Over the past year, the sale of foreclosed homes has been depressing sale prices in the Brainerd lakes area, especially in the city of Brainerd, and homes for sale have stayed on the market longer.
But there may be good news on the horizon if the number of homes going into foreclosure continues to slow.
Of nonwaterfront property in Brainerd, 169 homes sold in 2008 for an average sale price of $102,059 compared to 135 homes this year through September for an average sale price of $88,786.
Greater Lakes Association of Realtors president Kevin Goedker, of Goedker Realty and Property Management in Baxter, said of all the homes that sold in the past 12 months, 26.6 percent of them were homes in foreclosure and 21 percent of all the current pending sales are foreclosures. Goedker said of all the properties currently on the market, only 2.8 percent of them are foreclosures.
"There has been a lot of activity on foreclosures and most of them have sold, giving the typical homeowner a better chance of getting a better price for their home," said Goedker. "Foreclosures have had an impact on the market and now that the inventory is down, there will not be as much competition. It's simple supply and demand.
"However, with that being said, there is a rumor of another wave of foreclosures entering the market, but I'm not sure if or when that will happen. We'll have to wait and see."
Goedker said homes have been selling for less during the past year because foreclosures have affected property values across the board. But with the foreclosure properties leaving the market, Goedker said it is a good sign that the market could be on its way to a stable, more balanced market.
Today, the housing market continues to be a buyer's market. Goedker said a stable market would be a five- to six-month supply of homes. And currently, on average, there's an 18-month inventory of homes waiting to be sold. Broken down, Goedker said there is a nine-month supply of non-waterfront properties priced at $100,000 or less and a 39-month inventory of privately owned waterfront properties.
"The higher the price the tougher it is to sell," said Goedker.
In the Brainerd area of the multiple listing service, which consists of 17 central Minnesota counties, including Aitkin, Crow Wing, Cass, Morrison, Todd and Wadena - the total number of new listings in the first three quarters was down 8.5 percent, with 5,391 new listings in September of 2008 to 4,933 this September.
Goedker said October was a good selling month in the MLS and the number of new listings dropped even lower to 3,664 Wednesday.
In comparing the third quarters of 2008 and this year: The number of sold properties was down .6 percent from 1,512 sold properties in 2008 to 1,503 in 2009; the number of days on the market decreased 2.9 percent from 167 to 162 days; the average sales price decreased 14.2 percent from $205,163 to $176,018; and homeowners earned 1.2 percent less this year on their original asking price to bring the percentage down to 91.2 percent in 2009. The three-year average of 86.9 percent is the percentage of what homeowners received in relation to their asking sales price.
Goedker said the lower end lakeshore properties are moving, but the higher end ones are not selling as well.
Goedker said the type of home that seemed to be in high demand this year were those with three bedrooms, two baths and a two-stall garage. Goedker said there also was more demand for non-waterfront homes of $100,000 or less. Nearly half of the non-waterfront homes that sold in the first three quarters of the year were $100,000 or less.
A home had about a 50 percent chance of selling in Brainerd and Baxter in the first three quarters of 2009, based on the relationship between new listings that entered the market and homes that sold during that same period. In the six-county region, the percentage dropped to between 26 to 37 percent, with Cass County being the lowest at 26.5 percent of the number of homes selling.
Goedker said there were more homes priced around the $100,000 price range in the cities and that's why the homes sold faster. Goedker said Cass County may have been slower because it has higher end homes on the market, as its average price was $220,872.
Carol Medek, C-21 New Horizons Realty in Little Falls, who also is the MLS president, said the housing market is looking up.
"Things are picking up," Medek, who has been a real estate agent for 20 years, said. "Listings are down, sales are up and the days on the market are down. It's starting to come back. It's not the boom years we saw years ago, but an uptick is good."
Medek, who specializes in properties in Little Falls, said properties in Little Falls that were listed for $100,000 to $150,000 sold. Medek said just like the Brainerd area, Little Falls properties listed on the higher end were tougher to sell.
"Due to the economy, jobs are not secure, financing is definitely stiffer than it was and it's hard without good credit," said Medek. "Everything is looked at under a fine microscope ... Now it's more work for the buyer to get the financing accomplished."
Medek said homeowners who have lost their homes are now renting and that trend continues until they are able to rebuild their credit.
On a more positive, financial note, Medek said the federal housing $8,000 first-time homebuyers tax credit, which is part of President Obama's stimulus package, has helped push the market. Medek said it has brought out more buyers. The deadline for the credit is Nov. 30, meaning a first-time homebuyer must close on their home by this date.
Medek is hoping the tax credit is extended, which may happen.
Sunny Redding, a real estate agent with Keller Williams Realty Brainerd Lakes, Thursday was excited when she learned the tax credit may be extended. Redding works with many first-time homebuyers. Out of 26 transactions Redding has had this year, 19 were first-time homebuyers. In 2008, Redding said half of her sales were with first-time homebuyers.
Redding said if first-time homebuyers have not started the process of finding a home - and the tax credit is not extended - they most likely will be too late to make the Nov. 30 deadline. Redding said everyone from the bankers to the underwriters to the appraisers are busy right now with first-time homebuyers trying meet the deadline. Redding said if a person has not started the pre-approval process with a lender it could be too late for them to make the tax credit deadline.
Redding said those who have not owned a home in the past three years are considered first-time homebuyers.
"People are using the tax credit to pay their mortgage payments or doing updates on their new home, such as putting new windows in or even paying off their debt," said Redding. "The tax credit is great. My hope is that this $8,000 tax credit will be extended."
First-time homebuyers also are qualifying for zero down low interest rate loans, said Redding.
Reed Campbell, a mortgage consultant at American National Bank of Minnesota, said the bank has seen a 25 percent increase in its home mortgages this year compared to last year. Campbell said last year the interest rates were higher and with the recession, people were more wary about buying a home.
Campbell said the highest interest rates this year were in January and February when the interest rate on a 30-year loan was 6.5 percent and a 15-year loan was at 5.375 percent. The lowest rates were in October with a 4.62 percent interest rate on a 30-year loan and 4.25 percent on a 15-year loan.
Campbell, who has 35 years of banking experience, said getting a mortgage has become much tougher.
"It's gone back to the basics," said Campbell on getting a loan. "Everything has to fit, you need 20 percent down, a good credit score and the debt ratio has to be in line ... It's all going back to the way financing a home used to be done and regulated."
JENNIFER STOCKINGER may be reached at email@example.com or 855-5851.
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