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.

Trust "The Experts?" Don't.

The Wall Street Journal . . .
or The Onion?

Sometimes -- OK, a lot of the time -- I think The Wall Street Journal needs a meta-editor.

Their job?

To spot risible inconsistencies and contradictions between articles literally on the same page.

Or, if you're reading online, between articles barely centimeters apart.

Are They at Least Different Experts?

So, The Journal's Web home page today features a video with this title: 'News Hub Extra: Homes Sales Drop Surprises Analysts.'

Meanwhile, scarcely an inch away, is this quote:

Many economists expect housing declines to continue into at least next Spring, erasing most of the gains made since prices bottomed out in early 2009.

--"Housing Recovery Stalls"; The Wall Street Journal (12/29/2010)

See what I mean?

Next Spring, look for yet another installment of "surprised analysts" coupled with "housing experts' latest predictions."

P.S.: Today's Journal contains no fewer than three articles on the housing market, including the lead (print) article, excerpted above, and a piece in the "Money & Investing" section titled, "Housing Market is Still Facing a Blizzard."

"The Edgewater" in Uptown

Minneapolis' Most Discounted Condo?

I've blogged previously about deeply discounted single family homes in the Twin Cities.

A second-floor condo (#201) in The Edgewater (pictured above) may very well be the Twin Cities' most discounted condo.

Now at $749,823, the unit was originally listed for $1.981 million almost exactly three years ago.

That's a whopping 62% reduction!

"But Can You Afford the Property Taxes?"

The catch?

Not the A+ location, just off the Northeast corner of Minneapolis' Lake Calhoun.

And not the 2005 building it's in, a gleaming glass-and-stone structure with sleek walls of windows, great views, and open floor plans.

Rather, my guess is that it's the $19,000 annual property tax bill that is still attached to the unit, courtesy of its $1.35 million tax assessed value.

Opportunity Knocks

Does such a mismatch spell opportunity?

In this case, I think it does.

That's because the property isn't a short sale or foreclosure, where the tax authorities can (and do) argue that the ultimate purchase price doesn't reflect fair market value since it was a "distressed sale" -- and therefore disregard the sales price.

Translation: if you pay say, $725,000, that's also presumptively the new tax assessed value -- and that $19k property tax bill plummets.

In fact, if the Buyer closes in the next few months, they still have time to contest Hennepin County's 2012 assessment (determined January 2, 2011).

(Seasonally) Quiet Out There

Very Still Ponds
On the assumption that Edina Realty's City Lakes Office is a good bellwether, it's pretty quiet out there at the moment.

How quiet?

For the seven day period December 20-26 -- in other words, spanning Christmas -- there were a sum total of 26 showings for my office.

By contrast, in early April, before the Buyer tax credits expired, weekly showings peaked at just under 300.

In non-tax credit years, the peak typically arrives a few weeks later, in late April - early May.

P.S.: And no, that's not a local pond; Minnesota's lakes and ponds are now very much frozen.

2010 Person of the Year: Jon Stewart

The New "Most Trusted Man in America??"

Yeah, yeah, I know who Julian Assange is, and about WikiLeaks.

And I'm aware that Time magazine chose Facebook founder Mark Zuckerberg as its "Person of the Year" -- if not a "jump the shark" moment, then awfully close.

But my candidate for "Person of the Year" is Jon Stewart, of The Daily Show fame, and now an increasingly assertive political voice.

People such as myself have been decrying that this generation has no one comparable to Walter Cronkite: someone of unimpeachable credibility and stature (dareI say "transcendant"?), who both serves as society's conscience, and whose sentiments on a subject, when they weigh in, are decisive.

Cronkite played such a role vis a vis the war in Vietnam.

Stewart just played a similar role in getting Congress to fund health care for 9/11 responders:

“Jon Stewart so pithily articulated the argument that once it was made, it was really hard to do anything else."

--Robert Thompson, professor of television at Syracuse University; "In ‘Daily Show’ Role on 9/11 Bill, Echoes of Murrow" (The New York Times, 12/26/2010)

Junior "Senior Statesman"

Oddly, the person who Stewart reminds me most of is Ronald ("we begin bombing in five minutes") Reagan, circa late 1970's.

A two-term California governor and a fixture on the political right for decades, Reagan had yet to be embraced by the mainstream.

Instead, he was derided as a washed-up actor of dubious intelligence, who may or may not also be a trigger-happy cowboy.

Posthumously, Reagan is warmly remembered as The Great Communicator, a man with a genuinely sunny disposition and bedrock principles who guided the country into and through a period of national prosperity -- and not incidentally, a successful resolution of the Cold War.

(Sorry, lefties, he did.)

Stewart's Ascent

It's a bit hard to see Stewart's new-found stature, both because Stewart is a contemporary, and because his credentials -- in this case, as a wise-cracking satirist and media personality -- can also be easily dismissed by the opposite end of the political spectrum (ask now-U.S. Senator Al Franken whether his comedian background helped his candidacy).

But as evidenced by this month's 9/11 legislation, Stewart's growing influence -- culturally, politically, etc. -- is for real.

Amongst all our other problems, perhaps lack of leadership is the most acute.

If we can cultivate a couple more "senior statesmen-types" like Jon Stewart in the next few years, there's cause for optimism.

P.S.: Maybe it was the "avuncular" thing, or that "Walter" sounds so, well, senior citizen-like.

Or perhaps it was just because I happened to be 8 years old at the time.

But it sure seemed like Cronkite was older than 52 when he pronounced Vietnam a lost cause in 1968 -- barely older than Stewart's now 48 years old.

Realtor Business Card Collection

"What's in YOUR Wallet?"

I don't collect stamps or coins or baseball cards.

I collect other Realtors' business cards.

Not as keepsakes -- no one's that nerdy -- but to get design ideas.

What makes for a good Realtor business card?

One that stands out -- in a good way.

Miniature Billboards

The business card's front side is necessarily limited by certain conventions, i.e., the need to communicate your name, broker, and contact information.

However, the back side allows for more creativity (mine is a screen capture of this blog's masthead).

Other Realtors, meanwhile, use side 2 of their business cards to make a pitch for referrals; provide mortgage principal and interest tables; or even provide metric conversion charts (to that one, I suppose I have to add, "go figure").

However, my (second) favorite is fellow Edina agent and blogger Aaron Dickinson's: 'Write on me, I'm good for taking notes.'

And so it is.

P.S.: For a decidedly improper use of other Realtors' business cards, (re)read "Reason Not to Lie #37."

P.P.S.: The ultimate business card?

A vanity license plate.

Mine reads, "MY RLTR" -- as in, "There goes my Realtor."

"Kids Say The Darndest Things"

"Isn't That Obvious?!?"

"Kids Say the Darndest Things" was the title of a TV show hosted by Bill Cosby, and decades earlier by Art Linkletter.

It came to mind hearing my six-year old daughter (not her, that's a stock photo) talking on our (Skype-less) phone to her paternal grandparents in Arizona earlier today.

Presumably fielding the question, "What are you doing now?, a couple days into Winter break, she replied, "I'm inside, talking to you!"

Review: 2011 Honda Odyssey

Technology Time Capsule

Want an x-ray snapshot of where technology is headed?

Juxtapose an earlier version of a time-tested product used by millions -- in this case, Honda's best-selling minivan, the Odyssey -- and compare it with the new-and-improved version, the just-released 2011 model.

Evolutionary, not Revolutionary

Faced with an increasingly long list of deferred maintenance on our warhorse six-year old Odyssey, my wife and I made the fateful -- and expensive -- decision to instead plow money into a new model.

A month into driving it, I can report that the changes seem to be mostly incremental, and that the theme(s) seem to be (even) more technology, plus added comfort.

Shades of "Wall-E"

So, now there are not only built-in cup holders everywhere -- but they all have Styrofoam-like petals that stabilize your beverage.

Which is actually brilliant, because Honda's designers have no way of knowing the diameter of your beverage.

The solution?

Make the cupholder big enough to accommodate the largest imaginable drink, but then add flexible Styrofoam to stabilize smaller drinks.

Similarly, the armrests not only adjust, but now they have intermediate settings, for added comfort and customization.

It all sort of reminds me of the Pixar movie "Wall-E," where humans of the future have morphed into sedentary couch potatoes with atrophied appendages, who move about on mechanized barca-loungers with built-in . . . everything.

Safety & Design

The most functional of the upgrades is actually quite useful: a backup camera that now superimposes, NFL-style, a grid of yellow lines to provide perspective.

The previous version showed you what was in back of you, but it was much harder to judge distances.

Meanwhile, the new headrests in the third row are conspicuously taller, narrower and set further apart -- presumably to improve rear view visibility.

However, the effect is a bit like looking through field goal uprights in football.

Carnivorous Grille

Finally, Honda's designers apparently felt the need to kick up the new model's "testosterone factor"; the result is a more aggressive-looking car, full of angles and a front grille that looks like it could bite you.

All of which fools . . . exactly no one.

Honda's minivan was -- and is --a very functional, family car that's well-built and very reliable.

Which is just fine by us.

"Minnesota ESPECIALLY Nice"

Christmas & the Housing Market

There are plenty of reasons to explain why the housing market decelerates around the holidays: it's customarily a time to celebrate with one's family; take a respite from work (vacation, even!); and generally reflect on one's -- shall we say -- existential circumstances.

Plus, the weather (at least in Minnesota) is lousy.

All in all, a time for spirituality -- not commerce.

No Time for Lowball Offers

However, I'd posit that another, related factor is at work: Christmas spirit doesn't exactly go with aggressive negotiations.

Even if the market is soft and a home isn't necessarily worth the owner's asking price . . . Christmas just doesn't seem the right time to make that point (at least to a real, live human being -- vs. say, a bank).

Wishing all my readers a peaceful, happy Holiday, and a prosperous 2011!

Recipe for Multiple Offers: 1928 Fremont Ave. South

21% Over Asking Price!

Take an A+ location in Minneapolis' tony Lowry Hill neighborhood, strategically located in between Downtown Minneapolis and picturesque Lake of the Isles.

Add a huge, 4,800 square foot all-brick triplex.

Then put it on the market for $314,900 -- a whopping $351,600 below tax assessed value of $666,500.

What do you get?

Lots of Buyer interest -- and ultimately a sales price well above the asking price, or in this case, $380,547.

The deal closed last week.

And yes, it was a bank-owned foreclosure; it was first listed 3 years ago -- as a potential short sale -- for $695,000.

I discussed some of the shenanigans that took place when it first came (back) on the market in October in this post, "Hmm . . . I Wonder Where That Lockbox Key Went??"

Stolen Bread at Whole Foods

Infinite Markup?

Why is Whole Foods selling stolen bread? (and for so much, too).

And isn't announcing it to the world rather brazen?

The explanation, for fellow dyslexics, bad spellers and/or Emily Litella fans (Gilda Radner's old SNL character): that would actually be "stollen bread," a Christmas specialty (guess who celebrates Chanukah?).

Google and "Advertising Arbitrage"

Everything You Didn't Want to Know About Blog "Plumbing"

Want to know why -- amongst other reasons -- Google is a $200 billion behemoth?

Because it collects big bucks from advertisers to place their ads on millions of big and tiny Web sites, blogs, etc. (mine is decidedly in the latter camp).

Meanwhile, Google essentially auctions off the English language, one word at a time, to the highest bidder via a phenomenon called "sponsored search."

Tom Sawyer, who got paid both by the homeowner to paint their fence, and also by neighborhood kids for the privilege of actually painting it, would have been impressed.

Want to know who paid Google the most for "car?"

Type in "car" on a Google search, and you'll find out.

Raw Deal, or, "AdNonsense"

On the back end, Google promises to share some of its advertising revenue with content providers like this blog.

Through a program called "AdSense," Google software scours your online content, and "serves" ads that appear to be related.

Hence, current ads on the City Lakes Real Estate blog touting "Premium Deicing Road Salt" and "Roof Ice Melt Solution" -- thanks to my recent posts on ice dams (not to mention regularly serving ads from competing local Realtors -- something that I find especially annoying).

Call it "advertising arbitrage": charging a pretty penny for the phrase, "premium deicing road salt," while paying content providers practically nothing.

"Advertising Arbitrage"

How little?

After three years of blogging and almost 70,000 page hits, my cumulative Google ad revenue will barely buy . . . a steak dinner.

For one.

Meanwhile, the one time I signed up to buy ad words -- terms like "Twin Cities real estate blog," "Minneapolis real estate blog," etc. -- I literally had to scramble to unsubscribe after my bill tripped $100.

In less than 72 hours.

Nice business . . . for Google.

So, thanks, but no thanks.

Early in 2011 -- that would be about a week -- you'll see a brand, new-and-improved City Lakes Blog, no longer tied to Google, and with much more functionality and a slicker design, to boot.

P.S.: Kudoes to the superb Tim Elliott, Web developer par excellence, for his help with the transition ("emancipation?").

Housing Trends 2011

A Bigger Role for Home Warranties

No, this isn't a call about where housing prices are headed next year.

Rather, it's an observation that home warranties are becoming a bigger part of real estate sales.

Background

Local utility companies have offered home warranties for years now.

The basic plan typically covers the home's heating plant (forced air furnace or boiler), water heater, fridge and stove; premium coverage add the washer, a/c, dishwasher(s), etc., most often on an ala carte basis.

Such plans have also been a fixture of residential real estate transactions for at least five-plus years.

The most common situation: a home with older -- but still functioning -- mechanical's, where the owner wants to reassure a cash-tight Buyer, but also not bear the expense of preemptively purchasing several new appliances.

Instead, popping $400 or so for a home warranty has been a terrific compromise.

The appeal of such warranties has been further enhanced by the fact that payment is deferred until the home sells, when it is deducted from (buried in?) the home owner's sales proceeds; and the coverage can be assumed and renewed for subsequent years by the Buyer.

"Opting In"

As home warranties have grown in popularity, three developments have accompanied them.

One. Express mention of home warranties in the standard Minnesota purchase agreement.

So, there's now a clause, 2 years old, addressing whether or not the sale is accompanied by a home warranty, and if so, who's paying for it.

Two. More companies entering the business, and as a result, better pricing.

Locally, amongst utilities, Xcel Energy has been revving up to compete with Centerpoint Energy.

On the private contractor side, HSA, HMS, and several other companies write such policies.

"Leak" vs. "Roof" Coverage

Three. Home warranty policies are evolving and tightening up.

Until recently, private contractors offered a "deluxe" home warranty that, for an extra charge (natch), covered the home's roof and foundation.

However, such coverage was subject to both a deductible and a $2,000 ceiling, and required a private inspection.

Surprise, surprise, those limitations and caveats weren't exactly trumpeted in bold print.

To avoid misunderstandings (and lawsuits), both HSA and HMS now explicitly bill this feature as "leak coverage."

P.S.: And no, slapping a home warranty on a dilapidated home with shot mechanical's isn't a way to get new ones for cheap: all such policies are subject to strict "preexisting condition" clauses.

"Can You Sell a Home on eBay?"

That was the question my client posed to me the other week.

To answer it, I did a little investigating.

eBay Tutorial

Just navigating eBay's instructions easily consumed an hour-plus.

During that time I learned that eBay charges an "insertion fee," a "notice fee," and "picture hosting fees" – not to mention "optional feature fees" and "listing upgrade fees" -- all presented on various tables and schedules.

eBay also has a few more pages of directions explaining "auction style" vs. "fixed price" listings, reserve prices, etc.

Glorified Classified Ad

The real zinger, though, is fine print explaining that real estate properties that eBay lists for sale are ultimately really only (expensive) classified ads.

Which is probably why I found ZERO residential properties in Minnesota currently listed for sale on eBay.

In fact, there only 4 states – Florida, Michigan, Ohio, and Pennsylvania – where there are residential properties listed on eBay (you can imagine the ones in Michigan!).

Verdict?

No go.

I'll take the local MLS's forms any day!

Ice Dam First Aid

Contractor Advice

Barely two hours after my previous post on ice dams, I received a very informative email from Barak Steenlage, an up-and-coming Twin Cities general contractor (and generally good guy).

Here's what Barak's advises:

If you have ice dams on your roof, the first thing you need to do to avoid water leaks is get all the snow and ice off your roof immediately.

Once the ice dam is off your roof, you have a couple of different options to help prevent them from reforming.

One popular solution is to install warm wire cables along the edge of the roof and in your gutters. You can buy these warm wires at your local hardware store or Home Depot. If you are handy and you have the time you can install them yourself, just be sure to follow all the warnings and instructions.

To prevent the conditions which allow ice dams to form in the first place, can be a little more complicated and you may need a professional to look at your house and attic to determine the proper solution.

In general ice dams usually form from a lack of proper attic venting, sealing, and insulation. This can be corrected by clearing out the snow which can be covering up your roof ventilation vents in some cases or you may need to add more insulation and venting.

Below are a couple pictures along with a link from the U of M where you can read more information on how they are formed and how to prevent them. But in general when you do not have proper ventilation and/or and insulation your roof over your heated parts of your house become too warm which melts the snow on the main part of the roof.

Then, once the water runs to the edge of the roof eve which isn’t as warm, the water refreezes. The process continues until there is enough ice and water and it is forced back under your shingles or siding and into your attic, soffit, or wall.

http://www.extension.umn.edu/distribution/housingandclothing/dk1068.html

If you need more help than just this email, you can contact Barak at:

Barak@AnchorBuildersMN.com

"Anyone Know a Good Ice Dam Removal Company?"

In Demand: Twin Cities Ice Dam Contractors

April showers bring May flowers. --Proverb

December blizzards bring January ice dams. --Ross Kaplan

Judging by my email inbox, the Twin Cities' potentially record-setting December snowfall has been a boon for contractors specializing in ice dam removal.

If you aren't familiar with the phenomenon, ice dams occur when snow lower down on a roof -- typically over the eaves -- melts and refreezes, causing the water from melting snow higher up on the roof to back up under the roof shingles.

The result can be very expensive leaking and roof damage.

The solution is to get a professional contractor (vs. yourself, on a ladder) to remove the ice dam, then add insulation to prevent a recurrence.

The sooner, the better . . . .

Review: Foreclosures on Google Maps

Not Ready For Prime Time

I just spent 20 minutes or so checking out foreclosures on Google Maps.

My conclusion?

It's hard to escape the feeling you are an unwitting beta tester (guinea pig) -- plus, it's apparent that Google's real aim is use limited free data to goose paid subscriptions (translation: Google's business model is cable, not TV).

That is, once Google's data gets better.

Test Drive

The concept -- visually show where foreclosures are most (and least) concentrated -- is terrific.

At least for now, however, the execution is plagued by inaccurate and/or stale data, as well as purposefully incomplete information designed to get visitors to pop for the unabridged version.

To test out Google Maps, I drilled down on the neighborhood I know best: my own.

In my case, that would be Minneapolis' Sunset Gables neighborhood just south of Cedar Lake, and just to the East of Fern Hill in St. Louis Park.

Here's what I found:

Google Maps found (and mapped) ten foreclosed properties within about one mile.

So far, so good.

Of those, however, only two had specific street addresses; the other eight simply gave a street name, along with a push pin showing a specific location.

Chowen Ave Foreclosure? Where??

So, Google Maps lists "Chowen Ave S.", a 3 BR, 1.5 Bath home for $486,823.

The corresponding push pin locates the home somewhere on the 2900 block of Chowen, just north of Lake Street.

However, when you search MLS, there's nothing active on Chowen.

Instead, the closest home meeting that description is 2900 Chowen, a foreclosure that sold last July for a fraction of its $426,500 tax assessed value; see, "THAT Sure Went Fast (Too Fast??").

0-for-2

I had even less success finding "Inglewood Ave. S." in Fern Hill, which according to Google is a 3 BR/2 Bath home for $335,920 that it locates at the intersection of Inglewood and Sunset.

However, when I searched the corresponding stretches of Inglewood and Sunset on MLS, I found no listings, Active or otherwise, going back more than one year.

Which leaves me with the question,"where is Google getting its foreclosure info?," and this conclusion: 'if you can't use Google Maps to identify specific properties for sale -- which may not even be for sale -- what good is it?'

My answer: Google Maps is useful, kind of, to give a broad overview of which Twin Cities areas have the highest (and lowest) concentrations of foreclosures.

Assuming, of course, that Google's data is passably accurate -- for now, a big "If."

Try it Yourself

Want to try it yourself?

Here are the steps:

1. Punch in any US address into Google Maps.
2. Your options are Earth, Satellite, Map, Traffic and . . . More. (Select “More”)
3. The drop down menu gives you a check box option for “Real Estate.”
4. The left column will give you several options (You may have to select “Show Options”).
5. Check the box marked “Foreclosure.”

Good luck!