Date: November 10, 2009

MADISON, WI – Wisconsin home sales increased for the first time since the recession began nearly two years ago, according to data reported by the Wisconsin REALTORS® Association (WRA). Existing home sales increased 5.8 percent in the third quarter of 2009 compared to the same quarter last year, the first increase since the recession began in the fourth quarter of 2007. “We are finally seeing signs of recovery in the housing market,” said John Flor, Chairman of the Board of the WRA. “This deep and lengthy recession has kept many buyers on the sidelines for the better part of two years.” He credited a combination of favorable mortgage rates and the federal tax credit for first time home buyers for the surge in sales. “With mortgage rates in the 5 percent range and the tax credit putting up to $8,000 in the pockets of first time home buyers, the market saw a real boost,” Flor said. Wisconsin’s 5.8 percent increase in housing sales compared favorably with the nation, which rose 5.9 percent, and the Midwest region, which grew at a 5.2 percent rate over that same period.

Flor noted that recent action by Congress not only extended the housing tax credit through April of next year but also expanded it to include all buyers. “The extension and expansion of the federal tax credit is not only good news for home buyers and sellers, but also for the economy as a whole,” said Flor. “Families buy a wide range of goods and services after they purchase a home, which helps the entire local economy, and sales of starter homes create opportunities for sellers to trade-up to a new or more expensive home.” Flor noted that with the national unemployment rate now topping 10 percent, the economy still has a long way to go. However, he said there are good reasons for guarded optimism. “Gross Domestic Product grew in the third quarter and a key indicator of future economic performance, the Conference Board’s Index of Leading Economic Indicators, has been up each of the last six months. Hopefully these trends will help continue to fuel housing demand,” Flor stated. As sales increased, median home prices in Wisconsin fell 6.3 percent to $148,000 in the third quarter of 2009 compared to quarter three of 2008, according to the WRA report. This was better than the national reduction in median prices, which was at 11.2 percent over the period. WRA President William Malkasian says care should be taken when interpreting these price figures. “These annual changes in median prices are not apples-to-apples comparisons,” said Malkasian. “Over the past year we’ve seen a shift from higher priced homes to lower priced homes, so the median price naturally falls,” Malkasian said. While some of the price change is the result of seller concessions, Malkasian said much of it is due to the robust movement of starter homes as a result of the first time home buyer tax credit program. He concluded, “Wisconsin home prices are not nearly as volatile as we have seen in other parts of the country and so purchasing a home in Wisconsin remains a very stable way to build household wealth.”

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This email just came to me this morning from my mortgage guy.  I tend to agree with him based on some of the things I have been reading lately on cnbc.com.  Take for example this article http://www.cnbc.com/id/33616897 which talks about the unwinding of the artificially cheap credit we have had access to in the last few years.
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Letter from Kevin

Just wanted to supply you with some current market information. Two points of interest:

• Homebuyer Tax Credit Extension – Should become “Official” soon. The bill has passed the Senate and needs to be approved by the House of Reps. & signed by President Obama

• Interest rates will likely go up – When? Your guess is as good as anyone’s. My crystal ball gets a little cloudy at times.

Bottom line for home buyers…..Now is still the time to buy. Just because the tax credit is going to be extended, with the potential for higher interest rates and tighter lending guidelines, purchasing power will likely decrease as time goes on.

As usual….if you have any questions, feel free to call me anytime.
Thanks,
Kevin McSwain
(Kevin’s contact information can be found on my Rolodex tab above.)

Interesting report. It appears that the supply of housing inventory in the Franklin, Greenfield and Oak Creek areas are in line with the national trend of about 7.5 months. Oak Creek having a slightly smaller supply of about 6 months. The median home price for September in Franklin was $209,900, in Greenfield $172,000 with Oak Creek at $215,750. The average home sale price for the 3rd quarter for these communities was higher in Franklin and Oak Creek while it was pretty much the same as the median price in Greenfield.

Source: cnbc.com
Date: 28 October 2009
Link: http://www.cnbc.com/id/33506191

Sales of new U.S. homes unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery that businesses appeared to be banking on. New single-family home sales fell 3.6 percent to a 440,000 until annual pace from a downwardly revised 417,000 units in August, The Commerce Department said Wednesday. Analysts polled by Reuters had expected sales to rise to a 440,000 unit pace from August’s previously reported 429,000.

A separate report from the Mortgage Bankers Association on Wednesday showed demand for mortgages has fallen for the past three weeks as buyers move to the sidelines ahead of the Nov. 30 expiration of a popular home-buyers’ tax credit. The housing data represented a road bump in a recovery that otherwise appears to be widening. Another report from the Commerce Department showed that new orders for long-lasting U.S. manufactured goods rose 1 percent in September as business stepped-up investment plans.

“One month is obviously not a trend and I think there is plenty of evidence that things are turning around. I still believe the economy has hit bottom and is on the way up, but it will be a long, slow process,” said Mark Bonhard, an investment advisor at Dawson Wealth Management in Cleveland, Ohio. U.S. stock indexes extended losses when the data was released, while U.S. Treasury prices added to gains and the U.S. dollar rose against the euro. Despite the drop in sales, the number of new homes for sale at the end of the month shrank to its smallest in 27 years, leaving the supply of homes available at 7.5 months’ worth. The median sales price rose in September to $204,800 from $199,900, while the average sales price rose to $282,600 from $265,500.

The new home-buyer tax credit affected recent housing market trends, Cary Leahey, economist at Decision Economics in New York, said. The $8,000 credit, which expires on Nov. 30, helped lift the housing market from its deepest downturn since the Great Depression. U.S. lawmakers are considering extending it. “There are some distortions because of the new home-buyer tax credit, but we can say housing sales have bottomed,” Leahy said. “Some are afraid housing will fade in 2010. That will not happen unless the labor market fades or does not improve.”

The Mortgage Bankers Association said its mortgage applications index fell 12.3 percent to 562.3 in the week ended Oct. 23, with purchase applications the weakest since mid-May and refinancing requests at a two-month low. Eligible borrowers who applied last week would unlikely be able to close their loan by the scheduled Nov. 30 expiration of the tax credit, industry experts said.

Here are the current market conditions for the Greenfield Wisconsin Single Family Home Real Estate Market.

There were 62 homes sold during the 3rd quarter of 2009 in the City of Greenfield WI (2 more than last quarter.) The monthly break down is as follows:

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• July- 22 homes sold
• August- 21 homes sold
• September- 19 homes sold

There are 150 active listings in Greenfield, WI as of 20 October 2009 (up from 3 last quarter) of which 28 have accepted offers. There are an additional 16 homes that are in pending status meaning that they are pretty much ready to close. Homes sold in the 3rd quarter 2009 were on the market, on average, 102 days, up 2 days over the last quarter. Homes were selling for 96.26% of last asking price and 116.36% of assessed value which is about the same as last quarter. Based on the sales data for the quarter, there is currently a 7-8 month supply of inventory in the Greenfield, WI Market similar to last quarter. There was a total of $10,626,156 in sales volume which translates into an average sales price of $171,390 (down $5655 from the previous quarter) for the Greenfield WI home market.

(all data collected using the Metro-MLS 10/20/09)

Source: GMAR realtor email
Date: 9 October 2009

Sales in the 4-county metropolitan Milwaukee area were up 7.7% in September according to housing statistics released by Metro MLS, Inc. today. Milwaukee County had higher sales in September than at the same point a year ago for the 6th straight month, increasing 6.8%. Waukesha, Washington and Ozaukee Counties joined Milwaukee County in positive sales territory in September as well, with 6.4%, 19.3% and 3.7% increases, respectively. The main driver in sales strength is a decrease in prices from a year ago. Prices in Milwaukee County are down 22.2% from the 3rd quarter in 2008, Waukesha is down 4.8%, Ozaukee is down 10.7%, and Washington is down 10.4%. The average sales price in Milwaukee County going down 22.2% has lead to strong sales among first-time buyers with the federal tax credit in mind.

In suburban counties, the average sale price decrease of 5%-10% is due to a hot first-time buyer market – properties roughly under $200,000 – with little, to no, discounting. However, homes at higher levels have come down more in price, but have had fewer sales. Nonetheless, the bottom line is price decreases have translated into more sales. Price decreases combined with low interest rates, abundant choices, and the tax credit, make it an outstanding market for buyers to take advantage of right now.

The remaining counties in southeastern Wisconsin were mixed:

Racine County saw a 6.8% fall off in September, after a strong 15.7% increase in August. Average sales prices in the County are down 12.2% from the 3rd quarter of 2008. Kenosha County made an impressive comeback in September with a 12.1% gain, after a 12.7 decrease in sales in August. Kenosha, too, saw a 15.5% decrease in prices from the 3rd quarter of 2008. Walworth County has finally seen its first positive sales numbers in months, with an 18.1% increase in September. Walworth also saw a 14.6% decrease in average sales prices in the 3rd quarter. Again, the decrease in average sales price is probably tempered by strong first-time buyer homes. The decrease in prices at the upper end is probably much higher.

Listings (4-County Metro Milwaukee)

• There were 2,658 new listings in September. 5.7% less than September 2008 and 14.0% less than September 2007.

• The 25,589 listings through the 3rd quarter of 2009 are 9.4% less than 2008’s 28,234, and 20.8% behind 2007’s 32,317.

Sales (4-County Metro Milwaukee)

• Sales of 1,306 units in September were up 7.7% compared to September 2008’s 1,213 and 11.0% ahead of 2007’s 1,177.

• Sales in the third quarter of 2009, totaling 10,657, were down 1.5% compared to a year ago (2008 = 10,823) and 20.1% below 2007 (13,330).

You probably think I am crazy to post an article like this but I would disagree. I welcome it when owners want to sell their home without an agent. Why? Because it gives them an opportunity to see what we actually do. They get to put themselves in our shoes and in turn, I feel that they respect us more when they come and list their homes with us. I truly believe that at the end of the day people want convenience and that is what agents bring to sellers. The convenience of having someone take care of all the small details so they can worry about other things.

Source: cnbc.com
Date: 8 October 2009
Link: http://www.cnbc.com/id/33068926/

With prices still depressed in many parts the residential real estate market, homeowners these days are looking to eke out as much profit as they can from the sale of their home. Yet, with the high inventory of available properties, especially foreclosed or short sale ones, it’s hard, if not impossible, to get your price.

Enter: For sale by owner (FSBO).

By cutting out the middle man and selling your home yourself, you could walk away with tens of thousands of dollars more in your pocket. It just takes a little marketing know-how and a lot of entrepreneurial spirit. “A lot of people who are selling right now are doing so because they’re changing jobs or changing lifestyles and they’re selling by owner because they know it’s going to immediately save them 5-6 percent on commission costs,” says Eric Mangan, a spokesman for ForSaleByOwner.com, a sell-by-owner listing service. “In today’s market, where prices have dropped by double digits in some cases, the cost of using a realtor is that much more expensive.” Indeed, without a real estate agent you could lower your asking price by up to 6 percent to comparable listings in your community and help sell your house faster. Better yet, leave your price on par and pocket the commission that would normally go to the realtor. (On a $350,000 house, a 6-percent commission is $21,000.)

Who’s Doing It
Despite the financial incentive and growing access to online listing services, the FSBO (pronounced “fizzbo”) market has been trending down from a high of 19 percent of the market in 1997 to roughly 13 percent today, according to the National Association of Realtors (NAR). Some 81 percent of home sellers still use full-service realtors, 9 percent rely on limited service providers, including discount brokerages and the remaining sellers, and roughly 9 percent use minimal service (including FSBOs and those who pay only for the use of an MLS). About 45 percent of FSBO transactions involved people who already knew each other, such as family members or acquaintance. According to NAR’s Walter Molony, the majority of homeowners still rely on agents because their home is often their largest asset and they want an experienced professional on hand to protect their interests. Indeed, some homeowners still require the help of realtors to sell their home. Among them: those who can’t be physically on site to show their property and those not comfortable selling or promoting their houses.

While the real estate recession has some homeowners wary of selling solo, however, Mangan maintains the sell-by-owner strategy is actually easier than most homeowners imagine—and makes more sense today than during the boom. “It takes education about your local real estate marketing, including recent sales activity and some knowledge of what’s currently on the market,” he says. “Other little things are more important today, too, like being more flexible with a buyer’s closing time frame.” If your buyer needs to close within 30 days and you’re not ready to move, find an apartment and store your furniture. Be prepared to do whatever it takes. The housing slump, of course, also makes it more important to market your home effectively.

Above all, that means listing your house for a fair price. It’s easy enough to find out what your home is worth. Sites like realtor.com, zillow.com and homegain.com can help you review comparable real estate listings available in your neighborhood. You should also ask a realtor or two to stop by for a comparative market analysis. They don’t charge for the service, you can be honest about your intent to sell-by-owner (they’ll be waiting if it doesn’t work out) and they might even give you some good ideas on quick fixes to help you sell faster. Once you’ve arrived at a fair market price, you can either list for that amount or, considering the growing inventory of available homes, discount your price just enough to position your property as a bargain. For example, if your home would normally list for $450,000 with a realtor, consider lowering your asking price by 3 percent to $436,500. If you’re really eager to sell, you could reduce by 4 percent and sell for $432,000, while still coming out ahead.

What You May Need
Even a well priced home, however, isn’t going to move if buyers don’t know it exists. Ads in the local newspaper, which cost as little as $25 per month, can be surprisingly effective, considering a large percentage of buyers across the country upgrade into homes within their existing community. But you’ll have better luck if you pony up for a listing service, which publishes the specifics of available homes to realtors and potential buyers. Packages priced at $229 and up also include a yard sign kit, access to a consultation line and automatic syndication of the listing to the real estate sections of partner Web sites like Google, Yahoo and USAToday. Higher-priced packages, which run as high as $809, also include a listing on Realtor.com and on the MLS.” ByOwner.com, meanwhile, charges from $300 to $400 for its listings, which will remain on the site until sold. Both companies provide yard signs, printable flyers and instructional material to help you prepare, price and negotiate the sale of your home.

Screen, screen, screen
With banks continuing to tighten their lending restrictions, it’s more important than ever to get your buyers prequalified or preapproved. As the seller, you should demand a pre-approved mortgage letter with any written offer potential buyers make. And, as with any real estate transaction, don’t forget to work with a lawyer or title company during the closing, to ensure both you and the buyer have a legal representative who understands the process and is looking out for your best interests.

The Downside
Before you set out to save a buck, of course, there are some potential disadvantages to consider. For starters, there’s the added time commitment of showing your own home. (If you’re at work, you may miss a sale.) You may also feel uncomfortable opening your home to just anyone—whereas a realtor is bringing only bona fide potential buyers to your door. Realtors also, of course, handle all the paperwork, provide legally binding contracts that account for local disclosure ordinances and know which lender to direct your low credit score-buyers to when their financing goes sour. Finally, because they are exposed to a wider audience of potential buyers, some would argue agents may be able to obtain a higher sales price for your home, which can offset some or all of their commission. A 2008 survey by NAR found the median price for sellers who used an agent was $211,000, while homes sold directly by the owners fetched closer to $153,000. (Molony notes, however, the significant price spread in the most recent survey was partly due to the fact that FSBO properties were more likely to be in rural areas, and more likely to be manufactured or mobile homes. That suggests the homes might be worth less to begin with, he said.) A smaller survey by Northwestern University of all homes sold in Madison, Wisc. between 1998 and 2004 found those who joined a for-sale-by-owner Web site got as least as much for their homes as sellers who either used an agent or the MLS. The study shows that FSBO sellers ended up with a “significantly enhanced net sale price because they didn’t have to pay the brokerage commission that real estate agents charge sellers, generally 6 percent of a house’s sale price,” the summary report said. It did find, however, that homes sold through the MLS were more likely to sell faster—20 days faster on average. (And that was during the real estate boom.) It also found that over 20 percent of FSBO listings did not sell by owner, and ultimately had to list anew on the MLS. The increased time to sell can be tough to swallow for homeowners who are carrying two mortgages at once. If your home sits too many extra months on the market, of course, it would have been cheaper to simply hire an agent and cough up the commission. Yet, despite the potential drawbacks, the cost benefit of selling your home on your own makes it worth considering if you can afford to wait for a buyer, are prepared to market your home effectively and aren’t afraid to do the legwork yourself.

Wow!  Another great article.  This is definitely strait talk that every seller needs to hear.  So easy to say and less easy to implement.

Source: cnbc.com
Date: 8 October 2009
Link: http://www.cnbc.com/id/32893590

If you’re planning to put your home on the market, it’s not your manners that need polishing. Try your silver, among other improvements. Now, more than ever, getting a signed contract in hand is all about price and quality. Here’s a few tips to selling your house in a tough market.

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Price Is A Science

“The biggest mistake sellers make today is that they don’t price their homes correctly,” says Elizabeth Weintraub, a broker with Lyon’s Real Estate in downtown Sacramento. “If a house sits on the market, people start to wonder, ‘what’s wrong with that property. How come it’s not selling?’” She says pricing is an art and a science, and also depends on the local market. In Sacramento, for example, home sellers are competing directly with foreclosures and short sales (when a seller owes more on a property than it is worth and the bank agrees to accept less than the amount of the mortgage). “In the past, if there was a home that was sold as a foreclosure on your street, it was an isolated circumstance. Now, because of the high number of foreclosures and short sales, they are the comparable sales,” Weintraub says. “If your price is not competitive with these numbers, it might not get shown at all.”

Her pricing method: look at pending sales. These will become the comparable sales. Even though they don’t say the exact sale price, you can make an educated guess or find out from the listing agent. Weintraub also says that if you put your house on the market and it doesn’t sell after 90 days, take it off the market and list it again at another time. “You don’t want it to become stale.” Mary Ann Grabel of Greenwich Fine Properties in Greenwich, Connecticut, agrees. “It’s all about price,” Grabel says. “People who really want or need to sell are willing to take less than what they paid two or three years ago.”

Condition, Not Conditions

Tom Apligian, whose Re/Max office in Plano, Texas serves the Dallas suburbs, says that “while kitchens and bathrooms still sell houses, what used to work in the past doesn’t anymore.” “Going back four or five years, we used to do a decorating allowance,” Apligian says, referring to the money that sellers would offer buyers to cover new carpet or other decorative items. Now, he says, this sends up a red flag that a house is run down. “If you think a buyer wants to take your four or five thousand dollars to decorate a house that’s been neglected or needs updating, you’re wrong,” says Apligian. “People are always working, and the last thing they want to do when they come home is pick up a paint brush,” he says. Apligian also believes that the reason for this is not just the economy; lifestyles and expectations have changed, and a fresh coat of paint is good, but not enough. “Part of the reason is that you have all these decorating programs on TV,” says Apligian. “People want to walk in and say ‘wow!’ The “wow” factor is very important today.”

If you can’t renovate your entire kitchen, Apligian says, “Granite now costs $25 a foot. Put in a granite counter top, and updated appliances—new stove, oven, microwave, dishwasher. In the bathroom, change the toilet or the vanity.” Grabel says, “almost every listing is extensively landscaped and sellers are paying to have their homes staged if they are not fully furnished or furnished in a certain manner, so it’s less personal, and more of a blank canvas.” “Sellers are doing whatever they can do to put their house in the best light possible, especially in the very competitive price ranges. People are looking for things in pristine condition,” she says. Apligian’s other staging tips: appeal to the senses with soft music, vanilla aroma, the color yellow and natural light.

Less is More

One of the best things to hit the industry, says Apligian, is the pod—a mobile storage unit that is dropped off in front of your house. “You’re moving, right? Let’s start the move now,” Apligian says, “let’s get half the stuff out of your house into a pod. Empty that closet. Get all the crud off the kitchen counter. The toaster oven, the coffee pot. I don’t care if you use it everyday. Get it out,” Apligian says. On the other hand, one of the most sensitive subjects for sellers, Apligian says, is pets. He says that he frequently has to tells his clients nicely, “sorry, but Fido has to go.” “If you have a pet, one out of ten buyers won’t even step foot in your house,” he says. It is much easier to sell a house if your dog can board with friends so there is no smell, noise, or allergy problems. “When you are selling your house, it’s no longer a home, it’s a house. There’s a difference,” he says.

“Wow” House Priced to Sell
In April of this year, Andreas and Keri Wetterwald, decided to sell their three-bedroom, 1700-square foot Tudor, located across from a private lake in White Plains, N.Y. “We were under contract in two weeks,” Andreas Wetterwald said. In the seven years that he and his family lived there, they did approximately $80,000 worth of improvements, including renovating the kitchen, refinishing the hardwood floors, putting in new windows throughout the house and installing a new enclosed patio with French doors. “Three months before we listed the house, we also rented storage units and cleared out a lot of things that were not being used,” adds Keri Wetterwald. “Our house looked bigger and not crowded,” When it came time to put the house on the market, they felt comfortable that their house was in good shape. “We didn’t want to play games,” he says, “we wanted it to sell.” To arrive at the listing price of $579,000, the Wetterwald’s consulted with their realtor. They also did some homework on their own. They found that two houses on their street were also for sale—one priced higher and the other lower. After a couple of low offers, the Wetterwald’s got their asking price. Andreas Wetterwald believes his house sold quickly because of its price and condition. But, he says, there was also that minor detail about the house being across the street from a lake. Isn’t there another rule in real estate, something about location, location, location?

Here are the current market conditions for the Franklin Wisconsin Single Family Home Real Estate Market.

There were 69 homes sold during the 3rd quarter of 2009 in the City of Franklin WI (11 more than last quarter.)  The monthly break down is as follows:

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• July- 29 homes sold
• August- 20 homes sold
• September- 20 homes sold

There are 175 active listings in Franklin, WI as of 10 October 2009 (down from 203 last quarter) of which 20 have accepted offers.  There are an additional 14 homes that are in pending status meaning that they are pretty much ready to close.  Homes sold in the 3rd quarter 2009 were on the market, on average, 138 days, down 19 days over the last quarter.  Homes were selling for 95.36% of last asking price and 92.48% of assessed value which is up from last quarter.  Based on the sales data for the quarter, there is currently a 7-8 month supply of inventory in the Franklin, WI Market down from last two quarters. There was a total of $15,278,443 in sales volume which translates into an average sales price of $221,427 (down 28k from the previous quarter) for the Franklin WI home market.

(all data collected using the Metro-MLS 10/09/09)

Source: cnbc.com
Date: 8 Octover 2009
Link: http://www.cnbc.com/id/32893442

The common perception of Middle America is that of a region insulated from the afflictions of the coasts, but a look at some of the larger Midwestern real estate markets shows that’s not always the case. indeed, some areas fell victim to the same woes that dragged down large markets in New York, Florida, and California, while others are currently experiencing boom-era price increases. Sales are rebounding in the harder-hit markets, but much of that activity has been in distressed properties—foreclosures and short sales. One trend is clear: the $8,000 first-time home buyer tax credit has been a boon to markets throughout the Midwest. And with prices beginning to stabilize, Midwest realtors are cautiously optimistic about the near-term outlook. Here’s a look at some big and small markets.

Chicago

High foreclosure rates, tumbling prices. That’s the Chicago-area real estate market in a nutshell. According to the National Association of Realtors, the media sales price of existing single-family homes in the second quarter fell to $204,300 from $257,600, or 20.7 percent, from the same period in 2008. The first-time home buyer tax credit has sparked six consecutive months of increased unit sales, according to David Hanna, president of the Chicago Association of Realtors. But he points out that much of that activity is in distressed properties, which is putting downward pressure on sales prices overall. No surprise, given that the Chicago area’s foreclosure rate climbed 30 percent in the first half of 2009, according to foreclosure listing service RealtyTrac.
More disturbing, Hanna says, has been the pressure on Chicago’s condominium market, once the strength of the area’s real estate market. The median condo price fell 17 percent in the second quarter. Unit sales dropped 19.1 percent in August, according to the Illinois Association of Realtors. Hanna attributes much of the weakness to regulations Fannie Mae implemented in January to limit risky lending, including raising the pre-sale requirements in condo developments from 51 percent to 70 percent. “[Condos are] entry-level housing in many areas of the city, but in Nevada or South Florida or parts of California, these are second homes, and people are much quicker to walk away from those properties than if they are their primary residence,” Hanna says. “Even though we had a healthy condo market, they made decisions based on national statistics and applied them onto our marketplace. Those were body blows.” Chicago is also known for two-to-four-unit condos. Hanna says changes in Federal Housing Authority guidelines regarding approval of loans for such housing should help bolster the market. Effective Nov. 2, the Federal Housing Administration will allow one unit of two-to-four-unit condos to be eligible for financing. “You’re going to have FHA willing to do loans in two-to-four-unit buildings, which they weren’t doing for most of this year,” Hanna says. “Our neighborhoods are full of these two- to four-unit buildings.”

Minneapolis

Minnesotans tend to be a more fiscally prudent bunch. That’s why it’s so surprising the Minneapolis market experienced the same boom and bust of more high profile markets. “We’ve had a large degree of risky lending practices that were similar to what was going on in the coastal markets,” says Mark Allen, chief executive officer of the Minneapolis Area Association of Realtors. “It’s fairly perplexing to us, because Minnesotans historically have been very conservative in how they spend, invest, and borrow money. Nobody’s been able to come forward with a good explanation as to what created that cultural shift in our market. But it’s clear relative to the data.” The end result: a 12.5-percent drop in second-quarter median sales price for existing single-family homes. On the bright side, inventory is steadily declining. “Last year, as of August 31, there were 31,600 homes for sale,” Allen says. “This year there were 25,500 homes currently on the market.” That’s a decline of 19 percent. But, like Chicago, much of Minneapolis’ sales activity has been in distressed properties and lower-priced homes. “We are confident that we’ve seen the price bottom, but it’s far more established in the lower-end price ranges than in the higher-end price ranges,” Allen says. “Our expectation is that the higher price ranges are going to continue to suffer for at least a year, and possibly two to three years.”

Quad Cities

Thanks to a steady agricultural market, and industrial industries that serve the agricultural market—along with a traditional approach to mortgage lending—the Quad Cities area (a group of four cities in Illinois and Iowa split by the Mississippi River) has been a pillar of strength in the Midwest. Second-quarter prices jumped 30.6 percent from a year ago to a median price of $113,200. “Our marketplace has always been a little bit more conservative when it comes to financing,” says Jon Yocum, chairman of the Quad City Area Realtor Association. “It also has to do with the education we provide our member realtors and making sure our buyers are comfortable with the loan program they applied for.” Although the 30-percent jump is exceptionally steep by Quad Cities standards, much of it can be attributed to an unexpected decline in prices at the end of 2008. “Last fall with the election, you had talk about the economy on every candidate’s agenda,” Yocum says. “They were saying how values had gone down across the nation and it was going to affect every market. It wasn’t uncommon to see offers come in 20 percent below list price. That was because of what people were hearing on the national news, but we didn’t have that effect here. Once the election was over, things started to turn around and get active again.”

Springfield

Illinois’ capital best exemplifies the steady-as-she-goes approach to growth typically associated with the Midwest. “If we had 2- or 3-percent appreciation in a year, we always felt that we were doing good,” says Nancy Long, president of the Capital Area Association of Realtors. “A lot of our people do lending with the local lenders. That’s a big help because they’re a little more conservative than the other lenders, so they haven’t gotten into the financial quagmire that a lot of other people have gotten into.” According to Long, year-to-date home sales through July were down 4.5 percent from a year ago. But activity has recently rebounded with sales for the month of July up 3.8 percent from a year ago. Long also says homes are selling quickly—often after less than 10 days on the market. And foreclosure activity fell 29 percent in the first half of the year, according to RealtyTrac (it helps that Springfield has the second-lowest unemployment rate in the state). And prices are holding up well. Second-quarter median prices climbed 3.5 percent. But for anyone thinking that they’ll get prime property on the cheap, Long says it’s best to look elsewhere. “We’ve got people out there who think because of everything they hear nationally, people come from some of the bigger areas to our area and think they’re going to get a $400,000 or $500,000 for $100,000 or $200,000,” she says. “That’s not happening in our area. Our list-to-sales price ratio is still hovering around 95 percent.”

This is probably one of the best written articles that I have read in the last few weeks pertaining to the housing market.  Truly every market is a local market.  Based on what is happening locally surely gives us an idea of what we might expect in the real estate market locally.  The Milwaukee area real estate market was not specifically mentioned in this post but my feeling is that Milwaukee and surrounding communities fall in the stable category.

Source: cnbc.com
Date: 8 October 2009
Link: http://www.cnbc.com/id/33069456

Take a quick look at America’s hardest-hit housing markets, and you might think you’re looking at some once-in-a-lifetime bargains. Miami down by almost half from its peak? Las Vegas off 55 percent and Phoenix selling at a similar discount? Get your checkbook, you’ve got a McMansion to buy. But hold off a minute, says Ingo Winzer of real-estate consulting firm Local Market Monitor, which tracks and forecasts 330 metro areas around the country. Just because a local housing market has sunk like a stone, doesn’t mean it can’t drop some more. And that’s exactly what many cities around the country are facing right now. “Real estate cycles last for many years,” says Winzer. “Even though prices have been dropping for a couple of years in some markets, they could keep dropping for several years more.”

The culprit: A horrendous employment situation, which has already seen almost seven million jobs lost since the end of 2007. Even if the recession has technically bottomed out, people are still being laid off, and that will continue to be a drag on the housing market. Couple that with skittish lenders and the sheer number of distressed mortgages, and you have a toxic mix that still hasn’t been resolved. “We’re definitely close to the bottom,” says Celia Chen, senior director of housing economics at Moody’s Economy.com, who points out that the Case-Shiller 20-city house-price index has finally been ticking up. “But we expect prices to start descending again by the end of this year. With so many foreclosures still in the pipeline, we don’t expect a bottom until the middle of next year.” But not all is lost. All real estate is local, after all, and your hometown has its own unique prognosis. To make his forecasts at Local Market Monitor, Winzer compares income levels to housing prices, to determine which markets around the country are overvalued or undervalued. He then pairs that with local jobs outlook, to predict what’s in store for each community. His take on the best (and worst) housing bets for the next year:

Best Expected Performance:

In this group are many locales that never experienced the housing boom in the first place. Since they never climbed to unsustainable heights, they didn’t have a price cliff to fall off. Among this group are southern spots like Baton Rouge, La.; Columbia, S.C.; and Little Rock, Ark. Long-suffering upstate New York cities like Syracuse and Buffalo also make the list, as does Pittsburgh, none of which saw the huge price run-up of the sunbelt. Finally, Texas takes a total of four spots on the list, with Dallas, Houston, Fort Worth and San Antonio. Because of the oil-patch bust years ago, they’ve already worked through an extended era of weak prices. With all of these communities, don’t expect huge price jumps in the near term, but only appreciation of up to 5 percent a year. After all, in this brutal economy, even flat home values are considered outstanding performance.

Stable Performance:

In a whipsawed market, most homeowners would love a little stability right now. That’s what buyers can expect in Oklahoma City, expected to fall only 1% in the next 12 months; Denver, down just 2%; and Nashville and Raleigh, both expected to sag a mere 3%. Also seeing only minor, if any, declines will be St. Louis, Mo.; Louisville, Ky.; and Omaha, Neb. Home prices in those area are close to what Winzer calls their ‘equilibrium,’ with housing prices at reasonable levels that can be sustained by local incomes. While these regions might see very slight declines over the next 12 months, thanks to macro issues like the sluggish economy, their long-term outlook appears healthy.

Worst Expected Performance:

Here’s where you’ll find many of the faded stars of the housing boom, which could continue to see double-digit declines over the next year. Miami prices could get chopped back another 16 percent, Las Vegas by the same amount, and Phoenix by even more, at 17 percent. Embattled Florida figures most prominently on the list, with Sarasota, Orlando, West Palm Beach and Pompano Beach also making the top ten. So does California, including foreclosure-riddled Stockton, Bakersfield and Fresno. Even Portland, Ore. in the Northwest isn’t immune, slated for an 11 percent decline. In many cases the market may be overshooting to the downside; it may not be fair to existing homeowners, but such is the powerful momentum of housing cycles. “Some of these markets have fallen so that they’re not overpriced anymore, but the depth of the local economic situation is so bad that they’ll continue to fall below their equilibrium price,” says Winzer. “So new buyers, wherever they live, should want to live in their home for a long time, not take out too big of a mortgage—and not expect prices to go up anytime soon.”