John Murphy’s MEDINA REAL ESTATE REPORT

The Office of Federal Housing Enterprise Oversight has a lot of terrific information about the U.S. housing market. I believe the data they report is based strictly upon the information they receive from Fannie Mac and Ginnie Mae loans which are loans with a maximum loan amount of $417,000.

Their mission in linked here with a brief paragraph about them copied below:

OFHEO’s mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). OFHEO works to ensure the capital adequacy and financial safety and soundness of two housing government-sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are the nation’s largest housing finance institutions. They buy mortgages from commercial banks, thrift institutions, mortgage banks, and other primary lenders, and either hold these mortgages in their own portfolios or package them into mortgage-backed securities for resale to investors. These secondary mortgage market operations play a major role in creating a ready supply of mortgage funds for American homebuyers. Combined assets and off-balance sheet obligations of Fannie Mae and Freddie Mac were $4.2 trillion at year-end 2005.

They are known for publishing this report on the House Price Index each quarter. For their most recent report published on May 31, 2007, they showed that home prices were 4% higher for Q107 vs. Q106.

I will add the OFHEO web site to my links to the right.

Home Services of America is the company that owns Edina Realty and several other real estate brokerages across the country.  Home Services is owned by Warren Buffet.

USA Today interviewed Home Services CEO, Ron Peltier, in yesterday’s edition.  Mr. Peltier discusses Home Services strategy to keep the brokerage brands local rather than rebranding under a national brand like Re/Max or Coldwell Banker.

Full disclosure - I am an agent with Edina Realty’s Wayzata Office.

Jim Buchta published this story yesterday about the challenge buyers and their agents face when trying to purchase homes either in foreclosure or in pre-foreclosure requiring a short sale.

With all the seminars coming to town and the news media reporting all the bad news about foreclosures, many think it should be easy to find a deal in the foreclosure market.  If you’re incredibly patient and have lots of flexibility as to when you can close, buying a foreclosure might be right for you.

The City of Medina now has a separate web page dedicated to recent news about the City of Medina, MN.  It’s helpful to be able to provide this link.

The New York Times did a great job with this interactive map.  They have pricing trends for 20 metro areas across the country including the Twin Cities.

The National Association of Realtors published their second quarter report for 149 metro areas.  The Twin Cities showed a decrease in prices of 2.5% so far this year.

The table is excellent because you can sort it by metro areas, median home sales prices, or % increase or decrease.

The biggest jump in the country occurred in Salt Lake City where the median prices home jumped 21.9%.

Representative John Dingell wants to Congress to pass a law eliminating the mortgage interest deduction for those who own homes that are larger than 3,000 square feet. The reason is because apparently they use too much energy.

I have a call in to his office at 202-225-4071 to see if his staff can clarify a few things. For example, what exactly does he mean by 3,000 square feet?

1) Does this only count for above ground square footage?

2) What if someone has a 2,500 square foot 2-story but an unfinished basement. If they go ahead and decide to pull a permit to finish the 1,000 square feet in the basement they will be at 3,500 finished square feet. Does this home owner then lose their mortgage interest deduction?

This seems to be a precursor to the types of ideas we’ll see when Hillary Clinton is elected President next year and if the Democrats control both houses.

The elites in Washington D.C. despise the successful upper middle class. Meanwhile, if this bill gets passed, it will ultimately hurt all of Dingell’s and the Democrats’ buddies in the trade unions. They won’t be building too many “McMansions.”

The U.S. could be energy independent if those in charge wanted to be independent, but they have no intention of doing so. By keeping an artificially constrained energy market in place, they can call for $.50 per gallon gas taxes, arbitrarily raise MPG requirements for auto manufacturers, dis-incentivize ownership of large homes and waste billions of tax payer dollars on ineffective light rail.

Soon the carbon tax will make it through congress creating another multi-billion bureaucracy designed to limit our lifestyle choices in the U.S. I have been on record with friends to say that ultimately, people will need a government issued permit in order to go ahead and have a child. After all, that child is just going to pollute and crap all over the planet in their zero sum game. There have already been calls by some crazies on the left for an elimination of half the world’s population. We must stop Global Warming. Humans are the cause. We must nip this problem in the bud.
Remember: the earth is your mother. People are bad. This is the New World Order.

I don’t know about you, but it seems everyone is coming to the Twin Cities to sell their “Riches in Foreclosures” seminars.

It seems you can’t listen to the radio or open the newspaper with advertisements for the latest real estate guru coming to town to teach people how to buy foreclosures.  I can’t help but wonder when everyone is rushing in, does this mean we’re near the top in foreclosures?

Looking at the numbers and talking to experts in the trenches, it does seem like we have at least another year of growing numbers of foreclosures in the Twin Cities.  Here’s the challenge though.  It’s not as easy as some of these experts make it out to be with regard to buying foreclosures.  Surely the seminars are educational and very informative.  I recommend anyone who has an interest in this area to attend as many of these as you can.  The initial seminar is fee and usually runs two hours.  All of them are trying to get the average consumer to purchase an additional 3-5 day seminar for $500 - $3500.

We all hear about the rising foreclosures, but many of these are not the foreclosures of yesteryear where there was still a lot of equity in the home.  Certainly there are some of those out there, but a lot of what we’re seeing is someone purchased a home for $275,000 and has mortgages of $250,000 to $275,000 on the home.  Now the home is worth $220,000 to $240,000 given the changes in the market.  The home owner is upside down.  The bank is losing money.  A short sale will need to be involved which takes time and often leaves the present home owner or seller, with a substantial tax bill to the IRS.

I’m not saying there isn’t money to be made and a service to be provided to upside homeowners, it’s just that if it were as easy as the advertisements suggest, everyone would be making money at this.  The fact is they aren’t.

Realty Times has an in-depth article on the Fed’s recent decision to cut the Federal Discount Rate for banks.  While this affects back end transactions of banks borrowing from the Fed, it will allow for better liquidity which should help mortgage rates to continue to drop.

The market seized up last week with many brokers not able to write jumbo mortgages or else they came with an 8+% rate which was a big jump from two weeks before.  Jumbos are anything over $417,000 for a mortgage.
Word on the street is the panic seems to have subsided and people are once again able to get jumbo loans.  Whether this is a temporary calm or a more permanent one, only time will tell.

This is a much belated shameless plug for an article that ran in the Star Tribune on August 11, 2007.

Jim Buchta wrote a story called, “Eye of the Storm: No Relief In Sight for Housing Market.”  It was published just before all hell broke loose in the mortgage market that following Monday.

Here’s where I’m quoted from Jim Buchta:

Still, loan officers and sales agents face a more challenging environment. John Murphy, a sales agent with Edina Realty’s Wayzata office, said that what’s happening on Wall Street has already trickled down to the local markets.

Slow and getting slower

“The market has been slow anyway and it seems to be slowing it down even further,” Murphy said. “Properties aren’t moving as fast and buyers are taking longer to get their financing together.”

Right now, for example, he’s representing a buyer who has a signed purchase agreement, but has been trying for two weeks to line up financing.

And he’s becoming more cautious now when it comes to working with buyers who are getting financing from companies he’s not familiar with.

“If it’s a company that I’m not familiar with, I want to talk with the buyer’s loan officer to make sure that the loan is going to work,” he said. “It’s just all a little trickier.”

Since the Star Tribune published this story, that mortgage market has only become more complicated and challenging.