Broker Open Today 11 a.m. to 1 p.m.

One Block to Cedar Lake!

Where: 2705 France Ave. South, in Minneapolis' Sunset Gables neighborhood
What: 3 BR/2 Bath Cape Cod with almost 2,200 FSF, including a huge first-floor Family Room.
How much: $439,900
Who: listed by Ross Kaplan, Edina Realty City Lakes
When: on market yesterday (Nov. 15).

If you're anywhere Cedar Lake over lunch hour today, please feel free to stop by my Broker Open at 2705 France (even if you're not a Realtor).

You'll be impressed by this home's fine construction, period details like cove moldings and a Dining Room arch, and the spacious, eat-in Kitchen.

Oh . . . . and there's a 600 square foot, 2 1/2 car garage (detached) in back to go with the one car attached -- not something you commonly find with 1938 Cape Cod's in such a great location.

P.S.: in keeping with the "man plans, God laughs" theme a few posts back, my gorgeous Fall shots (including the one above) turned out to have a shelf life of 48 hours: taken last Thursday, the Twin Cities almost immediately turned white with the arrival of the season's first big storm Friday.

Dear Google: Please Get Your Sh*t Together

Message to Google (See Above*)

Don't be evil.

--Google corporate motto

I suppose it's the blogging equivalent of losing an election to a deceased opponent, or "none of the above" on a ballot.

What am I talking about?

Routinely being buried on Google's search engine rankings by dozens of other Twin Cities real estate blogs.

That's quite an accomplishment, given that there aren't dozens of such blogs; charitably defined (see next), I come up with no more than 8-10 real estate blogs locally (including some truly excellent ones, by the likes of Aaron Dickinson and Teresa Boardman).

What constitutes a "genuine Twin Cities real estate blog?"

My three criteria are: 1) regular posts -- if not daily, at least multiple times weekly; 2) original (vs. "borrowed" or syndicated) content, with a consistent point of view; that 3) regularly discusses and analyzes the local (Twin Cities) and national housing market(s), respectively.

Bone to Pick

So, if you search "Twin Cities real estate blog" on Google this morning, what will you find?

Here's a (partial) roll call of putative Twin Cities real estate blogs that currently out-rank "City Lakes" (which, for the record, pops up 17th in response to the query, "Twin Cities real estate blog"):

--"Living Twin Cities" (#9): last three posts are Oct. 5, Aug. 11, and July 20 (less content than I've posted this weekend).

--Pete Aplikowski's Real Estate Blog (#7), featuring all of three posts in October, and none yet in November.

The blog's solitary September post largely consisted of this zinger:

If you know anyone who needs help renting their property, please let me know. Sometimes it makes more sense than selling it given the current market conditions. I can handle all the details, showing property, drafting lease, etc.. The fees for this are very minimal compared to selling.

--"Minneapolis Real Estate Blog" (#5): Visit this one and you'll see that the author abandoned the blog in favor of a new-and-improved one last April; the post prior to that is from July.

July, 2009.

Search Engine (Dis)Optimization

Honestly, I'm delighted that anyone reads my blog.

And I certainly wouldn't expect every Realtor-blogger out there to generate original, quality content on a daily basis.

Or for Realtors to blog at all.

But that hardly explains getting lapped by less active (or defunct!) local realtor blogs.

So what does (explain it)?

Pay-for-Play

I'll leave the search engine algorithms to Google's quants, but you'd certainly suspect one (or a combination) of these explanations: 1) Google searches can be gamed; 2) Google searches aren't so smart after all; 3) they're bought and paid for.

Can you say, "pay-for-play?" (or more to the point, "Google Adwords").

If it's #3, how about ditching the false piety (see, corporate motto) and providing disclosure to that effect ("our search results are dictated by corporate sponsors")?

And to think, all this from the search engine not owned by Microsoft (don't even get me started on "Bing").

*The graphic above shows the number of visitors and page views for City Lakes Real Estate from Sept. 15-23.

The "spike" (statistical middle finger) was Monday, Sept. 20, when my post on Elizabeth Warren ("The Wall Street Journal Whiffs on Warren") got picked up nationally.

"Landlords Have the Upper Hand. No, Renters Do"

So Which Is It?

One side effect of a market flooded with both sales and rentals is that renters are gaining clout when it comes to negotiating, just as buyers have.

--"As Sales Slump, Rental Stock Rises"; The New York Times (9/25/2010)

To the chagrin of many renters . . . the balance of power in the rental market has tipped back toward landlords — if not far enough for landlords to start celebrating quite yet.

--"Landlords Are Back in Control"; The New York Times (9/25/2010)

Want evidence that "all real estate is local?"

Look no further than the real estate section of today's New York Times.

The lead story proclaims that the rental market has surprisingly tightened, giving landlords more leverage; scarcely an inch further down the page (I get 99% of my news online), the same newspaper(less?) observes that the "rental market is flooded."

The explanation?

One article is discussing Manhattan, the other residential New Jersey.

P.S.: Variability in market demand by area and even neighborhood characterizes the Twin Cities, too.

What's Selling . . . Fern Hill

From Dowager to Belle of the Ball

Where: 2820 Huntington Ave. South, in St. Louis Park's Fern Hill neighborhood
What: top-to-bottom renovation of what had formerly been a 1 1/2 story home with less than 2,000 FSF
When: listed August 6; closed Sept. 20.
How (much): asking price = $859,900; sold price = $840k (purchased last Winter for $390,000).
Who: listed by Mike Sward, Edina Realty City Lakes

Talk about leap frog: what had been the dowager of this pretty block in Fern Hill is now the belle of the ball.

You name it, they did it: dramatically opened up space (see, "What do you do with dead space?"); four all new baths; a spectacular new Kitchen; a widened, 2 car garage in place of the original one car; 3 new dormers; a brand, new lower level with 1,700(!) finished square feet (and over 4,500 total in the re-done home); and a new mud room.

And on and on.

The result?

A quick sale (after about a month of market time) for virtually full price, followed by an even quicker closer (one week).

"The Jack-O-Lantern House"

Is it Halloween Yet?

I'm a big fan of dramatically lit homes.

And with the seasonal change, we're heading into ever-shorter Fall days.

And yet, the technique doesn't work all the time -- and can even backfire: especially for smaller homes, interior lighting at night can produce an (unhelpful) "Jack-o-Lantern effect."

The (kind of) scientific explanation?

The ratio of (orange) interior lights to (white) exterior is lopsided in a small house with lots of windows, making it seem like a back lit pumpkin.

A back lit pumpkin, of course, is the reverse combination, i.e., interior white and exterior orange (dyslexia helps with that one).

Minds in the Gutter

"NYC Stoops and Horse Manure"

Many suspect it, but I have definitive proof that people's minds really are in the gutter.

Literally.

In almost 2,000 posts over 3 years covering everything from Twin Cities real estate to Federal Reserve monetary policy to geothermal energy, the City Lakes blog post getting the most attention on Google at the moment is this one: 'Manhattan Stoops and Horse Manure.'

The post, discussing an anecdote from the book SuperFreakonomics, is ranked #1 on Google for that (admittedly unusual) search query.

Try it.

(Odder still: the last flurry of hits on the City Lakes blog looking for those key words were all from Poland, about 6 a.m. Central earlier today.)

Spiking the Ball . . . on the 2 Yard Line

Q: When Doesn't "Sold" Mean "Sold?"

Answer: when it means "Pending" (as, when it's in front of a home that's for sale).

Huh?

At least in Minnesota, once the Buyer's Inspection has been removed, the convention is to switch a home's status from "Active" to "Pending" on MLS, and to put a "Sold" rider on top of the "For Sale" sign in front of the home.

That's the case even though the home hasn't closed yet -- and the Buyer's loan most likely hasn't been finally underwritten (or even successfully appraised!).

Of course, that's in addition to any title work still to be done, as well as any other outstanding conditions that the Buyer and Seller may have contractually agreed -- or be subject -- to (repairs, obtaining a municipal inspection certificate, etc.).

Isn't declaring such a home "Sold" like spiking the ball on the 2 yard line?

Explanation/Rationale

It can be.

However, once any Inspection issues have been resolved, the odds of a deal closing go up dramatically; from experience, I'd peg the odds at anywhere from 80% to 98%.

Why the range?

If it's a cash deal and the Buyer is richer than Croesus . . . it's virtually a done deal.

However, especially if the Comp's are thin and the sales price lacks recent, nearby precedent, the risk of an appraisal issue goes up.

Too, if the Buyer works for a company that's been hit by the recession, or is otherwise vulnerable to layoffs, there's the added risk that the Buyer will lose their job before closing (or otherwise suffer a major hit to their "creditworthiness").

Less likely, but still within the realm of possibility, are such things as Buyer health issues, an unexpected job relocation, major damage to the home (fire or weather-related) -- or even a simple change of heart (and mind).

"Pending" vs. "Closed"

So, to repeat, why not put up a sign that says "Pending" rather than "Closed" -- or remove the "For Sale" sign altogether?

My take is that it's a mix of the following reasons:

--Psychologically, putting up "Sold" helps cement the Buyer's commitment (see, "change of heart").

--"Sold" better tells prospective Buyers that the house is spoken for, and not to bother the homeowner.

--Marketing exigencies. Whereas "Pending" sounds equivocal and gray, "Sold" is strong and declarative.

Too, because there is a risk that the house won't close, it's premature to remove the sign.

However, once the risk of not closing is effectively zero, i.e., the Seller has been paid, title has transferred to the new owner, and the "For Sale" is removed . . . there's nothing to attach "Sold" to.

Talking Heads & the Housing Market

Missing Voices

One of the oddities -- at least to me -- about selling real estate these days is to peruse Op-Ed pages full of people with opinions about the "true state" of the housing market, its future direction -- and what should be done to fix it.

Print journalists (there's an anachronism). Economists. Government officials. Elected politicians. "Members of the Media" (mainstream and minor). Think tank-types. Senior business executives. Financiers. Bloggers.

With some notable exceptions, most of these people are based in either New York or Washington, and none of them have real, boots-on-the-ground insight into the rhythms and nuances of the housing market -- their own locally, and certainly the national market (which is an agglomeration of hundreds of local markets).

The only voice missing from the cacophony?

Realtors' (and PR mouthpieces like NAR don't count).

P.S.: "caveat emptor" applies equally to ideas as well as to products.

Beautiful Built-in's, Buffet, Millwork

What do Realtors have in mind when they say a home has gorgeous built-in's and millwork?

Rooms like the one pictured above.

It doesn't get more aesthetic than this!

(The beautiful dining room is located at 2401 Humboldt, in Minneapolis' Kenwood neighborhood; Steve Havig at Lakes Area Realty has the listing).

The Wall Street Journal Whiffs on Warren

Protecting Consumers From Banks

It turns out that Harvard Professor Elizabeth Warren will head the new Consumer Protection Financial Bureau, after all.

The Bureau, which Warren proposed creating, is charged with ensuring that "consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination."

Seeing as how millions of consumers are routinely deceived, abused, and dealt with unfairly by the nation's biggest banks, that would seem to be a good start.

So, what exactly is the Wall Street Journal up in arms about ("Elizabeth III")?

Here is their case against her, followed by my rebuttals in italics:

WSJ: [Senate leaders] have warned the White House that Warren probably isn't confirmable. A President with more political and Constitutional scruple would have nominated someone else.

Ross Kaplan: Most of the Senate's senior leaders depend on Wall Street cash to fund their election campaigns. The surprise would be if someone hostile to Wall Street's interests was confirmable.

WSJ: Ms. Warren was a vociferous opponent of allowing regulators charged with maintaining the safety and soundness of banks to control this new bureau.

Ross Kaplan: Regulators just presided over the biggest financial debacle since The Great Depression, and did nothing to stop it -- in fact, they facilitated it. Why should Warren answer to them??

WSJ: The new bureau [is] destined to be a bureaucratic rogue, inside an agency (the Fed) that it doesn't report to, with a budget not subject to Congressional control.

Ross Kaplan: And exactly who are the too-big-to-fail banks accountable to? Yes, there are "rogues" running amok and threatening the Republic . . . but it's not Warren and her tiny, new federal agency.

In truth, installing Warren by Presidential appointment instead of Senate confirmation -- what the Journal is putatively upset about -- could very well be a tactical blunder.

That's because a Senate confirmation hearing would shine a huge, public spotlight on a dysfunctional U.S. Senate, and the interests it truly serves.

Condo-Hotels: Instant Anachronisms?

Victims of Soft Economy,
Tight Financing

Imitation is the sincerest form of flattery.

What makes a trend, especially in real estate?

Imitators.

How do you know something's a bust?

Lack of imitators.

In the Twin Cities, two years after it was completed, the Westin Galleria in Edina stands out as the area's sole (to my knowledge) Condo Hotel ("Hotel Condo??").

Economic Sea Change & "The Lag Factor"

The reason there's no "Westin Galleria II" is because such projects have a multi-year gestation period, and since it was conceived, both the economy and real estate financing have undergone sea changes.

Like many real estate trends, the hotel-condo phenomenon -- and the economic headwinds they're now facing -- are most conspicuously on display in New York City:

Nearly a dozen [condo] projects in and around New York City that offer [hotel-like] perks . . . have recently opened or are nearing completion. For developers from Hoboken to Harlem, Williamsburg to SoHo, a condominium with a hotel attached is one more weapon in the reignited amenities arms race.

For buyers, the concept of a home with all the comforts of a hotel may seem like paradise. But hotel services don’t come cheap: the developers of condo-hotels plan to charge as much as 20 percent more per square foot than high-end competitors that don’t have hotel partners. And along with room service can come hotel-like bills, not to mention higher monthly maintenance fees. Financing can also be more difficult to secure; banks are leery of lending money for what could appear to be strictly investment property.

Dolly Lenz, the vice chairman of Prudential Douglas Elliman, said that at the same time they fantasize about dialing up club sandwiches at midnight, prospective buyers should take into account the possibility that the price of the amenities could go up over time. “It might be included for a year or two years,” she said. “Three years from now the kicker hits them.”

Jonathan J. Miller, the president of the appraisal firm Miller Samuel, said, “The key factor to remember is that these properties were conceived in a different market.

--Marc Santora, "Looks Like a Condo, Acts Like a Hotel"; The New York Times (9/18/2010)

To heighten their appeal in more frugal times, several of the properties discussed above are moving towards ala carte pricing for their (long) list of hotel-like amenities.

Revisiting Westin Galleria

So, is the Westin Galleria a financial bust?

I don't know the building that well, so I'm not going to render a verdict; the only thing that jumps out -- quickly looking it up on MLS -- is that 16 of the 82 units total (about 20%) are currently for sale.

And you'd certainly expect such a high-end building to be facing the same challenges common to all upper bracket properties in today's market.

If there's a silver lining for the Westin Galleria (and properties like it in other markets), it's this: real estate is ultimately all about two things: location, and supply and demand.

The Westin-Galleria's location is excellent, and -- at least for the foreseeable future -- the supply of hotel-condo units is constrained.

Tina Fey as a Realtor

"Date Night" Realtor Vignette

In "Realtors in Modern Culture," I noted the paucity of Realtors depicted in movies and on TV.

Well, add one more: Tina Fey's character, Claire Foster, in "Date Night" (I just saw it on DVD).

The highlight of the movie (at least to this Realtor) was a blink-and-you-missed-it scene near the beginning of the movie in which she's showing an upper bracket home to a Yuppie couple.

Fey: this home used to be $1.8 million; now it's $300,000.
Couple: We're going to wait for it to get cheaper.
Fey (rolling her eyes): Good plan, I think that makes a lot of sense.

No, I didn't make up those (movie) numbers.

And yes, lots of real-life Realtors are showing real-life homes marked down almost as much . . . and hearing Buyers same the same thing.

"Can You Shadow Me?"

No, that's not a line from a James Bond movie, or what you might hear during a game of Dungeons and Dragons.

It's what I say to Edina tech support every time I call with a (for me) headscratcher . . . . like 5 minutes ago -- solved by Thu in about 30 seconds.

(If you're not familiar with the phenomenon, "shadowing" allows remote tech support to see what you see on your desktop.)