Around 35% of people looking for homes fall into the first-time category. The pursuit of a new home foments both excitement and stress, but for good reason. Obviously, you have never committed to such a large financial investment in your life. Though you may not be a real estate expert, you can take the critical steps required to choose a home that’s perfect for you and priced appropriately. Continue reading…
Lake Minnetonka homes for sale are a lot like those in other markets across the country. Searching for a home is a process – and it can be a painstaking one in a competitive real estate market. With fewer houses for sale and more potential buyers than sellers, it's a classic scenario of the law of supply and demand. When the supply is low and the demand is high, the competition heats up. Let's examine ten signs to know you're in a competitive housing market.
Lake Minnetonka Homes for Sale Spur Competition
1. Cash – as always – is king. You know you're in a competitive market when there are cash offers made by prospective buyers vying for the same house. Because cash is so "immediate" and usually contains no "strings" or "red tape," most sellers are more partial to cash offers than those involving a mortgage. Assuming the sales price and resulting offer is the same or fairly close, a cash sale will usually win every time. It's hard to compete with a buyer who's ready to pay cash and forego the time it would take for a loan to be processed and approved.
2. Expect war – a bidding war. When competition is stiff, usually every player brings his "A game." What makes the competition both interesting and stressful are the lengths that prospective buyers go to get what they want. Usually that means outbidding any and all competitors. Most real estate agents agree the Lake Minnetonka homes for sale over which bidding wars are waged are those that have a combination of three unique features. Sellers with houses attractively priced, in very good condition and in a great locations are likely to find themselves the beneficiary of multiple offers. Best of all – at least for the sellers – is that each offer is usually surpassed by an even higher offer.
3. If your city is popular, you can expect to pay more. Remember when you were renting? The newest or most popular apartment complex always had a waiting list. That's because its popularity spread and with it the demand for living there increased. Cities and metropolitan areas are similar in that respect. A progressive, popular, "in place" to live usually benefits in a higher-priced housing market. Real estate experts say the keys to look for are where certain industries are locating, since jobs will be created. The growing technology sector is a good example. In cities where that industry has grown, so have the outlying communities and the housing prices. Analysts also recommend looking for trendy retail stores, coffee shops, restaurant chains, niche-market grocery or health food stores and yoga and fitness centers.
4. You start hearing about "escalation clauses." If you're beginning to understand for the first time in your life exactly what an "escalation clause" is, you're probably in a competitive real estate market. A bid you may submit to purchase a home you have your eye on may include an escalation clause. Simply put, it means you're prepared to increase your offer up to a specified maximum in order to outbid other buyers. Not only is it a time-saver because you and your agent don't have to go back and forth with the seller, it demonstrates to the seller that you're serious about buying his home and paying whatever it takes – within reason – to be the successful bidder.
5. You may have to go the extra mile. Buying Lake Minnetonka homes for sale can be an emotional experience, for sellers too. And included in that emotion are often ideas that accompany offers designed to give buyers an advantage over their competition. A savvy real estate agent can assist you greatly here. Knowing what will motivate a seller or knowing when they want to close or move is one way a buyer can potentially gain an advantage. In addition, playing to a seller's heartstrings sometimes works, too. For example, buyers who write a personal letter outlining why they want to buy the home and raise their children in the neighborhood that was so important to the seller and his family may find themselves closing the deal.
6. If the sales price exceeds the asking price. Again, it's simple supply and demand. If there's greater competition for the same house, not only are there bidding wars and escalation clauses, many times there are offers that are higher than the home's listing price.
7. More than one offer – from a variety of purchasers. Multiple offers are a lot like being in an auction. As soon as one offer is made, another higher offer follows – then others after that! Naturally, that's a telltale sign that you're in a competitive market with Lake Minnetonka homes for sale.
8. The cupboards are bare. Ever been to the grocery store when a storm or other weather event is expected? Many of the popular staple foods like bread, milk, or bottled water may be in short supply. Other shoppers have beat you to the punch and bought their selections first. It's the same with a tight real estate market. You may search online for homes in a certain market, only to find they, too, are in short supply. Usually that means the remaining homes on the market are being viewed and visited by a larger number of people – all vying for the same purchasing opportunity.
9. The "ripple effect" in adjacent neighborhoods. In popular neighborhoods, it's not unusual for areas nearby to enjoy the "ripple effect," allowing those neighborhoods to enjoy increased interest and higher sales prices.
10. Deadlines. One of the more popular selling tactics in a competitive market is to set a deadline or cutoff date whereby any and all bids must be submitted. The seller, of course, isn't obligated to accept any of the bids, but usually if there are multiple bids, chances are there's at least one that will be selected.
See more articles pertaining to Lake Minnetonka homes for sale in the Lake Minnetonka Real Estate section of our site below Lake Minnetonka Real Estate Categories in the column to your right. As always, you can find information here on a variety of topics ranging from home buying and home selling tips to home improvements, home inspections, mortgage financing, homeowner's insurance and of course, all the latest Lake Minnetonka real estate news that affects all of these categories.
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Your current Lake Minnetonka home may or may not be the place you’ll end up living when you retire. Many of us have dreams of retiring to a secluded beach or some other relaxing location. Statistically, however, most people never leave “home” when they retire. Let’s look at a few reasons to stay put when you retire.
Lake Minnetonka Home Perfect for Retirement
According to a study by the Center for Retirement Research at Boston College, only 7% of the older U.S. population move every year. Despite improvement in the economy allowing for greater relocation, a recent AARP survey found that as people near retirement they plan to stay in their current home. Here’s what retirees and soon-to-be-retirees think.
Home is where the heart is.
It’s more than just an old adage. It’s a frame of mind. People become attached to where they spend most of their time. Communities that they’ve lived in for a long time are usually near and dear to them. They feel comfortable there and they like that.
My friends all live here.
As people age they remember friendships and relationships forged over time. They may include church membership, service organization or a bridge club, and these personal connections are important. Experts say that a strong social network if vital in the happiness of an aging population. As one retiree asked rhetorically, “Where am I going to find friends like the ones I have now?”
People usually retire where they are.
Baby boomers were accustomed to moving to different parts of the state or country for job opportunities. Many didn’t settle down in one place until they were in their 40s. Usually after that, there are children involved and it becomes a little more difficult to move them away from their friends, their school and the towns they grew up in. And, let’s face it, as we get older we don’t really relish the idea of packing up and relocating to a completely new part of the U. S. In addition, it costs a lot of money to move. There’s a lot to be said for feeling comfortable and content.
It need not cost a lot to prepare your Lake Minnetonka home for retirement.
Of course, you can spend a bundle if you decide to remodel your whole house. Yet many of the improvements regarding safety as we age needn’t cost all that much. Improving lighting in hallways or along stairs, adding grab bars or raised toilets in the bathroom aren’t expensive projects.
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The market for Lake Minnetonka homes as well as the nationwide real estate home buying market has often placed the blame on recent drops in the number of homebuyers on the Millennials. A new study now shows that Generation X should shoulder part of the responsibility as well.
The rate of homeownership in the U.S. has consistently fallen each year since 2005. New evidence shows that Gen Xers are part of the decline. Owning a home among the age group 35-54 has declined more than any other age group for the past 22 years.
Fewer Gen Xers and Millennials Buying Lake Minnetonka Homes
Harvard University's State of the Nation's Housing 2015 report reveals homeownership among those aged 35-54 has dropped the most of any other age group since 1993, especially those under age 44.
Daniel McCue, senior research associate at The Joint Center for Housing Study of Harvard University said, "The market peaked right when they were at peak first-time buying age."
The generation's older members were particularly unlucky because when they were at the age where most people tend to trade up to larger homes, the housing crisis occurred. "They were subject to the decline in home prices, which made [some homes] subject to distress, underwater and delinquency," McCue said.
The current homeownership rate of 63.7% has been buoyed in large measure by Baby Boomers. This trend seems unlikely to continue for the Gen Xers due to their smaller population. When we look at Millennials, their homeownership rates are low … they have a much higher chance of building careers and catching up, but for those aged 35-44 it's more of a question.
Generation X, which the Harvard study defined as people born from 1965-1984, occupy an important place in today's housing market. As they trade up to larger, more affluent homes, inventory becomes available for new first-time purchasers of Lake Minnetonka homes.
However, the study finds, such is not the case. The number of homeowners aged 35-39 has dropped 23% from 10 years ago.
Gen Xers seem to be staying put in the rental market longer than before. The normal cycle of renting and moving onto homeownership and making room for younger renters to follow isn't happening as quickly.
Furthermore, it appears they may not become buyers of Lake Minnetonka homes any time soon since greater rental demand has pushed rent to new highs, making it harder for them to save money for a sufficient down payment.
In addition, the lack of job and wage growth continues to make ownership of Lake Minnetonka homes a challenge to most and a fiscal hardship to many. In households aged 35-44 incomes are at mid-1980s levels and for people aged 45-54 incomes are at the lowest levels since the late 1960s.
Experts say repercussions and scars from the recent housing crisis have made prospective buyers hesitant to buy. However, Gen Xers could participate in owning Lake Minnetonka homes as those who lost their homes through foreclosures or short sales return to the home buying market.
Of the 11 million homeowners who lost homes to foreclosures during the housing crisis, only about 2 million have returned to the home buying market. It is expected that the market will see a gradual return of the remaining 8-9 million as they convert from paying rent to owning again, but industry experts warn it may take some time to fully realize the gain.
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According to recent data from the U.S. Census Bureau, larger Lake Minnetonka homes are making a comeback, and bigger than ever. After a few years of shrinkage in the aftermath of the Great Recession, the median square footage of newly built Lake Minnetonka homes last year tipped the scales at over 2,400 square feet. That's nearly 1,000 square feet larger than the median home built in 1992. The death of the McMansion has been greatly exaggerated.
Buyers Screaming for Larger Lake Minnetonka Homes
Back in 2011, many observers were predicting the end of the McMansion era. But five years into the recovery that hardly even feels like one, homebuilders have returned to the old ways of building larger Lake Minnetonka homes. The recession was supposed to usher in a return to the dense, urban and walkable. Instead, the opposite has happened.
Young first-time buyers, who are less inclined to buy big suburban houses, are largely staying away from the market altogether. Credit requirements are still much tighter than they were before the housing collapse, so much of the activity in the housing market is from wealthier families looking to trade up – and they're looking for bigger and better Lake Minnetonka homes.
On one level, builders building Lake Minnetonka homes may be inclined to build communities that reflect their own values. This isn't a problem if potential buyers share those values too – but what if they don't?
One potential sign of trouble might be the homeownership rate, which at the end of 2014 reached its lowest level in 25 years. That's not necessarily a bad thing. Data shows the economy added millions of new households in 2014 as more people lived in shared arrangements – including some of those young adults staying with mom and dad – struck out on their own. Most of them decided to rent. That could carry over to an uptick in the homeownership rate in the coming year as more renters decide to buy.
Sizes of Lake Minnetonka homes are rising even as sales have slowed because builders have competed for affluent buyers who aren't likely to run into trouble qualifying for a mortgage and saving for a down payment.
Get more information as it pertains to buying Lake Minnetonka homes in our section on Lake Minnetonka Real Estate to your right under Lake Minnetonka Real Estate Categories. We also post tips daily on Twitter and Facebook, sometimes pertaining directly to Lake Minnetonka homes and the current trend of the Lake Minnetonka housing market. Find us there as well.
When the housing bubble burst, the desire for buyers to want bigger Lake Minnetonka homes faded, but according to trends and statistics, that was short-lived and seems to be back to its 80-year trend of buyers wanting larger homes.
Trends Moving Toward Bigger Lake Minnetonka Homes
Zillow Chief Economist Stan Humphries says the trend is back to buyers wanting bigger Lake Minnetonka homes again. He spoke on "Bloomberg Surveillance" about the current trends and market data that is available today. He also talks about what rising interest rates may do to the Lake Minnetonka homes market…
Rising prices of Lake Minnetonka homes have helped restore home equity to many, but more than a third of potential homebuyers — 38 percent — earning the national median household income of $63,900 cannot afford to buy Lake Minnetonka homes that sold over the last quarter.
Rising Prices of Lake Minnetonka Homes Partly to Blame
The rising prices of Lake Minnetonka homes are partly to blame, along with stagnant incomes, mounting student loan debt and tougher credit standards requiring unattainable down payments.
The national median home price increased from $214,000 in the second quarter to $221,000 in the third quarter. Meanwhile, average mortgage interest rates slid from 4.44 percent to 4.35 percent in the same period, according to home builders.
“Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards,” according to NAHB Chief Economist David Crowe. “Rising employment and incomes, interest rates that remain near historically low levels, and pent-up demand should contribute to positive momentum heading into next year.”
Overall, 61.8 percent of new and existing Lake Minnetonka homes sold between the beginning of July and the end of September were affordable to families earning the U.S. median income. That's down from the 62.6 percent of homes sold that were affordable to median-income earners in the second quarter.
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Families are losing their Lake Minnetonka homes because of unpaid utility bills. It's happening all over America, not just in the Lake Minnetonka area…
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A majority of Baby Boomers surveyed recently by the non-profit Demand Institute say they plan to stay put in their Lake Minnetonka homes.
Many of the decisions to stay in their Lake Minnetonka homes has to do with the recession. The financial crisis put an end to years of rapid wealth accumulation, causing the typical Boomer household's net worth to fall to $143,000 in 2013 from just over $200,000 in 2007, according to Federal Reserve data.
The Boomer generation is also carrying a lot more mortgage debt. The survey found that the median outstanding mortgage balance for 50- to 69-year-olds was $118,000 in 2013, up from $48,743 in 1992. Financially, the Boomer generation is not necessarily ready for retirement, and half of their assets are tied up in their homes.
37% of the Boomers surveyed said they were planning to make a move, however. Nearly half of the movers said they wanted to get a bigger place — and that they intended to spend more money on it. But with a median net worth of just $40,000, this group was among some of the least wealthy surveyed. In fact, the report found that many of those who were looking to "up-size" were also looking to switch from renting to owning.
Many Baby Boomers Plan to Remodel Their Lake Minnetonka Homes
Boomers seemed generally unconcerned about whether or not it would be "aging-friendly" — even though a whopping three-quarters of them reported having significant health issues, such as cardiovascular conditions, arthritis, obesity and high blood pressure. Only one-in-five of the movers said they intend to live in senior housing.
Instead, many of those surveyed said they plan to use their money to remodel things like kitchens and bathrooms in order to increase the value of their existing Lake Minnetonka homes.
More than 17% of the 76 million Boomers are already retired and about 10,000 will reach the traditional retirement age of 65 every day for the next 15 years. And even though many Boomers plan to stay in their current Lake Minnetonka homes, the Demand Institute estimates that nationwide, this generation will purchase about $1.9 trillion in homes over the next five years.
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