This series is brought to you by Josh Zuehlke + Co., a real estate group and Southwest Voices sponsor. Josh will be answering questions you have about buying a house, the real estate market, and more. We’ll be publishing another one of these in the next couple of months, so if you have a question for him that isn’t covered here, submit it in the “Add Context” box below.
I'm looking at condos in Minneapolis. The properties with units affordable to me are mostly pre-WWII or built between 1950 and 1980. Are there any considerations I need to take when buying a unit in an older condo building? -Joshua
The most important things to understand would be related to assessments or the potential for them. Some properties built in this era are often in need of new windows and sliding glass doors (if applicable). These are nearly always the responsibility of the owner, not the association. Be sure to review the association docs closely and ask a lot of questions during your 10 day right of rescission to better understand what might be coming up as an expense. If the assessment (improvement or required maintenance) has already been earmarked, pending, or levied, there’s a good chance you may be able to negotiate that the seller pay for it.
Dunno if this can be a forum for individual home advice but I’ll give it a go. We want to upgrade the kitchen but are thinking about preserving our resale value. The house currently has three full baths over three floors. The bottom floor bathroom (next to the dining room) has a walk-in shower that borders the kitchen. When I remodel the kitchen, if I wanted to make the kitchen bigger, I could get space by removing the shower next door. So my question is — could turning the first floor bath from a full bath to a half bath decrease the value of a home? -Ashley Lowes
Ashley - this is a great question. One clarifying question: What are the locations of the bedrooms? Is there one on the main level? If not, having a main level “powder room” is often most important., especially when dealing with older southwest Minneapolis homes that don’t have a main level bathroom at all. Improving the home’s kitchen functionality will greatly improve the livability and resale value and should surpass the loss of the full bath on the main.
What are the pros and cons of buying a condo/apt that has a homeowners association? -Anonymous
Most condos and townhomes have a homeowners association. And most of those provide a pretty good value based on what is provided. Often times they are very inclusive of your utilities - insurance, security, water, garbage, heat, and often some level of internet and cable. If you average these costs out compared to the dues and consider the cost of maintenance, security, etc. the dues will often feel more reasonable. Always be sure to read the budgets, as well rules and regs related to rentals and responsibility for things like windows and doors 🙌.
I just received a notification from the county that they want to raise my property assessment for taxes by over $100,000. How do you appeal this and what can you expect? -Anonymous
Lots of people are asking this very question, and many are contesting.
If you’re a student of the market, you’ll remember how assessed values fell when we rode the effects of the 2007+ recession. Since then, you’ve likely seen gentle but sustained year-over-year increases. With 2020 and 2021 providing record-setting sales price averages in addition to the significant amount of permits pulled for improvements (these increase your values too), we are seeing significant impacts on how Hennepin County sees values. According to MAR data, average year-over-year sales prices in the County have increased approx $34k on average, while Minneapolis property averages have increased by a modest 15k on average.
The easiest way to appeal is to contact a real estate professional and ask them to perform a market analysis of your property compared to others that have recently sold. You will want them to be as specific as they can be about your home’s improvements compared to the recently sold home. A Google search for Hennepin Co property tax petitions [Editor's note: Here’s a link] will provide additional details of what’s needed. There are deadlines, so be sure to check that out.
As far as what to expect? We’ve been getting a lot of calls like this - which means they are too. Perhaps the abundant protest will cause an across-the-board shift? Expect a potentially slow response and a nominal shift in evaluation based on your property type, condition and location.
How do you expect rising mortgage rates to impact the housing market in Minneapolis? -Sarah
For this answer, I reached out to my trusted mortgage advisor, Shawn Poppler of US Mortgage Investments. Here's what he had to say:
"Rising rates will temper a portion of the demand as some buyers will either no longer qualify at a particular price point or they will decide to sit on the sidelines due to the increase in rates. However, this is more of a supply and demand issue as we now have the largest generation in history (Millennials born between 1981 and 1996) in their peak buying years. New construction starts fell sharply post 2008 and have not kept up with the increased demand. We will need to build our way out of the current inventory issue and this may take up to 10 years.
In short, while we expect home appreciation to slow down due to the rising rates / slower demand, we expect to see positive appreciation in the near term due to the demand still outpacing supply. Over the long run, even with higher interest rates, owning is better than renting because you're building equity while owning an asset that tends to rise with inflation or faster."
