By Tara-Nicholle Nelson

Freud was famously (and incorrectly) quoted as having said “sometimes
a cigar is just a cigar.” But with real estate, the exact opposite is true.
Buying, selling, even staying in or moving from your home is rarely just about
picking a place to hang your hat. Rather, real estate decisions are whole-life
decisions, because they impact and are impacted by nearly every other area of
your life.

Most people are highly aware of the fact that their real estate decisions are related to their family matters and their money matters, but many don’t give nearly as much thought to the interconnectedness of whether, how and where you buy your home with your career: past, present and future.

Here are five ways your career and real estate decisions are linked, and some new ways to think about these topics together, to make decisions that better serve both these areas of your life.

Link #1: Location, location, location. At the top of the market, many areas saw an outflow of professionals from urban areas to the rows of McMansions that lined the gated cul-de-sacs and subdivisions of the suburbs. But as the prices of closer-in homes have declined, home values have melted down in many of these suburban areas and gas prices skyrocketed, many buyers have begun to prioritize urban areas to be closer to their jobs, some even ditching their cars and taking public transportation or walking to work.

Buying a home near work has obvious efficiencies and conveniences, including giving you back the hours you might otherwise have devoted to your commute. However, if your job is located far away from other companies, buying a home to be very nearby can cause issues – especially if your employer ever hits hard times or closes that location.

Link #2: Job choices and income can limit or enlarge your home options. As you’ve probably heard by now, mortgage guidelines have gotten very tight lately, with lenders forcing borrowers to stay well within their means, shrinking the amount of documented current monthly income that can be consumed by the new mortgage, property tax and home/mortgage insurance payments. Lenders also view your job history as relevant; large gaps of unemployed time and even major career moves from one industry to another can trigger a lender to require that you be in a stable work situation for at least
two years before they agree to finance your home purchase.

While it might seem obvious that your income would have a direct effect of limiting how much you can afford to spend on a home, what is somewhat less obvious is that the way you make it can also have an impact. Borrowers who work on commission, earn cash tips and even are self-employed or small business owners may find themselves subjected to stricter guidelines than those who earn a salary, because of the greater burden of documentation lenders may impose. For example, if you’re self-employed, your “income” will likely be determined by your Adjusted Gross Income on your last two years’ federal tax returns, which many entrepreneurs work hard to bring down by making aggressive deductions.

Link #3: Home and mortgage obligations can limit your career decisions. While most home buyers are very aware of the extent to which their past job decisions and income impact their real estate moves, there are many ways our real estate commitments can impact our future career decisions. Smart agents advise their clients not to make any major job moves or go from, say, a salaried position to starting that business you’ve always wanted to in the weeks and months just prior to buying your home. But even after you’ve committed to make a mortgage payment in a market like today’s, where selling can take many months or longer, these obligations can actually limit your
ability to work fewer hours, move to a lower-paying job in a field you want to break into, or quit your day job and become an entrepreneur without much more intensive planning and saving than you would have had to do otherwise.

Buying a home on today’s market is a long term commitment; most insiders recommend you not buy unless you are okay staying put at least 5 to 7 years (longer if you’re buying in a locale that has been hard hit by the foreclosure crisis; shorter if your market was relatively immune to the recession). At the same time, the length of time Americans work for one employer is getting shorter and shorter. Gone are the days when your 30-year mortgage matched right up with the 30 years you could expect to stay on a
single job. Over the past few years, I’ve heard more than a few reports of unemployed homeowners who felt stuck in their homes, unable to accept job offers across the country because they were deeply underwater or other market forces made it impossible for them to sell their homes.

The upshot? It’s important to feel comfortable making a long-term geographic commitment to an area before you buy; if you expect you may need to move in the near-term for work, it might be best to rent unless you are able to negotiate for your compensation package to include relocation assistance from your employer.

Link #4: Health of your local job market impacts your home’s value. Many news stories have reported how the Silicon Valley real estate market has thrived of late, despite the home value doldrums still being experienced across the rest of the nation. In San Francisco and the South Bay Area, the tech boom means the local job market is booming and employees are being made millionaires by cashing in their stock options when tech companies go public. One of the first purchases many of these new millionaires make is a home.

On the other end of the spectrum, we’ve seen entire regional real estate markets fall into incurable recessions when the only major employer or two in town moves away or shuts down. Then, not only are you stuck with a home and no job prospects nearby, it becomes very difficult for you to find anyone else to buy it. When an area has a high unemployment rate or no new jobs are being created, not only does it increase the rate of foreclosures and make it difficult to find buyers, it also makes locals who do have jobs very nervous about their job security and hesitant to make the long-term financial and geographic commitment to buying a home.

My advice is to prioritize homes located near bustling job centers and areas with multiple industries that are thriving (and projected to continue doing so), areas in which the job market is not dependent on a single employer or even a single industry.

Link #5: Your home’s infrastructure can impact your ability to work there. Things like local internet speeds and networks available, lighting, room configuration – even the age of your home’s electrical system can have a major impact on how comfortably or effectively you are able to work at home – or whether you can work at home at all. And if you are looking to create an area in your home exclusively devoted to working or running a business, that may impact your ability to take extra tax deductions for a home
office (a topic you should discuss with your tax professional).

This also highlights the holistic view you should take on how your choice of home impacts the entirety of your life. If you are able to work at home, your choice of home location vis-à-vis work location might be different than if you are not, which might impact what sort of work you do and which employers you prioritize, if you’re looking for a job.

It’s like Freud didn’t say, but could have – in real estate, nothing is just a cigar.

As the first month of the year trots onward, so do home buyers. They posted increased activity levels compared to the same week in 2011. Seller activity slowed compared to last year, however. Inventory declines effectively positioned many local markets into a more balanced state – particularly toward the end of last year. Increased seller activity in the coming months could slow or even reverse that trend. Don't fret. Not only is an increase in new listings perfectly normal for this time of year, but improved absorption rates and seller concessions could begin to stew into seller confidence.

In the Twin Cities region, for the week ending January 21:

• New Listings decreased 8.2% to 1,092
• Pending Sales increased 29.0% to 730
• Inventory decreased 23.2% to 17,822

For the month of December:

• Median Sales Price decreased 6.5% to $145,000
• Days on Market decreased 2.1% to 141
• Percent of Original List Price Received increased 1.7% to 90.6%
• Months Supply of Inventory decreased 33.7% to 4.7

Click here for the full Weekly Market Activity Report.

From The Skinny.

Last week, the Mortgage Bankers Association reported that mortgage applications increased more than 23.0 percent from the week prior. The fine print stated that most of the increase was driven by refinancing activity, given record low rates. Residential construction data also provided glimmers of hope. By now, many have surely noticed that the supply-demand balance is changing. What some may not realize is that this is a leading indicator, while home prices are a lagging indicator. Price appreciation is the final phase of recovery. Excess supply is down–in some areas, it's way down. Purchase demand in most areas strengthened throughout the second half of 2011. For sellers, it's less scary out there. For buyers, it's still a once-in-a-lifetime opportunity.

In the Twin Cities region, for the week ending January 14:

• New Listings decreased 5.2% to 1,216
• Pending Sales increased 28.4% to 728
• Inventory decreased 23.8% to 17,690

For the month of December:

• Median Sales Price decreased 6.5% to $145,000
• Days on Market decreased 2.5% to 140
• Percent of Original List Price Received increased 1.7% to 90.6%
• Months Supply of Inventory decreased 35.6% to 4.6

Click here for the full Weekly Market Activity Report.

From The Skinny.

Decreased supply, high demand and low prices are among the encouraging developments in 2011 that give cause for optimism in 2012. Consumer purchase demand increased absent any outside incentives. As the active supply of homes for sale decreased dramatically, absorption rates improved to levels not seen since 2005. Unprecedented low interest rates and record housing affordability resulted in an 8.2 percent increase in home sales for the area.

2011 by the Numbers

• Consumers purchased 41,429 homes, up 8.2 percent from 2010 and—excluding 2009—the highest since 2006.
• Sellers listed 68,875 new homes on the market, down 15.8 percent from 2010 and the lowest level since 2002. Inventory levels dropped 28.7 percent from 2010 and are at the lowest level in 8 years.
• Months supply of inventory—the time it would take to sell off all active properties—dropped 36.5 percent to 4.5 months.
• The median sales price fell 11.7 percent to $150,000.
• Precisely 50.0 percent of all closed sales were either foreclosures or short sales, up from 47.9 percent in 2010 and 48.9 percent in 2009.

"We are pleased with the recovery we saw in 2011," said Richard Tucker, President of the St. Paul Area Association of REALTORS®. "Median sales price reflects the mix of properties sold during the year—and in 2011 a lot moved in that lower bracket. Price increases will be the final piece of the recovery."

Distressed properties were the driving factor of home prices, selling for roughly 60 cents on the dollar compared to traditional homes.

"Homeowners need to remember that median sales price does a better job of reflecting what's going off the market as a whole than representing the home values in a given area—each area is unique," said Cari Linn, President of the Minneapolis Area Association of REALTORS®.

Improvements in the local economy will boost the Twin Cities real estate market in 2012. The outlook is positive: steady hiring, lessening layoffs and record low unemployment are all reasons the area continues to outperform the nation.

For other year-end residential real estate statistics and for stand-alone December 2011 data, please visit www.mplsrealtor.com and www.spaar.com.

The first full week of 2012 shows that buyers were off to a busy start while seller activity cooled down. Sales volumes easily beat the same week in 2011. The inventory drops that many communities saw during the second half of last year should translate into further positive news for sellers. Interest rates are expected to hold the low ground, enriching the buying environment for consumers. It's early now. The spring market will ultimately be the major tell as to the rate of recovery throughout the year. Today's lesson: Maintain a long-term perspective and watch trends develop beyond one week of data.

In the Twin Cities region, for the week ending January 7:

• New Listings decreased 14.6% to 1,266
• Pending Sales increased 13.8% to 561
• Inventory decreased 24.5% to 17,302

For the month of December:

• Median Sales Price decreased 6.5% to $145,000
• Days on Market decreased 2.5% to 140
• Percent of Original List Price Received increased 1.7% to 90.6%
• Months Supply of Inventory decreased 35.6% to 4.6

The attached Weekly Market Activity Report is produced by the Minneapolis Area Association of REALTORS® (MAAR) for REALTOR® members and interested parties on a weekly basis. Use it to further your understanding of the Twin Cities 13-county residential real estate marketplace.

Click here for the full Weekly Market Activity Report.

From The Skinny.

Most observers would agree that this year's housing recovery was not as robust as many had hoped. That said, a handful of things went right. Supply-side market correction took the guise of inventory declines and a pullback in listing activity. Consequently, sellers generally faced fewer challenges than in the past. Driven by improvements in the economy and record-low mortgage rates, purchase demand strengthened organically, independent of government incentives. Those sales gains dovetailed with falling inventories to move the market back toward balance. Nobody knows what 2012 will bring, but it's a safe bet that these positive developments will continue to evolve.

In the Twin Cities region, for the week ending December 31:

• New Listings decreased 11.6% to 593
• Pending Sales increased 41.7% to 564
• Inventory decreased 24.9% to 18,341

For the month of December:

• Median Sales Price decreased 5.6% to $145,000
• Days on Market decreased 2.4% to 140
• Percent of Original List Price Received increased 1.8% to 90.6%
• Months Supply of Inventory decreased 36.2% to 4.6

The attached Weekly Market Activity Report is produced by the Minneapolis Area Association of REALTORS® (MAAR) for REALTOR® members and interested parties on a weekly basis. Use it to further your understanding of the Twin Cities 13-county residential real estate marketplace.

Click here for the full Weekly Market Activity Report.

From The Skinny.

By Tara-Nicholle Nelson

Today’s home sellers have a hard row to hoe, as my Mom would say. Home values have dropped, the market is flooded with competition and even if a buyer does come along, a record high number of deals fall through. On top of that, they face the age-old conundrum of having two seemingly conflicting aims: they want to get their homes sold, fast, but also want – and need – to squeeze every single possible dollar out of it.

While it’s tempting to price your place on the high side and ‘test the market’ or ‘negotiate down,’ overpricing your home can actually deter buyers, cause your home to lag on the market and eventually even expose you to the risk of being perceived as desperate and receiving lowball offers.
Here are 5 ‘cures’ to the temptation to overprice your home, all of which can help you max out the chance that your home will sell.

1. Check the Comps! “Comps” is real estate lingo for comparable sales – the nearby, similar homes that have recently sold. You might think that your taste level, aesthetic style and home maintenance practices are vastly superior to those of your neighbors – and you might be right. But this will be the single largest purchase your home’s eventual buyer will ever make, and trust me – they will be doing the research. The small contingent of urgent and qualified buyers who are active on today’s market do not want to overpay for a home, and most will view your home as overpriced and not worth the hassle (or the haggle) if it is out of whack with the recent sales prices of similar homes.

Similarly, appraisers will use these numbers when figuring out your home’s value. Even if you do get an offer at a higher-than-justified price, if the buyer’s appraiser finds that your home is overvalued compared to other nearby recent sales, it can cause major delays in your buyer’s mortgage process – or derail it altogether.
Work with your agent to find and evaluate the recent sales in the area, and to ensure that your home’s list price makes sense vis-a-vis the comps.

2. Get inside the minds of the local home buyers. The vast majority of buyers – over 90 percent – start their house hunting online. And what most of them do is type in a price range, a range of bedrooms and bathrooms and a geographic area, then spend dozens of obsessive hours perusing hundreds of listings.
Given the flooded market and buyers’ busy lives, many will screen your home off their interest list in a New York minute if it seems overpriced from its online listing. If that one-inch picture and the number of beds, baths and square feet either (a) doesn’t make it into their search results because the price is so much higher than what most local buyers want to spend on a home with those criteria, or (b) seems underwhelming, for the price, compared to the other online listings of similar homes, prospective buyers will never even make it into your home, and all your stunning staging and crave-able curb appeal will never have the opportunity to work their magic.

Local agents have an inside track on what local buyers care about and what they will and will not spend. Talk to your agent about it, but don’t forget to actually listen to and consider what your agent has to say! If you don’t trust what an agent is telling you about where you should list your home, talk to several agents – if the consensus is a recommended list price range lower than what you had in mind, that’s a sign you should reconsider.

Also, search for similar homes to yours on Trulia, to see how it would stack up against similar listings online at the price range you have in mind. That’s where local prospective buyers will see it (and screen it in or out) first.

3. Visit competing Open Houses. Buyers do not shop for homes in a vacuum. They’re out there looking at dozens of homes – or more – to make sure they’re (a) getting the best deal possible, and (b) not missing ‘the one.’ So, while viewing a thumbnail image of your competition and seeing the list prices of other homes online is informative, it is even more useful to walk through the actual properties with which your home is competing, in living color.

Before you put your home on the market, take a few hours and visit nearby Open Houses. This exercise is the most vivid way to get a reality check about what you’re up against and what your home’s strengths and weaknesses are compared with the other homes buyers will see, which will go a long way in getting you to the right asking price. Even if you are unpleasantly surprised at how nice the neighboring homes are at low prices, taking this information in before you list your home is much less painful than waiting months for the market to give you this education (in the form of no or uber-low offers).

4. Get an inspection – in advance. Home buyers have long used the home inspection as a negotiating tool to get the seller to come down on the sale price mid-stream. Get ahead of the game by getting your own inspection(s) – talk with your agent about which ones are appropriate – and getting the skinny on your home’s condition before you list it. Keep in mind that you will likely need to provide any written professional inspections you obtain before listing your home to the buyer under your state’s real estate disclosure laws.

You might be able to repair some things at relatively low cost and include the recent improvements in your marketing. Alternatively, you can set and negotiate pricing based on any condition issues or needed repairs you want to pass down to the buyer. This empowers you to get to a final price that aligns with market conditions and the condition of your home without taking massive mid-escrow hits on pricing. It also empowers you to offer a discount for needed fixes up front, when the price break has the most power to help attract bargain-seeking buyers.

5. When in doubt, go low. An overpriced home, in most cases, will cause a lot more problems in your real estate journey than an underpriced one. Think about it: an overpriced home just sits on the market with little or no buyer interest until the seller cuts the price. And many interested buyers just sit, waiting for that price cut, seeing it as a cue to make an even lower offer.

Now, consider the opposite end of the pricing spectrum: you start with a lower price than you want, but one that is supported by the comps in your market – or even goes a tad bit lower than recent homes have sold for. Lots of buyers are attracted to your house, in part because it looks like a great value for the price. You end up with multiple offers, which gives you the upper hand in negotiating a higher price.

The moral: if you aren’t sure about what price to place on your home, go a little bit lower than the recent comps sold for. Insiders know from experience that you’ll sell your home faster this way – and at a better price than if you overprice it out of the gate.

These steps can help you get out of your own way, get a bird’s eye view on the market and see your home as buyers will see it. And that’s a reality check that can make the difference between selling your home and not.

by Carla Hill

According to the latest report from the National Association of Realtors Pending Homes Sales Index, pending home sales are at the highest level in 19 months.

What has precipitated this rise? Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. "Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage," he said.

There was a 7.3 percent jump in contract signings in November, up 5.9 percent from the year prior. The last time to market had this many signings was in April 2010 when the deadline for the first time home buyer tax credit was

"November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead," Yun added.

Regionally, the largest rise was seen in the West, which has previously struggled. It rose 14.9 percent for the Month, giving it a boost of 2.9 percent of November 2010.

The Northeast was close to double-digit gains with a solid 8.1 percent rise. It is still 0.3 percent below last year’s figures. The Midwest is doing well. It is 9.5 percent above November 2010 for pending sales and rose 3.3 percent for the month.

Finally, the South rose 4.3 percent, rising 8.7 percent above last year’s numbers.

Other factors that could have contributed to this rise are recent declines in the unemployment rate. The rate has lingered about 9.0 percent for months, but fell below this mark in recent weeks. Holiday hirings were up, but so were hirings in other sectors.

Consumer confidence peaked 10 points in November to the highest rate seen since the end of the recession and retailers boasted the best holiday sales figures in years. This could signal a return of buyers to the housing market.

Published: January 4, 2012

Last month, the number of homes for sale in the 13-county Twin Cities metropolitan area plunged nearly 24.0 percent from last year to 19,516 – the lowest November inventory reading since 2004. In addition, November 2011 marked only the third month in more than five years (68 months to be precise) where there was less than six months supply of inventory. Sellers listed 4,102 new homes on the market, down 13.6 percent from last year. Buyers entered into 3,321 purchase agreements, up 30.2 percent over November 2010.

Some sellers are already starting to benefit from less competition. The share of asking price that sellers receive at sale has posted year-over-year increases for the fourth consecutive month. In November, sellers received an average of 90.9 percent of their asking price. That figure was likely helped by the 30.6 percent decrease in months supply of inventory – currently at 5.7 months. Generally, 5 to 6 months is considered balanced.

The median home price was down 10.1 percent from November 2010 to $149,250. Lender-mediated activity (foreclosures and short sales) comprised 44.1 percent of all closed sales and 41.9 percent of new listings.

The first and fourth quarters of the year tend to see the most distressed sales and listing activity. Consequently, traditional prices fell 9.2 percent to $187,400, foreclosure prices dropped 14.3 percent to $98,500 and short sale prices were down 11.5 percent to $130,000.

Market times were down 1.7 percent to 135 days, on average – the second year-over-year decrease in a row. The housing affordability index hit a new record high of 245, meaning that the median household income in the region was 245% of what is necessary to qualify for the median-priced home under prevailing interest rates.