Friday, September 28, 2007

Friday photos

Lighthouses fascinate me! This is the lighthouse at Betsie Bay harbor in Frankfort, MI. If you've ever been there, then you know how peaceful the setting really is.

Gaze at the photo, take a few deep breaths, and let go of some of that stress!

Monday, September 24, 2007

More Statistics

As readers of my blog have already noted, I'm hooked on statistics. My exclusive "Total Market Overview" (or TMO, for short) has served me and my clients well since 1996.

But I'm not the only one who tracks statistics in the real estate market. Our local Board of Realtors also keeps track of market statistics every month. Here's their latest commentary:

For the second month in a row, the average list and sales prices are up over last year for
residential properties, according to the Ann Arbor Area Board of REALTORS®. Average list
and sales price shows a gain of 9.33 percent and 6.75 percent respectively over last month
and an 8.06 percent and 7.28 percent over last year. While the total number of transactions
still trail over last year, activity has been good.

Lawrence Yun, senior economist for the National Association of REALTORS® said “There’s
been an unusual hit to home sales, starting in March when subprime problems emerged and
more recently when problems spread to jumbo loans, with many potential buyers on the
sidelines. However, the jumbo loan market is now beginning to settle, and FHA-insured
loans are helping to fill the subprime vacuum. Nationally, the volume of existing-home sales
this year will be better than 2002, which was the second year of the housing boom.”

The mortgage markets will calm further in the months ahead, but it’s important to
underscore the fact that conventional loans – the vast majority of available financing – are
available to creditworthy borrowers, “ Yun said. “FHA modernization could buffer the fallout
of subprime loans, which would raise our sales forecast in the future.”

If you'd like to see the statistics which the local Board tracks, you can see them here.

Monday, September 17, 2007

September Market Statistics

The middle of the month is when I regularly update my statistics for the health of the real estate market in Washtenaw County, so here's my analysis for September 2007.

The Ann Arbor market continues to be a strong "Buyer's Market". We have tested our market lows for percent pending (the percent of homes where the sellers have accepted an offer) at 9% in September (as compared with October, 2006). If we have truly hit our market lows for this year, then we will have established a strong base for the market. We'll have to watch this figure closely.

For those who are more detail oriented, here's the actual raw data from September, 2007 that makes up the chart you see above.
By price range, I keep track of the number of homes available, and the number of homes "pending" (where the sellers have accepted an offer).
What you see on the chart is the overall percent pending for the Ann Arbor market, which is at 9% for the month of September.
You'll also see that I keep track of the number of homes sold in the past 30 days in each price range. That helps me to keep track of how much inventory of homes we really have. Overall for September, you'll see that we have a 7 month inventory for Ann Arbor.
Since there are 870 homes available for sale in Ann Arbor at this time, and it's a strong buyer's market, consider adding an investment property to your portfolio. It's an easy time to buy right now.
I found a fascinating article at the Wall Street Journal about how easy it is to shop online for a home in the United States. Here's a quote from the article that I found most interesting:
But when you look at how real estate is listed and sold around the world, Denmark's system is the rule; the U.S. is the exception. It's not that American brokers don't want to control information on sales and price trends; it's simply that they can't. In the U.S, such information comes from public sources, like tax records and Census data, and is readily available online to anyone who wants to build a better Web site, as both Zillow and Trulia have done. In most other countries, such information flows far less freely and openly

Something to keep in mind as you're searching the web for your next home.

Wednesday, September 12, 2007

Mortgage Relief

I came across this article the other day, and it certainly is relevant in today's market.

Making Mortgage Relief Work for You
by David Bach

On Aug. 31, while many of us were getting ready for a long holiday weekend, President Bush addressed the nation about the mounting concerns in the housing market. His speech took place exactly one month before we'll see a record-breaking $50 billion in mortgages reset to a new rate.

That's right, in the month of October alone, many homeowners will be forced to pay higher monthly mortgage payments than they can reasonably afford. And while this number is staggering, it's not exactly new information -- it's been known for two years that the crisis was coming.

The Associated Press reports that, in all, 2 million homeowners have adjustable rate mortgages scheduled to reset by the end of 2008. Of those, the Federal Housing Administration (FHA) estimates that 500,000 could experience foreclosure.

Is Bush's Proposal Enough?

In my opinion, the president's proposal is an excellent start -- but will it offer enough help to those half-million families at risk of losing their homes?

Bush isn't proposing a direct bailout for homeowners who knowingly overextended themselves.

Nor will the government be rescuing irresponsible lenders and speculative investors who bought homes to flip for a profit. As the president acknowledged, that would only encourage the problem to occur again.

Instead, Bush's proposal strikes a balance by offering:
• Temporary tax relief to ensure that cancelled mortgage debt on a refinanced mortgage isn't counted as income
• A foreclosure-avoidance initiative through homeowner education and outreach
• Ways to help responsible homeowners refinance through FHA loans offering a lower interest rate and lower monthly payments

Help for Those in Trouble

Among the president's new initiatives is the immediate introduction of a refinancing product called FHASecure. This product will now be offered through the FHA and offers help to homeowners who are already in default of their primary residence mortgage loans. Previously, the FHA would not insure refinanced loans from borrowers delinquent or in default, so this is a significant change.

There are specific criteria that must be met in order to qualify:
1. First and foremost, you must have a history of on-time mortgage payments before your teaser rate expired -- which means you must have a decent credit history.
2. Your interest rate must have reset after June 2005 but before December 2009.
3. You must have at least 3 percent cash or equity in your home.
4. You must have a sustained history of employment.
5. You must have sufficient income to make your mortgage payments.

Beefing Up the FHA

Since 1934, the FHA has helped more than 34 million people become homeowners -- not by lending them money directly, but by guaranteeing their loans. This reassures lenders who might otherwise be reluctant to make loans to buyers who don't have a lot of money. Borrowers have always paid a set price for this insurance.

The president's proposal seeks to introduce risk-based pricing, which will give borrowers with weaker credit more access to FHA loans. Rather than being denied an FHA loan, underserved borrowers will instead pay a slightly higher fee. This will allow them to refinance at a lower interest rate with more affordable monthly payments.

President Bush is also asking Congress to pass new legislation that would modernize the FHA. These proposed changes -- including lower down payment requirements and higher maximum loan limits -- would also help borrowers with weaker credit and lower incomes. Hopefully,
Congress will act quickly.

Can the Fed Help?

Echoing the sentiments of President Bush, Federal Reserve Chairman Ben Bernanke also weighed in on the situation on Aug. 31. He stated that it's not the responsibility of the Fed to protect lenders and investors from the consequences of their actions.

However, he also acknowledged that developments in certain financial markets, including those currently emerging with mortgages, could have broad economic effects. As a result, the Federal Reserve will take those effects into account when determining policy.

Many believe the odds are growing that the Fed will cut the federal funds rate, now at 5.25 percent, by at least one-quarter percentage point on or before Sept. 18, its next regularly scheduled meeting. The Fed hasn't lowered this rate in four years.

That could be good news if you currently have an adjustable rate mortgage. Even a mild rate cut of .25 percent might mean a slightly lower payment for you now. A cut of .75 percent would create significant breathing room for those on a tight budget, and could potentially send the stock market on a tear. My prediction is that the rate will get cut between 25 and 50 basis points.

Other encouraging news came on the Tuesday after Labor Day, when the Fed put added pressure on loan-servicing companies to modify loan terms or defer payments for borrowers having trouble making their mortgage payments and facing default.

Take Action Now

With the combination of new and current programs, the FHA estimates that it will be able to help 240,000 American families avoid foreclosure.

Only lenders approved by the Federal Housing Administration can process an FHA loan for you. If your adjustable rate mortgage has reset or is about to reset, call your lender and ask if they offer FHA loans and find out whether you qualify. The FHA web site offers loads of additional information, and includes a search feature to find an approved lender in your area.

In two previous columns ("Adjusting to Higher Mortgage Payments" and "Six Steps to Avoiding Foreclosure"), I advised those of you with an adjustable rate mortgage that'll reset this year to call your lender and find out about refinancing options. Have you reviewed your mortgage documents and made that phone call yet?

Tuesday, September 11, 2007

Is now a good time to buy?

As commented on in previous posts, I get asked many times "How's the market?" That all depends on whether you're buying or selling a home. If you're a buyer, the title of this post is very likely something that you would ask - Is now a good time to buy?

I read a recent post from the Wall Street Journal that makes some excellent points about the timing of buying a home. It's worth a read.

What are your thoughts - Is now a good time to buy?

Friday, September 7, 2007

Friday photos

We just celebrated Labor Day here in the U.S. - a uniquely American holiday. In keeping with that theme, this photo from our summer trip to Yellowstone should be familiar to all.

If you've ever been to Mount Rushmore, in the Black Hills of South Dakota, you know how impressive the site really is. First you wind your way up the mountain to the entrance of the memorial. Then, you park in this huge parking structure! When I visited Mount Rushmore back in 1980, there was only a small surface parking lot. It just goes to show you how we Americans love to travel!

Leaving your car, you proceed up this fabulous granite sidewalk to the base of the memorial. From there, you can overlook the amphitheatre - which was bustling with the setup for a concert on the day we arrived.

Sadly, a rapidly-approaching thunderstorm overtook the mountain while we were there. We ran back to our car and made our way back down the mountain to find our hotel for the night.

I encourage everyone to visit Mount Rushmore at least once!

Tuesday, September 4, 2007

Once in a Lifetime opportunity?

I get asked regularly "How's the market?".

My answer is usually the same. "It depends on whether you're selling or buying." Let's examine that a bit further.

If you're selling, then you already know that it's a different market than just a couple of years ago. If you see my earlier post on August market statistics, you'll see a visual depiction of the decline in the market. There is a glut of homes for sale on the market, many of which will be your direct competition when you're selling. There are also plenty of national articles on the impact on prices for homes.

But, if you're buying,'s a different story! In fact, we may be experiencing a Once in a Lifetime opportunity! Let me explain.

First, you've already read the national articles about declining prices for homes. In our area - the general Washtenaw County area - prices are down about 10% from last year. There has also been a huge impact on builders.

Second, interest rates are still at incredibly low levels historically. Your buying power hasn't been this good in our lifetime!

Third, you have the luxury of time on your side. During the most recent Seller's market, the competition from other buyers meant that you had to decide on a house as soon as it came on the market. If you waited, the home would sell to another eager buyer. But today, you have so many homes to choose from, you can see lots of homes, then boil the list down to the top 5 to go visit again, then boil the list down to your top two, and negotiate confidently with either home seller, knowing that you'll get a good deal, no matter what!

All in all, it's a great time to buy a home!

If you've ever given thought to owning investment property, now is a great time buy. With the challenges in the mortgage market due to "sub prime" mortgages, many of those home buyers have turned back into renters. There are many, many tenants out there looking for a home or apartment to rent. You can buy a great single-family home, or a duplex, at today's prices, and rent it out for many years to come. You'll be glad you did! Just ask me!

Mackinaw Bridge Walk 2007

What a way to celebrate Labor Day 2007!

On the Fiftieth (50th) anniversary of the opening of the Mackinaw Bridge, connecting the upper and lower peninsulas of Michigan, yesterday my family and I made the walk from St. Ignace to Mackinaw City.

The crowds were huge! On-line reports indicate that there were over 57,000 people who made the walk. The locals there told us that a typical figure was 25,000, although they expected more this year because of the 50th anniversary. Those of us who regularly attend UM football games, where the crowds are over 100,000, had no problem with the size of the crowd crossing the bridge. The only real issue was the traffic jam getting away from Mackinaw City following the walk.

The weather was perfect for the walk, sunny skies with temps around 80 degrees. The forecast for today, the Tuesday after Labor Day, had rainy skies and temps in the low 60s. So, the local Chamber of Commerce sure ordered up a good day for the walk!

Here’s a view of some of the crowd approaching the north tower.