The Don Edam Group | Real Estate Professionals Serving Minneapolis, Edina, St. Paul and Surrounding Suburbs

We’ve been hearing it through the grapevine for awhile now…some of the larger equity investment groups are purchasing thousands of homes to add to their portfolio, with the intent to rent them.  Now, the New York Times has put together an informative and concise article with some of the details. While we haven’t heard of any of these large scale purchases happening in the Minneapolis area, we’re keeping our ear close to the ground as it would be a great boon (by decreasing inventories further) to an already accelerating spring market.

The federal government released some of the broad items that the revamped Home Affordable Refinance Program (HARP) will address today.  While I understand they are attempting to placate the part of the market that has kept up to date on their mortgages while their home value has fallen below their mortgage balance, I don’t get how this is going to help the public in general…and especially the housing market.

While the details of the program are scant so far, it is the belief of most that homeowners who have been current for their last 6 months on their mortgage and who have missed no more than 1 payment in the last year will meet the bare minimum of eligibility for the program.  Other factors, such as credit score, will also be in play within the determination if someone qualifies or not.

From the side of the banks, I don’t understand why a bank would be incentivized to refinance or take on a mortgage with a loan to value over 100%.  These homeowners are much more likely to default if times get tough. (we’ll see what types of incentives the government ends up giving them)

From a housing market perspective, I don’t see HARP really having any effect.  Those that are currently current on payments and that would like to stay in their home will probably not make a move whether they were given the opportunity to move or not.

All I see this program as is a way to make a certain segment of voters happy.  Those who were current on their mortgage payments, but underwater with their loans, and angry that other people who were behind on their mortgages were getting ‘bailed-out’.  But, as always, its just my opinion…let me know if you think I’m right or wrong.

I’ll update this post as more details become available on HARP.

Regulators from the FDIC and Federal Reserve unanimously approved a draft version of mortgage-lending rules that could drastically hike up mortgage costs to potential homeowners.  The two main things I took out of the various articles I read were:

A provision in which each bank that bundles and sells mortgages and loans as securities will need to keep 5% of that credit risk (thus hopefully giving incentive for those banks to be more careful with who they lend money to in the first place).

and

the proposal would eventually reset what constitutes a prime mortgage as only those to borrowers who make down payments of at least 20%, with higher equity levels required for refinances. (with about 46% of homeowners having less than 20% equity in their current homes, this would obviously reduce homeownership through higher costs)

There still could be a good amount that changes between now and when the FDIC and Fed enact these changes.  It should be an interesting (and very important) story to follow over the next 2-4 months.

The article from the Wall Street Journal is here

According to Forbes, Minneapolis currently has the second lowest rental vacancy rate in the nation at 3.3%. This is in accordance with what we saw occur over the fall and winter time period where a good amount of our clients were choosing to rent for a short period of time in between selling their home and purchasing another. While this did mean multiple moves, it allowed some of our clients time to breathe when their home sold a little quicker than they thought it would and they weren’t quite ready to purchase yet. We also saw nearly all of our short-sale clients end up renting after their sale closed. Buyer activity has definitely been picking up over the past couple weeks, but we’ll see if that becomes a trend instead of a mirage, or if clients continue to choose rentals over purchases.

The Top 10 from Forbes:

1. New York, NY: 2.4% vacancy
2. Minneapolis, MN: 3.3% vacancy
3. San Diego, CA: 3.4% vacancy (tied)
4. San Jose, CA: 3.4% vacancy (tied)
5. Jersey City, NJ: 3.5% vacancy
6. San Francisco, CA: 3.6% vacancy
7. New Haven and Fairfield County, CT: 3.7% vacancy
8. Portland, OR: 3.8% vacancy
9. Philadelphia, PA: 3.9% vacancy
10. Milwaukee, WI: 4% vacancy

The full post is here: 10 Cities Where the Rental Markets are Rebounding (Forbes)

While us Minnesotans suffer through our normal end of January cold spell. I thought I’d share a fun little trick that impresses my kids every time. Making boiling water freeze instantly (done this morning at -15 degrees) :