Randy Fischer Real Estate Blog

Had a gentleman from Michigan stop in looking for housing.  He was with 3M and looking at the new jobs posting they had on the net.  According to Jason Murray from the Alexandria Area Economic Development Commission, he gave me this report:  “according to local management, 3M may transfer roughly 10-12  of the new employees to Alexandria from other 3M operations, with the rest of the jobs being hired from the local labor shed.  Projected new hires with the expansion of the facility is 50 new people over the next couple of years.”  For more information about this popular area, go to www.alexmn.org.

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In reading the Wachovia report, their  Topic of the Week was “How Far Will Housing Prices Fall?”.    At the end of the article it said , “Our forecast for the NAR (National Association of Realtors) median price series would be for a peak-to-trough drop of around 17 percent.  As far as timing goes, it looks to us that at least one-half of the peak-to-trough price decline has already occurred and that we should see an outright bottom either late next year or in the first part of 2010.”  You can view the whole article at www.wachovia.com/economics.  Go to the report for 8.01.08 on page 6. 

In viewing the market here in Alexandria, this morning’s inventory is at 646 residential listings and 391 lakehomes.  Last year on July 13th, we had 663 residential listings in the multiple listing service and 417 lakehomes respectively.    We have less inventory at the peak this year than last.  Has our market started to turn around, especially with less sellers deciding to put their homes on the market?  Time will tell.  (The Fed meets on Tuesday)

Also, in same report:  Residential Construction has fallen 26.4 percent over the past year and has tumbled 44.9 percent since peaking in the Spring of 2006.  Non-residential construction increased 0.4 percent in June and is up 10.8 percent over the past year.

Statistics from Greater Alexandria Area Multiple Listing Service and Wachovia Economics Group report from August 1, 2008

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Talked with Sara today from the Douglas County Sherrif’s Department.  She said that by the end of today, that the Department will have served 62 foreclosures this year in Douglas County.

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As of this morning, there are 652 Residential Listings, 395 Lakehomes listed and 458 Lake Lots listed in the Greater Alexandria Area Association of Realtors MLS system.  In doing a Year Over Year Comparison report this morning.  It showed that Residential W/Acreage Sales were down 27% over last year, Residential Sales were down 19% over last year with 223 reported sales vs. 276 at this time last year, Lots and Acreage sales are down 51% over last year with 40 sales reported vs. 83 at this time last year, Commercial Lot Sales are down 46% with 7 sales reported vs. 13 last year, Lakeshore lot sales are down 63% with 17 sales reported vs. 47 last year,  Residential Lot sales are down 66% with 5 sales reported vs. 15 at this time last year,  Condo/Townhomes on the Lake are even with 10 sales reported this year and 10 sales reported last year,  Condo/Townhomes off the lake are up 5% with 20 sales reported at this time with 19 reported last year,  Lakeshore Homes/Cottages are down 37% over last year with 67 sales reported at this time vs. 108 at this time last year.

We are all waiting for the market to hit the bottom, it can only go up from there.  In the Wachovia Economic Report of July 25, 2008, their headline was “Defining a Bottom”.  I’ll quote: “most of the damage from the housing bust has already occurred.  Housing has not bottomed out, but the worst is almost certainly behind us. … We expect the bottom in sales to occur withing the next six to nine months and look for home prices to bottom out between a year and 18 months from now.   The rate of deterioration in sales and prices , however, has already moderated significantly.”  (these comments are based on national sales and inventory data) 

In the next headline, “Signs of Progress are Evident, If You Look In The Right Places”, they have encouraging news:  “The National Association of Realtors noted that sales had picked up notably in many of the parts of the country where speculative excesses had been the greatest, including parts of California, Florida, Arizona and Nevada.  Much of the improvement is due to a dramatic  increase in foreclosure sales and short sales.  As a result, prices have fallen sharply, particularly in the West.  As speculative buying had driven prices well above traditional measures of affordability, this is precisely what needs to happen.  …  Inventories of unsold new homes peaked in July 2006 at 572,000 homes and since declined by about 25.5  percent to 426,000.  If the recent rate of decline continues, inventories of new homes will fall back to their historic normal range of around 300,000 units about one year from now.”

Statistical information from Greater Alexandria Area Association of Realtors Multiple Listing Service AND Wachovia Economocs Group report dated July 25, 2008.

One last note, I quit watching and buying the news media’s propaganda.  Last year, I was waiting for the sales report on the results of Black Friday.  I picked up a newspaper to catch the info, the headlines read “Black Friday Sales are Up 8%, however Economists Are Worried that Sales Will Plummet Due to Overbuying”.  I thought, take a good piece of news and spin it to the negative.  Why?   I believe that the answer is that news corportations exist only for profit.  To try and gather information that may be relative to anything that we do on a daily basis won’t be found on the evening news.  But you will catch up on human misery.   Unfortantely, the human psyche would rather pay for negative news about other people than for positive news.  These billion dollar corporations produce Negative Entertainment.  I find little else in their program and for that reason, I have given up on their program since the day after Black Friday, 2007.  If you need statistical information to make decisions, look elsewhere.  I wonder if a Positive News station could make it?  I’d watch it.

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I am sorry for the lack of blogging.  Been real busy, I have $5,000,000+ in the pended sales category.  All from the last 7-8 weeks of work.  I’ve been working real hard, many late nights and 6 days a week (I don’t work on Sunday).  It’s been paying off though… starting this new business has been challenging, rewarding, costly and demanding.  People say the market is bad, I wouldn’t know.  I haven’t watched the news since November. 

Anyway, the morning’s inventory levels are:  Res.Actives 615, LakeHome Actives 379, Lake Lot Actives 427.  On May 30th we saw a peak of 629-383-430 resepctively.  Let’s hope that the inventory levels stay down.  If you read my earlier blog, you will see what the peak levels in the market were last year.  We are fast approaching the peak of the listing season.  If the levels of last year remain in the history books, then we may have left the “trough” of the market.  Time will tell.  Nationally, the OFHEO reported it’s first quarter home data.  The troubling news in the report “was the sharp jump in inventory, which almost eclipsed an all-time high set last July.  We had seen some progress in inventory levels over the last six to nin-months, but this was all but erased in April.” as quoted in Wachovia Commentary May 23, 2008.  This is nationally, we were headed there, but maybe on May 30th it stopped?

S&P CASE SCHILLER HOME PRICE INDEX. TUESDAY (as reported in Wachovia Commentary on May 23,2008).  Year-to-year home price declines in many of the major US housing markets have reached double digits on an S&P/Case Schiller basis, pulling down the composite indices, which are created on an aggregate housing market value basis.  These composite indices may overstate the national picture but it is clear that many large markets are experiencing painful price declines.  We do not see substantial gains in home prices returning before the end of the decade, at best.   The total hit to household balance sheets will likely prove to be less than widely feared, however, as many small and medium sized markets are still seing modest price gains. (Alexandria would be considered a small-sized market)

In a recent article released by Site Selection magazine, the Alexandria area was ranked the fastest growing micropolitan in Minnesota and the 10th fastest growing micropolitan in the nation.  Ranking is based upon the number of qualifying industrial/commercial construction projects taking place during 2007.  In 2005, the Alexandria area was ranked as the 2nd fastest growing Micropolitan in Minnesota and tied for 20th in the nation.

AAEDC, April report…New Jobs:  Pfeninger Warehousing 5-7 new jobs.  3M will add 50 new employees within one year and up to 90 employees withing 5 years of completion.  Carlos Creek Winery will add 3 new employees.

Also in the AAEDC Report (Alexandria Area Economic Development Commission) they have the 2006 Retail Trade Analysis Stats. “Retail sales in the Alexandria area continue to lead the state.  With a Pull Factor of 4.26 and annual taxable sales exceeding $443 million, based on 2006 retail sales data, the Alexandria area is outpacing the state and the like-sized cities in West Central and North Western Minnesota.  Alexandria’s three closest regional center competitors boast sales taxable sales of $229 million or less and pull factors of 1.81 or less.

A Pull Factor amount is derived by dividing the per capita sales of a city or county by the per capita sales for the state.  For example, if a city’s per capita sales are $20,000 per year nd the state per capita sales are $10,000 per year, the pull factor is 2.0 ($20,000/$10,000).  Average per capita taxable sales for the state of Minnesota is $9,600.

As a regional center, the Alexandria area has consistently scored a Pull Factor above 3 since 1991.  This sales strength high-lights the regional pull that our community has in the retail sector (not to mention the healthcare, service, manufacturing, and tourism sectors).  The most visible proof behind our high Pull Factor is evident during the summer months as traffice and population counts are augmented by snowbirds, tourist, and cabin/lake home owners arriving in our area.  To a lesser amount, this augmentation continues throughout the year as travelers utilize our economically diverse community for theri daily needs.  As people fortunate enought to call this area home, we are truly fortunate to not only have our beautiful lakes and natural resources, but the strong economic base that continues to fuel and drive the sustainability and growth of our community both today and into the future.  It will be our continuing challenge to maintain and grow our economic diversity into the coming years.

Sources of Information:Greater Alexandria Area Multiple Listing Service, AAEDC, Wachovia Commentary May 23, 2008

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This morning we have 612 active residential listings, 367 active lake home listings and 422 lake lot listings in the MLS.  We are approximately 10% below the peak inventory of last July. 

This information is provided by the Greater Alexandria Area Association of REALTORS Multiple Listing Service.

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Currently listed this morning, there are 253 lake homes in the MLS system.  This is a 14.23% increase from one month ago.  This inventory is still 39% below last July’s.

The residential homes (non-lake) inventory is at 521 in the MLS.  Home inventory is only grown at 3.8% in the last month.  However, our home market is only off 21% from the record level of last July.

 This information is provided by the Greater Alexandria Area Association of Realtors Multiple Listing Service.

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I checked the MLS stats this am, there were 517 residential listings in the system.  Since the 1st of the year, there have been 28 residential sales in areas 1 and 2 (Alexandria).  That’s about 3.5 homes per week during our winter chill.  It will pick up soon, it always has in the 25+ years I’ve been here. 

Statistics from the Greater Alexandria Area Association of Realtors MLS

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If you or a client has used a Section 1031 tax-deferred exchange recently, hold on to your documentation, as the Internal Revenue Service is stepping up reviews of such transactions, according a Wall Street Journal report.  Urged by a recent Treasury report to do a better job of explaining 1031 rules, the IRS also is revising its reporting forms, publications, and other communications and will conduct an in-depth study of reporting and compliance issues regarding like-kind exchanges in the past decade.   In 2004, taxpayers filed more than 338,500 forms for like-kind exchanges, more than double the number in 1998, representing almost $74 billion in deferred taxes.

 From CCIM magazine, Jan-Feb 08

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I got an email from Cindy Nosan from Orexco, “The 1031 Exchange Experts” today, regarding the tax deferral treatment of VACATION HOMES.  The email started like this:

Finally-IRS Guidance on Exchanging Vacation Homes Revenue Procedure 2008-16 Provides Safe Harbor

Until now, the issue of whether a vacation home qualifies for tax deferral treatment under IRC 1031 was the subject of much scrutiny and uncertainty.  To the delight of many tax practitioners, on February 15, 2007, the IRS eliminated that uncertainty by issuing Revenue Procedure (”Rev. Proc.”) 2008-16, effective March 10, 2008, which provides a safe harbor for exchanges of vacation homes (defined as “dwelling unit” in the “Rev. Proc.).  Now taxpayers can have a clear understanding of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property “held for investment” under IRC 1031.

The email goes into length about the criteria, either email Cindy at cnosan@orexco1031.com  for more details, or myself and I will send you the remainder of her email.

This will help people better understand the rules for exchanging vacation homes.  Thanks Cindy.

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