Some good news hits the real estate market for 2012, as S & P/Case Schiller puts out its latest quarterly report. Several markets are showing noticeable recovery in individual home prices and in number of sales when compared to last year. Among those continuing to ascend are Minneapolis, Phoenix, Miami, Detroit, and Denver.

But we’re not out of the woods yet. Nine other major metros have shown new record lows in this post-crisis era. Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa are continuing to slide downward with only speculation as to where their bottom lies.

Phoenix, one of the now recovering cities, is still down 54.2% from its peak and considered one of the hardest hit MSAs (Metropolitan Statistical Areas) during the entire recession. They’ve now stationed five successive months of positive monthly returns and two consecutive months of positive annual returns, the latest being up 3.3%.

In stark contrast, Atlanta is still reaching new lows in the 20 years this data has been collected and reported. They posted a new historic drop of -17.3% annual return and a -2.5% monthly decline. They are also one of only 4 cities in the United States to have their January 2012 average sale prices continue to be below January 2000 home prices. They are joined by Cleveland, Las Vegas and the now-in-recovery Detroit who’s up 1.5% from 2011 data, second highest annual increase in the nation following Phoenix.

Of the improving markets several are even crossing over to being a “sellers market”, with  the primary telltale sign: having more buyers then there are homes for sale. This inventory shortage makes purchasing a home more competitive than in the recent few years in these markets. Minneapolis area Realtor Alex Anderson says “Well-priced homes are selling in days, not months, and getting multiple offers from eager buyers. The best ones are selling for well over their listed price and experienced buyers are putting down large sums of earnest money in hopes the seller will choose their offer over another.”

“With very little new construction to compete for sales in this market, flippers have a distinct advantage right now, and are the ones setting pricing standards in the neighborhoods they are flipping. The advantage they have is that they are selling a completely remodeled, refurbished home that will go onto the market and compete with John-Q-seller that has not done improvements to his house in years. Buyers want the fresh clean updated home and are willing to pay a premium for it.”

So, although we are off to a rocky start to 2012, and overall this country is still a mixed bag to be sure, we are showing some signs of a recovery from crisis. Interest rates are slated to remain low well into late 2014, hopefully continuing to stimulate buyers to buy, and, some say, leading our nation back to a place of stability.

What is a short sale exactly? That’s when the bank agrees to let the home go for less than the amount owed on the mortgage. And short sales are more commonly approved if the difference is not that great from what is owed on the home. If there is a second mortgage on the property, that lender must also approve or you won’t qualify. If the residence in underwater significantly, the bank may not be open to short sale options, and it varies greatly from lender to lender.

And the process is relatively fast, typically only 90 to 120 days assuming you’ve chosen a Realtor who specializes in short sales and knows their way around them. The bank will also require quite a bit of paperwork from you showing your hardship, tax returns, bank statements, pay stubs and other items depending on your specifics.

Don’t get frustrated, it is just the nature of the beast. They may even ask for documents you’ve already sent. This is commonplace and we recommend just sending the documents again until the bank is satisfied. And if they find you have significant liquid assets at your disposal, they will not approve a short sale in such a case.

Also, you will need to show significant or imminent hardship. This needs to be legitimate, straight forward, honest and factual information related to why you are in or near default. It is handy to know what qualifies as a “hardship” in the eyes of a bank. Some of the most obvious are loss of job (unemployment) or reduced income, loss of a spouse (death or divorce/separation), health related emergency or illness (including short or long term disability) and related medical bills, or other long term expenses increase, bankruptcy (personal/your business), job relocation, or military duty. Also, if you had the type of mortgage with an adjustable interest rate and your payments changed dramatically that will be a consideration of the bank. But if you don’t find yourself on this list, more than likely you won’t qualify. Banks don’t care if you just want to move to a different neighborhood, or a different school district. You must prove some type of hardship first if you want to be approved for a short sale.

Please keep in mind that even when you are approved for a short sale, have a great offer in your hands and are ready to go, the bank approval process is also a slow and arduous one. Just getting the approval and a clear to close letter itself may take months. Be aware of this going into the process, so that you’re not frustrated with your attorney or agent during the process. It is out of their hands and solely in the hands of your lender, and banks right now are completely backed up with short sales and foreclosures in Minnesota.

And as such, you may be one of the people who couldn’t find the money to keep paying your mortgage and now need some assistance with the next step. If this is you, fear not, help is available to you when you do decide to reach out. Entire teams of short sale negotiators and foreclosure specialists are experienced in negotiating with banks and fulfilling on their paperwork and follow up needs. It is entirely possible that a short sale can be settled with the bank, meaning a sale for less than what is owed on the property, or an agent may be able to reduce or even eliminate a promissory note on your behalf. Our agents will even negotiate with lenders to pay for commissions and closing costs, if the circumstances allow it. Having a 3rd party negotiating on your behalf can ease the stress of the financial circumstances.

And, depending on what stage of the foreclosure you’re in, we may be able to help you avoid foreclosure altogether. It just takes one call or email to find out. And our agents are sensitive to your circumstances. We know that life can throw you a curveball and that bad things can happen to good people. If you’re in a tight situation, our agents can even help advise you how to manage your property during the foreclosure process, making recommendations to make the experience go more smoothly and easily.

Or conversely, you may be someone shopping for a ‘good deal’ in this current economic climate. And they are out there. Because of others hardships, there are homes for sale cheaper than are available in a healthy and balanced market. You may be able to acquire a home more cheaply now than in the decade to come. And especially if you have time to find and negotiate a good foreclosure or short sale, you can end up with a heck of a deal. Because these sales involve a 3rd party (the bank) and sometimes a 4th or 5th party if there are additional liens, it’s easy to come across multiple delays due to paperwork, parties approval and getting all documents and signatures as needed.

If you have time and patience – and a place to live while you are waiting – you can find a good deal.

Homes that sell as short sales and foreclosures continues to be strong with over half of the market share at 57.3%, leaving only 42.7% of the sales to be traditional owner occupied sales. And sellers are gaining more confidence now too, having less inventory to compete with in the market and an improving economy to provide more buyers. There are 15,738 active MN listings in Minneapolis alone, the lowest number in inventory since 2003 and around half of active inventory for 2007 or 2008.

With interest rates still low, it is also a great time to be a Minnesota Homebuyer.

There’s an increase in newly listed houses over last year, with 5,366 new listings in February alone: a 1.1% increase over last February.

This means that prices are still affordable and you still have a variety to choose from. More people signed purchase agreements than in 2011 and the 5 previous years, up 34.2% over last year’s numbers. And now many people are much better educated about home buying and are more cautious as a result, and agents who survived the down time are also better educated by the experience and dealing with a variety of properties and conditions.

If you’d like more information about the state of the market currently, market trends, what we are predicting for the near future, or MN foreclosures, or short sales, please feel free to call or email at your convenience. As the economy continues to recover, the market will continue to shift, and it’s good to know what current trends are so that you can make educated choices about your current or future real estate needs.

What??? That sounds way too good to be true.

Well, it’s part of the government’s new stimulus package to boost the economy by encouraging people to buy a home. This will also have the effect of reducing the number of foreclosed homes sitting out there on the market.

How does it work? Well, besides being a 1st Time Homebuyer (or meet the 3 year limit), you must also close on your new  home by November 30, 2009. It can be any type of loan and any type of home. If you prefer a condo or townhome instead of a house – no problem. The $8,000 still applies.

How do I collect the money? It’s managed through your taxes. Next year (2010), when you get your tax return the $8,000 tax credit will be included. Let’s say for example you OWE $5,000 for taxes. You have your $8,000 credit coming your way. Now you will receive a check for the difference, $3,000. If you owe nothing, you’ll simply get your $8,000 check in the mail.

Still sound too good to be true? Well, it is! If you don’t believe me, turn on the Oprah Show where Susie Orman shared about this very same thing. It is a nice (and rare!) bonus to buyers. Remember, it expires at the end of November, so you only have a limited time to buy. And I recommend trying to close sooner than later. With everyone buying before the deadline, closers and title companies will be swamped towards the end, and a December 4 closing date will not qualify!

The front ratio (F) represents the percent of income that goes toward basic housing costs. For someone who rents, that is your rent and insurance if applicable. For homeowners that number stands for your mortgage (principle, interest, taxes and insurance), hazard insurance and homeowners’ association dues, if applicable.

The back ratio (B) notates the percentage of income designated towards all recurring payments (including housing expenses). This number will contain such things as car loans, student loans, credit cards, and legal judgments such as child support or alimony.

For a standard conventional loan, those numeric limitations are always 28/36. Meaning if you are calculating the front ratio (F), your income vs. housing expenses must not be more than 28%. Similarly, if you are calculating your back ratio (B), all your recurring expenses must make up 36% or less of your income.

FHA and VA loans have their own set of rules that differ from conventional loans, however. FHA DTI limits are 31/43 and VA is (essentially) 41/41, although they do not use this particular notation. For help calculating yours, see your favorite lender, bank or credit union.

There are typically no age restrictions, and fewer restrictions on pets and a condominium. And the association fee is often less monthly than a condo, but has less facilities available. In a town home, often the Association fee will also cover general exterior maintenance, such as exciting and roofing.

That being said, there are different types of town homes. Row homes, for example, are attached side by side to other MN town homes. Unless you are in one of the end units, you have a neighbor attached to each of your sidewalls. If these Row homes are also built back to back, all residents except for the end units will have neighbors on three sides.

In contrast, there are also townhomes built one on top of each other with single level living designed for the handicapped or elderly. But these are typically lowrise buildings (three stories or less) because each town home will have its own individual entrance. You can also find Minneapolis townhomes that are three or more stories tall. This design, often with a garage or carport on the main level, allows the maximum amount of square footage with the minimum amount of acreage used.

Styles to vary significantly, so whatever your lifestyle preferences dictate like your realtor know so that he or she may find the appropriate town home for you. Don’t be afraid to say what you like and what you don’t like. This will only help your agent to pick out units that you would like.

Condominium style living has existed for thousands of years in any place where the population is dense. It is an efficient way for communities of people to live together in a small area and maintain their privacy, while sharing the neighborhood.

A Minneapolis condominium also has the least amount of responsibility in care of all the types of living circumstances. You must obviously take care of the interior of your unit, but not typically anything outside of it. Hallways, parking lots, and shared facilities, like exercise rooms and swimming pools will all be taken care of by an Association. This association charges you a monthly fee and manages the maintenance of any shared facilities. The more facilities, the larger your monthly fee to take care of it all. But also, because you’re sharing the community, the Association will have general rules that everyone must follow. For example, the most common is the limitation in number of pets and size they may be. Often a building will have age restrictions, for example 55 +, or even buildings that don’t allow children.

If you are concerned that the bylaws of the community may be too strict for you, make sure to review the condo docs before you close on your purchase of a condominium. In most states, you will have a 10 to 15 day time window in which to review the documents. If you find anything that does not work for you, you cancel your offer on the condo. If, however, you decide that this is the community for you, when your 10 to 15 day window ends, you will continue as normal, to close on your new purchase.

People do not get “upside down” on purpose, however. It’s usually a matter of having purchased their Minnesota home during a time when real estate was booming and now they happen to be in a time when it’s declining. This cycle happens frequently and is nothing to be afraid of. It just means that at that time of decline is not an ideal time to sell your home if you can help it…

Obviously, the best time to sell your home is during the boom-time. This cycle has gone back and forth since the beginning of property ownership, and if you don’t want to lose money, do your best not to make a purchase when Minnesota real estate boom is at its peak, and not to be forced to sell when real estate is declining.

The unfortunate part is no one can see when a “boom” is at its peak or a decline is at its bottom. Although news and other media love to be “Doom Sayers” about it all, your best bet is to speak with an experienced

Minnesota Realtor about the local cycles and their average length of time.