The Washington Post has this article on Five Myths about interest rates. I believe there is a sixth myth, but I don't have facts to prove it, so let's call it an assumption. Here it is:
Low interest rates drive demand for home purchases higher. I doubt it. Low rates drive refinance and a person with a refinanced mortgage would be less likely to sell and buy at a relatively low, but higher rate than they have, if rate is the deciding factor. Decling rates also influence consumers to sit on the sidelines and wait. When the low point is missed and the enthusiasm cools, some people step out of the buying line and move to the sidelines again.
If the evidence exists to prove my assumption right or wrong, send it to me and I will post what you have.
Tuesday, March 1, 2011
Wednesday, February 16, 2011
What's Happening in Your Neighborhood?
When someone says "How you doin'?" they don't want to know if my neck aches; they're just saying "Hi". However, when I meet a person who says "How's the real estate market?" they probably want to know How's the real estate market. In fact, they specifically want to know What's Happening in MY Neighborhood?? That's what matters most and last I heard from the us Realtors, markets are local.
They certainly are local. In Madison we have Lake Mendota, which has shoreline extending to more than a few communities and 21.6 miles, according to Wikipedia. If I'm sitting on the pier at Memorial Union and a friend calls me from his home in Middleton and asks "How's the water?" and I answer "warm", because the north side of the lake heated up that day, and he jumps in and finds the water frigid, he might wonder about my sense of reality. But, If before answering, I ask ,"What water?" or "What part of the lake?" I can give an answer more relevant to my friend. Same goes for real estate.
For 2011, I will follow the neighborhoods where I have homes for sale, and report on the statistics and trends on this blog. The beginning of the year looks cautiously optimistic at first glance at a few areas. Here's what's happening in your neighborhood according to our MLS, and all data is too small to draw any projection conclusions. Unless otherwise noted, the areas are by High School districts.
If your neighborhood isn't mentioned, just let me know and I will include it---FREE. I'll keep adding areas as the year goes and we can drill down to get the most important insight. If I do this right, I should be able to tell you where the water is warm or cold before you jump in.
** a reader asked for Elvehjem information.
Another reader asked for condo sales to be broken out. Because not all neighborhoods have condos, I am not tracking Condos. However, I will provide that information in you give me specific condo associations you are interested in.
***On 2/24 a reader asked for Burke, Bristol, and Town of Sun Prairie.
They certainly are local. In Madison we have Lake Mendota, which has shoreline extending to more than a few communities and 21.6 miles, according to Wikipedia. If I'm sitting on the pier at Memorial Union and a friend calls me from his home in Middleton and asks "How's the water?" and I answer "warm", because the north side of the lake heated up that day, and he jumps in and finds the water frigid, he might wonder about my sense of reality. But, If before answering, I ask ,"What water?" or "What part of the lake?" I can give an answer more relevant to my friend. Same goes for real estate.
For 2011, I will follow the neighborhoods where I have homes for sale, and report on the statistics and trends on this blog. The beginning of the year looks cautiously optimistic at first glance at a few areas. Here's what's happening in your neighborhood according to our MLS, and all data is too small to draw any projection conclusions. Unless otherwise noted, the areas are by High School districts.
- Middleton: 9 closings in January. Average first asking price to sale price is 83% and 190 days on the market.
- DeForest: 7 closings in January. Average first asking price to sale price is 89% and 218 days on the market.
- McFarland: 6 Closings. 95% and 55 days
- Mount Horeb: 3 Closings. 93% and 32 days.
- North of the Beltline, near Fish Hatchery Road: 2 Closings 93.7% and 288 days on the market.
- ** Elvehjem School District: 3 closings (two others were new construction) 85% sale price to first asking price and a cumulative average of 520 days on the market. However, each of the 3 homes attracted an acceptable offer in less than a 100 days from their last price change. In fact, the two that took over a year to sell were got an offer ins 37 and 16 days after the last price change.
- ***Burke, Bristol, Town of Sun Prairie: 8 Closings, 85% sale price to first asking price. 169 days on the market, HOWEVER, it took only an average of 46 days from last price change until the owner accepted an offer. Three of the sales appear to be distressed sales out of the 8. This area is a distressed sale hotbed.
If your neighborhood isn't mentioned, just let me know and I will include it---FREE. I'll keep adding areas as the year goes and we can drill down to get the most important insight. If I do this right, I should be able to tell you where the water is warm or cold before you jump in.
** a reader asked for Elvehjem information.
Another reader asked for condo sales to be broken out. Because not all neighborhoods have condos, I am not tracking Condos. However, I will provide that information in you give me specific condo associations you are interested in.
***On 2/24 a reader asked for Burke, Bristol, and Town of Sun Prairie.
Monday, February 14, 2011
Reforming America's Housing Finance Market, a Reasonable Perspective
Uncertainty in any aspect of the real estate transaction process causes a shift in an attitude of security for consumers, and all parties to the process. Safety is always a prudent position.
Realtors prove their adaptability in tough times. We adjusted to the appraisal and underwriting changes to help our clients make it through until the process regained its footing. We learned how to help people navigate the short sale process as a favorable option to the embarrassment of being forced from their homes in foreclosure. Today the distressed sale is better understood and people who were frozen by fear are now moving forward with confidence because or our determination to raise our level of expertise.
The next wave of uncertainty is starting in Washington D.C. and moving quickly inland. The President’s report to Reform America’s Housing Finance Market was released on Thursday and the media was roiling with reports of implications of doom for homeownership in America on Friday. The political and social consequences of doing away with Fannie Mae and Freddie Mac will be debated and politicized beyond our control. Changes are needed. Drastic changes are required but to do no further harm, these changes are best planned, designed, and implemented over time.
I am confident the landscape of mortgage finance will be different and more effective in critical areas such as:
· A mortgage system that allows future generations to enjoy the same advantages of predictable payments from a 30 year fixed mortgage
· A continued government participation in ensuring a flow of mortgage capital in all economic conditions
· Ensuring mortgage options for limited down payments for qualified, credit worthy buyers in all price ranges
· Fair price premiums for lending fees and mortgage insurance
· An improved mortgage servicing and foreclosure process
· Further empowerment of consumers to avoid unfair practices
The National Association of Realtors has written their analysis of the President’s report. My comments are just a summary of some of the points. The worst case scenarios will make headlines and may impact the attitude of the consumer this year.
We can not change the debate. We can participate in the discussion with an attitude of acceptance of the need for change, trust in our ability to rise to the challenge, and confidence in the democratic system. My responsibility is to come up with smart solutions for my clients and be careful with my assessments of the situation. Patience is helpful.
Friday, February 11, 2011
Re-Post of Geithner's Plan to Wind Down Fannie and Freddie
Click here to read ABC News Story on Wind Down of Fannie and Freddie by Tahman Bradley
A multi level story made simple: The 30 year mortgage was made possible by the existence of Fannie and Freddie. Without these massive buyer's of home mortgages, home purchase power will decline for a substantial segment of the American poplulation. A smaller buyer pool will eliminate competition and home values will adjust. Foreclosures will rise as people who have to sell can not sell for what they owe.
Phasing out is not an effective option because the period of uncertainty will effectively halt today's buyers from making commitments. This is the next phase in adjusting the real estate economy in the United States.
Adjustable rate mortgages and 10 year mortgages make wise economic sense. In the short term there will be pain. In the long term, the shift is reasonable.
A multi level story made simple: The 30 year mortgage was made possible by the existence of Fannie and Freddie. Without these massive buyer's of home mortgages, home purchase power will decline for a substantial segment of the American poplulation. A smaller buyer pool will eliminate competition and home values will adjust. Foreclosures will rise as people who have to sell can not sell for what they owe.
Phasing out is not an effective option because the period of uncertainty will effectively halt today's buyers from making commitments. This is the next phase in adjusting the real estate economy in the United States.
Adjustable rate mortgages and 10 year mortgages make wise economic sense. In the short term there will be pain. In the long term, the shift is reasonable.
Monday, January 17, 2011
Packer NFC Championship Games Move the Dane County Real Estate Market
Those were the days my friend, we thought they'd never end...ahh the Glory Days. God loved the Green Bay Packers on Sunday and every other day ending in "Y". Everyone was happy and it showed in the economic indicators. We were buying more & bigger houses, traveling to Super Bowls, and spending big money on fat cigars, and SUV's. From 1995 through January 1998, the Packers played in 3 straight NFC Championship games, at Dallas in January '95, winning at home against Carolina, and on the road against San Francisco. We were young, money grew on trees, and neighborhoods replaced corn as a cash crop so farmers turned into developers.
We felt good about everything and everything began with the Green Bay Packers. The economy boomed. Is there a correlation between a Packer NFC Championship game and a boost in housing sales in Dane County?
It's always possible that there are other factors contributing to the activity in our housing market so I looked to recent history. The 90's were long over, and the Packers were on their third "Mike" head coach. Following the 2007 season, when 6744 homes were sold in Dane County, the Packers hosted the New York Giants in January 2008 in the NFC Championship Game. Having never lost a championship game in Green Bay, and led by a grizzled quarterback, the Packers were heavy favorites to beat the Giants. All good things must come to an end; the Packers lost when the Old Gunslinger froze up in overtime.
It was probably a sign of things to come when part way through the spring market the perennial waffler lost his direction. He didn't know if he was coming or going. In or out, up or down, the precipitous slide of Brett and the Dane County housing market was underway. We might have been able to pull it together economically and then the Old Textslinger let it be known he wanted to wear purple and instead the Packer brass railroaded him to The Big Apple. A pall spread over Wisconsin--and American.
We could still smile, but we were no longer young. Every grandmother's favorite son had left home. Somber days were upon us. In Dane County only 5336 homes sold in 2008, down from 6744 in '07. The 1408 home sale decline wiped out all of the upward mobility generated by the Packer's '90's NFC Championship Games.
When I ciphered the numbers 1212 and a negative 1408 I saw the net loss was 196 sales. There's a message in that bottle; the numbers 1+9+ 6 total 16, and 1 + 6 equals 7. Now it gets complicated, so listen carefully. This is good news for us. Don "Majic Man" Majkowski wore number 7. Seven is a lucky number. And luckily for the Packers, Majic got hurt and Favre took over in '92. Three years later the Packers started playing in championship games and home sales took off. Aaron Rodgers has been in charge for 3 years now...Got it?
What does all of this tell us? Let's see---Expect the number of real estate sales to increase some, or decrease a lot this year. And while we don't know if the Packers will be playing in the Super Bowl, we can be confident the Bears won't. Let the good times roll! Happy days are here again. The evidence is in the numbers.
We felt good about everything and everything began with the Green Bay Packers. The economy boomed. Is there a correlation between a Packer NFC Championship game and a boost in housing sales in Dane County?
- 1995 had 3656 Dane County Home sales (non-condos) 1996 after losing to Dallas in the Championship game, Dane County Posted 4142 sales. That's a plus 486.
- 1996 was bested in 1997 with 4267 sales after the Packers beat Carolina and went on to win Super Bowl XXXI. It looked like every little thing was gonna be alright. That's a plus 125.
- 1997 was then trounced in 1998 after the Packers beat San Francisco for the right to go to Super Bowl XXXII and be the sacrificial lambs to the rise of John Elway's legendary status. Even with a Super Bowl sized depression, Dane County recorded 4868 sales. The 601 more home sales took some of the agony out of defeat. Buying and selling was therapeutic.
It's always possible that there are other factors contributing to the activity in our housing market so I looked to recent history. The 90's were long over, and the Packers were on their third "Mike" head coach. Following the 2007 season, when 6744 homes were sold in Dane County, the Packers hosted the New York Giants in January 2008 in the NFC Championship Game. Having never lost a championship game in Green Bay, and led by a grizzled quarterback, the Packers were heavy favorites to beat the Giants. All good things must come to an end; the Packers lost when the Old Gunslinger froze up in overtime.
It was probably a sign of things to come when part way through the spring market the perennial waffler lost his direction. He didn't know if he was coming or going. In or out, up or down, the precipitous slide of Brett and the Dane County housing market was underway. We might have been able to pull it together economically and then the Old Textslinger let it be known he wanted to wear purple and instead the Packer brass railroaded him to The Big Apple. A pall spread over Wisconsin--and American.
We could still smile, but we were no longer young. Every grandmother's favorite son had left home. Somber days were upon us. In Dane County only 5336 homes sold in 2008, down from 6744 in '07. The 1408 home sale decline wiped out all of the upward mobility generated by the Packer's '90's NFC Championship Games.
When I ciphered the numbers 1212 and a negative 1408 I saw the net loss was 196 sales. There's a message in that bottle; the numbers 1+9+ 6 total 16, and 1 + 6 equals 7. Now it gets complicated, so listen carefully. This is good news for us. Don "Majic Man" Majkowski wore number 7. Seven is a lucky number. And luckily for the Packers, Majic got hurt and Favre took over in '92. Three years later the Packers started playing in championship games and home sales took off. Aaron Rodgers has been in charge for 3 years now...Got it?
What does all of this tell us? Let's see---Expect the number of real estate sales to increase some, or decrease a lot this year. And while we don't know if the Packers will be playing in the Super Bowl, we can be confident the Bears won't. Let the good times roll! Happy days are here again. The evidence is in the numbers.
Tuesday, January 11, 2011
Should I Buy a House? Maybe. It Depends...
Up, down, sideways...which way is the real estate market going? A reasonable answer could be simply: "Yes". I think we can find every which way: up, down, and sidways markets in neighborhoods all across Dane County. However, the direction of the market is only one consideration for buying or selling real estate, and it's not the most critical. More important is your personal situation.
Today I had a refreshing conversation with a mortgage banker who gets it. Bill Quigley, of Network Funding LP, Residential Mortgage Bank visited to share his approach to being part of the solution in a challenging economy. Bill is the host of a mortgage and real estate radio show on 1670 WTDY. For years Bill has been the Madison area go-to guy for FHA mortgages. Because Bill is a considerate guy as well as a smart broker, he has attracted a lot of business by improving loan applications for people who didn't get the higher level of service from banks and credit unions. Bill told me this past year was big business for banks doing easy refinances and first-time buyer purchases. Makes sense to me that the loan processing departments were busy with easy enough loans that taking time to improve applications was not a high priority for some institutions. People like Bill Quigley do more than take orders and process loans. Bill is a true consultant. He problem solves for clients of Realtors. Bill's approach is one of a professional who enhances the process by structuring an application and a mortgage in a way that works long term for his client---the home buyer. I like that. Working with Bill today, a home buying client of mine is not going to be buying more home than they can afford, and their loan is going to work for them.
Buying real estate could be the right move. I don't know. It depends. What I do know is this: Bill Quigley, a mortgage broker, is a smart guy to look to for deciding if buying is smart for people who want to be safe. Call Bill and tell him you found him through MadisonHomes.blogspot.com.
Today I had a refreshing conversation with a mortgage banker who gets it. Bill Quigley, of Network Funding LP, Residential Mortgage Bank visited to share his approach to being part of the solution in a challenging economy. Bill is the host of a mortgage and real estate radio show on 1670 WTDY. For years Bill has been the Madison area go-to guy for FHA mortgages. Because Bill is a considerate guy as well as a smart broker, he has attracted a lot of business by improving loan applications for people who didn't get the higher level of service from banks and credit unions. Bill told me this past year was big business for banks doing easy refinances and first-time buyer purchases. Makes sense to me that the loan processing departments were busy with easy enough loans that taking time to improve applications was not a high priority for some institutions. People like Bill Quigley do more than take orders and process loans. Bill is a true consultant. He problem solves for clients of Realtors. Bill's approach is one of a professional who enhances the process by structuring an application and a mortgage in a way that works long term for his client---the home buyer. I like that. Working with Bill today, a home buying client of mine is not going to be buying more home than they can afford, and their loan is going to work for them.
Buying real estate could be the right move. I don't know. It depends. What I do know is this: Bill Quigley, a mortgage broker, is a smart guy to look to for deciding if buying is smart for people who want to be safe. Call Bill and tell him you found him through MadisonHomes.blogspot.com.
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