style that can “take you there,” it’s definitely French country design. Whether you’re in the middle of New York City or somewhere in the midwest, if you walk into a classically French country room, you’ll immediately feel like you’re somewhere deep in the heart of Provence. But even though the design feels effortless (as do all things French), it actually follows a formula to achieve that perfectly imperfect aesthetic. So what do you need to turn your place into a French country dream worthy of Pinterest boards everywhere?
Here’s everything you need to know. It comes as literally no surprise that French country design is inspired by the actual French countryside, specifically Provence. French decor in and of itself can be extremely ornate, elegant, and often over-the-top, but Provencal homes incorporate traditional elements in a way that’s far more relaxed, distressed, and subdued. “The core essence is a refined elegance that is humbled by bringing in aspects of nature such as
weathered and white washed wood, and neutral color palettes,” says lead designer of ASR Design Studio, Ariel Richardson. While if you head to Paris or the castle region, you’ll be inclined to find interiors with far more flourishes in the form of ornate gilding, paneling, and molding, country decor is by far more rustic—but not wholly so. The classic French elegance is merged with a rustic, country aesthetic, creating a balance between beauty and comfort. It feels lived-in and welcoming, but still impeccable. “It’s also playful with its touches of botanical themes in art, fabric, wallpaper, and accessories,” Richardson says. As in traditional rustic design, natural materials are it for French country. You’ll find exposed wood-beamed ceilings for days, natural stone or wood planked floors, and likely a stone fireplace. Materials, whether wood or stone, will often have a weathered appearance. Nothing is perfectly polished, but rather, finishes feature subtle distressing for a lived-in feel.
Single Family Homes
11433 Kingsborough Trail Cottage Grove, MN 55016 Endless amenities and detail with soaring views of the Mississippi River and Golf Course. Over 5,000 sq ft with 6 car upper and lower garage on1.5 acres – new construction doesn’t compare. Barrel-vaulted entry leads to exquisite main floor with all living facilities. Enjoy endless details inside and out with open living spaces, 13’ tray ceilings, highest quality finishes, fun spaces for entertaining and more. Private rear golf course views, extensive patios and landscaping, deck with pergola, heated garages – the details are endless. Please see supplements for a full list of Home Highlights and don’t miss this opportunity!
2347 Dorothy Avenue White Bear Lake, MN 55110
$849,000
Welcome Home! This stunning renovation sits in a quiet neighborhood and boasts amazing details both inside and out. Enjoy the open floor plan with mudroom off the garage entry, soaring vaulted family room & timeless design. The kitchen features granite tops, stainless appliances, custom lighting, breakfast bar peninsula and adjoins the main floor family room & walk out to your rear patio. Endless details including hardwood floors, custom woodwork, custom lighting & plumbing fixtures, built-ins, wood & gas fireplaces, paneled doors, private rear patios, generous landscaping and more.
$349,900 5315 Elliot Ave South Minneapolis, MN 55417 Stunning new construction just blocks from Lake Nokomis and Minnehaha Creek. This 2-story craftsman blends modern day amenities with old world charm. Enjoy the open floor plan with 9’ ceilings & custom finishes throughout. The gourmet kitchen features granite tops, center island with utility sink, custom cabinets & lighting, top-end appliances & walk-in pantry. The lower level features a custom wet-bar, entertainment area and in-floor heat. This home is truly a must see and will impress!
$764,000 1750 Pioneer Trail White Bear Lake, MN 55110 A beautiful split entry in gorgeous White Bear Lake!. Turn-key and ready for any buyer. Open floor plan, generous landscaping, private rear views and patios. Great house with 2,400 square feet of space. Do not miss this one!
$285,000 Joe Holmes joeholmes@kw.com www.holmesgroupmn.com Office: 651.379.1581 | Cell: 651.491.2151
Bob Adamson radamson@kw.com www.holmesgroupmn.com Office: 651.209.9856 | Cell: 651.387.6262
742 Lake Ridge Drive Woodbury, MN 55129 Lovely 4 bedroom, 2 story home with all bedrooms on one level. Spacious master bedroom, large eat-in kitchen and formal and informal dining spaces, open concept main floor with gas fireplace and unfished basement waiting for your finishes. Enjoy summertime on the deck or around the beautiful firepit. This home won’t last long!
$389,000
COMING SOON!
11660 Irish Ave North Stillwater, MN 55082 Over 6,000 square feet of luxury home living. Enjoy the lower level bar and theater room, walk out to private back yard, private gazebo on your own island. Yes.. your own island! Additional detached garage for all the extra toys and tools. Fantastic use of space, open concepts, detailed finishes and more. This is a must see!
$1,650,000
COMING SOON!
1443 Cutters Lane Eagan, MN 55122
Wonderful split entry in the quiet tree-lined streets of Cutters Ridge in Eagan. Enjoy an open floor plan, vaulted ceilings, over-sized bedrooms, tons of storage and more. This home is very well maintained and features an eat-in kitchen with center island, informal dining that walks out to your deck and private rear views, lower level family room with brick surround fireplace, generous landscaping and more. Roof, windows & mechanicals are all in great condition and relatively new. Conveniently located near Eagan’s shopping district & has proximity to parks & trails – this home has it all. Don’t miss this one!
$359,000 5620 Pillsbury Ave S Minneapolis, MN 55419
Gorgeous renovation in the charming Windom neighborhood! Gourmet kitchen includes Wolf range and hood, granite counter tops, pantry built-ins, and cork floors. The original farmhouse in the area, this home is an urban farmer’s dream, with cherries, golden raspberries, currents, blackberries, rhubarb and more, ample gardening space, custom chicken coop (easily converted to shed) and still plenty of open yard to play. Two fully renovated bathrooms with stylish finishes. Lower level mixes rustic and industrial with barn doors, exposed beams and modern lighting.
$409,000 Heather Pederson hlpederson@kw.com www.heatherpederson.com Office: 651.379.6315 | Cell: 612.964.2524
Jay Mangine jaymangine@kw.com http://jaymangine.kw.com Office: 651.379.6362 | Cell: 612.865.0400
Q&
Joe answers questions
he received from clients. Feel free to submit your own questions. Tweet us @HolmesGroupMN or email at joeholmes@kw.com
How can I show my home during the pandemic and keep my family safe? We’ve implemented safety guidelines for our current health crisis including requiring buyers to wear masks and use hand sanitizer. We’ve restricted any overlap in showings so only 1 party at a time. Showings are for
A buyers that are ready to buy.. not just shopping and only meant for the decision makers meaning leave the kids at home! Additionally we can use 3D tours, live stream showings and open houses as well.
What about Open Houses during the pandemic?
My friend told me no one wants to buy a home right now, is that true?
They’re back on and we encourage them if it fits into the seller’s schedule! Our state association of realtors announced that we’re approved for open houses. We practice general safety guidelines by having only 1-2 buyers through at any given time. We stage one person at the front door to ensure this and bring the appropriate safety gear. We can also live stream an “open house” in the event a seller doesn’t want the traffic.
Did you ever read Batman comics or see recent Batman memes? I picture Batman smacking Robin .. one bubble for “SMACK” and the other “Robin – don’t get your news from Facebook”
Can I get the value of my home from an online site? Sure.. but you know how I feel about Zillow. They suck. Just call me and we’ll put together a market analysis for you!
Should I do anything extra to prepare my home for sale? Staging Staging Staging! I can’t express this enough. It’s FREE. It only takes your time and effort. For occupied homes with furniture, we bring in our interior designer for you to spend time with. You’ll go room to room and get up to date design ideas for placement & removal of furniture, how countertops & kitchens should look, bathroom presentation and so on. The time and prep for this could literally make you tens of thousands extra in a sale price. This is not an exaggeration.. this is simply the way it is. Presentation is HUGE!
OLMES ROUP Real Estate Solutions
Call Us Today! 651-379-1581
C D
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Across
39. Chewable leaf
1. “___ fan tutte”
43. Words between man and mouse
5. Word with paper or plastic
45. Black and white predator
9. Thousand
47. Argentine article
14. Tom-tom
48. Peppy
15. Inter tag
51. Cheap confection
16. Scamp
54. Letters for a nondiscriminating hirer
17. Macedonian’s neighbor
55. “___ matter of fact ...”
18. Mawkish sentiment
56. Removes impurities from
19. Dodge
57. Short-distance racers
20. Gridiron formation
61. Big name at Daytona
23. Sanford of “The Jeffersons”
62. Drove recklessly
25. Life imitator
63. Palindromic emperor
26. Moines or Plaines opener
66. Some bacteria
27. Melodramatic publications
67. Egyptian wader
30. Dramatis personae
68. Free from fat
31. Night before
69. Singer Lotte
32. Men-only
70. Deities
33. ___ de cologne
71. Rice or Archer
35. Billiards stroke 37. Size abbr.
Down
21. Ceremonial burner
1. Audiophile’s amassment
22. Irish Gaelic
2. Comstock output
23. Same as before, in footnotes
3. Smith and Jones, e.g.
24. Part of the Hindu trinity
4. Tipple
28. Kilmer of “Batman Forever”
5. Place to make a scene, perhaps
29. Provoke
6. Moisturizing ingredient
30. Kind of card or stick
7. Cover follower
34. Ancestor of the adding machine
8. Beach shoe
36. Sauce for chop suey
9. Politician’s crime
38. Sea cliff dweller
10. Emulate nomads 11. It may be hidden 12. Helps back to health 13. Dislike intensely
40. Atomic number 74 41. “The Neverending Story” author Michael 42. Is a productive hen
44. Vaulted cathedral area
53. Part of the iris
46. Louisiana’s state tree
55. Indoor-outdoor rooms
48. “Rocky II” or “Rocky III”
58. Depend (on)
49. Leap like a leopard
59. One of Skelton’s personas
50. Left brain’s forte, supposedly
60. “Metamorphoses” poet
52. Insect with abdominal pincers
64. Process leather 65. Self starter
OLMES ROUP Real Estate Solutions
Easy. Simple. Real Estate.