My Last Post

Dear City Lakes Readers:

You're reading my last post.

Not forever -- just at this particular blog address.

The reason for the lull in posts the last week or so is that I've been busy tweaking and fine-tuning -- with very patient assistance from Web developer Tim Elliott -- the new City Lakes Real Estate Blog.

The new blog, powered by WordPress software, is much more robust, aesthetic, and -- hopefully -- user-friendly.

The one thing that won't change is the content: posts and comments by yours truly.

Revamped blogs don't really have opening nights or formal debuts; they just have re-directs and hypertext links.

So, please follow the link (above), or enter the actual address:

http://rosskaplan.com/blog/

See you there!

Year-End Spike in Activity?

Like most Realtors, I set up what are (or used to be) called "hot sheets" on MLS to track activity in areas of specific interest to my clients.

So, just by clicking "Update," I can see everything that's changed on the market -- across multiple neighborhoods, price ranges, etc. -- since the last time I logged on.

Normally, the waning days of December are quite slow -- which is why a flurry of December 31 MLS changes caught my eye.

Pended Sales? New listings?

Try, "Expireds."

You'd guess that the vast majority of these will likely pop back up as "Active" today or tomorrow.

Is Peter Schiff Right About Housing?

Schiff: ‘Home Prices Are Still Too High’

The market can stay irrational longer than you can stay solvent.

–John Maynard Keynes

Just for argument’s sake, assume that Peter Schiff’s Op-Ed piece in today’s Wall Street Journal is right: namely, that even after a 30%-plus drop nationally the last four years, U.S. housing is still overvalued by at least 20% (never mind various benchmarks indicating that housing has never been more affordable).

Should you heed Schiff’s advice, and wait till housing prices regress towards their historical mean?

Or even longer, until they overshoot on the down side? (as Schiff speculates will happen).

The problem with relying on historical trend lines to make long-term decisions like buying a family home is that you may be waiting a long time.

On the Sidelines

In fact, according to Schiff’s preferred benchmark — “Standard & Poor’s Case-Schiller 10-City Home Price Index” — the last time home prices nationally were at or below their historical averages was . . . 1998.

Ala Keynes, that’s a long time to wait -- presumably in an apartment or rental home -- for a mean reversion.

If you got married and started a family then, your oldest child would now be nearing junior high school while you waited, patiently, for housing prices to correct all the back to the long-term mean.

Understandably, most people don’t suspend their lives based on such historical considerations.

They buy homes when their life circumstances dictate — and they can afford to.

When people have better housing choices buying rather than renting — which certainly seems to be the case today, in the Twin Cities and many other cities nationally — that’s usually what they do.

Seller Liability for Ice Dams

Who Pays?

Unfortunately, the way this Winter is unfolding, the first major (and expensive) repair facing many people who bought Twin Cities homes this Fall is for ice dams.

Can they look to their Sellers to absorb some -- or all -- of the expense?

Legal Standard

To answer the question, first revisit the two-pronged legal standard for recovery: 1) the problem existed before the Buyer purchased the home; and 2) the Seller knew -- or should have known -- about the problem.

So, if you closed on one of those balmy October days we enjoyed this Fall . . . you likely flunk #1, never mind about #2.

Pre-existing Condition

But what if the home historically suffered from ice dams, and this year's are simply the latest recurrence?

Usually, there's residual evidence that a home previously had ice dams, even after the damagehas been repaired.

Plus, a good home inspector will note the roof's pitch and design, following any roof valleys to the home's interior ceiling(s) to look for signs of past leaking (stains, fresh paint, etc.).

Seller Disclosure

Of course, at least in Minnesota, the Home Seller is obliged to tell prospective Buyers if they've previously had ice dams -- or any other roof damage -- in state-mandated disclosure forms.

Misrepresenting such material information not only risks liability for fraud (and its open-ended statute of limitations), but isn't likely to fool a Buyer who does their due diligence.

For all those reasons, it's likely that either a home hasn't previously had ice dams -- or, if it did, the issue was identified and dealt with prior to closing.

Bottom line?

Just like Buyers usually can't recover from Sellers when, post-closing, they get water in their basement after a rare, torrential rain, it's unlikely that they have recourse for ice dams following this year's record-breaking December snowfall.

Fortunately, most homeowners' insurance policies cover ice dam-related roof damage, subject to a deductible.