Real Estate Snippets

Bikes

I had a bike, a very nice bike, one the salesman 4 years ago said would be just perfect for my needs.  Falls from a bike were not part of my life experience prior to that time.  Knee surgery changed my range of motion, however, which precipitated the purchase of my four year old bike.  The former salesman assured me the cross bar was low enough to get over with my limited range of motion.

After the surgery and former bike acquisition, falling became a scary part of my biking experience.  Prior biking experience had been fun, but falling created a torturous apprehension.  I LIKE to bike so didn't like this new fear.  The increase in gas, St. Paul's bike friendliness, and my desire to bike into my old years precipitated a trip to a different bike shop to buy an "old lady" bike, the bike of my childhood years!

Bobby and Cubs, salesmen at Now Bikes and Fitness, 75 North Snelling, had my solution.  They allayed my embarrassment saying these bikes have become very popular (Is that because baby boomers are getting older?).  The goal is "to get you moving" according to Bobby.

That flashy green thing in the picture is my new new bike (a Townie 21).  Same price tag as the former new bike, but what a difference.  Here's what I learned about this bike vs. my hardly used old one:

1. The seat is behind the pedals instead of over them.  This allows upright posture and the weight to be on the seat providing better balance.  (Not to mention being easier on the hips because I don't have to fold in half to ride!)
   
2. The pedals are "flat foot"  which means they don't have those funny pokey things that keep catching on tennis shoes so old ladies can't keep their feet on the pedals.
3. The handle bars are not "racing" style, but higher.  The rider's center of gravity is over the seat providing more control over steering for those who don't steer with their bodies!   This design also makes signaling turns and shifting easier as hands are not supporting any of the rider's weight.
   
4. The cross bar is very low and a person with limited range of motion can get their foot over it without a struggle.  Starting is seldom an issue to someone "stuck" on their bike.  Emergency stops or stops on a grade can be a problem when one can't dismount because the cross bar is too high.
5. Should the seat be mentioned?  Wider, cushier, and better support for that upright posture?
   
6. The color is so bright, lights may be unnecessary.

Now with the addition of a sidecar, showing houses should be more economical!

Common Sense Mortgages

The Federal Reserve first published their proposed Regulation Z back in January, 2008, with a deadline for public comments to be made by April 8, 2008.  The proposal now has been enacted with some important (I think) changes to be made to mortgage lending practices.  I say I think they are important because I thought they were being done before, but apparently I was wrong!

The first set of changes were made to regulations for higher priced mortgages (sub-prime loans with high interest rates).  They seem common sense to me.  Why do they even have to make these rules?

• Lenders cannot give a loan to borrowers that do not have the ability to pay back the mortgage.   Well, duh!  I thought this was the case already.  It seems sub-prime mortgages (given to buyers with borderline or worse credit) formerly were not required to be sure borrowers had income to make their mortgage payments!  And we wonder why so many people are losing their houses?  A subset of this regulatory change is that borrowers must qualify to make payments on the highest possible payment of an adjustable rate loan rather than the introductory rate they qualified for before.  This is a caution I made to all of my clients who used ARM's to make their purchases.  It is just common sense to make sure you can make the worst case scenario of adjustments work!
• Income and assets apart from the collateral of the house have to be verified!  Oh, so they mean the borrower can't just SAY they make $100,000 per year?  They actually have to prove it?  Common sense, I say again!
• Escrow accounts have to be set up so the borrower pre-pays 1/12 of their annual taxes and insurance into this special account from which the lender draws to pay the annual tax and insurance bills.  Mortgages for people with good credit do this.  Wouldn't it just be common sense that people with less than good credit would have to do the same thing?
• Pre-payment penalties are only allowed within strict circumstances.  There are no pre-payment penalties allowed within 60 days of an adjustable interest rate being reset.  This allows borrowers who want to refinance in order to avoid a high interest rate to do so without a financial penalty.

The next set of rules applies to most mortgages including prime mortgages.  These, too, seem like common sense.

• Lenders and borrowers cannot influence appraisers to assign a specific value to a home.  Considering that appraisers get a copy of the purchase agreement before doing their valuation, it seems they are already being influenced.  The purchase agreement certainly states the "goal" value in the purchase price!
• Seven changes in how lenders can advertise were made including that they must disclose when a low rate is just an introductory or "teaser" rate; an ARM must be disclosed as an ARM; and if the current mortgage servicer's name is used, it must be disclosed that the offer provider does not represent the current company.
• Lenders must provide a good faith estimate of the costs of all types of home loans including a payment schedule within 3 days of application.  These are currently only required on home purchase loans.
• Companies collecting the loan payments must credit the payment when it is received and not hold it; late fees can no longer be "pyramided"; and pay-off figures must be provided in a timely manner.

Some of these changes needed to be made, but some of them really are common sense!  I know if I was the lender I certainly wouldn't give someone a couple hundred thousand dollars without knowing they had the means to pay me back!

Green Rooftops

Imagine the view from the office skyline that had lovely green rooftops instead of cold cement surfaces.  My thoughts go beyond grass to flowering gardens and fresh vegetables growing from the flat tops of buildings across the city.  The advantages of natural sun protection and soothing aesthetics are numerous.  We could all daydream at our desks and take breaks amid the flowers on the roof!  These are the thoughts of those who want to "green" our air and rooftops.  Carole Cohen in Cleveland and Elaine Reese from Worthington, Ohio, each recently wrote interesting pieces on greening rooftops.

The experts agree a roof must have a waterproof barrier before grass is planted, but I can't help but remember an old landlord's experience every time someone talks about "greening" a roof.  The building was a duplex.  The main floor housed a long term tenant who seldom complained about the property.  A new resident had occupied the second floor for about 7 months.  One afternoon the owner received a frantic call from the main floor resident.  The ceiling over his living room had been discoloring for a couple months but he had ignored it.  The call came to the landlord when the ceiling had started to drip and appeared to be sagging!  The tenant couldn't figure it out as the kitchen and bath were not over the living room. 

Further investigation by the landlord found a full fledged vegetable garden growing under lights on the upper level.  (For the suspicious, it was not marijuana.)  The immigrant family did not realize the damage the soil and water would create in their dwelling (Their homes were constructed of concrete.), but knew they needed to grow some of their native vegetables that could not easily be purchased here.  The landlord was shocked.  The insurance company didn't believe it, but in the end it all got sorted out.

The moral of the story is that if you want to make your roof "green" make sure you get professional advice on how to first waterproof the building below it!

Another Reason to Like St. Paul

What a strange fountain, thought I, until the light bulb went on.   It's a doggy fountain! 

This testimony to St. Paul's dog friendliness was found at Two Rivers Overlook where the Minnesota River joins the Mississippi.   Besides being dog friendly, the overlook itself is a work of art with the map of the river area worked into the walking path using different paving materials.  The view combined with the historical significance of the area make a visit worthwhile.  The overlook is located on Shepard Road just east of Highway 5.

The Mississippi Headwaters

We made it to the headwaters of the Mississippi along with a few hundred other people.  This photo shows what is called the origin of the Mississippi today, but it's really a dam built by man in the 1930's to prevent erosion of Lake Itasca into the river.  The true headwaters (according to signs posted along the way) is a spring in the weeds that isn't clearly marked.  It can be found somewhere in the following picture.

I couldn't help but compare this end of the great river with the southern end in New Orleans.  Yes, the headwaters is smaller, narrower, and can be forded by even young children.  The thing that most impressed me was the pristine clarity of the water.  Even with dozens of people tromping around in the river above this picture, the water was clean and totally transparent.  In St. Paul, the water already has a murky color caused by things being carried in the water.  New Orleans . . .   The best description of the New Orleans Mississippi was coffee with lots of cream in it. 

Here are some fun facts about the Mississippi (click on the picture to enlarge it):

A surprise bit of information about Itasca State Park was that a young woman, Mary Gibbs, in 3 short months as park commissioner stood physically and philosophically against armed lumber jacks to prevent the destruction of the Lake Itasca area due to logging.  Single-handedly this woman made a huge difference in the ecology of Itasca State Park and managed to preserve a beautiful area for future generations.  All this happened in 1903, long before the feminist movement!  I couldn't help but smile at the contrast of Mary in her Victorian dress reading in the rustic log cabin she called home.

The Ojibwe culture sees women as sacred keepers of the water, and although Mary was not Ojibwe, she certainly fulfilled the woman's role of keeping the water pristine and renewable for future generations.

Gas Hog

The Loving Husband, ever the prepared man, made our reservations long before the gas prices skyrocketed, so we've got to go.  Besides, it's Minnesota tradition to camp in the summer!

It will be my first experience seeing Minnesota's Itasca State Park where the great Mississippi originates.  They tell me I'll be disappointed.  I disagree!  Having been to New Orleans to see the end of the great river will make the trip all the more impressive for me as I compare the beginnings to the massive end. 

However, I'm trying to tell myself I'll enjoy the trip enough to compensate for the pain of feeding the gas hog that's hauling our camping trailer to the nether reaches of the state!  Maybe, just maybe, we'll get by with less than a commission?

Pictures are promised when we return!

The Mortgage Fiasco

Have you ever noticed how the pendulum swings back and forth but never goes from the extremes to the center without lots of repetition?  So much of life is like a pendulum including real estate and the mortgage market.  For every action on one side of the cycle there is a reaction to the other extreme.

Today the mortgage market has swung toward conservative.  In fact, lending practices have become so stringent that acquiring a mortgage has become very difficult.  Just a few short years ago lenders were so liberal in their application approvals that one only had to be alive (although there's rumor that some deceased borrowers were even approved for a loan!) to get a mortgage.  Aaron Dickinson has an interesting article on how loose lending got us to this sorry state, and now tight lending is keeping us there!

The irony about the swing from easy lending to difficult lending is that neither is good for the market.  The easy lending practices allowed buyers who really couldn't afford a home to get a mortgage.  (A true breeding ground for default.)  The lenders who cast a closed eye at applications that were obviously not realistic, or who encouraged borrowers to get a mortgage with teaser rates that would inflate more quickly than the buyer's income seemed as surprised by the turn in the market as others were.  Big companies were caught with their hands in the cookie jar, ever reaching for bigger profits.  The fall of Bear Stearns, the demise of Indy Mac (a notorious subprime lender), tightening of home equity lines of credit, and the rise in foreclosures took the lenders all by surprise?  I think not.

Even I had wondered when it would end and I'm not an economist.  Surely the people in the know knew that easy money with no downpayment gives little incentive to stay the course when times get tough.  Why would an upside down borrower remain faithful to his lender when so many don't remain faithful to even their spouses whom they know and care about?  The money was too easy to get.  The consequences of defaulting were too easy to bear.

So now the pendulum has swung from almost everyone getting a loan to the other extreme.  The real estate pendulum has begun to center itself and balance will eventually return . . . if we live long enough!  ☺

One Fate of Registered Vacant Buildings in St. Paul

It looked like this in 2003.  In 2004 the new owners had installed new siding and greatly improved the exterior look.  It was light gray siding with new windows and doors and white trim.  It was the nicest looking house on the block.  On December 5, 2007, it was blue tagged.  It joined the ranks of many others labeled as "registered vacant" in St. Paul. 

The full story is unknown to me.  Maybe the city was unable to get a response from the owner whose tax records show a California address.  Maybe the owner paid to have the building removed.  Maybe (I hope) the business to the west of the house bought the property to be used as a parking lot.  Maybe . . .

At one point the windows were boarded because former tenants were found illegally entering the building to salvage their belongings.  Two week ago the front yard was dug up and the steps and cement disrupted.  No attempt was made to salvage the detailed dental molding of the fascia.  It was the original from 1890.  Even the siding, windows and doors could have been reclaimed by a "deconstruction" company.  It didn't happen. The disturbed front yard was the sign that this building was going the way of so many registered vacant buildings.  It's fate was sealed.  The coffin only needed to be nailed.

Wednesday the registered vacant building above looked like this.  Just 6 months and 12 days after it was condemned.  I guess they gave credit for holidays to get to the extra 12 days.

To my dismay the house next door is now sporting a blue sign as well.  St. Paul is becoming a veritable wasteland of registered vacant buildings!  As of Monday, the 14th, there were 1993 buildings on the "hit" list.  Some with history that will never be restored.

Landlord Woes

It's my mantra:  property management is really tenant management.  Given my mantra, it's totally annoying when I've been had.  Yes, I've been had by a tenant and it was all my fault.  TLH (The loving husband) liked the way she looked.  She was a classy lady.  Very refined and articulate.  Her hair was in place, her clothes were nice, she wrote legibly, etc., but I should have known better.  The application checked out except for one small flaw.  The rental reference company showed changes of address about every two months.  Yep, I shoulda known better.

TLH said go for it, so knowing I could cast the blame on him, I signed the lease.  Thankfully, we chose a month to month "trial" period before executing a longer term lease.   The neighbor complaints began immediately, on day one of occupancy!  The police called.  They didn't pay the balance of the rent.  Calls made from my known number were not answered by the tenant but from my office they were.  The lower unit was flooded by an overflowed toilet. We got visits with complaints at 2:00 AM and calls regarding heavy bass at 4:30 AM! It ended with a 45 minute shouting match in which the neighborhood and I were called many unsavory names! 

By day 21, we were done, but I kept hoping.  My hopes fell flat.  Thirty days after the lease was signed, we gave notice that we were terminating the lease effective the end of the next month.  Of course, the rent didn't get paid for that month, but empty promises kept floating my way.  My assumption was they'd remain past the move out date which they did.  Only with a stern threat of filing an unlawful detainer did they move  leaving an apartment full of "stuff" for us to deal with.

Some landlords have creative ways of dealing with these problems.  A client said he "repairs" the entry door by removing it until they leave!  Steve Glover shares in his blog about a nightmare owner in California.  My husband's first experience with removing tenants had him issuing fantasy threats of changing locks at midnight and proclaiming, "This is MY building!" 

Regrettably, one has to follow the rules.  Using the month to month lease as we did, allowed us to terminate the lease by giving written notice no later than the last day of the month stating that the end of the next month is the end of the lease. This allowed us to avoid a court action.  The thirty day notice cannot be given at mid-month for vacating at the following mid-month if the lease period goes from the first to the last day of the month. 

Had the tenant not left, filing for an unlawful detainer at the courthouse would have been the next step.  The $250 filing fee is a bit tough to bear, but well worth getting rid of a troublesome tenant.  The papers have to be properly served and every "t" crossed and "i" dotted in order to successfully follow through with an eviction (unlawful detainer action).  If the owner doesn't follow the law and the correct procedure, the tenant has every right to stay in the property regardless of what the owner desires!

St. Paul Real Estate Sales June 2008

This chart is based on information from the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC for the period June 1, 2008,  through June 30, 2008.  Clicking on the chart will enlarge the image so that it is readable.

Pending sales have increased significantly in June compared to last month which is normal for our area.  Expired listings have decreased somewhat but not significantly, and closed sales have also increased.  The number of active listings on the market has remained pretty constant compared to last month.  The average sale price has decreased from $194,808 in May to $160,000 for the month of June.  The short sale and foreclosure inventory has a direct impact on the decrease in the average sales price for this month.