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.
  • 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.
Distressed sales (REO and Short Sales) do not appear to be significant yet. I found 3, and there were also 3  new construction homes which were not included in this data. Our MLS can be manipulated to show fewer than actual cumulative days on the market. For the big picture it probably doesn't matter as much as when you try to get a clear image of the hyper local market. My sense today is that PRICE is key and more key is that the price is perceived as a "Tremendous Value". I think Tremendous Value is replacing Location, location, location in the priority of real estate lexicon.

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

Obama Administration Plan Provides Path Forward for Reforming America’s Housing Finance Market, Winding down Fannie Mae and Freddie Mac

Obama Administration Plan Provides Path Forward for Reforming America’s Housing Finance Market, Winding down Fannie Mae and Freddie Mac

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.