The PRICE is the same as 2003 prices, but the COST is even less. According to the most recent S&P Case Shiller price index, residential real estate values have returned to 2003 PRICEs. That, in itself, says something. However, when you factor in mortgage rates, the case for buying a home today becomes even more compelling. In 2003, 30 year mortgage rates stood at 5.88%. Today, they are 4%. How does that impact the actual COST of a home? Well, on a home purchased for $250,000 you save $285.30 a month, that equals over $3400 a year, and over $100,000 over the life of a 30 year mortgage! You buy the home for the same PRICE, but the COST is over $100,000 less. So this is why so many financial advisers are saying that this may be one of the greatest times in history to purchase a home.

How are CENTURY 21 Agents like the biggest tycoon in real estate?

How are CENTURY 21 Agents like Deion “Prime Time” Sanders?

Behind that flash there’s genuine moxie and zeal.

The kind that allows them to wear 18 different hats at one time.

And look good doing it.

See how our Agent stacks up against Deion in the third quarter.

CENTURY 21 Agents- Smarter. Bolder. Faster

How are CENTURY 21 Agents like the fastest skater on ice?

It is for that reason I will not be covering the projections of those groups. Instead, I want to share the beliefs of other organizations.

Washington Post:

“Housing Market and Economy Showing Encouraging Signs.”

The Wall Street Journal:

“From Bottom Up, Signs of Housing Recovery”

USA Today:

“Housing Outlook is More Upbeat”

CoreLogic:

“CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.”

Freddie Mac:

“With the New Year comes a sense of cautious optimism. There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”

Fannie Mae:

“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.”

Source: http://www.wra.org/hsrdecember2011/

Date: January 23, 2012

MADISON, WI – The Wisconsin real estate market improved in 2011 with home sales totaling slightly above 2010 levels, according to a year-end report released by the Wisconsin REALTORS® Association (WRA). Sales of existing homes for 2011 were 0.2 percent above 2010, and the median price of homes fell 6.4 percent to $132,000, according to the report. Monthly trends in home sales ran well above 2010 levels throughout the second half of the year.

“Remember that home sales were pushed into the first half of 2010 due to the Federal Homebuyer Tax Rebate program, so we expected the first half of 2011 to look weak and the latter half to look stronger by comparison,” said Rob Keefe, Chairman of the WRA Board of Directors. “What is encouraging is to see monthly home sales continue to outpace last year’s levels,” he said, noting that home sales in December were 11.3 percent higher than December2010.

Regionally, sales were typically within 5 percent of 2010 levels. The strongest growth in home sales was found in the Southeast region where existing home sales rose 3.4 percent over the previous year, followed by the North region where sales grew 2.1 percent. Sales in the Northeast region were even, with an increase of 0.1 percent with last year, but sales were slightly lower, down 1.2 percent, in the South Central region. Finally, annual sales dropped 4.8 percent in the West region, and fell 6.1percent in the central part of the state. Median prices for the year were below 2010 levels in all regions of the state, with prices falling between 3.6 percent and 5.5 percent in five of thesix regions. In contrast, the Southeast region dropped 9.1 percent over the period.

The WRA’s report said other economic factors impacting the housing market also showed signs of improvement. “We are seeing some promising signals in the state labor market,” said WRAPresident and CEO, Michael Theo, who noted that the state wide unemployment rate dropped more than a half percent over the last two months to 7.1 percent in December. “We are actually seeing private sector job growth in excess of the lost local government employment for 2011, and with net job growth outpacing the growth in the labor force for the year, the rate of unemployment has been falling,” said Theo. “If home sales are to continue to grow, we will need more robust job growth going forward, but a falling unemployment rate is a welcomed sign,” he said.

Another bright spot in the WRA’s report showed inventories ofunsold homes dropped to 12.5 months of supply in December, which isthe first time it has been below 13 months since the WRA began tracking inventory levels in May 2010. In addition, the Wisconsin Housing Affordability Index, which shows what percentage of amedian-priced home a buyer with the median family income canafford, stood at 269 for December 2011, up from 230 in December2010. “The Wisconsin housing market is still very much a buyer’smarket, and the decline in median prices in December combined with 30-year mortgage rates below 4 percent has pushed affordability tovery high levels, which is great news for buyers who qualify for mortgage credit,” said Theo.

1. Buyers Will Return

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

2. Foreclosures Will Increase

The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

3. Prices Will Soften

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

• They will eat up some of the buyer demand in the market.
• They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

4. Short Sales Will Increase

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

5. Great Agents Will Be VERY Successful

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.

1.) Interest Rates remained at historic lows

In order to help stabilize the economy in 2010, the Fed took certain actions which kept mortgage rates at or near historic lows (approximately 4%). Most felt this would be a short term tactic and once abandoned would result in rates returning to long term averages (6-7%).

However, the government has continued to support lower rates with the hope of fostering a recovery in the housing sector. The 30 year fixed rate mortgage (as measured by Freddie Mac) stood at 4.77% to begin 2011. A month later, it was over 5% and many, including us, believed this was the beginning of rates returning to normal levels. Instead, rates continued to fall ending 2011 at 3.91%.

The lower rates along with great prices have had a favorable impact on home affordability leading more buyers to enter the market.

2.) Sales up over 2010

At the beginning of 2011, we all realized that a year-over-year (Y-O-Y) comparison of home sales would not be a true “apples to apples” comparison as home sales at the beginning of 2010 were bolstered by the Home Buyers Tax Credit. Likewise, comparing home sales over the summer would not be a fair comparison as many sales in 2010 were dragged forward so that buyers could take advantage of the credit. However, many thought Y-O-Y comparisons would again be useful later in 2011 as the impact of the 2010 tax credit waned. Yet, the National Association of Realtors (NAR) Existing Homes Sales Report shows that over the last three months sales have increased quite nicely. The October and November reports each showed a Y-O-Y gain of in double digits and the December report gain was 12.2%. These numbers showed closed sales were increasing even though more contracts were falling through.

3.) Contract cancellation rate surges

Probably the most troubling trend to emerge in 2011 is that the number of sales contracts that are cancelled before closing has skyrocketed in the last year. The cancellation rate has jumped from 9% in August 2010 to 33% each of the last two months.

Some of the increase can be attributed to the higher level of difficulty in distressed property transactions. However, NAR also says cancellations are caused largely by “declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price.”

4.) Foreclosures were delayed

The robo-signing debacle of late 2010 caused a delay in many foreclosures entering the market. It DID NOT prevent the banks from continuing to put homes into the foreclosure process. The delays jut prevented banks from repossessing the homes and putting then up for sale as REOs (foreclosures owned by the banks).

For most of 2011 the banks and the state governments worked on a set of standards that would be enforced before a bank could repossess the house. They are currently working on a settlement to be paid for those homes that where foreclosed on without the proper paperwork.

As these procedures and settlements are completed, more and more of the backlog of distressed properties will come to market. Distressed properties sell at a discount. They will have a substantial impact on the prices of all houses in the region.

5.) Prices move up then down

 Many experts expected prices to continue to slide downward as we entered 2011. However, a large inventory of distressed properties was held back (see #4). That turned out to be good news for prices as supply decreased throughout the year and demand increased in the second half of the year. That actually caused prices to ‘bottom out’ and ten nudge upward in the late summer and early fall.

As the foreclosed properties again began to enter the market in the last quarter, prices again began to slip. Most believe this downward trend will continue through the first half of 2012.

We spent today looking into the rearview mirror. Tomorrow, will share some of the trends we think we will see in 2012.

I have heard a lot lately ‎”Should I wait until January to list my house” -or- “Why should I list now?”

Here are my top 4 reasons why I think you should list now instead of waiting until January or February.

1) the home shows best during this time of year – it is decorated the best now.

2) there is less inventory on the market this time of year, after the first of the year more properties will come on the market, therefore, more competition.

3) relocation buyers are coming to visit during the holidays, during the mid-term break.

4) it takes a couple of weeks to get the marketing up and running, by placing the property on the market now, you will be out in front in January, assuming it doesn’t sell during the holidays.

Lastly, I will leave with a story about a Seller who called me in early December last year. He called to tell me he wants to take the house off the market for the holidays and put back on after the first of the year. I told him he could do what ever is best for his family, but I strongly encourage him not (for the reasons above). He said, “I trust you Neil, and if you say so, we’ll leave the house on the market”. Well on December 27th he accepted an offer that was $2000 less then full price and $3000 more than the price he was going to reduce to on January 2nd. Needless to say, he was happy he left his house on the market over the holidays.

I hope this helps you when deciding if you should list now or after the first of the year. And if you are listed now and thinking about taking the house off the market for the holidays…don’t!

Educating the buyer and setting the correct expectations is imperative to a successful short sale transaction. Nothing is more discouraging than successfully negotiating a short sale only to have the buyers walk from or not be able to close the transaction. The following are some precautionary and educational items to consider which would avoid such buyer fallout.

Patience is a Virtue

Not every buyer is a short sale buyer.  However, one important characteristic a short sale buyer must have is patience. Setting the proper expectations regarding the time frame of a short sale plays a key role in bringing the short sale to the closing table.  If a buyer is not willing to stay in the transaction for at least 90 days, they are not a short sale buyer. Of course we cannot speak for every circumstance. But, in most cases, the short sale process takes 60-90 days to complete.  For their patience, the buyer will likely earn instant equity. The average short sale, according to the Realty Trac report dated 5/21/11, sells for 79 percent of market value. To that end, a buyer will earn “patience equity” (a term coined by Steve Harney).

Work with a Lender that Understands the Short Sale Process

The pre-approval process should be the same whether the buyer is being pre- approved to buy a short sale or pre-approved to buy a non-distressed property. This seems like simple advice doesn’t it?  However, from our vast experience negotiating short sales, we have found that 35% of successfully negotiated short sales do not reach the closing table because the buyers financing falls through. We must educate buyers to work with the proper lender who will not only walk them through the mortgage process, but also understands the short sale process. Too many mortgage applications start at the time of short sale approval. Some short sale approvals expire in 10- 15 days from date of issue. In many cases, that is not enough time for a lender to underwrite the file, order title, order appraisal and fund the loan.

A proper pre-approved short sale buyer would be one who is brought through a complete underwriting analysis prior to the short sale offer. This includes full income analysis, full asset analysis and full credit analysis. The ideal lender is one who completes the underwriting procedure and has a credit decision pending clear title and appraisal. The lender should also help in keeping the buyer engaged throughout the process. In a lengthy short sale negotiation, the lender should be proactive in keeping the loan file up to date with recent paystubs, asset documentation etc.  This will ensure the transaction closes on time and without extensions.

Complete Inspections Prior to the Short Sale Approval

This is a confrontational subject but each buyer should be educated to understand that in most cases any major deficiency regarding the condition of the property will not be cured prior to closing. However, in many instances, if the deficiencies are known prior to the start of the short sale negotiation, the short selling bank will be more willing to except a sale price that is discounted deeper to the current market value. It is a challenging task to go back to the bank and ask for a lower sales price when a home inspection that was done after short sale approval showed major deficiencies.

In addition to the home inspection, the lender appraisal can be done prior to the short sale approval.  In most circumstances where the short selling bank’s broker price opinion shows a property value that is much higher than the buyer offer, the lender appraisal can be used to negotiate the value.

We should educate buyers as to the pros and cons of completing the inspections prior to short sale approval.  We understand there is a monetary commitment that would have to be made. Having said that, having the inspections done can save allot of aggravation to the seller and buyer later in the process.

In closing, the above are just a few items to consider when educating the buyer regarding the proper short sale procedures. If we remember to keep the buyer engaged and walk them through the process every step of the way, we will ensure the buyer earns their “patience equity” and the short sale transaction closes.