MANKATO — Nicole Schmidt had long wanted her own house. She knew interest rates were as low as they’d ever be, but first she needed to clean up some bruises on her credit history.
“I made some mistakes with my credit. I have a friend who works with a mortgage company, so he helped show me how to clean up my credit.”
After taking the time and steps needed to get on the right side of credit-rating agencies, Schmidt set out to find a home for her and her teen son.
“I thought you’d get more of a house for the money. Up to $120,000 they’re kind of junky. You get $130,000 and over, they start getting nicer.”
Schmidt eventually found what she described as “a very nice home with a lot of potential” and closed on it recently. “It was a foreclosure, so I think I got a good deal. They almost had the basement finished and then just stopped. Someone else’s loss was my gain.”
Schmidt was one of a growing number of people with good enough credit and a desire to buy homes who pushed the long-struggling real estate market decidedly higher last year.
“Things really picked up last year and it’s not slowing down,” said Mary Weller, a longtime Realtor in Mankato with Coldwell Banker Welcome Home Realty.
The number of homes sold in the 10-county area rose 16 percent in 2012 and the average home sales price was up about 10 percent for the year to $140,000, according to the Realtors Association of Southern Minnesota.
While Schmidt benefited as a buyer from a foreclosed home sale, agents say they’re glad to see the stock of foreclosed houses on the market dropping. The homes not only drag down overall sales prices, but the previous owner of the house isn’t looking to buy another home.
“We’ve seen a lot of first-time buyers out and that was what was really needed,” Weller said. “In previous years a lot of them were buying foreclosures, so there wasn’t that domino effect. Now we’re seeing them buy homes that allow the other people to move up.”
Appraiser Brian Schultz of River City Appraisal Services in North Mankato said while the Mankato and the overall markets have picked up, sales in small towns remain slow and prices are flat.
“In the smaller towns there’s no increase in sales prices. You have a husband and wife who both work and have to drive to Mankato or Waseca, and the further out you are, the gas prices play a big role,” Schultz said of the tough time pitching small-town living.
The slow sales cause a problem for appraisers: Before approving a loan, a bank wants to know what comparable homes have sold for recently in the immediate area. When none has sold recently, Schultz’s job gets harder.
“If you’re in a small town like St. Clair and can’t find comps (comparable sales), you have to look at other towns like Lake Crystal or somewhere else to find some.” But with underwriters scrutinizing loans very closely, they can be reluctant to take such comparison appraisals.
Weller said that besides more interest in general, Realtors are finally seeing some pricier homes moving. “The higher end really picked up last year. In just the last month we sold two big homes on Madison Lake,” she said. “There’s more selling on the lakes, which is really nice. That was just stagnant.”
Schultz said properties on Lake Washington and Lake Francis have been the most popular.