May/June 2018 Real Estate Q & A 

This summer has brought transition to the housing market.  Rising rates, soaring values and low inventory have left many with questions.

Zach Adams has answers about today’s real estate market:

  • Rising Rates Impact on Buying Power
  • Housing Inventory Shortage
  • Downsizing

The economy is roaring and interest rates have risen, how serious an issue is this for a buyer looking to upgrade? – Rao in Wayzata

You are right Rao. Rates have risen fairly consistently throughout 2018. According to the Federal Home Loan Mortgage Corporation (Freddie Mac) 15 of the first 21 weeks of this year have seen an increase. This has carried average rates over 4.6% for a 30-year fixed mortgage (up about 0.7% in a year).

How big an impact this will have on you depends on a variety of factors. It is worth noting first however that the news is not all negative. While rates are rising they remain low historically. In addition, along with the increase in rates has come a general uptick in the value of most homes in our area. As we looked at last month, West Metro homes have appreciated well over the past year. So buyers like you who are looking to upgrade are likely well-positioned to find a new home and still attain a manageable payment.

Clarity depends on your exact situation and next steps require that we run a few scenarios. Rates are an important consideration, but property taxes, moving expenses and other factors also play into the equation. A Comparative Market Analysis can help you quantify things as it relates to your current home value and can inform your new home budget.

In addition, remember that finding the right home also means selecting the best mortgage. The median length of time a family stays in a home is 10 years. If your timeline is similar, it is doubtful that a 30-year mortgage makes sense. This opens up a variety of options to finance your purchase, each with tradeoffs of their own.

The only way to set a course is to run the numbers and consider your options. A consultation is a great first step

My wife and I have been searching for a home, but are getting discouraged. Why aren’t there more listings in our price range? – Brett J., Maple Grove

Thanks for your question Brett. I can tell you are frustrated, but encourage you to stay the course. You are not alone in lamenting a shortage of listings. While we’ve seen an active season, inventory remains challenging at certain price points (notably $300k - $500k). Compounding matters, when compelling listings do show up at that price point they often elicit multiple offers.

This makes buyer preparation crucial. Getting the home of your dreams in a tough market requires the ability to recognize contenders quickly and be ready to act.

Several items can help:


  1. Engage a Full Time Local Agent
    By working with an agent who knows your search area well and has the wisdom of experience, you can ensure speed in setting up a showing, prompt submission of an offer and a proactive relationship with the listing agent. Agent availability and experience are crucial to staying nimble and acting fast.

  2. Develop a Highly-customized Search
    Spending time to refine exactly what you are looking for in a home can help you and your agent collaborate to build a custom search and significantly cut the time from initial listing to showing to offer.

  3. Obtain a Mortgage Pre approval
    A mortgage preapproval can help make your offer more attractive to sellers in a competitive bid environment and offer better budgetary guidance to increase your speed to respond to contending listings.

The bottom line is that although it may not seem like it, inventory is increasing. Finding and buying your new home requires increased diligence in preparation along with a little patience.


My kids are grown and my husband and I need to downsize. Do we need to update things in order to sell?—Mary Anne, Minnetonka  

The scenario you describe is a common one, Mary Anne. You are not alone.  Baby boomers are retiring at a fast rate and many are looking at housing options that better fit their changing lifestyle and goals. The good news is that there are likely many buyers anxious to purchase your existing home.

In many cases simple carpet and paint can do wonders to prepare a home for sale. For others a few additional updates may be needed. While every home is different, some of the more common upgrades are listed in the article Crucial Updates When Listing the Family Home.

As to your home in particular, a walkthrough with an experienced agent should provide all of the info you’ll need.  An experienced agent will be able to assess your home and answer any questions you may have about updates and their impact.  In addition, if you choose to work with Zachary Adams and Associates, our walkthrough will also include a home valuation and net proceeds report.  These will spell out the financial side of any potential sale including not only a bottom line number but all of the information that went into arriving at that final number.  This includes comparable listings that have sold recently and an assessment of the overall market in your area.