Dan Green writes The Daily Mortgage Report and his post is of interest to me because FHA insured mortgages are the fuel for mortgage financing today. To increase their mandated reserves, beginning today the annual cost of a $200,000 mortgage is going up about $500.00. With the FHA the major game in town for mortgage financing, an increase in the cost of the mortgage is downward pressure on offers. Everytime I hear a real estate expert spin an isolated incident into a story about real estate prices rising, I wonder about two things: one, the author's motivation, and two, the author's awareness to reality.
As long as competition for mortgage business is restricted for the many, the opportunity for competition to move prices north will not happen. As long as the buyers are walking in and out of homes priced at huge discounts to unload bank owned property, the buyer will not be agreeing to higher prices/values of non-distressed properties----even if the buyer prefers the non-distressed property, the perception of value based on what they are seeing, is driving decision about price to offer.
Karen Rivedal writes Property Trax for Madison.com and Karen understands the importance of looking deeper and questioning the spin doctors. Karen's a follower of What's Happening in My Neighborhood??? blog, an offering on real estate results at a hyper-local level, and this is she had to say last week: "And the data is arguably more practical, focused on things an average would-be buyer or seller in those areas would like to know...". There are some Buyer markets in Dane County, but there are some Seller markets too. Just as the spring market is getting a full head of steam, it is certain that the bigger economic picture is going to play a role in the real estate market velocity.
I believe this to be true: The first time buyer in 2011 is planning for this home to be home for longer than 3-5 years. They are inclined to be conservative in deciding on a price to pay. They are willing to have less space and determined to have a safe mortgage payment. Higher mortgage costs will take away from the aount they are willing to finance.
The evidence for prices to go north instead of south may exist, but I think it exist mostly in the imagination or the wishes of some people.
Monday, April 18, 2011
Tuesday, April 12, 2011
Reasonable Expectations Trump Magical Thinking; Change is Happening
Things don't change, we change. So wrote Henry David Thoreau in the mid 1800's. Apply that concept to Madison, WI 2011: "The real estate markets don't change, we change." First to go is faith in Magical Thinking. "I want it to be, I will think it to be, and if I can see it in my mind, it will be for me." OK, right.
The USA's history of victory always includes honest assessments of our positions and changing our sentiments. For example: Women's Suffrage, Civil Rights, the 1960's. Without exception, all challenges include an oppositional force of power influencing the population to put their hope in magical thinking. "If wishes were horses, the poor man would ride," my Dad said to me more than enough times. Reasonable expectations will move us to higher and firmer ground in our real estate markets, and I see reasonable expectations taking hold across Dane County.
All over Dane County, home owners are starting the selling process with expectations of value unsupported by the evidence of recent sales. More than 160 days, over 5 months time, is spent holding on to lofty expecations. It seems the mindset is something like this: "I know the real estate market is down all over the country and in Madison. My neighbor can't sell his house. But that's them, not me." The first quarter sales in Dane County, show the trend of reasonable expectations is taking over where magical thinking has failed to spur a wide recovery. Over and over again, the owners who adjust their expecations (price) to meet the demands of the buyer (value or tremendous value) are closing on the sale of their real estate and gettin on with their lives. After five months, the average seller is getting an accpetable offer in about 60 days or less. It's always either time or money.
McFarland home owners are getting 98% of their last asking price in 140 days, but they take 100 days before they let go of expectations or old information.
Rural NW and SW Dane homes over $299,000 recorded 14 sales in the first quarter. With sales prices showing 83% of initial asking price, should we conclude anything but missed expectations? These are patient people as they ride the market for six and a half months before conceding price. In the end they are getting 94% of their last asking price and those offers are accepted in about 2 1/2 months. The first asking price is an average of $552,000 and the selling price averages a $100,000 less. These sales are not distressed sales, however, we can conclude the owners may be a bit stressed by the end of the process.
People change and the more we let go of what once was, the sooner we enjoy what is.
The USA's history of victory always includes honest assessments of our positions and changing our sentiments. For example: Women's Suffrage, Civil Rights, the 1960's. Without exception, all challenges include an oppositional force of power influencing the population to put their hope in magical thinking. "If wishes were horses, the poor man would ride," my Dad said to me more than enough times. Reasonable expectations will move us to higher and firmer ground in our real estate markets, and I see reasonable expectations taking hold across Dane County.
All over Dane County, home owners are starting the selling process with expectations of value unsupported by the evidence of recent sales. More than 160 days, over 5 months time, is spent holding on to lofty expecations. It seems the mindset is something like this: "I know the real estate market is down all over the country and in Madison. My neighbor can't sell his house. But that's them, not me." The first quarter sales in Dane County, show the trend of reasonable expectations is taking over where magical thinking has failed to spur a wide recovery. Over and over again, the owners who adjust their expecations (price) to meet the demands of the buyer (value or tremendous value) are closing on the sale of their real estate and gettin on with their lives. After five months, the average seller is getting an accpetable offer in about 60 days or less. It's always either time or money.
McFarland home owners are getting 98% of their last asking price in 140 days, but they take 100 days before they let go of expectations or old information.
Rural NW and SW Dane homes over $299,000 recorded 14 sales in the first quarter. With sales prices showing 83% of initial asking price, should we conclude anything but missed expectations? These are patient people as they ride the market for six and a half months before conceding price. In the end they are getting 94% of their last asking price and those offers are accepted in about 2 1/2 months. The first asking price is an average of $552,000 and the selling price averages a $100,000 less. These sales are not distressed sales, however, we can conclude the owners may be a bit stressed by the end of the process.
People change and the more we let go of what once was, the sooner we enjoy what is.
Friday, April 8, 2011
Window of Opportunity for Turkeys and Real Estate
In a week the spring turkey hunting season begins in Wisconsin. Big flocks of turkeys are still grouped up in fields all over Dane County--but they're not all of the fields. Spring has sprung and the Toms are busy with being Toms, and the first time turkeys, the Jakes, are exploring their options. The excitement will peak in the next few weeks, the run its course by the end of May. Amazing how that bird-animal behavior is mirrored in us humans with respect to real estate. Spring is the window of opportunity, and the window closes when the urgency runs its course.
Like the strutting Tom, time is not on our side if we want to attract the most enthusiastic buyers. The strongest natural elements that drive a person to want to own a home run their course by the end of May and surely by the end of June. Summer in Wisconsin is the four-five weeks of July and running around chasing the sun and fun takes precedence over shelter in our summers.
To get done what we have to do with respect to selling our homes, today is the day we have to take the first step and it might be wise to get going. And, where are we going? There are as many ways to go about the selling process and it makes sense to me that I pick a direction and a method of traveling, and commit to it. Anything else is trial and error, and I'd like to think I've done enough of both to be comfortable with a plan.
Followers of this blog know that I believe:
Price is critical. All homes have a right price and a lot of wrong prices. We are instinctual animals. We know what's right and maybe it's our ability to rationalize that leads us down the trial and error path.
Stage the house. If we prepare our homes for our parent's or friend's visits, we prepare to impress them about ourselves. Staging prepares the house to have the home, not the occupant, appeal to and impress a consumer. Big difference and very important.
Update and Repair. Buyer's aren't going to go for homes that need updating and repairs--regardless how small. You aren't getting your investment back either. Look at it this way. If you had replaced the green and blue toilet and sinks and carpet when the style changed your home would be up to date, and you would have had the pleasure of being in style to impress the Grandparents. You only missed that opportunity--you still have the expense. Leave it up to the buyer and you won't have a buyer. If you don't believe me, I wish you the best and hope you prove me wrong. But, I'll be here with the same opinion later---the buyers will be gone and your value will be much lower in August, and the work will still need to be done.
Range Price. You can wait for the one buyer who is smart enough to have the income and savings to qualify for the mortgage necessary to buy your home, but not smart enough to know the market or care about the implications of recent sales in your neighborhood. I have met only a few of those people since 1989---none recently. Range pricing won't inspire anyone to be illogical, but it will bring more people to the door and create some competition where none exists. Competition from qualified buyers will push offers to their best terms.
Know What's Happening in Your Neighborhood. Real estate markets are hyper-local. I care what's happening in Timbuktu, but your neighborhood can rise or fall below the Wisconsin trend, and surely differ from the national statistics.
The turkey animals and human animals are going to move and commit this spring. Today is the day to know where they are going and be there ready to impress. Hen and hunter know the key to success has everything to do with going with what works.
To get done what we have to do with respect to selling our homes, today is the day we have to take the first step and it might be wise to get going. And, where are we going? There are as many ways to go about the selling process and it makes sense to me that I pick a direction and a method of traveling, and commit to it. Anything else is trial and error, and I'd like to think I've done enough of both to be comfortable with a plan.
Followers of this blog know that I believe:
Price is critical. All homes have a right price and a lot of wrong prices. We are instinctual animals. We know what's right and maybe it's our ability to rationalize that leads us down the trial and error path.
Stage the house. If we prepare our homes for our parent's or friend's visits, we prepare to impress them about ourselves. Staging prepares the house to have the home, not the occupant, appeal to and impress a consumer. Big difference and very important.
Update and Repair. Buyer's aren't going to go for homes that need updating and repairs--regardless how small. You aren't getting your investment back either. Look at it this way. If you had replaced the green and blue toilet and sinks and carpet when the style changed your home would be up to date, and you would have had the pleasure of being in style to impress the Grandparents. You only missed that opportunity--you still have the expense. Leave it up to the buyer and you won't have a buyer. If you don't believe me, I wish you the best and hope you prove me wrong. But, I'll be here with the same opinion later---the buyers will be gone and your value will be much lower in August, and the work will still need to be done.
Range Price. You can wait for the one buyer who is smart enough to have the income and savings to qualify for the mortgage necessary to buy your home, but not smart enough to know the market or care about the implications of recent sales in your neighborhood. I have met only a few of those people since 1989---none recently. Range pricing won't inspire anyone to be illogical, but it will bring more people to the door and create some competition where none exists. Competition from qualified buyers will push offers to their best terms.
Know What's Happening in Your Neighborhood. Real estate markets are hyper-local. I care what's happening in Timbuktu, but your neighborhood can rise or fall below the Wisconsin trend, and surely differ from the national statistics.
The turkey animals and human animals are going to move and commit this spring. Today is the day to know where they are going and be there ready to impress. Hen and hunter know the key to success has everything to do with going with what works.
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