Out with the old, in with the new…but why?

Recently the Shakopee video rental market has changed. Blockbuster near Cub Foods is closing down after YEARS of occupying the corner of the strip mall next to Super America off of Marschall and Vierling Dr. The odd part is there is a new video store opening just down the street on Marschall Rd where the old Snyders used to be accoss from the Wells Fargo building on 4th Ave.

I do ask myself why. In the new age when everything is being pushed toward streaming movies online I wonder what audience they are tyring to cater to, or if they will have some sort of “catch”. Personally if my wife and I want to go rent a movie now, we just hit up a Redbox located at the Holiday station near our home in Shakopee.

I’m not sure what the new store name is, or if they will have any other business attached, but it located near our Re/Max Advantage Plus office in the Voyager Bank building. They have been making many improvements lately so it will be interesting to see what happens in the near future.

I could see eventually see the Shakopee real estate market also changing similarly as many local real estate agencies are condensing and reducing space. Despite rumors I have heard about the Shakopee Coldwell Banker office and the Shakopee Edina Realty office potentially closing they ARE NOT.  The Edina Realty office in Shakopee, which I worked at for 9+ years,  located off of Vierling Dr is only reducing their space from over 8000 sqft to under 4000 sqft. I also had coffee last week with the manager at Coldwell Banker and he stated they have had a great year so far and condensed their square footage to one floor. Neither of these companies would close shop and move, but rather just realign themselves for the changes in our real estate marketplace. There simply are not the number of Shakopee Realtors anymore that there was years ago and I do see that as a good thing! I think the agents in the marketplace now are committed to the business and are more overall prepared to help their clients.

Why Active Shakopee Homes Are Sold

Do you wonder why homes in Shakopee that are sold show up on many real estate agents websites?

There can be many reasons a home in Shakopee can show up this way. A few reasons are homes are sold subject to an inspection, sold subject to another home selling, or the most likely reason in todays Shakopee real estate market, sold subject to third party approval. Shakopee realtors are able to still show these homes as active because technically they could accept another offer, although that offer would be subject to a cancellation of the first offer.

The first two reasons are pretty obvious as to why a home in Shakopee is sold, but the third can be a bit more complicated. Houses in Shakopee sold subject to third party approval are essentially a short sale. They are homes that need bank approval because the owners mortgages total more than the home is worth. Still this really does not answer the question. To answer the question, Shakopee bank owned homes are getting smarter,hold your laughter because we all know that entertains us a little, but they really are. Often times a real estate agent is pressured by the bank to keep the home marketed so the bank feels they truly did receive the highest price for the home.

If you feel a little lucky and think you may have found “The One” Shakopee home out there for you, feel free to submit a back up offer, sometime banks do reject all short sale offers and yours could be net in line.

Wait to buy a home in Shakopee if you want to pay more $

Many buyers searching the MLS  have been sitting and waiting for home prices to hit bottom. The problem with theat theroy is we ultimately will not know what are at the bottom, until we are on our way back up. Minnesota buyers looking to purchase their first home in Shakopee, or possibly their next home want to try guarantee that they are purchasing at the best possible price. I do believe that prices still have some room to fall in the Shakopee real estate market due to the overwhelming foreclosure numbers you see in our current real estate marketplace. I do however, disagree waiting is the best option. In the midst of some of the lowest interest rates we have seen, and may potentially ever see, I feel more buyers should be taking advantage of low interest rates. Most buyers feel that waiting is a good financial decision when it comes to the current real estate market conditions. The buyers in the current Shakopee real estate market should not be so concerned about housing prices, but they should also be concerned about cost. Interest rates and current pricing are the two factors that dictate your overall cost.

PRICING AND PAYMENTS

I could realistically see the price of Shakopee real estate dropping 10% of the course of the next few years. Note if there was a decrease of 5% per year in 2011 and 2012 from an original sales price of $200,000 at the end of 2010, by year end in 2011 the value would be $190,000 and by 2012 $180,500. Overall the is a decrease in price of almost $20,000. That really makes one think before purchasing. I compare real estate similarly to that of the stock market. No one watches their stocks EVERY SINGLE DAY to see where their value is, but rather when the time comes to sell you may take a closer look. Those purchasing today really do not need to look at values decreseing the next two years, which is just a possibility, but what are their payments going to be and overall cost.

If you were to have purchased that same Shakopee real estate for $200,000 in 2010 with an interest rate of 4.5%, your payments as a first time buyer with 3.5% as a downpayment would be an estimated $1,283. This does not include taxes or insurance. Now multiply that payment by 24 months and the cost would total $26,472 in principal and interest payments over that two year time frame.

If values held tight and that same homes was worth $200,000 tqo years later and Iif interest rates for a 30 yr fixed rate mortgagehad increased at the same time to 6%, your monthly payments would jump to $1,283 and at 6.5% they would increased even higher and ballooned to $1,345.

Over the course of 24 months the total cost in payments alone at a 6% over a 4.5% interest rate would be $180 per month to total $4,320, and at a 6.5% rate the monthly cost would be $242 more per month totaling $5,808

Now fast forward two years and theorize the value would potentially fall 10% to $180,500. If interest rates for a 30 yr fixed rate mortgage increased at the same time to 6%, your monthly payments would jump only to $1,158 and at 6.5% they would increase to $1,214.

Over the course of 24 months the total cost in payments alone at a 6% over a 4.5% interest rate would be $55 per month to total $1,320 and at a 6.5% rate the monthly cost would be $111 more per month totaling $2,664.

INTEREST RATES

The power of compounding interest. The lower your interest rate, the more principal you will pay on your loan early. The numbers above show a brief example of a cost estimate that may still leave you wondering why the numbers don’t quite even out. The reason being is I took a snipet only over two year year period to show the savings over that two year time frame.

To analyze the big picture and total cost savings as most people will stay in their home over a longer period of time, look at the overall 30 yr total interest and principal payment costs:

$200,0000 @ 4.5% total cost $359,046

$200,000 @ 6% total cost $423,568

$200,000 @ 6.5% total cost $446,162

$180,500 @ 6% total cost $382,270

$180,500 @ 6.5% total cost $402,661

Even if prices fall another 10% , the cost of a owning a Shakopee home will increase if interest rates goup more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be in the future.

Shakopee Entertainment Sector to Continue to Expand

Shakopee is back at it and adding to the entertainment hub they are known for in the southern part of the Twin Cities. Currently Shakopee real estate is home to many venues including Canterbury Park, Valleyfair, Murphy’s Landing. Owner of Dangerfield Gus Khwice and Michael Orensteen owner of MinneHaHa in Burnsville, is planning to move the comedy club to the lower level of Mr. Khwice Dangerfield’s restaurant in Shakopee. Dangerfield’s has the food to bring people in for a nice dinner and a 90 minute show. An article from the Shakopee Valley News states, “For $25, people can watch a 90-minute show and also select a dinner entrée, ranking from whiskey sirloin to crab meat stuffed tilapia. Tickets to just a show will be $10 or $13.” To me that is a steal of a deal. My friends and I usually head to downtown Minneapolis to catch a show at Acme Comedy Co. Looking on Acme’s website; prices seem to be close to Dangerfield’s quoted prices ranging $15 for just a show, and $30 for dinner and a show. The next performer at Acme is Dwight Slade, which I am not familiar with, but I hope to see Dangerfield’s grow and bring in some top talent. My Mother, Carol Scott, loved going to Dangerfield’s for dinner and I am sure she would have loved the opportunity to have an adult entertainment venue so close to home. Gus Khwice was a great man to her and I respect and support his business ventures and wish him the best of success. Let’s hope Gus keeps prices for beer down, we get lots of laughs in and the comedy club can continue to thrive. Now if the Minnesota Vikings would just move their stadium to Shakopee and buy a little real estate down here, maybe we could keep generating some more tax dollars to help pay for our future second high school.

Shakopee Townhome Update

There are many townhomes in the Shakopee real estate market. Of the 301 current active listings 126 are townhomes, twinhomes or condos which represent almost 42% of the current market inventory. The Shakopee real estate townhome market is very affordable now compared to past markets especially after seeing values drop significantly over the past few years. Currently of the 126 active Shakopee townhomes, the average sales price if hoovering just over $129,000 for a 2+ bedroom 2 1/2 bath townhome built in 2001 with over 1550sqft. 4-5 years ago these Shakopee townhomes would have sold in the $190’s. If you are searching for a home you need a way to narrow down all your choices. The best options in the Shakopee real estate market I feel are in the 3+ bedroom 3+ bathroom townhomes with at least a 2 car garage built after 2000 and priced competitively under $125,000. If you were to narrow down the Shakopee real estate market with that search criteria you would still have 15 homes. To view all Shakopee real estate listings or homes in other areas, go to my website www.MinnesotaListingSearch.com

Shakopee Real Estate Market Hits Bottom

That is a question many Shakopee real estate buyers are asking these days. It’s hard to look at this market and think that we are not close to the bottom if not there. It is true the Shakopee real estate market will see many more foreclosures over the next few years, however currently most pricing is cheaper than if you were to rent real estate in Shakopee.

The other day I looked at a home behind St. Francis hospital in the Pheasant Run neighborhood. The home was price at $162,500 and really all that needed to be done was paint and carpet. This home was built by Keyland Homes and years ago in the Shakopee real estate market this home would have sold upwards of $300,000. Today, given values of homes in shakopee, this homes was priced almost 50% lower.

Generally speaking if you were to take estimates of a full price offer of $162,500 with the buyer putting 3.5% as a downpayment, current taxes at $2678 and annual insurance of $900 the estimated monthly payment would be only $1225 given a 4.75% interest rate. That shows you right there where the Shakopee real estate market is it today, a bargin. If 5 years ago the value for this home was even $275,000 and interest rates were one percent higher at 5.75% and taxes the same, your payments would be a staggering $2025.

This shows you what type of buying power there is out there in the market today. I see many Shakopee townhomes that sold in the $190,000’s a few years ago now priced under $100,000. You could buy these townhomes today, rent them out and cashflow the homes at $300-400 per month! The opportunities are endless and we may not know truely if we are at the bottom of the Shakopee real estate market, but we do know now more than ever pricing is great.  So if you are starting your Shakopee real estate search today, have your loan officer run the numbers and realize truel how low interest rates are in this market and what it means to your botom line.