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St Paul Home Price continue to climb

Minneapolis and St Paul area home owners continue to see an upward climb in the value of their homes. The median sales price soared up 17.5 percent over last year.  According to the Minneapolis Area Association of REALTORS®, the June 2013 average value was $210,000, the highest it’s been since December 2007, just as the market was starting to crash.  By the way, mortgage interest rates at the time were about 6.10%.

house_from_wordLess homes for sale than what we’d like to see, combined with fewer foreclosures, and low mortgage rates continue to fuel these price increases.  New listings were up in June by over 20% from last year, but still there are more buyers than sellers,  sparking competition amongst buyers.

While mortgage interest rates are still historically low, they have increased about 1% from the lows back in May 2013 to around 4.50% today. This increase has put more pressure on the home prices as those who were sitting on the fence are jumping into the water before rates go even higher.

In the sub $250,000 price range, considered the “most affordable”, many homes are selling very quickly with multiple offers just days on the market.  Therefore all prospective buyers need to be fully lender pre-approved and ready to make an offer the moment they see a house they love.

Rising home prices and higher mortgage rates caused housing affordability to decrease by 15.9 percent from last year. However, home prices remain well below pre-housing-crisis levels and mortgage rates remain historically low, even after the rate increase.

 

Homebuyer jump into market as rates rise

Mortgage rates have risen about 1% since May 2013, and that is clearly making potential home buyers jump into purchase contracts more sooner than later according to a recent Fannie Mae housing survey.
Real Estate, Minnesota, Minneapolis, for sale, mortgage rates, interest rates
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The survey shows 57% of people expect mortgage rates to rise in the next 12 months, with just 7% responding that rates will remain stable. The previous survey indicated only 46% of people expected mortgage rates to rise.

Potential home buyer clearly see the writing on the wall, and anyone even close to purchasing a home realize interest rates, while up from previous lows, are still historically good.  Given the fact home prices are rising and rates are rising, homebuyers have decided that now is time to get off the fence and get serious about buying real estate.
Americans’ outlook on the economy deteriorated slightly, though many were more optimistic about their personal situation. The share of people who expect their own personal financial situation to improve over the next year jumped to 46%, its highest level in three years, while  16% said they expect their situation to worsen, unchanged for the third consecutive month.

Buying a HUD foreclosure with FHA financing

Minneapolis, MN:  The Minnesota and Wisconsin housing market for homes under $250,000 is hot…   Good homes priced well are selling very quickly, and usually above the original asking price.

I’ve run into this situation many time recently when buying a HUD home, so I thought I would address it here.

DOES MY BUYER HAVE TO USE HUD’S FHA APPRAISAL?

hh_fsThe quick answer is YES if using an FHA loan to buy the house.  NO if using any other financing.

If you are buying a HUD foreclosure, they almost always already have a HUD Appraisal.  This is good and bad.  On the good side, if the buyer is using an FHA loan, the buyer does not need to pay for one of their own.  They get to use the HUD appraisal.

If the buyer is using any other type of financing, the existing HUD appraisal is meaningless.  You will need a new one.

OVER ASKING PRICE?

But if the house goes into multiple offers, the buyers using FHA financing are hamstrung by the HUD Appraisal. Sure, they can offer more than the HUD appraisal, but any amount they offer above the asking appraisal amount will be additional cash out of their pocket above the standard FHA down payment of 3.5%.

For example, a HUD Home is on the market for $100,000 with an existing HUD appraisal at $100,000.  There are multiple offers.  You want the house.  You offer $105,000. Therefore your down payment is $8,675 (3.5% of $105,000 PLUS the $5,000 above the appraisal price).