There is not a glut of homes on the market; there is a glut of over-priced homes on the market

The KCM Blog hit the nail on the head. “There is not a vacuum of buyers in the market. There is a vacuum of homes a buyer in today’s market will purchase. ……There are plenty of buyers in the market for a home they consider priced correctly. You have to decide what the correct price is for your home if you truly want to sell. If you want your house sold, you must list it at a price a buyer will pay for it. Not a buyer from 2006 but today’s buyer who has plenty of homes from which to choose.”

Many homes on today's market are overpriced or they would be sold already.

As I have said again and again, home and condos will sell if priced to the current market.  Most are over-priced.

There is not a glut of homes on the market; there is a glut of over-priced homes on the market

The KCM Blog hit the nail on the head.  “There is not a vacuum of buyers in the market. There is a vacuum of homes a buyer in today’s market will purchase. ……There are plenty of buyers in the market for a home they consider priced correctly. You have to decide what the correct price is for your home if you truly want to sell. If you want your house sold, you must list it at a price a buyer will pay for it. Not a buyer from 2006 but today’s buyer who has plenty of homes from which to choose.” 

As I have said again and again, home and condos will sell if priced to the current market.  Most are over-priced.

All the Quiet & Seclusion of Wisconsin’s Northwoods; All the Cultural Amenities of Madison

Prairie School influenced Mid-century Modern Home for Sale

Own a rare piece of paradise. 200 feet of glorious Lake Waubesa waterfront. 2.5 spectacular acres of private hilltop.

200 feet of Lake Waubesa shoreline

Set Among burr oaks, Prairie School influenced Mid-Century Modern home, unaltered design by notable Frank Lloyd Wright disciple John Steinmann. Secluded large lot neighborhood, surrounded by extensive natural areas, only 5 minutes from Beltline, 15 minutes from downtown restaurants, shops and entertainment of Madison. Cathedral ceiling, expansive windows, mahogany finish. Loads of storage.  (SF & acres per appraisal; house plan angled; measurements approx; buyer to verify.)

Set on crest of hill, house commands unparalleled views over Lake Waubesa

All the quiet and seclusion of Wisconsin’s Northwoods; all the cultural amenities of Madison; so much closer to Chicago.

For details google  or point your browser to www.GeoffreyHomes.com “Featured Properties”  or CLICK HERE.

It would be my pleasure to arrange a personal showing or provide further information.  Call or text me, Geoffrey Gyrisco, Realtor, KW Realty, Cell 608-354-9456.

The house was constructed to the specifications of Dr. Maxine Bennett, the first woman to head a department at a major medical school in the U.S., at the University of Wisconsin.  She was also a renowned mountaineer.  The house remains largely unaltered since Bennett’s ownership.

Cathedral ceiling, expansive windows, deck overlooking Lake Waubesa

As research has progressed on  Steinmann Architects, the significance of the firm has become apparent.  For example, one of the draftsman on the Bennett House had previously worked for Le Corbousier and returned to Europe to engage in a prominent architectural practice in Switzerland.  The house is regarded as one of the best home designs of the Steinmann firm.

Wrightian Mid-Century Modern with Prairie School Influence

 

Related articles

• Cultured Traveler: Touring Wright Buildings in Wisconsin (travel.nytimes.com)

A workable solution to foreclosed homes: large-scale investor purchases and conversion to rentals

Finally, the federal government is moving towards one of the few avenues of resolving the vast foreclosed home crisis.  The solution, large scale investor purchase of foreclosed homes and conversion to rental properties.  Many of these rental properties will be single family homes.  Already the percentage of the US population living in owner-occupied housing has dropped 5% from the peak about 2007 and another 5% shift from owner occupied to rental housing is predicted, bringing the percentage of the population owning versus renting back to historic norms.  The number of people involved in such a shift is huge, about 31 million.

The new innovation driven economy demands a highly mobile workforce and that is only going to be possible if many people rent or homes are highly liquid assets and easily sold for purchase price plus transaction costs.  The latter certainly is not the case now and nor will it be for the foreseeable future.  So the solution is investor purchase of single family homes on a large scale, converting them to rentals in a wide range of prices.   This will also allow the US government agencies to dispose of their vast inventory of repossessed properties.  Hooray for some pragmatic thinking!

Big investors are showing interest in an evolving Obama
administration plan to sell off foreclosed homes, although the
government will have to make the offer sweet enough to coax
private funds.  The White House is assessing how best to
encourage private companies and investors to snap up foreclosed
properties held by the government and convert them into rentals.
Officials want private partners to take over as much as $30
billion in single-family properties that are currently on the
books of government-run Fannie Mae, Freddie Mac and the Federal
Housing Administration.  Several money managers with large fixed
income funds are interested, according to sources, and a request
for ideas on how to construct a program received nearly 4,000
responses.  The foreclosure conversion program would come as the
next step to complement other government supports for housing,
including an expanded refinance program announced on Monday.

The main question for prospective investors, which include
broker-dealers and firms already overseeing similar rental
programs, is the type of financing the government will make
available—an issue officials are still struggling with.  “In
order to get a better bid, there has to be some incentive
involved to get qualified investors involved,” said Ron D’Vari,
co-founder and chief executive of NewOak Capital. “The reality is
not a lack of interest, but so far it looks like a lack of
financing.”  Incentives could include low interest rates, tax
benefits or some type of rental assistance, said D’Vari, a
portfolio adviser who has been involved in mini-bulk auctions of
real estate-owned properties, or REOs, in California.  REO
properties are those acquired by a lender, whether a bank or the
government, after an unsuccessful auction attempt. Fannie Mae,
Freddie Mac and the FHA own about 250,000 properties, close to a
third of the country’s REO pool.

One key challenge would be finding big enough blocks of
properties in specific geographic areas that could be sold at one
time. Analysts say this is what it would take to make the program
attractive to large institutional investors.  The transaction and
liability costs property managers will face as they try to bring
deserted units back up to code also pose a hurdle.  The
government also needs to determine how it will protect taxpayers,
and it might explore ways to pair up with investors and allow
Fannie Mae, Freddie Mac and FHA to keep some type of an ownership
stake in the rental properties.  A public-private partnership,
somewhat along the lines of a program the Treasury tried to use
to soak up toxic bank assets during the financial crisis, would
allow the government to gain from the sales.  Fannie Mae, Freddie
Mac and the FHA have already undertaken some small efforts to
reduce the backlog of foreclosed homes. They have donated a few
vacant properties for demolition and have held some small
auctions.  Having already received $141 billion in taxpayer
support since being seized by the government in 2008, Fannie Mae
and Freddie are under enormous pressure to make sure they
maximize the returns from the properties they hold.  “This has
got to be thought out. Fannie and Freddie would need to assess if
they are getting the return they need from a rental,” said Ken H.
Johnson, a real estate professor at Florida International
University. Johnson said one way to get over the hurdle would be
for the two agencies to be given an explicit mission of market
stabilization.

If you want to sell, lower the price!

There is no other solution. Even in Madison and Dane County.

At the risk of being repetitive, if you want to sell your property in the next year or longer, you must reduce the price so it is the best property for the money on the market or it will not sell. Over-priced properties will languish on the market and grow stale. Empty properties will feel stale to anyone walking in the door.

If you decide to rent the property until the market improves, know that this is a long term solution. When you put the property back on the market–buyers are picky because they can afford to be–so you will likely need to repaint, refinish or recarpet floors, and maybe even replace kitchen appliances. Are you prepared to do that? If not, lower the price.

Two key indices of home prices likely fell in August, suggesting large numbers of foreclosures and continued high joblessness are acting as a drag on the market, according to a new forecast. The Case-Shiller 20-city composite home price index, scheduled to be released on Tuesday, likely fell 3.8% in August from a year
earlier and 0.3% from July on a seasonally adjusted basis, said a forecast from Zillow Inc. chief economist Stan Humphries. The downward trend will continue through the end of the year, he predicts. “We expect to see continued home value depreciation as unemployment and negative equity remain high,” said Humphries. “The large foreclosure pipeline will produce relatively low priced REOs in the market, putting downward pressure on prices going forward, and we do expect the pace at which homes exit this pipeline to pick up in the near-term.” The Case-Shiller 10-City composite index is expected to register a seasonally adjusted decline of 3.5% in August from the previous year, and 0.2% compared to July.

“After showing monthly appreciation earlier this year and building some momentum, recent weak economic data is starting to be reflected in home values,” Humphries said. “Existing home sales have been disappointing, with September sales down 3% from August.” Humphries is bearish on the overall housing market for at least the next year. A survey of more than 100 economists by Pulsenomics shows the median expectation for that group is a decline in the Case-Shiller 20-city index of 2.8% in the fourth quarter from the final three months of 2010. Zillow, on the other hand, is projected a 4.5% decline, and then another 2.5% drop from the fourth quarter of 2011 to 2012. Zillow has a strong
track record of accurately forecasting changes in these Case-Shiller indices. Zillow’s July forecast for the non-seasonally adjusted 20-city index was off by just 0.1 percentage point, coming in at 4.0% compared to the actual number of 4.1%

Declining housing prices forecast for Spring 2012

Sellers waiting until next spring for better prices are likely to be seriously disappointed.

Many years, the spring market appeared to favor the sellers with the number of houses coming onto the market not be as great as the number of buyers entering the market, thus causing prices to tick upwards.

The spring of 2012 likely will be different. The supply of homes coming to the market will be increased dramatically by foreclosed properties being released by lenders. Simultaneously the number of buyers will be held down by stringent new lending standards.

So what are the real estate gurus predicting?

–Zillow believes we will not see a bottom in prices until the first quarter of 2012.
–Standard & Poors thinks prices will drop %5 in the next few months.
–JP Morgan Chase believes prices will depreciate 6 to 7% over the next six months.
–Barclays says prices will fall 7% by the end of the first quarter of 2012.

I would not rely on the real estate gurus, few of whom predicted the real estate and subsequent economic crash.  I would rely on thoughtful assessment of the facts, and those facts point to continued declining real estate prices.

 

HAVA a Giant Flop; Banks Ramp Up Short Sales

HAFA (Home Affordable Foreclosure Alternatives) provides financial incentives for servicers and borrowers to agree to short sales (selling the property for less than the mortgage) and deeds in lieu of foreclosure (giving the property to the bank). The program was launched in April of 2010 with much fanfare, and it was streamlined in December 2010.   So far, nation-wide,  HAFA has completed a measly total of 7,113 short sales and deeds in lieu of foreclosure.

In comparison, the much maligned banks have done far more short sales, assisting distressed home-owners.  JP Morgan Chase has done over 110,000 short sales since 2009 and is now processing about 5,000 a month. They are the number three servicer behind Bank of America and Wells Fargo.  These top three banks probably are doing more than 20,000 a month, and they’re ramping up,something they should have done long ago.   In fact, the Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey reported that nationally,  short sales hit a record high of 19.6% of all home purchase transactions in March. These national figures are mirrored in Madison and Dane County, Wisconsin.

Banks ignore HAVA and finally ramp up short sales

Banks have discovered that short sales are often the fastest and most cost effective way to resolve a severely delinquent mortgage, and they have greatly
improved their processing systems.   Compared to a foreclosure, other sources say, short sales result in smaller losses. There is more financial certainty than from an REO (bank owned) sale many months down the road when the property likely has deteriorated. The banks are currently looking at so many potential REO’s from so many delinquent loans in the pipeline, they’d be ridiculous not to try to short sell as many as they possibly could.  Some servicers are aggressively seeking out borrowers for short sales.  “Chase reaches out to borrowers who have already listed their homes or were recently denied a modification to initiate the short sale evaluation process. The goal is to have as much paperwork completed as possible prior to receiving the offer, thereby reducing the time from offer receipt to approval,” a Chase spokesman explains.

But why, if HAFA actually pays borrowers and servicers to do short sales and DIL’s, would banks be doing so many outside of the program? The short answer is it is a taxpayer funded program and comes with a boatload of restrictions and regulations.  This regulations knock out investors (a major segment of buyers these days) and sellers who don’t meet the “hardship” requirements of the federal government.  Remarkably, the big banks likely are more flexible on the definition of “hardship” knowing that a short sales will be cheaper in the end than a foreclosure.

When Moving in Stages and it Gets Complicated: What Do You Take and What Do You Store?

Many people are facing moving in stages or moving with the possibility of moving back.  When moving gets complicated, what do you take with you and what do you leave in storage?  Here is a great blog article on the topic with some insights.

Think the housing market is a mess in Madison; it is far worse elsewhere

It could be worse and it is worse, far worse elsewhere than Madison and Dane County, Wisconsin, as Gina Ferazzi of the Los Angels Times (April 22, 2011) explains.

In parts of North Las Vegas, more than 80% of homeowners owe more on their mortgages than their homes are worth. Staying is expensive, but many can’t afford to move.

For example, Charles Mills can barely afford to stay here. But he also can’t afford to move. That’s why the 44-year-old heavy-equipment operator was preparing to leave his wife and young daughter here and go where he could find work — the Oklahoma oil fields. Mills has a mortgage to pay, even if its size pains him.  He purchased his house in 2006 for $308,500. Current value: $105,797. “We talked about it: What can we do with the house?” Mills said. “Nobody’s going to buy it. Nobody’s going to rent it. If we walk away, my credit’s shot. We’re stuck.”

Mobility in search of new opportunity has long been a cornerstone of the American economy, much the way homeownership has long offered a path to firmer financial footing. But the housing bust has left tens of thousands of homeowners across Nevada essentially trapped.  Elsewhere on Midnight Breeze Street are Steve and Gay Shoaff, who once talked of selling their house and retiring somewhere pretty.  But the Shoaffs have been living mostly off savings since the construction industry sputtered.  Their $187,980 home is now assessed at $99,220. “This house won’t be worth what we paid on it until after we die,” Gay Shoafff said. Some economists would agree, predicting that a full recovery in parts of the West’s “foreclosure belt” — California, Nevada and Arizona — won’t occur until at least 2030.

Some economists argue that, in a way, these homeowners are worse off financially than those who lost their houses through foreclosure and were forced to move on. Those borrowers often were able to live rent-free for years because of the snail’s pace of foreclosure proceedings. Meanwhile, their underwater neighbors poured money into mortgages, not savings or investments. They couldn’t chase higher-paying work. Homeowners with negative equity are at least a third less mobile than other homeowners, according to a recent study in the Journal of Urban Economics. But abandoning their homes was an option that appeared too dicey. “Walking away, it does wreck your credit history for a while and you can’t get another mortgage for seven years,” said Richard Green, director of the USC Lusk Center for Real Estate. Defaulting also makes it harder to rent an apartment.

Home prices continue to fall & may reach bottom next year

The following comes from an electronic newsletter from Chris McLaughlin.  Much of it concerns the national market, not the Dane County market or Madison market or your neighborhood market.  However–with few exceptions–while the Dane County housing market has not been hit by declining prices and foreclosures as much as other markets, prices have fallen and the number of sales last year declined. In addition,  currently 40% of sales in Dane County are distressed property sales. If the historic and artificially low interest rates move up to norms, this will put significant additional downward pressure on prices by reducing what buyers can afford to pay.

According to Bank of America Merrill Lynch (BOAML),  the nadir for home prices appears to be still more than a year away.  BOAML strategists Chris Flanagan, Ryan Asato and Timothy Isgro said their model calls for home prices reaching a bottom in the second quarter of 2012. The analysts expect the Standard & Poor’s Case Shiller home price index to fall another 4.1% from its third-quarter level.

CNBC’s Diana Olick reported, “you can talk all you want of renewed interest in housing, slowly increasing sales and supposed stabilization in prices, but the elephant in the room is slowly growing, and banks, Fannie, Freddie and the government know it. REO (Real Estate Owned by lenders) inventory is rising…four million seriously delinquent loans, out of 50 million first mortgage loans. There are still over 600,000 properties in REO, which will only put more pressure on prices when they come to market.

Housing economist Mark Zandi’s biggest concern is that 14 million homeowners, according to his calculations, are underwater (owe more on their mortgages than their homes are worth), and 4 million of those are underwater by more than 50%. ‘That’s deeply underwater.’ he elaborated. Those who owe two times the value of their home are likely to walk away.

Last year various government home buyer incentives helped mitigate the foreclosure losses to the overall market; the market doesn’t have that benefit now. Zandi says one answer is for Fannie and Freddie to stop charging higher refi rates for borrowers with low credit scores and higher LTV’s (loan to value ratios) in order to facilitate more refinancing, even when borrowers are underwater. These are loans Fannie and Freddie likely already own or back. ‘It will cost Fannie and Freddie in interest income, but they will benefit in the form of fewer foreclosures,’ argues Zandi.”

Carbon Monoxide Alarms Required in Wisconsin Homes by Feb. 1

Madison homes now require carbon monoxide detectors.

Wisconsin’s Department of Commerce reports that all single- and two-family homes in Wisconsin must have carbon monoxide detectors by Feb. 1. Homes being built after that date in Wisconsin will have to have CO detectors hard-wired into the home electrical system with backup battery supply. Existing residences may use battery-powered, stand-alone alarms. Such alarms are required in the basement and every floor of a dwelling, except for attics and garages. The law only applies to houses with garages and homes that contain CO sources, such as fireplaces, furnaces, heaters, and cooking sources that use coal, wood, and so forth. This comes on the heels of Madison’s smoke alarm ordinance that went into effect last year, which requires hard-wired or 10-year battery-powered smoke alarms in bedrooms and on all floors of all residences.

The Importance of Being Surveyed

A client of mine, who I had recently shown some rural property sent me the following humorous story by Sheri Dixon from www.Homestead.org (click here).  It underlines why when someone asks me about property boundaries I hand them a survey map or tell them if it is important to them they may measure it themselves or hire someone to do that.  I never guess, no matter how logical the boundaries seem.  For rural properties, I have the listing Realtor meet us at the property show where she believes the boundaries lie.

As told by Sheri Dixon …

“Ten years ago I was overworked, underpaid, alone in the world and adrift without a home to call my own…. I was fortunate to find this place I call home on a land contract purchase.  It was a happy day when I signed papers to buy this place and an even happier day to receive the deed free and clear from our county tax office.

Interested, since I had never seen the legal description of my land, I playfully paced out my east lot line (the only one that’s a pretty straight shot over pretty level land).  I started at the north corner and counted out paces.  I looked up when I reached what should’ve been the end.

Curious… my house was up ahead of me by about 100 feet.

Confidently, I started at the other end of the east lot line and counted off paces.  I looked up.

There was my house, teasing me from 100 feet away again.

This was potentially bad.

My mind has a wonderful way of being able to fly off in several directions simultaneously.  I think there are medications for that…

My first thought was, “Very nice.  I don’t own my house.”

My second thought was, “Who DOES own my house and will I have to buy it from them?”

My third thought was, “What’s the cure for hyperventilation?”

For the rest of the story, see Sheri Dixon’s web article.