Great letter from the President of Coldwell Banker Burnet to her Agents

Our Housing Market Offers Unprecedented Opportunities

by Robin Peterson, President


Happy New Year! It was good to see so many of you at our recent company event featuring real estate speaker Terry Watson.

I’m looking forward enthusiastically to this new year. We’re seeing a number of positive trends that bode well for the coming months. In their Jan. 14 news conference, the four Twin Cities REALTORS® associations reported that home sales improved in 2008 over the previous year. In the 13-county metropolitan area, there were a total of 44,067 pending sales, which was 1.2 percent higher than 2007. The last half of the year saw tremendous momentum—15.7 percent more pending sales than during the same time period in 2007.

This sales increase is primarily the result of the wonderful combination of low interest rates and increased affordability. Interest rates are now the best they’ve been in decades. As of mid-January, the following great rates were available: 30-year fixed-rate loans in the high 4 percent range and 15-year fixed-rate loans in the mid-to-low 4 percent range. In addition, the Minneapolis Area Association of REALTORS® (MAAR) Housing Affordability Index, which looks at home prices, interest rates and consumer income, is now 192—the best it’s ever been since MAAR began tracking affordability in 1990.

This month, we’re also seeing a welcome moderation of the supply-demand ratio. The supply demand ratio is 8.36, or 8.36 houses for sale for every buyer. This is 19.7 percent lower than the 10.41 supply demand ratio posted in January 2007. But despite the lower number of houses for sale, there is still a great inventory of homes available, whether you’re a first-time buyer, move-up buyer, or looking for a luxury home.

The inventory is especially ideal for first-time home buyers. The four local REALTORS® associations reported that the median home price in our area has dropped to $195,00, a price that you would be hard pressed to find in many areas of the country. In our market, it’s amazing what you can get in an affordable $195,000 home. For that price, you can find single-family homes, condos and townhomes in all styles and in all communities with several bedrooms and baths, one or two-car garages, and plenty of room.

Another great benefit is the $7,500 home buyer tax credit that is included in the Federal Housing and Economic Recovery Act of 2008. The legislation, however, currently stipulates that the tax credit is available only for first-time home buyers. REALTORS® groups such as the National Association of REALTORS® (NAR) are lobbying Congress to offer this tax credit to all home buyers and to eliminate the repayment requirement. If NAR’s lobbying efforts are successful, this will be another positive development for consumers and for the real estate industry. But in the meantime, this is a great incentive to entice prospective first-time buyers to make an offer and to start enjoying the benefits of home ownership.

In addition, our company has worked hard to offer a number of creative marketing programs that benefit home buyers and sellers in this market. In September, we held a 10-Day Sales Event on 1,500 listed homes, which represented more than $46 million in price reductions. We were pleased with the results, which included increased showings, buyer traffic, and closed sales.

Recently, Coldwell Banker Burnet and Burnet Home Loans launched an Interest Rate Reduction Program to attract more buyers and to help our sellers’ properties stand out in the marketplace. Through this program, Burnet Home Loans loan officers are working with our sales associates to help their home sellers “buy down” the interest rate on prospective buyers’ mortgages. This gives them an attractive, below-market interest rate and offers them substantial savings over the life of the loan. In addition, it helps sellers sell their homes more quickly.

So it’s clear that our market offers unprecedented opportunities—Coldwell Banker Burnet’s Interest Rate Reduction Program, the $7,500 first-time home buyer tax credit, the lowest interest rates in decades, extremely affordable housing prices, and excellent inventory. I can’t imagine a better time to buy a home.

Best wishes for a productive and successful 2009!

Robin