Note: I’m trying to get a picture of the nature of the housing market in Northfield. I talked to Mary Schmidt this morning but will be speaking with other people throughout the day on the matter. There will be updates attached to the bottom of the original post throughout the day. (Update log: 10/20 2:30 p.m., 2:45 p.m., 3:30 p.m., 5:40 p.m.; 10/21 6:15 a.m., 7 a.m.; 10/22 1:15 p.m., 4:00 p.m.)
Steven Schmidt Construction Inc., which owns Schmidt Homes on Armstrong Road, has built one house this year, Mary Schmidt, director of marketing, said on Monday.
Five years ago, the business sold upwards of 30 homes in a year, Schmidt said.
The 27-year old company is surviving, however, by providing another service that’s in higher demand now than in boom times: Remodeling.
“This year, we’ve probably done work in about 20 homes,” Schmidt said. “That work ranged from building a deck to completely re-doing a kitchen to building an addition.”
Those projects ranged in cost, she said, from about $10,000 to more than $100,000. As a wild guess, Schmidt estimated the amount of remodeling work to be about 20 percent higher than at the height of the housing market.
In a slow market, however, the kinds of homeowners paying for remodeling are fairly specific.
“We’re finding that people who plan to stay in their house for a longer period of time are the ones putting money in their home,” Schmidt said.
Younger homeowners who might move are generally not investing in their house right now, she said. In a better market, younger homeowners might have done so simply because houses were appreciating in cost so rapidly.
“Back then, you could put $10,000 in and make $15,000,” she said.
Despite the success the company experienced in the housing boom, Schmidt said she believes companies like the one her family owns are becoming better when faced with hard times.
“Yes, it’s worrisome but, we’re confident we’ll come out of it and I think we will all be the better for it,” she said. “Nothing is going to be the way it was during the housing boom, and I think that’s a good thing.
Question: Who will talk to me about their experiences in Northfield with real estate and foreclosure? Email me: RepJNorthfield@gmail.com
Update 2:30 p.m.: Annette Frandrup-Frie, office manager and Broker for Edina Realty’s Northfield and Faribault offices, said the company is still selling houses, but homeowners are facing stiffer competition.
“We have a saying in our office that the seller’s house must win the beauty contest or the price war,” Frandrup-Frie said. “Our Northfield office is doing well, although we are seeing the lower priced homes in good condition selling best.”
The Northfield office has participated in the sale 359 homes this year, she said. Last year at this time, it participated in 252 sales. Frandrup-Frie said more information about Edina and the market is online.
Update 2:45 p.m.: Linda Seebach, RepJ’s collaborating editor, asked me to find out if Schmidt Homes had to cut back on employees. Here is Mary Schmidt’s reply: “The number of our employees has already been dramatically reduced. We had 18 people total, six in the office and 12 carpenters. Currently, we have four full-time and two part-timers in the office and six full-time carpenters. Some people left on their own and others were laid off.”
Update 3:30 p.m.: Annette Frandrup-Frie answered the following question, which reader Anne Bretts asked. Question: “Are Edina’s house numbers all from Northfield? Are there more sales in other cities? That number seems high for just Northfield, and higher this year than last seems odd, unless it includes a lot of foreclosures?” Frandrup-Frie’s answer: ” It includes a mix of everything. My agents will take buyers everywhere and look for buyers for the Northfield homes everywhere. Sometimes we have to sell homes in other communities so they can buy homes here, too.”
Update 5:40 p.m.: Realtor Millie Berg of Coldwell Banker said one of the reasons the number of pending sales at real estate agencies in the region rose recently is because of a trend in “corrected” sales pricing, which basically means some people have begun to sell their homes at a lower price.
Despite the rise in pending sales however, Berg said the real estate market is in its worst condition since she entered the industry more than 30 years ago.
“I’ve never seen anything like it,” Berg said.
Mainly, she said, the trouble seems to be in reassuring consumers who have lost confidence in buying a house.
“People take a lot longer to make up their minds,” she said. “We just don’t have people with the confidence to go forward. A lot of people are concerned about their jobs.”
Berg said Realtors attempt to re-instill confidence by answering questions and using a variety of statistics. But, she said, positive news can take a while “to sink in.”
Note: I found some statistics online here.
Update 10/21 6: 15 a.m.: Thank you Linda, for seeing the labeling error in my chart. I have corrected it. Len, the online database appears to be incomplete when I search for months beyond July. I might travel to the office in Faribault today and see if I can get more current information.
Update 7 a.m.: Len, here are two more charts that should help answer another one of your questions. Note: these graphs are for rough comparison purposes only. After looking through the Assessors Office online database more thoroughly, I realized the circumstances of the individual cases filed under “legal takings” varies greatly.
Update 1:15p.m.: Peggy Hoffman, vice president at Community Resource Bank, told two mortgage lending horror stories on Tuesday afternoon when asked what the home-buying process is like today. But the moral of those stories was “buyer beware,” not “blame it on a bad economy.”
In Hoffman’s stories, a person failed to get the best deal on a mortgage because he or she had not found a trusted broker.
“You can still get a mortgage with zero down payment,” Hoffman said, adding that finding a trusted lender helps someone get the best mortgage plan for them.
Of course, she said, most mortgage insurance companies are now doing extra to help home buyers stay out of financial trouble as well. (Anyone who puts less than a 20 percent down payment on a house needs to buy mortgage insurance, she said.)
Hoffman said she sometimes receives dozens of emails in a day from mortgage insurance agencies listing new policies. In general, she said, home buyers have to meet stricter credit requirements than in the recent past. Also, nearly all insurance companies have stopped insuring “jumbo” mortgages, which are for loans greater than $417,000.
Current homeowners and “investment property” owners (landlords), however, are perhaps the people who are seeing the greatest changes in their mortgages, Hoffman said. That’s because some properties are now are worth less than what people paid for them, which can make them impossible to refinance.
Hoffman said Community Resource Bank is doing OK despite the national economic crisis and is too small to have many of the problems larger banks are experiencing now, since those banks had many more large investments.
On a positive note, Hoffman said that since the prices of houses have dipped so low, “it’s a great time to buy.”
She said quite a few Northfield properties are eligible for a long-standing rural development government assistance program. With that program, she said, homeowners can step in to a new house for a few hundred dollars in some instances.
Update 4 p.m.: Note: The following is a message emailed to me from Annette Frandrup-Frie, office manager and Broker for Edina Realty’s Northfield and Faribault offices. Mrs. Frandrup-Frie wanted to clarify figures posted in the comments section that she believed were misconstrued. I plan to talk more here about Mrs. Frandrup-Frie’s concerns with information posted by commenters.
“These facts and figures are just not right. MLS numbers can be pulled up in many, many ways. I just pulled up the pendings and solds in Northfield area this year and it was 215. In Rice County, it was 305, without Northfield’s numbers even included. This number is also just homes that are on the MLS. I did not include commercial or lots.
The Northfield office does not just list and sell in the City of Northfield. There are many sales outside of city limits too. As I stated earlier, the foreclosure listings we service are all over. They are in many cities and communities. So, it is not correct to subtract the forclosure sales from the City of Northfield of sales since they weren’t in the City of Northfield.
Also, to make it sound like it is only 2 or 3 per agent is just wrong. I don’t even have 35 agents. Some of these people are assistants, employees etc.
I just checked and Jesse’s numbers of foreclosures that he sold in zip code 55057 were only 11 since 1/1/2008. The rest came from areas outside of the 55057 zip code.”