It happened.

After having her large suburban house on the market for just about a year and half (!), my friend FINALLY got & accepted an offer today. And to have this come to pass on the eve of the New Year feels auspicious - and downright celebratory.

Although she went down on her price a considerable more than the 16% that the Star Tribune’s Jim Buchta said is the average price decline for the Twin Cities, she’s happy to be out from under an albatross right side up.

So I’m taking this as an omen. If it can happen to her, it can happen to you. 2009 is going to be better than predicted - pass it on.

The Chicago Tribune released a list of 8 trends for real estate this year and the one that rang home for me was a movement towards “less is more” in square footage of homes.

The paper claimed that home builders are predicting a continued movement toward smaller homes, with many buyers opting for less square footage. This doesn’t mean austere in any way however as people are taking the cash they save on a smaller home and pouring it into amenities. Home buyers are looking for quality over quantity.

I know my Realtor Tom and I were discussing that the problem with a big house is that one must then FURNISH a big house - not to mention clean it.

And heat it, too. An offshoot of the smaller home trend is energy efficiency. Even in these tough times, the green movement is pushing on as buyers seek bette-than-EnergyStar appliances and the like.

 A great read on the subject of smaller homes was written by Twin City native Susan Susanka. “The Not So Big House: A Blueprint for the Way We Really Live,” was a huge hit when it came out a decade ago and the architect author continues to write on the subject.

At our old digs we had fireplaces. Our rental home has no such obvious entrance for rotund, gift-bearing souls to enter. Thus I’ve been answering a lot of questions from a certain concerned constituency. Apparently when you’re 8 and 5 this matters A LOT.

So I talked to our local librarian who led me to  a book by Peter Collington. Without words it depicts fairies clueing Santa in about a child living in a chimney-less home. She gets some fairy friends and creates a landing strip for the sleigh with magical lanterns. Then she lifts the matt for jolly St. Nick where the extra key is hidden.

If you don’t have time to run out and pick up the book, you can weave a good tale yourself out of these elements - because no child should go to bed concerned. They will be adults soon enough.

I got to peek at a fantastic condo today and it got me thinking how buying a condo really is different than buying a home.

It’s a little like marrying a bunch of other people that you don’t even get to date before hand. Because when you buy a condominium, you’re entering into their association and their liabilities become your problem, too.

The closest thing to a date is the looking at the association’s “resale package.” This will include the legal documents (declaration, bylaws and rules and regulations), the current operating budget for the association and the most recent auditor’s report so you can see what you’re getting into.

You’ve got to read these documents carefully.

You want to make sure the condominium has adequate financial reserves for things like a new roof, windows etc. Also an important question is to find out about any delinquencies. If there are too many owners who are not paying their condo fees, you do not want to buy into this association.

Dog art by the talented and lovely Ms. Lisa Pahl. She’s right here in the Twin Cities and can be contacted at lisapahl@mac.com.

It’s been a hellva week here at the rental Rectory.

Our dog of 10 years chewed through 3 waterlines flooding the house and knocking out the furnace — in a house we rent month to month. Belle and I got caught in a blizzard on the way home from Minneapolis and had to stay in a roadside motel eating the contents of my emergency road kit - dill pickle chips and chocolate. Then we had a kid’s birthday party, acquired a hamster and found out the dog has dementia and was a “risk” both to property and children.

And when you’re a tenant you have to think differently. This isn’t my house, I’m borrowing it for money, and have an obligation to return it in good condition.

So I had to go put him down yesterday. It was pretty awful.  He couldn’t be left alone so he had to come with me on a bunch of errands ending with the BIG errand at the vet. It was terrible getting back into the car each time and having him so happy to see me. All I could think was “Dead Dog Riding.”

This has clarified a few things for me:

1. I talked aloud to that dog A LOT. He heard the first draft of everything and was very supportive and…

2. I want to buy a home. Furthermore I may be willing to take more risks than I thought to make it happen. Once you’re king of your castle, it’s hard to live in serfdom again.

And there really couldn’t be a better time for interest rates at a historic low and lots of great homes out there for the bidding.

When it comes to mortgage rates, sometimes it’s better to “act now”.

On Tuesday, mortgage rates fell to their lowest levels in 4 years. It happened because the Fed said it would “employ all available tools” to resuscitate the economy.

On Wednesday, however, the markets had second thoughts.

After considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date, suddenly, traders grew fearful that U.S. government action would devalue the dollar and lead to inflation — the enemy of low mortgage rates.

As a result, mortgage markets unwound.

At first, the exit was a slow and orderly. Then, without warning, investors began a full-on sprint for the exits. By the end of the day, mortgage rates were higher by as much as a half-percent. Nearly all of Tuesday’s big gains were erased.

In hindsight, the reversal Wednesday wasn’t all that surprising — it’s the same trading pattern we’ve seen twice already this year. The first time was after the Fed’s “surprise” rate cut in January, and the second time was after the federal takeover of Fannie Mae and Freddie Mac in September.

Sharp rate drops tend to be followed by immediate bounce-backs, it seems.

But, unfortunately, not every would-be refinancing homeowner saw the increase coming. While those that locked at the first opportunity to save money are sitting pretty today, the rest that “waited for rates to go lower” are likely kicking themselves about it.

Going forward, mortgage rates may fall, or they may not. We can’t possibly know. But we’ve now seen the pattern 3 times now — when mortgage rates plunge like they did Tuesday, they rarely stay that low for long. When you find a rate you like, get in and get locked as soon as possible.

Sleeping on it for even one night may end up costing you dearly.

(Image courtesy: The New York Times)

Now more than ever, it makes sense to live close to the University of Minnesota!

In recent years, the Office of University Relations and the Relocation Assistance Program have partnered to support the initiative, “Living Close to the U.” This program encourages University employees to explore the benefits of living close to the Twin Cities campus. While some of the benefits are obvious–saving transportation costs and commuting time–others may be more intrinsic–being located in the heart of the Twin Cities and experiencing the rich diversity of the metropolitan area and the small-town feel of local communities and neighborhoods.

University employees who have chosen to live close to the U know of these benefits first-hand. Calder Hibbard, Minnesota Forest Resources Council, says, “There are lots of reasons why my wife, children, and I love living near campus. One is that we can be a one-car family. It saves us thousands of dollars a year, and we get the satisfaction of living in an environmentally sensible way. The transit service in this part of the city works really well for us.”

Mike Ramolae, Parking and Transportation Services, says, “My neighborhood (Marcy Holmes) is close to everything. I can walk to east Hennepin, Dinkytown, and downtown. I live close to where I work, and my time is valuable. I don’t want to spend it commuting.”

University financial help

In the face of the current housing crisis, the U of M is stepping up its efforts to assist U employees by offering an incentive program to home buyers. The University District Home Buyer Incentive Program is designed for University employees seeking to purchase a home in one of the University District neighborhoods. These neighborhoods include: Cedar Riverside/West Bank, Marcy Holmes, Prospect Park East River Road, and Southeast Como. This program was developed through a partnership among the University, the City of Minneapolis, and the West Bank, Marcy Holmes, South East Como, and Prospect Park East River Road neighborhood associations.

To be launched on January 1, 2009, the Home Buyer Incentive Program provides down payment or closing cost assistance through a $10,000 two-percent interest loan that requires no monthly payments and is forgivable over five years. 

The incentive program is available to any eligible University employee buying a home in the University District and planning to live in the home as an owner occupant and who also qualifies or is receiving a traditional (prime or A-rated) fixed-rate first mortgage loan or who is making the purchase by cash.

Terms

The loan program is subject to the following terms:

1. Two-percent interest

2. No monthly payment

3. The loan will be forgiven over a five year time period from the date of closing, with forgiveness occurring at a rate of 20 percent each year on the anniversary of the closing date.

4. The loan is due on sale, transfer of title, when the primary mortgage is paid off, or when the property ceases to be the owner’s primary place of residence, except that in the case of a refinance, the loan may be subordinated subject to the Subordination Policy in effect at the time of the request for subordination.

5. These loans are considered a “Special Mortgage” under the terms of Minnesota Statute 58.13. The mortgage may be subordinated as part of a refinance of the primary loan; however, the owner must receive counseling regarding their refinance transaction. Proof of the completion of the counseling will be required prior to approval of the subordination in a refinancing.

6. Borrowers will agree to a ‘right of first offer and refusal’ which requires the borrower to offer the home to the entity who holds the lien on the property, should they decide to sell. If the lien holder cannot offer a price satisfactory to the owners, they may sell through conventional channels.

For more information on eligibility or other details of the University District Home Buyer Incentive Program, see Relocation Assistance Program.

For more detail on the loan program terms/guidelines click University of MN Home Buyer Incentive Loan Guidelines 

For detailed information about the neighborhoods surrounding the University of Minnesota (Southeast Como, Prospect Park, Marcy Holmes, East River Road, West Bank & Cedar Riverside) visit the Program Assistance Home Page.

If you have additional questions or would like to complete a loan application, contact the Greater Metropolitan Housing Corporation Housing Resource Center, at 612-378-7985.

For information about the University District Alliance, see Alliance.

For further information, contact: Jan Morlock, director of Community Relations, University Relations.Mary Everley, director of the Relocation Assistance Program, Office of Human Resources.Deborah Stull Kinsley, communication project manager, Office of Human Resources.

In my former home ( in my former life) I had a couple fireplaces - and honestly, I miss them. But here is the dirty little secret about fireplaces. Unless it’s has an insert, it’s actually not doing you any favors.

When your fireplace is lit, it of course needs oxygen. It gets it from the air that’s in your home, which has been heated to the present room temperature. When air in a home is consumed, it must be replaced - by cold outside air.

So while it may be cozy right up by the fire itself, the rest of your house is suffering from the heat-suck and then drawing in that cold air like a vacuum.

There are some ways to mitigate the problem. You can get a heat exchanger, but it won’t do much unless you have you keep your fire behind glass doors. That will slow the air draw from the rooms.

Your best best with a woodburning fireplace is an insert - it will give you heat, but not really a ton of ambiance. But it will burn less wood and usually has a fan to blow hot air out of its vents.

I’m guessing that I have a message from my banker on the day the Fed announced rate cuts is no coincidence. We actually qualify for a loan so I suspect we’re a sweet target these days. While I don’t see us pulling the trigger on a new house loan until I start bringing in some more money, that’s a possibility actually. There’s a part-time editor job that may just happen.

And that would make this whole market extremely tempting despite having a home in Minneapolis that did not sell and is now rented. The buys out there are incredible and as the weather gets (and stays) very cold this house seems to shrink incrementally.

So right now I feel like I’m in the second act of a three act play - and I have no idea what the ending will be. I’ll be sure to let you know…oh, and no word on the dog yet.

So I’ve had a few laughs at my dog’s expense in recent months. What with him getting stuck in the lazy Susan cabinet and tripping ungraciously over various and sundry.

Our new Vet believes that the stress of all our showings may have triggered some dementia in our old dog. As you remember, Scottie let his teeth do the talking to express how he felt about all his time in the mini-van, while gaukers strolled through our home on the market.

Recently he attacked a dog while frolicking off-leash while Jason shoveled the driveway and - and this is really bad - shredded our house while we were off doing errands. Our trusted dog who never chewed a shoe or tipped a garbage in nearly a decade with us, chewed through three waterlines - flooding the laundry room, the kitchen and a bathroom - and a 24 volt wire that knocked out the furnace.  He then proceeded to tear down & destroy shades, curtains and bath towels.

In short, he snapped.

This is not good for people in a month-to-month leasing situation.

We’re having some blood work done, but things don’t look good for ol’ Scottie. This probably would have happened down the road, but if he’s been absorbing all my stress all the Real Estate market and the economy in general - it’s a surprise it didn’t happen sooner.

I’ll update you tomorrow.