First: In the Minneapolis and St. Paul area real estate market, we are burning through our supply of foreclosures much faster than we are short sales and with good reason: Foreclosures are much easier to deal with than are short sales. Even though the foreclosure process is after the short sale process, the bank deals and replies to foreclosure offers (usually) in a much timelier manner than they do short sales. Right now our market inventory is  @ 2,000 foreclosure units – or about a 2.3 month supply. However, our short sale inventory is @ 4,200 units, which is about a 12.6 month supply (keeping in mind short sales sell less and take longer to sell).

Our housing market will never be in true recovery mode (as a whole) until we A) greatly reduce the existing short-sale and foreclosure (distressed property) inventory B) greatly reduce the potential distressed properties, C) Stabilize the employment sectors and D) See true, tenable signs of recovery in our economy in general. We will really have to let the distressed properties run their course and ‘burn-off’ the current supply and also the future supply (of which it appears there is still a fair amount coming down the pike).

Now does this mean it is doom and gloom in all areas of the our local or national real estate market? The answer is a definite no. As I’ve been saying all along, some micro-markets – at certain price points – within our local and national markets are still holding strong and steady.  Examples: Certain parts of Southwest Minneapolis ($175K-$350K) , Edina ($225K-$415K), St. Louis Park ($175K-$250K) and West Bloomington ($175K-$300K) have all had busy activity and strong sales.  Of course, the $8,000 home-buyer tax credit and low interest rates have been a great motivator, but these areas usually hold well anyhow.

Upper-bracket sales update: As is much the case nationwide, in general, in the twin-cities, there is a large inventory of upper-bracket homes on the market. In the twin cities metro, we currently have about a 35-month inventory @ $1-million and up. Now this does not mean that a home in the Edina Country Club, South Harriet Park, Parkwood Knolls, or in Kenwood, Lake of the Isles, Lowry Hill, Lynnhurst or Linden Hills will take 35 months to sell, by any means. As I’ve said, the inventory is a 35-month supply, and many areas do much better than others, such as Medina, or Plymouth for example.

One of the difficulties is getting past one great myth right now: the myth that jumbo (loans over $417K) are an expensive, poor product. The truth is, in the past couple of months, jumbo products have come around and been lowered to historically great rates again, and there are now products in which you do not have to do 20% down, and also not have to pay mortgage insurance!

Example 1: A 30-year fixed jumbo can be had for 5.75%.
Example 2: A jumbo, 15%-down option with no mortgage insurance (MI) can be had for 6.1% (as of last Friday).

This is fantastic news for upper-bracket, but the word has to get out there. Right now, in upper-bracket sales, many excellent deals can be had and money (lending) is cheap!

This means that if you should be targeting and seeing homes with your realtor now, as the final target date (best-case, last-minute scenario) is only about 70 days from now, if you would like the free, $8000.00 from the fed, just for buying a home. This would be a sad tax credit (actual cash in pocket, not a deduction) to miss out on, if you have been seriously thinking of purchasing a home.

How would you like 8 of these $1,000.00 notes?

These cities are; #2) Chanhassan, MN, #20) Chasaka, MN #36) Lino Lakes, MN., #97) Owatonna, MN.

With the exception of Owatonna, the remaining 3 representing Minnesota, are all suburbs of the Minneapolis/St. Paul metropolitan area (2nd and 3rd tier).

Other nearby cities on the list are; #4) Middleton, WI., #34) New Berlin, WI., #42) Urbandale, IA., #61) Pewaukee, WI., #62) Ankeny, IA., #76) Germantown, WI., #78) Waunakee, WI., #80) Bettendorf, IA., #81) West Fargo, N.D., (yes, Fargo does have a suburb, and as I am quite familiar with West Fargo, I can say that West Fargo has come a long, long way in the past 25 years).  Yes, Wisconsin has 5 on the list.

I also saw that Nebraska scored 3 on the list as well – Papillion, Columbus (I lived here when I was 4 and 5 years old) and Norfolk.

Although I don’t agree with 2 aspects of the criteria selected (one is ridiculously politically correct and quite unnecessary), the rest of the criteria is based upon size,  median income, quality of life, property taxes and unemployment rates etc.,  the rest of the criteria is general, and makes sense.

Of course Minnesota has a disproportionate share of homes in the top 100.

Very cool!

1) Total single family homes sold (closed) through June 6th, 2009 (the halfway point of the year) are 94, with an additional 63 ‘pending’ (sold, but not yet closed). Total pending including condos and townhomes are 97.

2) Remaining stats: Average sales price for single-family homes is $533,727, average days on market – 126.8, average beds/baths – 3.76/2.93, average price per square foot – $174.06 (with East Edina @ $200 per/sq. ft. and West Edina @ $155 per/sq. ft.)

3) The lowest-priced home that has sold in Edina year to date is $129,900, and the most expensive home sold in Edina so far for 2009 closed/sold @ $2,600,000.

4) 15 of these sold, single family homes in Edina were registered on the MLS as ‘in foreclosure’ – or ‘lender mediated’ (One was in the $900′s, and another in the $800′s). However, not all agents input or update this data correctly, so I think it is safe to assume that at least a couple more were lender-mediated properties in Edina. Obviously this will also tilt the average sales price down a bit.

What does this mean? It appears that home sales in Edina are somewhat sluggish, but not bad, all things considered. Homes are certainly selling, and some of them are definitely on the higher-end, but with the lower interest rates and first-time home-buyer tax-credit incentive, the market is certainly lopsided toward the lower-end for Edina: the under $400K-priced homes are currently dominating sales, thus tilting the average sales price down a bit from last year (which had high-priced condos and townhomes tilting the average sales price up).

What I am noticing with my buyers is that there are a fair amount of homes on the market in Edina, but many of them being mediocre in quality. What we are still seeing is that when a good or great home comes on the market, that is priced reasonably, it sells for a good price and sells quickly. Buyers are out there, but they want to perceive that value is there.

Edina: New listings are down. Inventory is down, mortgage rates are again down. Also, housing prices (recent sales only) are down in April ’09, compared with April ’08. At first glance, one might think that the prices in Edina are falling. In most cases, this is not true. True, higher-priced homes in Edina have taken a hit (sluggish upper-bracket sales), but the average home in decent shape still sells for a premium, and usually fairly quickly. Also, there has been a rush to purchase the lower-end homes in Edina, primarily due to the very low interest rates, and the government-backed first-time home buyer incentives. This has skewed the averages across the entire metro market. Average days on market before a sale on a home in Edina is currently about 144.

Southwest Minneapolis: Pretty much the same situation as Edina, with the average days on market time before a sale being about 113. This is pretty dang good, considering the entire Minneapolis metro housing market has an average of 7.5 (about 245 days) months of supply. At the higher-end of the market ($1 Million-plus) the current supply/inventory is about 28 months.

What these stats do show, is that Southwest Minneapolis and Edina are still the 2 best places to buy a home in the entire Minneapolis/St. Paul housing market.