Twin Cities Housing Market Update: June, 2016
It’s hard to believe, but we’re almost half way through the 2016 Twin Cities housing market already! I don’t know about you, but it’s like I woke up and the 4th of July had come and gone!
It doesn’t help that the Twin Cities housing market has been so aggressive either; it seems to only accentuate the fact that things (houses) are selling so quickly right now! Overall, residential real estate sales are performing strongly, as predicted they would early in the year and there really aren’t any signs of that changing any time soon. Both sales and average home prices have been climbing in most areas, which is a welcomed trend by many home owners! Sellers have been experiencing multiple offer scenarios again and are receiving a higher percentage of their asking price. While Sellers are certainly enjoying the strong Twin Cities housing market, Buyers really are not. Plain and simple, it is VERY tough right now for home buyers. Homes are often selling within a week or less on the market, and many times are selling at or above asking price with multiple, competing offers! I’m sure you’re probably saying “Yeah, yeah you keep saying that Justin!”…I don’t blame you for being frustrated, I am too! There’s nothing I enjoy less than informing one of my buyers that they didn’t win their offer. On a more positive note, though, it is definitely the sign of a stronger market and is better than the alternative! (Which we all experienced in 2007)
~Are you a home buyer struggling with multiple offers? Check out my blog post: “5 Proven Multiple Offer Strategies for Twin Cities Home Buyers!”
~If you’re thinking about selling your home this year, check out my blog: “5 Secrets to Selling Your Home Above the Asking Price!”
(I’ll bet you weren’t expecting a cool bonus video!)
Some Boring But Necessary Statistics…..
- *Twin Cities Housing Market: Median, single-family home prices were up 5.3%, from last June, to a record high $242,000!
- *Twin Cities Housing Market: Number of homes for sale was down 18.2%, over last June, to 14,214 units for sale.
- *Twin Cities Housing Market: Month’s supply of inventory dropped again, by 23.7% over last June, to 2.9 months supply of inventory.
- *Twin Cities Housing Market: New Listings in the Twin Cities region rose nominally, compared to last June, by .5% percent to 8,727 newly listed homes.
- *Twin Cities Housing Market: Sellers continue to be encouraged as Percent of List Price Received, for June, was 98.7%!
So…What the Heck is an Appraisal Anyways???
There are several different moving pieces to a real estate transaction. One that is very important, but often overlooked by both Sellers and Buyers, is the home appraisal. The home appraisal is the last major hurdle before reaching the finish line; otherwise know as the “closing table.” Essentially, before a bank will loan you the money to purchase a home, they’ll want to come in and take a look at the home to make sure the amount the buyer and seller have agreed upon is an actual “Fair Market Value” for the home. After all, the home being purchased really serves as the collateral to secure the loan itself. The reason I bring this topic up right now is because, often times, as the Twin Cities housing market is climbing so rapidly and home prices are rising so quickly, home appraisal values may fall short on occasion. So, what do you do then? Now you’ve got a seller and a buyer that are literally 1-2 weeks from signing over the deed to the house and handing over the keys and garage door openers, but the bank has decided the house is actually worth $5,000 less than the previously agreed upon purchase price. This scenario is definitely more common in such a strong Twin Cities housing market where prices are climbing rapidly. (GULP….now the negotiations just got real!)
3 Strategies For Addressing A Low Appraisal
1. Check appraisal report for inaccuracies
One strategy for addressing a low appraisal in this Twin Cities housing market is to check for errors or inaccuracies. This one is going to be an uphill battle from the onset, but it’s definitely worth a try. A small percentage of appraisals actually get overturned, but it does happen from time to time. Home appraisals can be very long, complicated documents to dissect and understand fully, so make sure you have a Realtor or mortgage professional help you out!
2. Buyer and seller may have to renegotiate
Another option, in this Twin Cities housing market, to handle a low appraisal is to renegotiate. If the appraisal comes in a couple thousand dollars low, that doesn’t necessarily mean the deal is off. However, in a low-inventory market where the seller has more negotiating power, he or she may not want to conduct a second appraisal. If the property is in high-demand, then the seller may opt to take the risk of putting the home back on the market or looking for a cash buyer. At this point, both parties stand to lose something very important so if a compromise can be reached, it probably will.
3. Show them the money!
The first question both parties must ask themselves in this situation is: “Is it really worth it to me?” As you think long and hard about the answer to that question, whatever you decide is probably what’s best for you. For buyers, if you feel like you’ve found your “dream home”, then the long-term value (coupled with ridiculously low interest rates) is probably there. Just make sure to check with your lender before agreeing to anything! For sellers, if your main objective is to sell the home in a timely manner, and you already have a captive buyer under contract, then a price reduction may be essential to closing the deal.
Wether you’re buying or selling a home in this Twin Cities housing market, it’s very important to understand where the market was, where it currently is, and where it’s possibly headed. Right now, in this Twin Cities real estate market, buyers and sellers are experiencing an a real estate market, the likes of which we haven’t seen since the early 2000’s! It’s more important than ever to “read up” on the current trends in real estate so you can be as prepared as possible to have a successful real estate transaction! For more tips and tricks to save you time and money check out the rest of my real estate blog HERE!
*This information is brought to us by 10k Research.
About the Author: The above article “Twin Cities Housing Market Update: June, 2016″ was written and provided by Justin Culley. Justin has helped many people buy and sell throughout the entire Twin Cities real estate area for years. If you are in the market to BUY or SELL a home, he can be reached via email at info@JustinCulley.com or by phone at 612-581-6842.
Are you thinking of selling your home? I’m very good at marketing homes to sell quickly, and for more money. If you’re a first-time home buyer then you’ll be in good hands. I’ve helped countless first-time home buyers through the entire process of buying that first home! I have a real passion for helping folks buy and sell homes here in the great state of MN and I would love to connect with you!
I help people buy and sell real estate in the following Twin Cities area cities & neighborhoods: Eagan, Hugo, Highland, Inver Grove Heights, Lake Elmo, Mac-Groveland, Mahtomedi, Oakdale, White Bear Lake and Woodbury to name a few. Other specialty areas include: Kenny, Lyndale, Tangletown, Lynhurst, Armatage, Kingfield and Carag neighborhoods.