I never thought this would happen to me…

March 19, 2013

I hear that phrase more often these days as more and more people who have been just barely hanging on by their fingernails finally get out of denial and call me about a possible short sale. These are not people who did anything wrong. They did not borrow frivolously, nor live extravagantly beyond their means. They are just regular people whose circumstances have changed; some through the loss of a loved one, some through the loss of a long-time job.

Most of these people were so sure that this would never happen to them that they entered a period of denial when those circumstances changed; sure that things would somehow change back and everything would be OK again, somehow. That really never happens. So they used what savings they had and perhaps borrowed against what retirement savings they had built up and now they realize that they are in trouble. They’ve started getting nasty letters from their mortgage elderly womancompany or other creditors.

This situation is especially hard on the elderly, who were brought up in a society that still put value on personal responsibility and paying one’s debts. Just the thought of being in this situation is too embarrassing for them to discuss easily, even with friends and family, much less a complete stranger. And yet they must get it out in the open in order to do something about it.

I have a web site – www.mishortsales.com – that they often find or that I send them to read. I tried to create that site to allow someone in this circumstance to have the ability to read, in anonymity – about the options that they might have in this situation. It’s not a fancy site, as I state on the opening page; but, there’s nothing fancy about this situation that brings people to it. It is just a few pages of straightforward information that I hope will help people better understand the options and make better choices for a course of action. I get lots of call from that site from people far out of my coverage area, so I refer them out to agents with short-sale experience on other areas. If they’re in my area I try to help.

As is pointed out in the reading material at the site, success with a short-sale is far from guaranteed. Many of the big banks are so inept at doing them that the foreclosure departments from the same bank often win the race to see who can take the house first. Bank that took bailout money from the government are also required to offer alternatives such as loan modifications, but many of the big banks have also figured out ways to get around those laws by selling off the servicing of those loans to smaller companies. The fat cats will always find a way to game the system.

So, while the real estate market is improving, short-sales and foreclosures still make up about 40% of all sales locally and I will continue to get those calls from people who never thought they would be in that position. I’ll help if I can.

Builder Index belies fragile recovery

March 18, 2013

Issues with credit and appraisals, as well as frustrations with the industry infrastructure causes Builder Confidence Index to slip, again –

BuildersWASHINGTON, March 18 – Builder confidence in the market for newly built, single-family homes paused for a third consecutive month in March, with a two-point reduction to 44 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

“Following eight consecutive months of improvement, builder confidence leveled off in January and has since edged down several points,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “Although many of our members are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots along with rising costs for building materials and labor. At the same time, problems with appraisals and credit availability remain considerable obstacles to completing deals.”

“In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself,” explained NAHB Chief Economist David Crowe. “During the Great Recession, the industry lost home building firms, building material production capacity, workers who retreated to other sectors and the pipeline of developed lots. The road to a housing recovery will be a bumpy one until these issues are addressed, but in the meantime, builders are much more optimistic today than they were at this time last year.”

This Builder Confidence Index report is just one indication of just how fragile our current “housing recovery” really is. Builders are facing issues of tight building supplies and manpower that were cause by suppliers pulling back or going out of business during the “Great Recession” and workers in the trades that support building looking elsewhere for work. In addition the banks continue to make things hard on builders as they are also doing with home buyers. Business credit is harder than ever to get, just like mortgages, even though the rates are relatively low.

The market is full of stories about houses going on the market for resale and selling within days; however, the untold stories are about the people who tried to bid on the same place and weren’t successful. There is increasing frustration in the market due to the tight inventory and the propensity of sellers to go for cash offers at the lower end, rather than wait to see if buyers who need a mortgage can get one. Even in the “normal” market of move-up buyers, the challenges that underwriters are throwing into the process can be very frustrating. The “it’s not worth the hassle” factor is definitely rising.

This will all work itself out eventually; but, in the meantime, an extra effort on the part of Realtors® to educate and prepare would-be buyers for the travails ahead is required. While executing a “normal” buy isn’t quite as trying to do as is a short-sale buy, they aren’t as far apart as they used to be. Patience and perseverance are still the by-words of this recovery.

Real Estate Index Shows Rise of .3% in January

March 17, 2013

The latest FNC Residential Price Index® (RPI) indicates that U.S. property values continued to recover through January—the 11th consecutive month of rising prices. Despite the uneven pace of price gains across different geographical markets, there are clear signs that the housing recovery is increasingly widespread. (Editor’s Note: these national statistics always trail the market by about 2 months, but they do point to trends that likely have continued.)

A limited housing supply and declining foreclosure sales are contributing to the recovery of underlying property values. The average list-to-sale price ratio increased to 93.5 in January, compared to 90.3 during the same period a year ago; in other words, the average asking price discount dropped to 6.5% from 9.7%. Foreclosures, as a percentage of total home sales, were 20.2% in January, down from 26.9% a year ago.

Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that January home prices rose 0.3% from the previous month and were up 5.7% on a year-over-year basis from the same period in 2012.1 The 30-MSA and 10-MSA composite indices show similar trends of rising prices, with the 10-MSA composite accelerating more rapidly at 0.8% month-over-month and 7.2% year-over-year.

FNC’s RPI is the mortgage industry’s first hedonic price index built on a comprehensive database that blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes.2 As a gauge of underlying home values, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts, reflecting poor property conditions.

What about our local market? I’ve certainly seen the rise in home sale prices and the impact of the lack of inventory locally. It’s really frustrating that I’ve got buyers who are ready, willing and able to buy a new home and we can’t find anything for them. As for would-be sellers who have been sitting on the sidelines awaiting a recovery – HELLO! The recovery has occurred and you should take a look at what you house is worth today.

Sure we haven’t made back the entire 30-40% that home values lost from their 2006-7 peaks values; but unless you bought or refinanced at that peak, you are probably OK in terms of what you can get for your house. At least find out. Ask me to do a Comparative Market Analysis for you. The analysis free and may free you up to get on with your life plans by making the move that you’ve been delaying.

YOU have to make it happen

March 12, 2013

The people who get on in this world are the people who get up and look for the circumstances they want and if they can’t find them, make them. – George Bernard Shaw

I have a whole raft of sayings by Shaw that I keep on hand for inspiration and reflection. This saying is one of Shaw’s inspirational sayings. Basically it admonishes us to take action to create the success (circumstances) that we desire. It is way too easy to just look around and not immediately see the circumstances that we desire and resign ourselves to living with what we do see. The harder decision is to take action to create what we do not see.

A key ingredient to achieving success would seem to be unwavering optimism. It is hard enough to keep plugging away in the face of adversity, much less trying to do so with an attitude of pessimism. I like another saying, this one by Paul Harvey to cover that topic – “I’ve never seen a monument erected to a pessimist.” That applies whether or not what you are trying to do is deserving of a monument.

I think another; more subtle message in the Shaw saying above is that you must be looking for that success (circumstances). This gets back to the message that forms the base of most self-help advice – you must visualize what you want before you can start to accomplish it. The antithesis of success is not really failure, it is apathy. Out of failures one can learn and move on; however, apathy tends to lock us in place.

So get up today and look around. If what you see is not what you want your life to be, visualize what you want, where you want to be, what you want to be doing and get started towards those goals. It won’t just happen; you’ve got to make it happen.

Local real estate market report

March 11, 2013

I had posted the final numbers for February before leaving on vacation and now have posted the real estate sales in my market areas for the first 10 days of March. Continuing the trend that has been evident since the beginning of the year, the total number of sales in February and the first part of March are down this year, when compared to last. That’s mainly due to the lack of inventory in the market, but also aligning with the national trend of sales being off a bit.

report with chartLocally, Average and Median sale prices continue to trend up in my markets, as does the recovery of the Cost per Square Foot stat. The average for sale value vs. SEV continues to run between 2.4 – 2.6 times SEV in non-distressed sales, which continues to show that the assessors have overshot on the downside and the market has reversed and is rising faster than assessed values. Lower than sale price appraisals continue to top the list of concerns of local Realtors.

The recovery locally has been uneven, with 3-4 of the 9 markets that I track doing very well and 2-3 lagging behind. Those laggards also still have the highest foreclosure and short sale rates. New builds continue strong in Lyon Township and have come back in Milford, too. New build costs per Sq Ft are now running between $115 – 135/Sq Ft, depending upon the quality of the builds. You can see all of the stats for March and 2013 Y-T-D by going to my web site www.movetomilford.com and clicking on the choice – What have homes in this area sold for?

The tight market has also made it more difficult for Realtors and appraisers to find “Comps” to use for Comparative Market Analyses (CMA’s) or appraisals. That has also affected Broker Price Opinions (BPO’s) that are used by banks to evaluate short sale and foreclosure offers. I’ve had a tough time doing CMA’s lately and have had to expand out further in distance and time than I would normally like in order to fine any similar home sales to use.

What this all means for buyers and sellers?

Well, it’s a great time to be a seller – the tight inventory and rising prices have resulted inhome repairsan environment where you will get the most for your house that the current market will bear, without having a lot of competition. You still need to keep your house in good condition. The market has shifted a bit towards favoring the move-in-ready houses, rather than the fixer-uppers. So if you’re getting ready to put your house on the market, work yor way down that to-do list of deferred maintenance items that you’ve been meaning to get to for some time.

For buyers it’s a frustrating market – there is less to choose from and, with more buyers chasing the reduced inventory, it is not unusual to see bidding wars for good houses. In addition, buyers are finding it tougher to get the mortgage that they had supposedly “pre-qualified” for once they have and accepted offer. Stricter underwriting policies mean that buyers need to get the best advice that they can find from their mortgage agent about credit reportwhat to do and not to do during the process. Even the most innocent misstep can put something on your credit report that the underwriters will see and use to disqualify you for that mortgage. If you’re a first time buyer or have not owned a home for at least three years, remember that MSHDA is still offering grants of up to $3,000 for non-military and up to $5,000 for military buyers. That money can be used to cover some of your closing costs and does not have to be repaid.

What’s happening on the low end of the real estate market

March 10, 2013

This may help explain what’s happening in the low end of the market –

Press Release: February 26, 2013  – Strong Homebuyer Traffic, Rising Home Prices Fail to Lift Market for Damaged REO, New HousingPulse Survey Finds
WASHINGTON, DC (February 26) – Strong homebuyer traffic and limited housing inventory continued to push overall home prices upward in January. But the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey results also reveal a growing divergence between prices for non-distressed properties and prices for damaged real-estate owned or REO. (Ed. – I am definitely seeing this trend in the markets that I cover.)
While HousingPulse data shows that home prices overall, based on a three-month moving average, are at the highest level – $236,100 – seen in nearly three years and have been climbing since last spring, those average numbers don’t tell the complete story when it comes to home price trends. (Ed. – See the sold homes data at www.movetomilford.com for the average and median sale prices in the nine markets that I cover.)
Yes, home prices are on the rise for non-distressed properties, which accounted for 65.0 percent of total home purchase transactions tracked by HousingPulse in January. In fact, average home prices for non-distressed properties were up a healthy 5.1 percent on a year-over-year basis – rising from $264,700 in January of 2012 to $278,200 in January of 2013. (Ed. – Again, these are national averages. See my local data for the averages here.)
But no, home prices for REO properties in need of repair – the type banks look to unload after a foreclosure – have not been rising along with prices for non-distressed properties. They have been moving in the opposite direction.
According to HousingPulse results, the average price for a damaged REO property sold in January was just $88,100. That was not only 17.1 percent below the average damaged REO price recorded a year ago – $106,300 – but also the lowest level ever recorded by HousingPulse in its four-year history.
One reason for the decline in home prices for damaged REO is the fact that both current and first-time homebuyers have reduce their interest in this type of property for the better part of the past year. HousingPulse results for January show current homeowners with a record low 15.0 percent share of the damaged REO purchase market, while first-time homebuyers had a near-record low share of 19.6 percent. (Ed. – I have definitely seen this locally. More first time buyers are passing on fixer-uppers and going for move-in ready homes.)
Meanwhile, investors, lured by low prices and the growing opportunities for flipping, have significantly increased the purchase share of damaged REO properties in recent months. During January, investors accounted for 65.4 percent of damaged REO home purchases, according to HousingPulse numbers. That was up from 58.1 percent a year earlier and the highest level recorded in the survey’s four-year history. (Ed. – In this area we are also seeing cash rule the lower end of the market. Basically anything under $150,000 is going for cash and many have multiple cash bids.)
The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns. For more information on the survey, contact John Campbell at Campbell Surveys at (202) 363-2069 or jcampbell@housingpulse.com.
Ed. – So now you know for sure that it wasn’t your imagination. The market at the low end has shifted mainly to investors with cash offers. And the prices at that end have actually declined for damaged houses, rather than rise with the overall market.

Women’s Enrichment Day

March 8, 2013

March 9, is the date for the 10th annual Women’s Enrichment Day at the White Lake Middle School at 1450 Bogie Lake Rd in White Lake. This event is organized by the Highland – White Lake Business Association and features workshops, shopping and lots of fun for area women. It’s a day of no chores, no cooking and no kids to watch; a chance to learn about a number of interesting topics for women in the workshops and a chance to shop at the tables of over 40 vendors who will be in attendance. Lunch will be available for purchase and there will be door prize drawings throughout the day.

Women in meetingWorkshops will range from how to download books from your library onto your Kindle, iPad or Nook, to learning how to knit to tips for improving your personal energy level. Other workshops will focus upon helpful tips like how to make small drywall repairs and how to make a felt Easter basket for your little egg hunter. There will be beauty tips and financial planning tips and lots of wellness tips. The admission is $5, which goes to the Huron Valley Educational Foundation. The event starts at 8 am and runs until1:30 pm. The first 200 women through the doors will receive a gift bag and an opportunity to have a continental breakfast.

Obviously the content of the workshops is enriching, but just getting together with other women to network, shop. learn and have fun is enriching in and of itself. Give yourself a break Saturday morning and join your sisters at Women’s Enrichment Day. For more about the event read the event brochure by clicking here.