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During my 30+ years in the real estate business, I have learned that there are two basic truths relating to the real estate market.
 1.) All real estate markets are local. Our market here is unique and is never as bad
or good as the Metro area or other national markets at any given time.
The primary reason for this is that the supply of properties of all types is relatively
limited here and always will be.
2.) The only constant factor relating the local market is change. The market is dynamic;
constantly being influenced by numerous factors: local, regional and national. The
person best qualified to recognize and advise you on current local market conditions
is the experienced, local real estate professional.
Whether you are thinking about buying or selling property in our market, please feel free to call me to find out how current market conditions will impact your individual situation.
The following information is provided for your consideration:
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LOCAL REAL ESTATE MARKET CONDITIONS
By Dale Lundblad
July 2010
July 2010 has arrived with mixed news on a number of economic fronts. Investors, growing wary about prospects for the U.S. economy over the coming year, have tempered their expectations for the amount of growth because of weak job creation figures, disappointing national real estate sales data and significant debt problems among some countries in the E.U. A declining economy in Europe could negatively impact our growth because they are major trading partners. This has been reflected in the equity markets. This economic turbulence has negatively impacted consumer confidence. The Consumer Confidence Index which stood at 63.3 in May, declined sharply in June to 52.9. Those anticipating more jobs will become available in the coming months decreased to 16.0 % from 20.4% in May. The percentage of consumers expecting business conditions will improve over the next six months decreased to 17.2% from 23.5% in May. The proportion of consumers anticipating a increase in their incomes also declined to 10.6% from 11.4%. Employment always lags behind the rest of the economy during an economic recovery. The national unemployment rate presently stands at 9.5% . Total nonfarm payroll employment declined by 125,000 in June. The decline in payroll employment reflected a decrease ( -225,000 ) in the number of temporary employees working on Census 2010. Private-sector payroll employment edged up by 83,000. The Minnesota unemployment rate is considerably lower than the national rate at 7.2%. The equity markets have been turbulent over the past month generally moving lower with the Dow recently reaching an 19 month high before retreating due to concerns over weaknesses in the economic recovery. The Dow now stands just above 9804, the NASDAQ at 2115 and the S&P 500 at 1037.
The National Association of Realtors reported that sales of existing single family homes,
townhomes, condominiums and cooperatives decreased in May, but they are still up
significantly over the previous year. "With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus." NAR President VIcki Cox Golder said. The national median price for existing homes increased in May to $179,600. This is up 2.7% over May 2009. Housing inventory fell for the first time in four months, down by 3.4% to 3.89 million available homes. At the current sales rate, that represents an 8.3 month supply. Generally, a six-month supply is considered healthy. Real estate activity in our firm increased significantly through June. We have a steadily growing number of pending and closed sales. Sales activity is, in fact, much stronger than it was during this time period last year. Our inventory of attractive properties is the largest in company history. Potential buyers are increasingly well informed and are recognizing that current market conditions may make this the the most favorable time since the 1980s to invest in real estate here. A growing number of them are moving to take advantage of reduced prices and historically low interest rates while they last. On Lake Vermilion, the lowest priced building lot, cabin and home properties are quickly being purchased, setting the stage for an upward movement of property values.
Some local developments which will impact the local real estate market include the following:
- Lake Vermilion State Park is finally a reality. Deeds and closing documents were executed in
a ceremony in St. Paul on June 8th marking the culmination of more than three years of effort
to obtain the property for the creation of a major new state park along Lake Vermilion's eastern shore. DNR officials plan to spend the next two years creating a park master plan, identifying key resources and building roads for public access into the park. The first planning meeting with a citizen's advisory group was already held in Late June. Approximately $2 million will be available for the planning effort, although additional state bonding dollars will be needed to actually develop the park. The park is technically open to the public and DNR crews have already converted an old cabin site in a cove in Armstrong Bay to a shore lunch/ picnic site for boaters and anglers. The first trails and parking areas will be ready by fall so hikers and deer hunters will be able to enjoy the park this year. The new park would adjoin the Soudan Underground Mine State Park, and together the two parks would provide 10 miles of shoreline for recreation.
- The Cook Airport to receive a major renovation and upgrade. At its regular meeting on June 24th, City counselors awarded the major project to KGM Contractors Inc. KGM's bid of $1.55 million was the lowest of the six bids submitted. The projects calls for repaving the existing runway and extending it to 4,000 feet. In addition, the project will add a second taxi area. The extended runway will make the airport accessible to larger and faster aircraft. The project will be divided into two parts. Schedule A will include the runway repair and extension, runway lighting improvements while Schedule B will include reconstruction of a connecting taxi way, replacement of the runway apron and construction of a partial parallel taxi way.
- Work has begun on Scenic Rivers Health Services plan to build a new dental clinic at the former Ashawa Inn property along Highway 53. The new clinic, designed by the architectural firm of DSGW, will provide increased access to dental care for residents, seasonal residents and visitors. Each of the four dentists currently working at Scenic Rivers clinic in Cook will have two chairs, cutting down on waiting time for patients. If all goes according to plan, construction of the new clinic will begin in the fall of 2010 with the clinic expected to open by spring of 2011.
So, how have recent developments changed the real estate outlook for the rest of 2010? All indications point to a significantly stronger real estate market in 2010. Locally, the economy is showing solid signs of recovery and growth. Stable, relatively affordable gasoline prices have encouraged tourists to return to their favorite recreation area. Recent real estate activity indicates that during the second half of 2010 we will see improvements in most categories of the local real estate market. Historically low mortgage interest rates, now in the 4.08% range for a 15-year fixed rate mortgage and in the 4.69% range for a 30 year fixed rate mortgage, are currently available to qualified buyers. All these factors have converged to create the best opportunities in over 20 years for buyers to invest in real estate.
"Ninety percent of all millionaires become so through owning real estate." - Andrew Carnegie
Dale Lundblad - Associate Broker
B.I.C. Realty
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Mortgage rates sink to lowest level on record
Rates on 30-year fixed morgages fall to 4.69 pct. lowest level on record Freddie Mac says
By ALAN ZIBEL, AP Real Estate Writer
Yahoo! Finance
June 24, 2010
WASHINGTON Mortgage rates fell this week to the lowest level on record, giving consumers added incentive to lock in low payments for home purchases and refinanced loans.
The average rate for 30-year fixed loans sank to 4.69 percent, from 4.75 percent last week, mortgage company Freddie Mac said Thursday.
That's the lowest point since Freddie Mac began tracking rates in 1971. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.
Mortgage rates have fallen over the past two months as nervous investors have shifted money into the safety of Treasury bonds. The demand for Treasurys has caused Treasury yields to fall. And mortgage rates tend to track the yields on long-term Treasurys.
Yet the falling rates have yet to spark a home-buying boom - or energize the economy. New-home sales collapsed in May after homebuying tax credits expired. The economy also remains under pressure from high unemployment. And many people don't qualify under tightened lending rules.
"As long as prospective homebuyers are still concerned about their jobs and financial well-being, many will be reluctant to take the plunge, even though affordability has never been better," said Greg McBride, senior financial analyst with Bankrate.com.
Low rates throughout the economy also hurt one group of Americans: savers. Puny rates are especially hard on people living on fixed incomes who are earning next to nothing on their savings.
Lending activity remains sluggish. Mortgage application volume dipped 6 percent last week from a week earlier, according to the Mortgage Bankers Association. Refinancing activity fell 7 percent. And mortgage applications to buy homes slipped 1.2 percent.
Many Americans owe more on their mortgages than their homes are worth - often called "under water" - and can't refinance. The Obama administration has launched programs to help borrowers refinance if they owe up to 25 percent more than their home's value and have loans owned or guaranteed by mortgage giants Freddie Mac or Fannie Mae.
About 291,000 homeowners have participated as of March. Yet that's a small fraction of the nearly 15 million homeowners who are under water, according to Moody's Economy.com, and cannot refinance. In hard-hit areas in Nevada and Florida, for example, home prices have fallen 50 percent or more from their highs. Record-low rates can't rescue those homeowners.
"It's not the desire to refinance; it's the ability to refinance," Chris Brown, a loan officer with Trinity Mortgage Co. in Orlando, Fla. "A lot of the people who can already have."
Given the costs of refinancing, some mortgage experts say a refinancing can be worthwhile if you can shave at least 0.75 percentage point from an existing rate. Others suggest waiting until you can lower your rate by at least a point.
Despite some lenders' ads, refinancing is never free. A fee normally goes to the mortgage broker or lender. There are also fees for title insurance, a new appraisal, document processing and other charges. Often, mortgage brokers or lenders create the appearance of a "no fee" mortgage by adding the costs to a total loan amount or by charging a higher interest rate.
People considering refinancing should factor in such fees. They should also calculate how many months it would take to recover them. For those who expect to stay in their home for two years or less, the fees might outweigh the savings from a lower rate.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate, even within a given day.
Rates on 15-year fixed-rate mortgages fell to an average of 4.13 percent. That was the lowest on records dating to September 1991. It was down from 4.2 percent a week earlier.
Rates on five-year adjustable-rate mortgages averaged 3.84 percent, down from 3.89 percent a week earlier. That was also the lowest on Freddie Mac's records, which date back to January 2005 for such loans.
Average rates on one-year adjustable-rate mortgages fell to 3.77 percent from 3.82 percent. That was the lowest average since May 2004.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.
The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for 30-year, 5-year and 1-year loans. The average fee for 15-year loans was 0.6 of a point.
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Dale Lundblad, Associate BrokerB.I.C. Realty
Hwy. 53 and River St.P.O. Box 1165Cook, MN 55723
(218) 666-5352
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