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Friday, April 26, 2013

Adding Pinterest into the mix


 I'll be the first to admit that I don't yet get it -  the interest in Pinterest. I read that it is the fastest growing new social media site these days. I also read that it is loved by women over men something ridiculous like 97% to 3 %. So maybe the fact that I don't get it, nor do the majority of men points to something that is attributable to the Women are from Venus and men are from Mars theory put forth in the book by the same name.

Pinterest is visual. I get that. But that’s all it is. It has a little bit of verbiage to label the board that one is looking at and labels for each picture (if they were entered by the board creator). In many cases the pictures that make up a board (kind of like a page in Pinterest) have little in common; although the better boards do have a theme that ties all of the pictures together. It is as close to a totally non-verbal visual experience as one can find.

So, I’ve made up boards of the pictures that I take of my listings and posted them on Pinterest. You can see them at www.pinterest.com/normwerner  . If you go there you’ll see some other things that I’ve created boards for in Pinterest. I’m still learning how to get pictures onto Pinterest boards and manipulate them, so they are a little disjointed. Pinterest doesn’t make it easy to load pictures to boards or to manipulate the pictures on the boards, or at least I haven’t found it to be easy, yet. Maybe that’s a man from Mars thing, too.

Anyway, enjoy what I have been able to load up to boards on Pinterest. Now that I know I’ll be doing that, I’ll probably take a lot more pictures of new listings. The other thing that I’ve decided to do is to take a lot of pictures of the interesting little details in each house – a special sink or faucet here or an interesting light fixture there. I have a feeling that this is what Pinterest is all about or at least what 97% of Pinterest users will find interesting.

Tuesday, April 23, 2013

Monthly Market Report for Southeastern Michigan


Michigan Monthly Market Report – April 2013
For the first quarter of 2013, Michigan is still a leader in the housing recovery but a number of states have caught up, extending the housing recovery across the nation. Throughout the state we are seeing inventory shortages and rising values. Southeast Michigan remains the most active with the lowest inventory and strongest buyer demand. A new term is being used in the industry: the Shadow Demand. Like the Shadow Inventory which represented the potential bank-owned homes that could go on the market, the Shadow Demand represents the pent-up Buyers who have been holding back for the past 5 years. While the release of the shadow bank inventory has been slow and steady, the Shadow Demand seems to be jumping in all at once.

We expect a shortage of homes for sale throughout 2013 and 2014 with inventories rising and demand slowing down a bit in 2015 as interest rates increase and the Shadow Demand is dissipated. How quickly home inventories will raise depends on two factors: the pace of appreciation, and more importantly, how quickly Sellers realize that home values are improving. For many Sellers, values have risen enough that it makes sense to sell now, particularly if you are also buying.

For anyone who has purchased a home in the past four years, particularly investors, it is a great time to test the market. You should be pleasantly surprised on the potential return on your investment. The same holds for those who leased their homes, waiting for the values to rise.
Historically, with low For Sale inventories, home builders fill the gap. So far, local home builders, which traditionally make up the majority of new construction, have had difficulty obtaining financing so they have not been able to supply any inventory relief.

Following the market trends over the past three years, you can see values have been moving off the bottom since the spring of 2011 and gaining speed these last three quarters.

Charts: Average Cost per Square Feet
The next two charts show both the decline in the number of new home listings entering the market as well as the increase in the number of homes being placed under contract. It is interesting to note the declining bank-owned share of the market.


Charts: Home Listings Entering the Market & Home Listings Placed Under Contract
The result is a big increase in Sales Absorption, which is the percent of the available homes being sold each quarter. Considering that about a third of homes for sale are not really saleable because of condition, motivation or price, a 44% rate this past quarter represents a true absorption of closer to 70%, which is the driving force behind the double digit appreciation rates.

Chart: Sales Absorption
As a company we continue to gain a bigger piece of the pie, and most importantly, we are gaining market share in the number of new listings taken. We are working hard to reach out to you, our clients, and show you the opportunities in this market.

It is important to note in this improving market that a decline in the number of sales reflects the shortage of inventory, not a market slowdown.

If you would like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime.
Thank You,


Norm Werner
Put my team to work for you
P: 248-763-2497
normwerner@comcast.net
www.themilfordteam.com
www.movetomilford.com

Saturday, April 20, 2013

How walkable is it where you live?


“Anything’s within walking distance, if you have enough time.” (Steven Wright)

But what if you don’t have all the time in the world to get to something? That’s where the “walkability” of your neighborhood comes in. I met the lady who wrote the book on “walkability”, which is a measurement of how convenient it is to walk to things from where you live. Out of her work a Web site was born that has the http://www.Walkscore.com. The book focused upon what makes a neighborhood walkable – the places that you can reasonably walk to and the things you can do once you get there. Included in important places that you might be able to walk to are stores, libraries, parks, restaurants and more.
URL

There are urban areas like Chicago and Boston and New York where you would see a very high walkscore, since they have very dense neighborhoods that have most of the things one needs integrated into the fabric of the neighborhood. Once you get out to the suburbs you often lose that ability to walk to the store or the restaurant.

I live in Milford, Michigan which has a very high walkscore of 77 (out of 100) when I type in my address. I used to live in Orchard Lake in a typical bedroom community and when I put in that address the score is 9, which means that it is almost a totally car-dependent neighborhood. Go to walkscore.com and type in your address. What score do you get? If you’d like to be in a more walkable place, call me and I’ll find you a home in Milford, where you can walk to almost anything you need.

Wednesday, April 17, 2013

The lid is off! The time is now! Jump out of the jar!

I read a blog recently that was based upon a story about an experiment that was done some time ago with fleas in a glass jar. When the fleas were initially put in the jar a lid was screwed on the jar to prevent them from getting out. At first the fleas would still climb up the jar walls and try to jump out. They would bang their heads on the jar lid and fall back down into the jar. After a few days the fleas stopped trying to get out because they had become conditioned that trying lead to a bump on the head and a fall. The lid was then removed from
the jar and none of the fleas tried to get out because they had been conditioned that trying that lead most certainly to failure and a sore head.


The real estate market has undergone similar conditioning that is keeping would-be sellers bottled up. The “lid” that was on our market – low property values caused by the recession – has been removed and yet too few have even tried to get out of the jar and put their homes on the market. Property values certainly aren’t all the way back to where they were at the peak of the bubble that burst and led to the recession; however, they are also not mired at the low point of the recession. Values have come back over 10% year-over-year in many areas and the low inventory in the market right now has led to bidding wars over the few homes that are available. Even appraisals have started coming back to support the price increases.


The point here is to shout out as loud as I can that THE LID IS OFF! TRY AGAIN! You may still bang your head on a market price that is too low to allow you to sell. People who bought at the peak or who took all their equity out at the peak are likely still underwater; however, most owners are probably better off that they know. You won’t know if you don’t have a current market analysis done by a real estate professional. Having a Realtor® give you an updated Comparative Market Analysis doesn’t usually cost you anything. It is quite likely that the recent uptick in the market will allow you to again consider listing your current home, so that you can get on with retirement or job-relocation plans. Call me and let me see what you house is worth on today’s market.

Thursday, April 11, 2013

First Quarter Southeast Michigan Real Estate Market Report

From our Brokerage President - Dan Elsea:

For the first quarter of 2013, Michigan is still a leader in the housing recovery but a number of states have caught up, extending the housing recovery across the nation. Throughout the state we are seeing inventory shortages and rising values. Southeast Michigan remains the most active with the lowest inventory and strongest buyer demand. A new term is being used in the industry: the Shadow Demand. Like the Shadow Inventory, which represented the potential bank-owned homes that could go on the market, the Shadow Demand represents the pent-up Buyers who have been holding back for the past 5 years. While the release of the shadow bank inventory has been slow and steady, the Shadow Demand seems to be jumping in all at once. 

We expect a shortage of homes for sale throughout 2013 and 2014 with inventories rising and demand slowing down a bit in 2015 as interest rates increase and the Shadow Demand is dissipated. How quickly home inventories will rise depends on two factors: the pace of appreciation, and more importantly, how quickly Sellers realize that home values are improving. For many Sellers, values have risen enough that it makes sense to sell now, especially if you are also buying.

For anyone who has purchased a home in the past four years, particularly investors, it is a great time to test the market. You should be pleasantly surprised on the potential return on your investment. The same holds for those who leased their homes, waiting for the values to rise.

Historically, with low For Sale inventories, home builders fill the gap. So far, local home builders, which traditionally make up the majority of new construction, have had difficulty obtaining financing so they have not been able to supply any inventory relief.

Following the market trends over the past three years, you can see values have been moving off the bottom since the spring of 2011 and gaining speed these last three quarters.



The next two charts show both the decline in the number of new home listings entering the market as well as the increase in the number of homes being placed under contract.  It is interesting to note the declining bank-owned share of the market.






The result is a big increase in Sales Absorption, which is the percent of the available homes being sold each quarter.  Considering that about a third of homes for sale are not really saleable because of condition, motivation or price, a 44% rate this past quarter represents a true absorption of closer to 70%, which is the driving force behind the double digit appreciation rates.

 
 
So, what does all of this mean to you? Well, if you've been on the fence about selling, now is the time to jump off the fence and get into the market. Once the market re-balances the supply and demand curves the appreciation rate and what you'll be able to get for your house will slow to a more normal rate. You can get top dollar right now and multiple bids are not that unusual. Call me for a free Comparative Market Analysis on your home, especially if you haven't had the value analyzed within the last year. You'll be pleasantly surprised.
 
For buyers, there is frustration at the lack of inventory to choose from and the bidding process that is going on for good properties; however, the mortgage rates are still low and home values are going in the right direction for you to recoup the buying costs fairly quickly. Jump in while things are still affordable and mortgage rates still low. Many mortgage lenders have re-instituted programs requiring as little as 5% down or allowing for 10-10-80 loans to avoid PMI. Check with your lender of the programs available. For first time buyers there are still down payment assistance programs available and a few 0% down programs still funded. Call me and let's get looking.


Tuesday, April 9, 2013

Make it possible...


From the Jack’s Winning Words blog comes this little bit of inspirational thinking - “Nothing is impossible. The word itself says, ‘I’m possible!’’” (Audrey Hepburn)

 
I like Hepburn’s line of thinking. It is directing you away from pondering the seemingly impossible things in life and towards using your imagination and intelligence to instead think of all of the things that you might do to make it possible. To my way of thinking, it is a much better use of your time.

 
If you start with the positive attitude that all things are possible, some perhaps more difficult than others, but still possible; then you can direct your creative juices towards finding that possible solution. I suspect that a lot of things don’t get done in life because the people involved were too content to believe that they are impossible, so why try. Some may know that they are possible, but have decided that the effort is not worth the reward – it’s possible but too hard. Still others may just be satisfied with the “moral victory” by thinking to themselves - “ I know I could do it if I wanted to.”  What a hollow victory that is.

 
There have been all sorts of management books written about how to manage your time or tackle big projects by breaking them down into smaller tasks. Underlying all of that good advice is the premise that you don’t look at the day ahead or the task at hand and just say it’s impossible.  You have to start with the view of life that Audrey Hepburn had – nothing is impossible.

 
How do you tackle the impossible in your life?

Friday, April 5, 2013

What the heck is a “Site Condo”

I often encounter confusion on the part of buyers, who either are not from Michigan or who perhaps haven’t been in the market for 20-30 years, about the different types of properties that I might be showing them. Michigan has at least one totally unique class of properties that you won’t find in any other state – the site condo.

 
Most people are familiar with the platted subdivision. Until the mid-1980’s that was one of the only ways that developers and builders could develop a property with multiple individual dwelling units. There also were a number of variants for developing multi-family units, either as apartments, condos or co-ops. I’ll discuss each of those in future articles. One important thing to remember about all of these types of properties is that each has its own set of laws and rules that the builder and owners must follow.

 
Until the mid-1980’s all builders who wanted to create subdivisions of single family homes had to go through the process of getting the plat (the layout of the individual lots) approved and follow all of the rules that had built up over time to govern those developments. Homes in those subs were wholly owned by the buyers – lot and house, inside and out. There were normally fairly rigid and strict rules about the size of lots, the closeness of houses to one another and the building standards (local building codes) that had to be met for the houses and the design and construction standards for the roads within the sub. The issue of the roads was a big one, since the roads were normally turned over to the local governing body (Township, Village or City) for future maintenance. Those local governments set the standards for the how the roads had to be designed and built. They also set up procedures for doing things like environmental impact studies and holding neighborhood hearings about the proposed project, that had to be followed and much more.

 
By the mid-1980 the process that a developer had to go through in order to do a platted sub had become onerous and time consuming. It often took a year just to get the necessary permissions to begin the development. Builder looked around for relief from the platted sub processes and found it in Michigan’s Condo laws and rules. Condo complexes were a newer type of multiple unit dwelling and more governed by laws and rules that were also more modern. One major difference was in the roads within a condo complex. They are designed to be private and to remain private upon completion of the complex.  Maintenance of those roads is planned into the long term maintenance plans for the complex and are the responsibility of the condo homeowners association, along with exterior maintenance and maintenance and insurance for any common elements like pools or parks or entrances (gates, islands, etc.).

 
Sometime in the mid-1980’s builders determined (I’m sure with the blessing and help  of the political powers at the time) that they could build the equivalent of a subdivision in a lot less time and with a lot less hassle by building under the Michigan Condominium laws and rules. The Condominium Law was enacted in 1978 and amended in 1983. Developers found that they could use that law to achieve much greater flexibility for the layout of the houses and the design of the roads by keeping the roads private and also creating shared areas the ownership of which would be retained by a homeowners association. The condominium law also laid out a much faster process for development approval. So, the Michigan “site condo” was born by redefining a “unit” within the condo complex to include the land and the house that is built on it. So, in a site condo complex the individual owners own the land that their house sits upon and the house itself; further they are totally responsible for the upkeep of both. The owners land and houses are considered to be units within the complex; and so, they required to be members of the Homeowners Association (HOA), which “owns” and is responsible for the roads and any common areas.

 
The site condo is sort of like taking the concept of a detached condo (which had been around for a while) one step further – now you own your own lot too. The rules for the site condo are in the Master Deed and take the form of By-Laws for the HOA. In most cases those rules are broad and fairly detailed in terms of what the homeowner may and may not do with or to his property without permission from the HOA. Things like paint colors for the house, additions to the house, putting in a swimming pool and any other things that is likely to have impact on the value of the whole neighborhood are governed under those rules. Some find that to be intrusive and onerous, but most find it to be comforting that the values in the neighborhood are less likely to be impacted by a rouge owner.

 
What other impacts are there for owners from living in a site condo, rather than in a plated sub?

 
One difference that was not recognized, even by by the builders, for a while is the requirement that condo complexes fill out special registration forms with the Veterans Administration certifying that their complexes do not discriminate, especially against vets. Many builders just didn’t do the paperwork when they were building and now find that veterans cannot use their VA benefits to buy one of their units. There is no way to recover if the paperwork was not filed when the complex was being built. Another issue sometimes comes up when buyers are trying t use out of state banks for financing. Since Michigan is the only state with this unique property type, many out of state banks don’t know what to make of it. They see the work Condominium in the legal description and immediately think of the traditional condo complex. It confuses them and many have more stringent lending practices for condos than for regular houses. That shouldn’t be an issue if you deal with local banks or mortgage lenders.

 
Should I avoid site condos?

 
There’s little chance that you will be able to in Michigan, unless you buy an older home. Almost all of the homes built after the mid-1980’s are site condos.

 
So, now you know what a site condo is. I deal with them all of the time. If you’re looking to buy in this area give me a call and we’ll find you just the right site condo to meet your needs.

Monday, April 1, 2013

Life in the shadows...


From a recent report on RIS Media – “CoreLogic, a leading residential property information, analytics and services provider, reported recently that the overall shadow inventory is down 28 percent from its peak in January 2010, when it reached 3 million homes. Current residential shadow inventory as of January 2013 was at 2.2 million units, representing a supply of nine months. This figure represents an 18-percent drop from January 2012, when shadow inventory stood at 2.6 million units.” To read the entire story on RIS Media, click here.

“Shadow Inventory” is a real estate euphemism for distressed homes – homes that are in some stage of the foreclosure process. A distresses home may be one for which the homeowner has missed a payment and a warning letter or default letter has been sent or it could be one that the mortgage company has already started the foreclosure process upon. The property is not yet listed for sale, so it does not show up on the active inventory of available homes. I suppose that we could have just as easily called this the “Limbo Inventory”, since the properties are in a state of limbo. There is, however, little sense of humor about this whole topic.

Some of this shadow inventory built up when the banks paused to reassess their procedures after the robo-signing law suits and the revelations about missing mortgage paperwork. The 2.2 million units at the end of January represents about a nine month supply if it were all on the market right now. That would be a welcome addition, since we are down way below that figure everywhere and the tight inventory is causing frustration for would-be buyers. Of course, sellers are happy that it’s not on the market, since the tight inventory is driving up prices.

Some of that shadow inventory could end up reaching the market as short-sale listings and avoid the whole foreclosure process. Some may be delayed indefinitely. There is no requirement that banks carry out the foreclosure process in a timely manner. Just going through the Federally mandated processes of offering loan modifications or other alternatives to foreclosure can take several months. There are many cases of people living in houses that are in or due for foreclosure for years without ever paying.

Even after foreclosure, the ex-owners have 6 months that they can live in the house without paying and then the bank must still go through an evict process to get them out at the end, if they haven’t left voluntarily. There have also been cases of “squatters” occupying foreclosed homes that had been abandoned. The banks must go through an eviction process to get them out, too; even though they have no real claim to the property.

So, if you've been wondering about that empty and seemingly abandoned house in your neighborhood, perhaps it is a member of this shadow inventory. It eventually will be put on the market and sold, but by then it will likely need quite a few repairs or other maintenance. It is very frustrating for Home Owners Associations (HOA) because, not only are dues not being paid to the HOA; but, the place gets looking run down and detracts from neighborhood values. Banks seldom care about really keeping the place up when it’s in limbo. Some HOA’s have slapped liens on the homes to pay for needed services like lawn mowing  or repairs of dangerous situations. The banks often refuse to pay off those liens when the place is sold, leaving it in limbo again.