Greetings Everyone,
Today is September 30, 2008 and 8:45am.
Uptown Financial Corp. is located in Minneapolis, Minnesota. Currently, the sun is shining and it is 45 degrees--the forecast is for SUN and a high of 65 degrees. The Minnesota Twins and Chicago White Sox will be playing a One Game playoff tonight to decided the American League Central Division Winner. Life is as usual---and somewhat normal.
Today's Rates: 30 yr. Fixed 5.75% & FHA 30 yr. Fixed 5.875%
This is the first posting in a long series of postings from Uptown Financial Corp. and those who surround us. With the 'Great Bailout Bill of 2008' failing yesterday and Wall Street Nose diving 778 points yesterday, we are all staring at the most severe Economic Crisis of our lifetimes. It has been labeled the 'Credit Crisis' and potentially could be the GREAT DEPRESSION of 2008.
In order to help educate our clients, network circles and public in general. We have been gathering professoinal perspectives from a wide array of industries to provide insights/takes on the current events of today. Should anyone have questions, comments or simply like to talk--Please do not hesitate to contact the professionals at Uptown Financial Corp. at any time.
All Current posts can also be read on our website, www.UptownFinancial.com in the Resources Section in the current Blogs Tag.
Stay Tuned and Keep Posted.
Take Care,
Ben Coulter
Uptown Financial Corp.
612-216-1388
612-677-3100
The Credit Crisis of 2008 Vol. #1 Minneapolis Real Estate Perspective:
by Don Edam, Minneapolis Real Estate Broker
Thoughts on the 'credit crisis' pertaining to the housing market
With all the news and media outlets playing 24-hours of doomsday clips regarding the current bank and credit issues our country is having, I've been receiving multiple calls and emails per day asking how this affects buyers and sellers in this fall market. While I am writing this at a time where no "bailout" has been agreed upon, I can give some educated opinions on where we are right now and where we're going in the housing market.
CONSUMER CREDIT
Nationally, the one thing the average person may be seeing is the tightening up of consumer debt. Car loans, home equity lines of credit, credit cards, etc., may be much tougher to obtain. This means that new car you may want/need may not come with the availability of financing. The addition you were looking to put onto your home with a newborn on the way may be put on hold because no one will approve you for a line of credit on your equity. As this seems to have the potential of drastically slowing down the economy, it has a mixed effect on housing.
You could run with the theory that the lack of consumer financing will lead to less money in the open market, thus leading to less income for companies, and a reduction in jobs. This could lead to people who own homes and lose a job to put their homes on the market (more inventory). This could also lead to those looking to purchase a home, who just lost their job, without the ability to qualify (less demand).
While I think the above point is a valid one, I also believe that many people are not going to sit on their situations without taking action. With the governments many changes lately, home lending is still going to be plentiful. Mortgage money will be one of the greatest and only places to obtain new money. If you are unable to secure a line of equity for that addition, you may end up have to become a 'move-up' buyer and purchase a home with the space you require. If you are unable to get that new car with better gas mileage, you may be compelled to purchase a home closer to your place of employment. While I don't see this as some grand acceleration in the housing market, I do believe it will help plateau the national home prices and spark a bit of demand.
FHA
FHA was almost extinct in the real estate vernacular a couple of years ago...yet, my last 3 buy-side transactions have used FHA and I expect that number to keep increasing. FHA has conforming limits for the price and type of homes that can be purchased with a FHA mortgage. Its my belief that we are going to begin to see a steep increase in demand over the next 6-12 months for homes that conform under FHA standards. It is also my belief that we may see a significant drop in demand for homes priced just over the FHA limit and some of these homes may be forced to make a tough decision to reduce to within the conforming limit or take their chances in a market with much less activity.
MINNESOTA MARKET
There are many things that I am seeing independent of much of the national market here in Minnesota lately.
The first thing that it capturing my attention is some of the quality of foreclosures coming on the market. In the past, a flashlight, sturdy shoes, and a faith in a higher power were required to step into a bank owned home. These properties were continuing to sit vacant and helping to drive down values in the areas they were listed. In the past month or so, that has changed. While I've still been in my fair share of "fixer-uppers", I have also witnessed many extremely well kept single family homes that are receiving multiple offers. These REO homes are not lingering on the market and are great values to the first and second home buyers out there.
Another thing that has really captured my attention lately is the number of multiple offers on newly listed properties. As near as last spring, many of my buyers were able to find a couple of homes they liked and then sit around and think for a couple of days (or weeks) before making an offer. Within the past week alone, I've had two separate buyers involved in multiple offer situations where the home has gone for at or above listing price. The pace of the Minnesota market is accelerating and inventory is starting to shrink for the first time in a couple of years. Average days on market in many areas of Minneapolis are declining sharply and transaction sides are increasing.
Now, I'm not trying to paint a rosy picture of the next housing boom coming to a town near you...but, with all of the calls and emails I have been receiving regarding worry over the state of the nation's economy, my team has also had their best month in 2 years...and I'm not alone. Other agents I have been talking to around the Twin Cities are expressing controlled optimism regarding the pick-up in business.
SUMMARY
I realize there are differences between the time we live in now and any other time this economy has gone through. I'm not going to get into personal feelings about the current state of the economy or some of the plans the government has to "fix" it. I see a large tightening in the "free money" that was rolling out over the past couple of years through the consumer credit markets, which will force people to put more thought into what is important to them materially. What I also see is an opportunity in this "crisis" to revive the housing market. In Minnesota, I see these times as additional fuel to ignite a market that is beginning to make the turn. I don't see it leading to the housing craziness we experienced at the beginning of this decade, but do see us well on our way to a more normalized market.
I would be happy to answer or comment on any questions anyone may have regarding the housing market, any current statistics, or any other related housing or economic thoughts.
Don Edam
The Don Edam Group
Owner Options Realty
952-486-7584 (direct)
952-400-5633 (fax)
www.DonEdam.com
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