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Economics, Home Prices, Housing, Housing Trends, Industry News, Minneapolis / St. Paul Housing, Multifamily, Real Estate Lending, Real Estate Trends, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate

A Brief Summary of the 2015 Twin Cities Housing Market. This Year was a Good Year, What About 2016?

We examine some of the more important questions about the Twin Cities housing market in 2016 and offer some thoughts Houseforsaleabout where the market is headed.

An analysis of Twin Cities real estate data for 2015 through November shows that the housing market is continuing to recover along with the economy; home prices, the number of closed sales, pending sales, new listings, and the percentage of traditional sales (not foreclosures) are all on the upswing.Meanwhile, a historically low number of homes on the market is continues constrain the number closed sales. This has created an imbalance in the market where buyers outnumber sellers and leads to situations involving multiple offers and homes selling above asking price.

Will 2016 bring more of the same? In this month’s Residential Real Estate Report Herb Tousley, director of real estate programs at the university will examine some of the more important questions about expectations for 2016. These questions are;

  • What will happen with median home sale prices in 2016? How long will it take for them to approach pre-crash levels? Look for an increase of 6% – 8% in the median sale price of homes sold in the Twin Cities. **
  • What will happen to the number of homes sold during the year? Look for an increase of 4% – 6% in the number of closed sales in 2016. **
  • What will happen with the number of homes available for sale in 2016? We are expecting an increase in the inventory of homes for sale of 1% – 3% compared to the previous year’s levels. **
  • Will interest rates and mortgage rates continue to rise in 2016 and if so, what effect will it have on the housing market? In 2016 look for rates to drift from just under 4% to slightly over 4% by the end of the year. **
  • What will happen with new housing starts in 2016? Will home builders break out of the doldrums next year?   In 2016 I am expecting an increase in the number of permits issued of about 10%. **
  • What will happen with apartment development and rent levels? Will the market continue to be able to absorb the expected number of units in the pipeline?   Our expectation is that next year will be another good year for apartment developers with an additional 3,800 – 4,000 market rate units being added to the existing stock. We also we expect that the strong local economy and continued employment growth will sustain continued rent growth of 2% – 2.5% in 2016. **

 **For a more detailed explanation of the above answers you can download the complete November Residential Real Estate Report at:

Real-Estate-Supply-and-Demand-300x259The Residential Real Estate Report is a monthly analysis of the 13-county metro area prepared by the Shenehon Center for Real Estate at St. Thomas’ Opus College of Business. Each month the center tracks nine housing-market data elements, including the median price for three types of sales: nondistressed (traditional-type sales), foreclosures, and short sales (when a home is sold for less than the outstanding mortgage balance). More details about the market, including an analysis of distressed-property sales during the winter months, can be found on the Shenehon Center’s website:

Research for the monthly reports is conducted by Tousley. The index is available free via email from Tousley at



Economics, Home Prices, Housing, Housing Trends, Industry News, Minneapolis / St. Paul Housing, Real Estate Lending, Real Estate Trends, Residential Real Estate, Twin Cities Real Estate

Unrealistic Rate Expectations Threaten Housing Recovery

Interest RatesReposted from 

By: Krista Franks Brock

 Despite a reported rise in homebuyer confidence in the third quarter—the first this year—unrealistic mortgage rate expectations could lead the housing recovery astray as the Federal Reserve looks to ease its stimulus program, according to recent reports from Redfin, a national real estate broker and technology provider. Twenty-eight percent of homebuyers said now is a good time to buy a home, up 4 percentage points from last quarter, according to Redfin’s Real-Time Buyer Survey conducted in November. Another 58 percent of buyers said now is an “ok” time to purchase a home, down just 1 percentage point from last quarter’s 59 percent, according to Redfin.

Low inventory remained a top concern with 60 percent of survey respondents citing this concern. Rising prices was also a popular concern, cited among 52 percent of survey respondents. Rising mortgage rates popped up as a concern among 53 percent of survey respondents in last quarter’s survey and then dropped to 41 percent this quarter. However, Redfin finds consumer attitudes toward interest rates quite troublesome. A majority—83 percent—of buyers believe a “normal” interest rate for a fixed-rate, 30-year mortgage loan is less than 5 percent.

Furthermore, a significant portion of homebuyers—42 percent—say they “would be unable or unwilling to buy a home if rates rose further.” In contrast to what today’s consumers view as “normal,” the average mortgage rate since 1990 is 6.7 percent, according to Redfin. In fact, rates did not fall below 5 percent until March 2009. However, only 5 percent of homebuyers view a mortgage rate above 6 percent as “normal,” according to Redfin’s survey results. “Even more surprising, both seasoned and first-time buyers think a rate below 5 percent is normal,” Redfin said. One in three first-time buyers view a rate below 4 percent as normal, while one in four seasoned buyers view a rate below 4 percent as normal.

While the market awaits news on when the Fed will taper its stimulus program, thus allowing mortgage rates to rise, Redfin says this summer’s activity is a good preview of what may come. “Two weeks after mortgage rates spiked about 1 percentage point in June, the number of Redfin customers taking tours and signing offers dropped 14 percent and 12 percent, respectively,” Redfin said. Redfin argues the time to taper the stimulus and allow rates to begin to rise is now, during the slow homebuying season. Doing so would allow consumers to adjust to the new rates and prepare before the market enters the spring buying season. By the time spring comes, the hope is that buyers will have adjusted their expectations and may be ready to purchase

Affordable Housing, Economics, Home Prices, Housing, Housing Trends, Minneapolis / St. Paul Housing, Real Estate Lending, Real Estate Trends, Residential Real Estate

Exploring a New Method of Financing for Homeownership


 The following is reposted from The M Report

12/09/2013 By: Sandra Lane

Perhaps you’ve known someone who raised money for a documentary or civic project by making an appeal through crowd funding on the Internet. Now, the concept of pooled resources is being used as an investment vehicle offering equities in homeownership to investors and loan assistance to selected prospective homeowners. One of the first companies to offer such a program is PRIMARQ, a San Francisco, California-based capital market company that uses equity shares to enable a person to be the major equity owner in a property that otherwise would have been difficult or impossible for that person to obtain. In addition, investors are able to purchase partial equities in the property. The creative mind behind this movement is Steve Cinelli, founder and CEO of PRIMARQ. “I had an ‘aha moment’ one day when thinking about the housing finance base established 90 years ago by the Federal Home Loan Bank back in the 1930s,” Cinelli explained. “I realized that other asset classes have both equity capital available to the users as well as well as debt capital, and I wondered why there wasn’t an equity capital market for housing. I also wondered why there isn’t financing tied to the asset price movement, namely equity,” he explained. Subsequently, PRIMARQ was created to bring equity capital into the mortgage and housing market.

Some may doubt the need for such a plan in the current market with interest rates being so low and doubt that prospective homeowners would choose to invest in equity rather than take on debt in such a low interest rate environment. Cinelli explained that lenders have become more restrictive in terms of their underwriting, and in January there will be increased standards that make credit availability very tight.
“You’ve got to have exceedingly high FICO scores, and banks require additional liquidity over and above the down payment,” he said. He also explained that during the past 18 months, nearly a trillion dollars in mortgage applications have been denied to people whose credit scores were over 700. “The reason for denial is that the debt to income ratio was too high and/or there was insufficient down payment. In other words, the deficiency of equity causes the problem.”

Cinelli believes that through the homeownership and investment plan offered by his company, many people who find it difficult to be approved for a loan will find a solution.
“Although there are [Federal Housing Administration] programs that allow for lower down payments, there are other costs to consider which jeopardize the ability of an individual to qualify for a mortgage,” he said. “If the prospective homeowner doesn’t have enough capital, then let’s bring in private capital to supplement that and allow those investors to benefit from the price movement of the property.”

Follow this link to read the rest of the article:


Real Estate Law, Real Estate Lending, Residential Real Estate

New Minnesota Law to Shed Light on Contract for Deed

A new Minnesota law set to take effect August 1st will require additional notification be provided to buyers in contract for deed transactions. In a contract for deed, the seller, rather than a lending institution, finances the buyer’s purchase of the property. The buyer takes immediate possession of the property and agrees to pay the purchase price in monthly installments. The seller retains the legal title to the property until the last payment is made and the contract is fulfilled.

Under the law passed in May, sellers will be required to provide notice to buyers that suggests obtaining an appraisal and inspection prior to signing a contract for deed, and that outlines the potential drawbacks of such purchase arrangements. Failure to provide this notice could result in a penalty of up to $7,500 for the seller. The Minnesota legislators behind the new legislation were motivated in part by a Star Tribune report earlier this year that documented potential abuses of the contract for deed mechanism. Many of the more than 1,000 deals examined by the newspaper found features that would make default likely for many buyers, including high interest rates, large ballon payments, and negative amortization. In many instances, contract for deed purchases were completed with no home inspection, leaving buyers responsible for correcting major code violations or safety hazards that a typical inspection would have revealed.

A 2009 article from the Minneapolis Federal Reserve highlights some of the pros and cons of contract for deed. A benefit for both sellers and buyers is that they are much faster and less expensive to execute than traditional mortgages, with no origination fees or high closing costs. Because there is no lengthy mortgage approval process, contracts for deed are appealing to buyers who are on time constraints or who do not Continue Reading

Real Estate Lending, Real Estate Trends

Tech Start-Ups Bringing Crowdfunding to Real Estate

Crowdfunding has become a popular way for entrepreneurs to find money for startup businesses or other projects. Organizations can use an online social fundraising platform like Kickstarter to pitch their ideas for a new business or art project and collect donations from individual contributors who want to support the idea. For example Butter Bakery in Minneapolis recently raised $16,800 to purchase equipment and furniture to aid their move to a new location.

Now, changes in SEC regulations resulting from the JOBS Act could bring crowdfunding to real estate investing. Previous regulations limited investing in closely-held real estate ventures to accredited investors, which for individuals requires either net worth of at least $1 million or annual income of at least $2,000. The JOBS Act eased those restrictions, allowing easier direct investment by non-accredited individual investors in commercial real estate ventures.

A few start-up companies are already getting the ball rolling. Realty Mogul recently launched a $500,000 seed-round. The product of a Microsoft tech start-up incubator, Realty Mogul is based in Seattle and will be offering real estate investment opportunities in Washington and California. The company is currently focusing on accredited investors while waiting for the SEC to determine the final regulations resulting from the JOBS Act, at which point it may open up investing to non-accredited individuals.

Fundrise is another start-up which has gotten off the ground recently. The company is focusing on urban retail projects in Washington D.C. and is touting crowdfunding as an opportunity for people to invest in the neighborhoods they live in while avoiding some of the costs and barriers to entry associated with traditional real estate investing.


Prodigy Network is one of the most prominent crowdfunding investment platforms for U.S. real estate, but it isn’t actually available to U.S. investors yet. The company allows individuals to invest in real estate in the United States and Latin America, and is Continue Reading

Real Estate Lending, Residential Real Estate

Main Street Justice? – $25B settlement over foreclosure abuse

Attorney General Eric Holder Photo Source: APA promotions

This morning officials announced a $25 billion settlement with the five largest mortgage lenders over foreclosure abuses.  Under the agreement, Bank of America, Wells Fargo, JPMorgan Chase, CitiGroup, and Ally Financial, will reduce nearly 1 million loans, compensate Americans wrongfully foreclosed upon with payments ranging from $2,000 – $750,000 and refinance mortgages for underwater borrowers over the next 3 years.

During the wrongful foreclosure crisis, Americans across the country were being threatened with foreclosure filings regardless if they were current with payments.  Complaints included banks foreclosing illegally on the wrong address, illegally foreclosing on soldiers fighting abroad, foreclosing on homes that were fully paid off, foreclosing on homeowners who were barely late with their payment and foreclosing on homeowners who requested mortgage modifications under home affordable mortgage programs.  Continue Reading