HOMETOWN REALTY BLOG

The real estate market in Hutchinson, MN is continuing to come alive. Right now, there are less homes for sale than there were a year ago and the pending sales have shown an increase over a year ago. (Pending means that a purchase agreement has been written by a buyer and the seller has accepted the offer, but closing has not taken place.) This is good news because according to John Tucillo, one of the most respected real estate economists in the U.S. and the former Chief Economist for the National Assocation of Realtors, there are three things that must happen in order for the housing industry to recover. They are 1) a decline in the new listing acitivity, 2) a decline in the days on the market, 3) an increase in the sales price to list price ratio. We started seeing a reduction in the number of homes on the market last fall and throughout the winter months. In the last quarter of 2008, we saw the days on the market begin to decline. Now, we are hoping that with the increased pending activity, the third phase of this recovery will begin. I’m told that Hutchinson Technology has started calling back some of their employees and that also is a good sign for all of the Hutchinson, MN residents and businesses. I also noticed over the last few weeks that the parking lots at the retail stores continue to be full as well as the restaurants. That tells me that things are not as dire here as they may be in other parts of the country. So, don’t pay attention to all the doom and gloom. Let’s focus on the good things that are happening here in Hutchinson, MN.

A few weeks ago I talked about the multiple offers that we were starting to see. Well, that’s intensifying with the “spring” market approaching. There are alot of buyers that have been making offers on homes in the last couple of weeks and many of them on the same houses. It’s very encouraging to see that so many buyers are realizing what a prime time it is for them to be purchasing a home or investment property. Recently I have read that the prediction by some economists is that we will have inflation beginning to creep into our housing market shortly. Some predict that inflation will regain all the value that was lost in the housing market over the last two years, in the next five years or so. Sellers have become much more realist about what price they can expect to get for their homes, and therefore the buyers may not see another “opportunity” to own homes as they have right now. The interest rates remain favorable and with the stimulus package incentives, anyone considering buying a new home will be glad they did in 2009. So, the race is on to take advantage of all that is taking place in the real estate market here in Hutchinson, MN.

Last fall I heard an economist speak to a group of real estate people and mortgage brokers. He spoke about what we could expect in 2009 in our industries. He told the mortgage people that there was good news and bad news for them. The good news was that the interest rates would drop and they would be flooded with homeowners who would want to refinance. The bad news for them was that many of those who wanted to refinance would not be able to because they were upside down on their mortgages (they owed more than the home is currently worth.) I remember thinking, “well, I’m sure we in the real estate industry here in Hutchinson, MN will also be faced with a similar problem.” The guy was right! Just last week I met with four homeowners who wanted to sell their homes, and I had to tell them that it was not possible for them to sell and pay off their mortgages in the market we are currently in. Fortunately, none of them had to sell. We discussed other options they had such as renting out their current home (which two have decided to do) or just waiting for a more favorable real estate market for them to sell their current home. This real estate market is not so different than it was in the early 1980′s. Back then we were faced with huge interest rates that most people could not afford and so we had to find other solutions like contract for deeds, seller second mortgages, assuming existing loans. Most real estate agents today weren’t around during those challenging times and don’t understand what we are talking about when we mention assumable loans. Finding solutions to help people accomplish what they want to do is what our jobs as real estate agents is all about. It’s also important that we be honest with home buyers and sellers about their expectations. This is a very exciting time in the real estate business as we are all part of a very challenging market.