If you’re in the market to buy a home in Minnesota, or many other parts of the U.S., you know what we mean when we say “Yikes!” First, there are so few homes available, especially in the more popular price ranges (such as those for first-time buyers) that those in good condition sell quickly, sometimes with multiple offers and many selling for much more than list price! 

A tight inventory of available homes drives up prices. Now, if you’re a homeowner considering selling your home, this is good news because you’ll get top dollar (again, if your home is in good condition). For homebuyers, however, it’s beyond frustrating. On the flipside, if you’re in the market to sell your home, then you are likely in the market to also buy a home (not so fun…)

The housing supply is now at its lowest level since the 1970s, due to millennial homeownership and other factors such as rising building prices, along with higher priced new construction homes and real estate speculators snapping up starter homes. Low mortgage rates, coupled with more work-from-home possibilities created by the pandemic, have also fueled a rise in housing demand.

So, how long is this situation going to last and what needs to happen to stabilize this market for buyers?

One thing that would help is for builders to build more new homes. “Single-family home construction is running at the slowest pace since 1995,” says Diana Olick at cnbc.com. One reason for that is the substantial increase in home building materials. 

“More housing construction will help — and it has been increasing — but the United States has been underbuilding for so long that it’ll take years to meet demand, according to Emily Badger with the New York Times.

So, why aren’t they building?

There are a number of reasons that developers have backed off residential construction. Money, of course, is at the root of most of them, but effects of the pandemic, such as the supply chain crunch are certainly contributing factors as well.

“Builders report shortages of windows and doors and flooring and appliances, and I’ve even heard stories of garage doors that are not going to arrive for months,” Robert Dietzhe with the Home Builders Association tells marketplace.org’s Mitchell Hartman.

Add a worker shortage to the supply chain issues and it’s understandable why the pace of new-home construction isn’t anywhere near where it should be.

“As more skilled workers retire from the industry … not enough young people are coming in,” Ed Brady, CEO of the Home Builders Institute tells Amy Scott at marketplace.org.

Additional challenges to the construction industry include “The pandemic, … growing inflation, … and the potential passage of all or part of the Build Back Better legislation …”  could have a dramatic impact on the construction sector this year,” said American Institute of Architects chief economist Kermit Baker.

Then, there is the existing home market.

When will prices come down?

Most of the factors that are encouraging a rise in home prices interact. So, if one factor changes, it may help the others to loosen their grip on the market. These factors include (but aren’t limited to):

• Not enough homeowners selling their homes
• Soft supply of newly constructed homes
• High demand for homes
• Low mortgage rates
• An improving labor market

The factor with the most impact right now is that there aren’t enough homes for sale to meet the demand. Even with the expected mortgage rate hikes this year, there won’t be homes to meet the demands of homebuyers left in the market, according to Ally Yale with The Motley Fool.

“… it’s likely that price growth will start to taper off as we get further into 2022,” she notes. “Make no mistake, though: Prices aren’t suddenly going to drop,” this year.

As you can see, when home prices will reverse their ascent is anybody’s guess. There are just too many variables to allow for an accurate prediction. Since we keep our eye on the economy, however, keep checking back for updates.

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For the foreseeable future, at least here in the Twin Cities, there will likely be a shortage of available homes on the market. That, coupled with historically affordable interest rates, will likely push prices even higher and create an even more competitive housing market for all those involved! It’s always best practice to meet with your lender FIRST so you can secure a pre-approval letter, then start looking at homes. You’ll also want to make sure you are working with a local, experienced Realtor, to help you avoid all the pit-falls of such turbulent and unpredictable market!

Check out my Buyer’s Guide for more tips and tricks!

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Here are some of our recent blog posts….

• What’s behind rising home prices in Minnesota, and many parts of the U.S.?
• 10 Things To Bring With You When House Hunting
• 5 hot features home sellers frequently forget to mention…
• How to save money when you buy a home
• Moving to Minnesota? Here Are 9 Reasons Why You Should!

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Looking at houses to buy can be a ton of fun, but it can also get tiring and overwhelming if you don’t come prepared! But unless you do it for a living, you might not know what to bring with you when you’re house hunting.

To make sure you spend more time enjoying your home search, and less time stressing, here are 10 things you should gather up when you head out to see houses:

1) A watch

OK fine, your phone will do. Just make sure you have a way to keep an eye on the time, and be on time! Not just because it’s courteous to your real estate agent (who likely has a busy schedule), but also for the homeowners who are probably leaving their house so you can view it without them breathing down your neck the whole time. Not to mention other buyers who may have an appointment to see the house after you.

2) Your “needs and wants” list

Before you even start actually looking at houses, you should create a list of things you absolutely need in a house, and a list of the things you want (but could live without). It will help you truly assess whether each house meets your needs or not. Pro tip: make it into a checklist and print one out for each house so you can check the items off as you view it.

3) Notepad and pen

A checklist won’t cut it for everything. Sometimes you need to jot down a few notes that you’ll want to remember about each house. They start to blend together after a while, and you can easily forget something you loved (or hated) about a house. Better to grab yourself a notepad and pen than it is to scribble notes on your hand!

4) A measuring tape

Got yourself a king size bed, or an heirloom piece of furniture you can’t live without? Then you better make sure it’ll fit in the house you choose. Better to know right away than to wait until you’re under contract, so bring a tape measure and the dimensions of the furniture you care about, and make sure it fits in the space when you first see the house.

5) Snacks

While it’s fine to look in the cabinets of the houses you look at, it’s a no-no to snag a snack out of them. You’d be surprised how hungry you get when you’re out looking at houses, but especially when you’re making an entire day of it. So pack a snack or two before you hit the road.

6) Coffee

More of a coffee fiend than a snack hound? Then make sure you stop at Starbucks on your way to the first house. (Can’t hurt to grab one for your agent while you’re at it! Just sayin’…)

7) Shoes that are easy to slip off and on

It might not sound like a big deal, but taking your shoes off and putting them back on every time you enter and leave a house can get annoying. Many homeowners will want you to take your shoes off when walking through their home, so make life easier on yourself and wear shoes that are easy to slip off and on.

8) Booties

Alternatively, you could wear whatever shoes you desire, and just hope that the owner provides booties for you to slip over them. That said, those things can get kind of gross with so many other buyers using them before you. So, if that grosses you out, you may want to buy some booties of your own and B.Y.O.B.

9) People with opinions

If you have someone in your life who has a say in any way about the house you buy, bring ‘em along as early and often in the process as possible. If you bring your parents, or a trusted friend to chime in to just the house you decide to buy, they won’t have all of the context they need to give a valuable opinion. They need to see the houses you didn’t like, as much as they need to see the house you love. (It’s especially important to include them in the process if they are chipping in money for your down payment or closing costs!)

10) A checkbook

You never know which house will be “the one,” and when you know, you know. And if you know it’s a great house, there’s a chance another buyer will too, so make sure you’re ready to pounce and make an offer. Bring your checkbook along so you can write out an earnest money deposit to show the sellers you’re serious — before someone else swoops in and swipes your home-to-be!

Now you’re ready to house hunt like a pro; let’s get out there and find your dream home!

When selling a home, homeowners depend on their agents to ensure that the home is sufficiently marketed. And, that’s understandable.

What many home sellers don’t understand, however, is how much knowledge they have about the home – knowledge that, in the hands of the right listing agent – can be transformed into powerful marketing points.

Before the home goes on the market, do yourself a favor and brainstorm all the positive aspects of your home. Here are five to get you started.

1. Why did you buy your current home?

Something powerful attracted you to the home and whatever it is might just be worth mentioning in the home’s marketing materials.

Take a mental walk-through of your life as you were house hunting and happened upon your current home. From location to floor plan, something struck you and made you fall in love with the property.

Share this information with your listing agent.

2. Chemical-free and/or eco-friendly home improvements and maintenance projects.

If the paint on your walls is free of VOCs, your home is tested annually for radon, or your furnace and air conditioner contains allergy-free components, put that on your list.

If you replaced your front door with an energy-efficient model, that’s a selling point.

Anything you’ve done to the interior or exterior that is chemical free or eco-friendly is something your listing agent needs to know about.

3. Nearby amenities that are popular with neighborhood residents

Real estate agents understand that nearby parks and schools are worth mentioning in an MLS listing.

But you live in the neighborhood and are more aware of what your neighbors find valuable. If there is an attraction or amenity nearby that is particularly popular, it’s worth mentioning to your real estate agent.

Think outside of your own preferences. For instance, you may not care that the airport is a quick 10 minute drive from the neighborhood, but it may just snag a potential buyer who takes frequent business trips.

4. Is your home baby boomer bait?

Older Americans aren’t selling their homes as much as the experts thought they would. Yet, they still make up the largest share of home sellers.

They often seek one-story homes with the following attributes:

• Lots of storage space
• Low-maintenance landscaping
• A walkable neighborhood
• Low taxes
• Energy-saving windows and appliances

If your home boasts any of these features, marketing it to baby boomers may just snag the perfect buyer.

5. A dedicated laundry room will help sell your house

If you’re like most Americans, the laundry room is the workhorse of the home. It’s also usually the most neglected room when it comes to deep cleaning and décor.

According to a study by the National Association of Home Builders (NAHB), a laundry room is an essential, according to 76% of the homebuyers they surveyed.

In fact, it took the number one spot on the list of what second-time homebuyers consider “essential.” It’s second to a living room on the list of essentials for first-time homebuyers.

If your home has a dedicated laundry room, make it the star of the home. Clean it until it’s immaculate. Consider a new, light-colored coat of paint and some yummy décor to make it irresistible.

You’ll find inspiration online at pinterest.com, ashleywinndesign.com and thespruce.com.

If you’re considering buying a home, statistics say that one of the first things you’ll do is surf the Internet. From looking at homes for sale to learning about the process and choosing a real estate agent, you’ll find lots of information.

Be forewarned, however, that not everything you read is factual. For instance, some real estate agents, especially, recommend that your first step to homeownership is to hire a real estate agent.

While it’s important that you go into the current market alongside an expert, the first and most important step doesn’t include hiring that expert.

All homebuyers who will not be paying cash for a home should see a lender before hiring an agent and WAY before looking at homes for sale, either online or in person. But even that isn’t the first step.

So, what is the first step?

It’s easy to feel overwhelmed with the homebuying process when all you really want to do is skip over the boring steps to get to the fun stuff: looking at homes.

Especially considering that the beginning of the homebuying process has to do with finances.

If your dream is to buy a decent home, in a decent area, with a comfortable mortgage payment, step one must come first: raise your credit score.

Raising your score even a smidge can make a huge difference

The Fair Isaac Corporation, commonly known as FICO, is an analytics company that takes all of your credit information and scores from the credit reporting agencies and calculates a FICO® scores

These scores can range from 300 to 850, and a “good” credit score is considered to be between 670 and 739.

Yes, many borrowers obtain an FHA-backed mortgage with lower scores and a lower down payment, but they pay more for the home in the end.

Plus, what many first-time homebuyers may not realize is that the loan that the FHA guarantees comes from a lender who will charge big-time interest rates because of a low FICO score.

Those rates result in a higher monthly home payment ― which will already be elevated because of the tiny down payment and FHA’s mandatory mortgage insurance premium that accompanies it.

Boosting your score, on the other hand, can mean big savings on your monthly mortgage payment.

Here’s a scenario, using a base rate we determined randomly (current rates are far lower). A borrower with a credit score of 700 to 759 might be offered a rate of 3.73 percent on a 30-year fixed rate loan. The borrower with a 620 to 639 score, on the other hand, would be offered a rate of 5.09 percent.

If you’re the low scorer in the above scenario you’ll pay $187 more a month on your mortgage payment than the high scorer. You will also pay $67,181 more in interest over the life of the loan.

If you were to raise your score to 640 you would end up saving more than $238,700. Raise it even higher, to 660, and you’ll save $42,000. Finally, if you can get that score up to 700 you will save more than $58,000.

As you can see, patience and a bit of hard work before you purchase a home definitely pays off.

How to boost that score quickly

At the very least, pay down bills, don’t apply for new credit and pay bills on time.

In fact, the folks at FICO specifically caution borrowers to cease the use of their credit cards completely and pay down what is owed on them.

Start paying off other debt that appears on your credit reports one-by-one; hack away at them and before you know it, those balances will be gone and your credit score will reflect the new, more financially responsible you.

Now you’re ready for step 2 of the home buying process – so strut into that lender’s office and confidently ask the representative to pull your credit score.

Automated access to MLS data is prohibited.