RE/MAX Affiliates

Psychologists will tell you that if someone tells you the same thing long enough, whether factual or not, soon you begin to accept it as truth.  The National Association of Realtors released its second quarter numbers yesterday and to the joy of media outlets everywhere…the news was “Grim”!

Housing was down over 25% from 2009, which BTW, was not a great year!  Shout it from the rooftops…the sky is falling…the sky is falling!  Meanwhile, back in the land of “Reality”…interest rates are at record lows, housing inventory is high, mortgage programs and grants are everywhere, and yet we see very little activity.

The “Qualified” Buyers want to wait to see what happens to the economy…”Too Risky, haven’t you seen the news?”.

The basic underlying ailments to our economy as it relates to the housing market is unemployment and support of business.  Creating good jobs creates demand for housing.  Demand for housing creates demand for new construction.  Demand for new construction creates good jobs…see a pattern?

The experts are still predicting that our sales volume will be higher than in 2009, which means there will be a boomerang effect going into the fourth quarter.  Interest rates are artificially low and will have to go up.  If inventory begins to fall in the fourth quarter and demand goes up…so will interest rates.  If you are looking for a home and it makes great financial sense in this market…ITS BECAUSE IT DOES!!!  Make a decision based on your local market, financial position, and common sense.  Home ownership is a wonderful thing if you are in a position to do afford it and there is no better time than now.  Call one of our professional Realtors today and get started.

The National Association of Realtors announced that the Senate has approved an extension of the closing date to September 30th, 2010 from June 30th, 2010 for those First Time Homebuyers and Step Up Homebuyers who had a valid Offer to Purchase in place prior to April 30th, 2010.  The announcement came very late in the day for many of the lending institutions who pushed hard to close on loans, but will definitely be a relief to many parties still awaiting responses to short sales and other loans that were unable to get closed by the deadline.

Interest rates remain under 5% and the market inventory is setting records in many areas.  Call one of our agents today to take advantage of this historic market.

After seeing the effect that the First Time Home Buyer credit had on the real estate market, many real estate firms are coming up with their own versions of a Home Buyer Credit.

The reality of the situation is that the First Time  and Step-Up Credit were available to those buyers with binding contracts prior to April 30th, 2010 (Except certain exemptions and military personnel).   Any other offerings as a credit must NOT be confused as a rebate from the Federal Government.

One example, is a National Franchise which is offering an “Extended First Time Home Buyer Credit” to those buyers purchasing a home through this company prior to July 31st, 2010.  The confusion to the public is that this credit is NOT a “cash rebate” and is instead a “Seller Credit” which is written into the offer to purchase.  This has become a standard practice over the last few years and can be done through ANY real estate company.

Although many underwriters are tightening requirements of the Buyer, they have loosened the restrictions on Seller credits.  This allows a Seller to credit the Buyer money for closing cost and down payment.  In many cases it can be 3-5%.  Using a 5% credit on a home purchase of more than $160,000 would result in the same $8000 credit offered by the government.  In this particular case it comes from the Seller and NOT the US Treasury.

Seller credits have become much more the norm in recent years and can be used to facilitate home sales for those with good credit, but limited funds for down payment or closing costs.  It is NOT something exclusive to any one company and can be used as long as the lender guidelines allow it.

Missed the deadline for the credit, but still thinking about buying?  Call one of our professional agents today and use this strategy to get the same result!

The question seemed to pop up every day as we neared April 30th, 2010.  What do you think will happen to the real estate market now that the home buyer credits are gone?  The follow up question was…do you think the credits will be extended?

The simple answers are…I don’t know…and NO!  According to the National Association of Realtors and the US Treasury Department, 63% of qualified first time homebuyers took advantage of the original credit in 2009.  The expanded credit into 2010 was an effort to “continue the momentum”.   Given the current condition of the economy, the remaining number of qualified buyers (estimated at less than 17%), and a push to let the housing market correct itself to determine the merit of the credits…it is fair to assume that the “love” in the form of homebuyer tax credits are gone in the near future.

As for the future of the housing market…there is some good news.  NAR statistics are showing median home sale prices increasing from the lowest level since 2002.  Interest rates are at historic lows thanks to Federal Backed Securities which pushed interest rates under 5%.  Inventory of homes has hit all time highs due largely to the number of distressed properties which include foreclosure and short sales.  New construction had a substantial increase in housing starts for the first time in 7 quarters and most national Economists interpret these present conditions as being the recovery upswing from the recent recession…good news right???

Now for the bad news…our national unemployment level is double digits and will contribute negatively to the housing market.  First, it will eliminate qualified buyers from the market and second, will undoubtedly bring on inflation which will push interest rates much higher.  The result of this will be less buying power for buyers, higher inventory and less demand which will once again push down prices. 

The Federal government got out of the “mortgage buying business” on March 30th, 2010 which did two things.  First, interest rates jumped 1/3 point in one day which lends itself to interest rates climbing steadily over the next few months.  Second, underwriting guidelines tightened up dramatically.  Lenders must now comply with new RESPA laws, achieve a higher accountability standard, and in doing so have made it much harder for buyers to obtain credit.

The Midwest has always been a fairly stable market.  We do not have the “peaks and valleys” of a market such as California.  The local market has seen very small depreciation over the last 3 years.  At worst, most sellers have seen the prices stablize with little to no appreciation over that time frame.

As for the future of the real estate market…really…its anyones guess.  My personal prediction is the following:

1) The momentum will keep the market on an upward trend into the fourth quarter of 2010.

2) Higher interest rates and inflation will slow the market in 2011.

3) The commercial market will be the next foreclosure victim in the 4th quarter of 2011 into 2012.  Due to tighter lending policies, a huge inventory of vacant commercial space, and a slower economy…banks will be forced to take back numerous commercial properties.  Blighted communities with empty commercial space will have a negative action on the residential market.

4) The election of 2012 will bring about many new “policies” to correct the real estate market.  Look for the government to get its hands dirty once again by backing commercial notes, offering buyer incentives, artificially lowering interest rates, and anything else they can do to win your vote!

Given all this information…Buyers (Get into the market while interest rates are low)…Sellers (Get your home on the market before interest rates and inventory gets much higher).

Call one of our professional agents today to get more information on market conditions and how we can help you!

Recently, RE/MAX launched a campaign against the use of part time agents.  They defined “part time” as any agent who didn’t complete at least one transaction per quarter, which is still well below the national average of 2.25 per quarter.

The campaign follows a letter a large RE/MAX Broker paid to have printed in The Real Estate Magazine, an industry publication. In the letter, he declares it’s time to “take back the industry” and calls for the creation of new requirements for agents such as increased education, a one-year apprenticeship program and a referral program that would allow inactive realtors to transfer clientele to full-time professionals for a fee.

The campaign is not without controversy as numerous agencies came out in opposition of the move and called it restraint of trade.   The underlying theme being that the public should have a right to hire any Realtor they choose, not just full time agents.

While the merits of the campaign will be debated over the next year, the point that shouldn’t be lost in the argument is that selling a home is the single largest financial transaction of most peoples lives and it should not be taken lightly.

Here are some figures from our local Real Estate Board relative to the campaigns assertions:

224 Agents in our Board did NOT have one transaction last year(23.5%)…385 Agents in our Board did less than four transactions  last year (40.4%)…606 Agents in our Board did less than the National Average (63.6%)…709 Agents in our Board made less than $10 per hour (74.4%).

Everyone has the freedom of choice, but when it comes time to buy or sell…we suggest using a Full Time RE/MAX Agent who is professionally trained, has unmatched marketing tools, and is committed to making your success part of their success.

Call one of our Professional Agents today and take advantage of the Home Buyer Credits before they expire.

Rather than speculation…how about hard facts!  Below are the numbers for the TriCounty Area:

Chippewa County (2009-4,951,250     2010-5,508,847    Percent Change  +11.3).      Dunn County (2009- 3,282,950    2010-1,900,465    Percent Change -42.2).   Eau Claire  ( 2009-8,544,172      2010-11,606,633    Percent change  +35.8).

Eau Claire and Chippewa Counties have shown improvements in both of the first two months of the year.  Dunn County had a great January, but a very poor February.  Overall, the average price of a home in the TriCounty area has increased…YES…INCREASED 2.6% from 2009!  Everyone is always asking our agents..”How is the Real Estate Market these days?”.

Our answer is…Great and Getting Better every day!  Call one of our professional agents today and let us help you make an informed decision when it comes to buying or selling real estate.

(Statistics taken from RANWW Multiple Listing Service and based on residential listings only.)

The one thing we know about predicting interest rates is that we CAN’T predict interest rates.  What we can do is look at historical data and extrapolate from existing market conditions to make a solid ”Educated Guess”.

Here is what we know.  The “Homebuyer Tax Credit” will expire April 30th, 2010.  Unemployment has hit double digits which will certainly lead to inflation.  Inflation will lead to higher interest rates.  If we look at the plotted interest rates over the last 3 years, we can make some assumptions.

The interest rates over the span of the last 3 years tended to peak in July and August and dip back down in the winter months.  Based on these criteria, we can make an educated guess for 2010.

Interest rates will be kept artificially low to stimulate the economy through the end of April and will begin to slowly trickle upward 6.75-7% on a 30 year fixed, likely peaking in July or August.  They will then slowly fall back down to around 6-6.25% over the winter months and into 2011.

What that means to our local real estate market is this.  If you were to buy a home in our area with an average price of $140,000…waiting until the summer could cost you an additional $132/month and $47,520 over the life of the loan.  When you factor the additional $8000 credit for first time homebuyers AND the $6200 credit for step up homebuyers…the savings are over $50,000…more than 35% of the purchase price.

For more information about how you can take advantage of the current homebuyer credits, low interest rates, and high inventory…call one of our professional agents today!!!

The Olympics are a wonderful event for many reasons, but this year the Vancouver Olympics opening ceremony was marred by the tragic death of  a young Georgian Luger.  My first emotions were sympathy for the family, friends, and fellow athletes at the loss of someone so talented and young.  I then began to have an overwhelming feeling of guilt.  I watch the Olympics for the Competition, Underdog Stories, and Yes…the Pageantry.  I selfishly compared the Vancouver Ceremony to the Beijing Ceremony…and was disappointed!

I heard a famous athlete say on friday that he didn’t watch the Olympics because of politics, greed, and the blatent disregard of safety for athletes.  I began to think about what the Olympics were all about and it dawned on me that I had the “Gladiator Mentality”.  I want to see world records being broken, I want to see the 1260 on the halfpipe, I want to see a luge track that has speeds of 95 MPH.  I began to dehumanize these athletes as robots that could defy physics without the element of fear or danger.  The death of Nodar Kumaritashvili made me think hard about what that athlete said. 

I read a blog this morning that discussed the efforts that went into creating the fastest luge track in Olympic history, yet couldn’t find it in the budget to place protective padding on the steel support beams.  I hope that the IOC does the right thing and begins to shift the focus on what is really important, creating a safe environment for athletes to enjoy friendly competition and bring countries together if only for 16 days every two years.  Go USA!!!

For those buyers riding the fence through the winter markets…good news came in the form of record low interest rates which dipped below 5% on a 30 year fixed loan.  Coupled with the First Time HomeBuyer Credit and the Expanded Buyer Credit…there is no time like the present to buy a home. 

As the spring market approaches we will see an increase in activity which typically leads to a short term rise in interest rates.  The housing inventory is very good and has fantastic value, the interest rates are at record lows, the homebuyer credits will expire in April, and buyers are starting to come back into the market.  There is no better time to buy a home.  Call one of our professional agents today and make your dream of homeownership a reality.