The Milford Real Estate Scene

The Southeast Michigan Market

2012-01-14T08:33:00.001-05:00

Every market is different, of course; so this report is local to the Southeastern portion of Michigan, which embraces Washtenaw, Wayne, Livingston, Oakland and Macomb Counties and is inclusive of several cities, including Ann Arbor, Warren, Troy and Detroit. The statistics that were used to generate the chart below were collected from the various MLS's in those areas and compiled by Real Estate One.

The chart shows average home sale values and clearly shows what happened to this market right after it hit its peak in 2006. Our crash was rather dramatic and reached an average of 40% loss in values, with some areas (especially the City of Detroit) going well beyond that into value losses of 50-60%. We believe that the market bottomed out somewhere in 2011, after five years of falling values. The chart shows a gradual return of value over the next five years.

It should be noted that this chart assumes a fairly brisk appreciation rate and there are many factors which could impact the rate of recovery of value. A financial meltdown in Europe, for instance, would certainly not help our economy and would slow everything down. The pace of recovery could still be impacted by many factors, but the point is that those waiting to see their home values return should anticipate it taking years, not months.

Other factors that will impact the pace of recovery include the speed with which the lendors recover from the legal issues of the Rbob-signing debacle and get back on track with foreclosures and the release of the overhang of foreclosure inventories. We still need to work that inventory off the books.

Finally there seems to be growing awareness in Washington that something needs to be done about resetting all of the underwater mortgages that are essentially damming up the normal flow of homes and home buyers in the markets. I'm not sure that there is the political will to do anything this year, with the election looming; so, perhaps that is a 2013 issue to resolve - depending upon the election outcome.

Is there a way to the middle ground?

2012-01-04T20:09:00.000-05:00

The American political process is well underway for the 2013 elections and it is readily apparent that the two parties are being pulled more and more towards the extreme positions on what should be the fringes of their ideologies. On the one hand the so-called conservative party is moving rapidly towards a form of theocracy that we take such delight in lambasting in the middle east and on the other side the line between liberalism and socialism is getting more blurry.

The so-called “litmus tests” for both sides have hardened and pulled further apart. Both parties are acting to reign in or disown members who stray to far away from the purity of their strident positions. Positions on social and fiscal issues have become dogma. Out of this stiffening of resolve over positions has come paralysis in Congress and an increasing level of vitriol and finger-pointing.

Having lived through more than 6 decades and many changes in political power, I can state unequivocally that our current set of lawmakers is the worst that we’ve ever had and that the situation in Washington is at its low point. There is no middle ground left, no room to compromise. It’s not just the fault of the Republicans or the Democrats. In fact both must share the blame and both need to be replaced.

In other countries (certainly Great Britain comes to mind), when things get this polarized, new parties spring up to fill the void lef tin the middle. Perhaps it is time for that here. Let the religious extremists on the one side and the socialist on the other side take their parties down those paths to destruction. It’s time for a middle party, a party of moderation and logical compromise, a party more interested in doing what’s right for the country and all of the people than just for an elite or noisy minority.

I know that we have some alternative parties right now – the Green Party, the Libertarian Party and others – but we really don’t currently have a party with a mission statement (probably a platform in political terminology) to be inclusive and to work towards compromise for the good of all. Certainly the current Republican and Democratic parties can’t claim those attributes.

I can see names such as the America First party or the American People’s Party for this centrist new party. And, I can see the possibility of defections by legislative members from both of the extremist parties, as legislators whose beliefs and values reject being forced to toe the line of dogma that both of the traditional parties have adopted.

The interesting thing is that it would take only a very small number of defections or outright wins by centrist candidates to change the balance of power in Washington and force compromise and change. A big part of that change would be the need to negotiate, to compromise, to reach out to others to get anything at all done. Imagine if you will a Senate split 47-48, with5 new members of the centrist party or Congress with a relatively even split and 15-20 centrist party members. The only way to get things done would be with the help of the centrists or with a few defections by traditional party members with a center-leaning bent. Things would change.

As long as we’re imagining things, we might as well tackle how this scenario could happen. The main hold that the political parties have on candidate members is money (no surprise in that). So, now imagine that someone like Warren Buffet, or Bill Gates or some other Bazillionaire decides that enough is enough. Remember that Ross Perot took this route when he ran as a third party candidate. Now suppose that one or two or more of these superrich people decided that enough is enough and decided to provide the seed funding for a new centrist party. A billion here and a billion there and pretty soon you have real money and with it a real chance to elect those 4-5 Senators and 10 – 20 Congressmen.

If that happened, I suspect that this would become the proverbial snowball rolling downhill, gaining momentum through traditional party defections and continued election successes. Remember t6hat it doesn’t really take that many to break the hold that the traditional parties have on the legislative process. Changing the ingrained, old-boy rules that prevail in the Senate and House would take longer, but what counts is that the votes still need to be counted and add up to majorities to get legislation passed. As soon as you take away the purse-strings as a control mechanism things change.

So there you have it. A modest proposal in this new year to change things, We won’t need to “throw the bums out”, at least not all of them – just don’t elect any new bums on either side. Instead let’s elect people who care more about getting this country going again than testing the religious beliefs of opponents or challenging everyone’s belief in capitalism.

FInd your confidence...

2011-12-23T08:29:00.000-05:00

“All we need is confidence.” (Charlie Brown). I like this little saying that was on the Jack’s Winning Words Blog on Thursday.

If there’s one thing that holds back many new agents it’s the lack of confidence in themselves. They tend to get into the mindset that they’ll make a fool of themselves in front of potential customers if they don’t know everything. So, that lack of confidence paralyzes them into inactivity.

In my mentoring role for new agents in our office, I try to help them see a way out of this dilemma by having them develop presentations (listing or new buyer) that focus more upon the strength of the company that they work for and the support team that is standing behind them. I get them to understand that it’s OK to say “I don’t know, but I’ll find out” and to explain how our company team supports new agents. It is relatively easy to turn what might have been an uncomfortable negative situation into a strength that actually benefits the client.

So the thing to do, especially when just getting started in the business, is to focus the client upon the strength of the company that you are a part of rather then just on your individual skills or experience. If you have confidence in your company and the people available to support you and answer questions for you, that confidence will show through in your presentations in front of clients. If you find that you really don’t have that support structure in your company, maybe you’re in the wrong company.

Happy Holidays to all!

There's good news and bad news in the chart...

2011-12-14T21:17:00.000-05:00

It's feels like the market is comng back in the Milford, Michigan market area and there are statstics to prove that. When I recently went to the Altos Research site to look at the charts that they create for the markets that they track, I got the following chart for median home sale values and inventory for Milford Township and Village combined -

It's pretty easy to see that there is good news and bad news in this chart and that perhaps one is actually causing the other.

The bad news is that inventory has fallen off a cliff. People just aren't listing right now, mainly because so many are so far underwater on their mortgages.

As a result, there's good news - median home prices for homes that have sold are soaring. It's a classic supply and demand situation. The demand for homes in the Milford community remains strong, but there are few to choose from, so the few good ones that are on the market are getting bid up.

That's good news if you've been waiting to sell. Values won't recover all of the lost 30-40% that they lost over the last 3-4 years; however, they have started a nice recovery and they are headed in the right direction. If you have a nice home, in good condition, now is a great time to list. There is obviously less competition and there will not be continued downward price pressure. In fact, you may end up on the winning end of a bidding war situation.

Just in the statistics that I track at http://www.movetomilford.com, I can see the turn around. Prices in the Milford market were down below $90/Sq Ft for a while. Now they are back near $100/Sq Ft. That's still a far cry from the $140/Sq Ft average during the peak, but gettign closer to the long term average that we had achieved befoer the market overheated. A steady-state market in the $105 - $125/Sq Ft range is within reason and probably sustainable in this area.

Hope for Help in HARP 2.0

2011-12-14T07:58:00.000-05:00

I suppose I’m a little like Linus sitting in the pumpkin patch on Halloween nioght awaiting the coming of The Great Pumpkin; however, I still have hope that at least one Federal program might end up doing some good for the housing industry – perhaps HARP 2.0.

The original Home Affordable Refinance Program, aka. HARP 1 – was a failure mainly because it failed to recognize the severity of the problem and had too many built in restrictions that limited the number of underwater homeowners who could qualify. HARP 2.0 lowered or removed those bars and should end up helping more homeowners. At least that’s the goal.

The major idea is to let homeowners who’s home values have sunk below what they owe on their old mortgages refinance with new loans at lower rates, even if the home wouldn’t appraise at the loan value in today’s market. In fact, the house won’t even ned to be re-appraised. The keys to the program are demonstrating the ability to continue to pay the new mortgage. You’ll note the “continue to pay” phrase. HARP 2.0 is aimed at people who have kept their current mortgages current, not those who are behind and headed for foreclosure. HARP 2.0 hopes to prevent foreclosures by providing some payment relief to those who have struggled but kept up payments, so far.

One key component to HARP 2.0 is that the mortgage on your house must be owned or guaranteed by Fannie Mae or Freddie Mac, which covers the majority of U.S. mortgages. Even if you send your money to another company called the ”mortgage servicer”, Fannie or Freddie may be in the background for your mortgage. To find out if your home qualifies, you can to go their Web sites – http://www.fanniemae.com/laonlookup/ or http://www.freddiemac.com/mymortgage/ and look up your address.

The program should be available now through most mortgage companies, so check with your preferred lender. If they aren’t supporting the program, check with a different lender.

So, maybe it’s not the Great Pumpkin after all; but, maybe it will help keep a few more homeowners who are struggling in this weak economy in their homes.

Taken’ it to the max in Texas…

2011-12-07T07:54:00.001-05:00

You gotta love this story out of Tarrant County, Texas, as relesed by The Associated Press and rehashed in the Daily Realtor Magazine news feed.

Squatters in Texas are taking advantage of a loophole in state laws in Texas to move into $Million+ mansions. According to the story written by Yamil Berard which appeared on the Star-Telegram Web site on December 4, Texas state law allows squatters to claim property if no owner is around to challenge them. Texas squatters are apparently targeting vacant properties where owners have died or home owners are away because of a job or even illness. The story referrenced one incident in Houston, in which squatters threw away the owner’s belongings in a commercial garbage bin and moved in while the home owner was having chemotherapy (probably in a hospital).

According to the article. the laws in Texas allow a person to file a claim of adverse possession on the properties with the county clerk., much as one might do on a piece of disputed land or right-of-way in most states. The filing fee is a modest $16 and the filer must sign a pledge to keep the place up to pay property taxes and to live there for at least three years. Heck, why not, it's free!

Perhaps Texas, rather than California, is leading the nation this time on the housing front. What a great opportunity to solve the homelessness problem. Basically, if ever state had laws like Texas, the homeless could not only find housing, but they could live in the lap of luxury by squatting in vacant mansions.
Of course, we’d likely have to change the real estate model a bit. Maybe we could become “spotters” for vacant properties for some sort of fee. We’d have a list of homeless people (or maybe just people looking for a move up the real estate ladder) that we could keep an eye out for vacant homes. Apparently in Texas the owners don’t have to be gone that long, just gone and not around to contest the occupancy of their property. So, we could be on the look-out for people going on vacation and, BAM! We move a new family right into the house while they are vacationing on a cruise.

You’ve got to love the state that gave us George W. Bush and, now Rick Perry. In this case they are so far ahead of the rest of us in solving the housing problem for all Americans. Heck, this would even let us recapture the glory days of the early 2000’s – no money, no job, no problem, let us find you a place to squat. We could even run ads modeled upon the Publishers Clearing House ads - "Be on the lookout for the Squat Patrol coming to your neighborhood soon."

An idea that is finally catching on...

2011-12-04T08:08:00.000-05:00

I noted this week, with some amusement, that Realty Times featured an article by Tanya Marchiol, who is said to be a real estate investing guru, which espoused the same Principal Reduction solution that I've been writing about for some time. Perhaps the idea will gain traction, now that a guru is behind it, too.

Tanya does a good job of explaining why investors should be jumping on the Principal Reduction bandwagon and why the banks and other mortgage servicers are holding them back. It's all about the money involved - the fees that the servicers are charging, which is much more if they can ride a property into foreclosure than they would be if the loan were redone to include a principal reduction or even in a short sale. She also re-stated a point that I made in my earlier posts that the banks can certainly afford to take the accounting hits on these underwater loans.

Until this issue is addressed we will continue to have a slow (in some placed stalled) real estate market. The people out at the end of these bad mortgages are the only ones in the chain who can't afford to take the financial hit. So, they are holding on to underwater properties, locked into place by the very mortgage products that were made to look, oh, so attractive a few years back.

Tanya did note that the lack of action in Washington towards this solution is also driven by money - campaign contributions to the major parties and politicians - to guarantee that nothing is done to endanger those fees. It will likely take an uprising of the people even larger that the Occupy Wall Street movement to ween our politicians from the teats of the big money banks.

Fund raisers for a unique food pantry…

2011-11-23T09:34:00.000-05:00

This is a time of the year when there are numerous fund raising activities going on. There are a couple of fundraising activities in the local Huron Valley area that are particularly worthy of note because of the unique charity that they support.

Our area, like most areas in the country these days, has quite a few families who are dealing with hardship and are unable to properly feed the family. We are blessed to have the Community Sharing Outreach Center Food Pantry in Highland to help those families with free food. Carolyn and I always ask the attendees at our annual Real Estate One Christmas party to bring food to donate to the Food Pantry and always have several bags to take in after the party.

Some time ago the people at Community Sharing noticed that some of their supported families were sharing what little they had with their family pets, because they couldn’t afford to feed them either. So, the Community Sharing people started a Pet Food Pantry, which they believe is unique in MIchigan and maybe in the country. Local vets and pet owners in the community immediately began supporting the effort to help feed family pets. Peter Barnes and Julie Hass, owners of Veterinary Care Specialists became especially committed to seeing this effort succeed and have spearheaded a couple of local fund raising efforts.

A committee was formed to create a calendar for 2012 that features the pets of local business owners, each of whom donated to have their pets featured in the calendar. Carlos Allison of The Digital Document Store in Milford donated the printing of the calendar and several merchants agreed to carry the calendar. All of the proceeds from the sale of the calendar go directly to support the Community Sharing Pet Food Pantry. Calendars are $6 each or $5 apiece for 10 or more.

The next fund raiser is upcoming – getting your pet’s picture taken with Santa. This event will be held on Dec 3rd and the 10th at the Pettibone Creek Powerhouse, aka. the Milford Powerhouse, at 225 West Liberty St in Milford (Google Map that, so you can find it). This event is also sponsored by Veterinary Care Specialists and supported by Friends of the Powerhouse. For a donation of pet food or cash, you’ll get a nice picture of your pet with Santa and the digital file of that picture. You can take that picture file to The Digital Document Store (DDS) in Milford and they’ll turn it into Christmas cards for you to send out. DDS owner, Carlos Allison, will donate 10% of the proceeds from each specially priced card printing order to the Pet Food Pantry.

To find out more about the Pet Calendar and the Santa Paws pictures with Santa event

s, visit my web site – http://www.movetomilford.com/ – and click on the pictures for both on the right hand side of the home page.

If you’d like to support this worthy and unique cause, please send donations to Community Sharing Outreach Center, PO Box 405, Highland, Michigan 48357. Let them know if your donation is for the Pet Food Pantry only and let them know that you heard about it here and/or on my Move to Milford web site. If you are local, buy a calendar at any of these locations and then plan on getting your pet’s picture taken with Santa on the 3rd or 19th of December – it’s fun and supports a great cause.

Try a little empathy...

2011-11-21T10:44:00.000-05:00

“Wise sayings often fall on barren ground, but a kind word is never thrown away.” (Sir Arthur Help) from the Jack’s Winning Words Blog.

How often have you heard a Realtor spout off about their real estate knowledge and experience when all that the would-be seller is looking for at the time is a kind word about the situation that is forcing the sale?

In today’s market, in many parts of the country, expressing some empathy and sympathy with short sellers or foreclosed clients is more helpful than spouting off a list of certifications and experience with distressed sales. The Realtor will get the chance to prove the value of that training later. For the moment, trying a little understanding and kindness when dealing with these situations seems to be the better approach.

Let’s face it, these sales are almost always off on the wrong foot already; and, statistically, the prospect for actually making the short sale before the place is foreclosed is below 50%. A long, frustrating process lies ahead, so taking the time on the front-end to establish a relationship based upon understanding and empathy is a much better start. The seller not only needs someone to sell their house, they often need someone to commiserate with, too.

In fact, many of the calls that I get about these situations result in only the one meeting. We determine during that meeting if trying a short-sale is even worth the effort. Sometimes things are too far gone and the fporeclosure process is already well underway. In those cases, having a good cry and then facing up to the need to move on when the foreclosure process has run its course is the best that the owner can do. Whether the owner can proceed to try a short-sale or not, having a meeting with a Realtor and getting a good assessment of their situation is worthwhile. At least they will have a better understanding of the process that they are facing and the options that they may still have.

So, give me a call. We'll meet. We'll talk. We may have a good cry. Maybe we'll pray about it. In the end, you'll know where you stand, what your options are, and that someone else cares.

Nibbling at the bullet and letting Citigroup off the hook…

2011-11-16T08:00:00.000-05:00

The new HARP 2.0 rules that go into effect soon are certainly helpful for many homeowners who wan to stay in their homes, but who would like to refinance at current low mortgage rates; however, they do little to actually stimulate the housing market. The big bullet that is yet to be bitten is getting the banks to swallow the lost housing equity in this market and free up more homes for sale.

I’ve seen a number of proposals that hinge on getting the government more involved in the process. Most of them have the government ending up owning the homes temporarily and then eating the losses. To my way of thinking this is just a way to disguise yet another bailout of the big banks. They got themselves into this mess with their loose (some might even say reckless) mortgage lending practices and their greedy practices of monetizing the loans in pools of investment bonds. They need to feel the pain of those mistakes, perhaps by cutting out the outrageous bonuses that they hand out to the very clowns that got them into the mess in the first place.

I read yesterday in this week’s Bloomberg Businessweek that Citigroup has recently been handed yet another sweetheart settlement deal by the SEC regulators. Citigroup agreed to a settlement of $285 Million in an SEC complaint that they knowingly created and sold to investors a complex financial instrument based loosely upon earlier Citigroup mortgage pool bonds. Basically it was a bet on a bet. The thing that the SEC alleged is that the Citigroup people not only knew that this was a sucker bet (it was designed to fail), but they also put their money on the failure – they bet against their own investment. Of course it did fail; however, from the fees and winning bet on its failure Citigroup made as much as $700 Million.

If true (which Citigroup did not have to admit in the sweetheart deal with the SEC) I’d certainly like to know where this betting window is. It’s like being able to enter a nag in the Kentucky Derby, talking up its chances to drive up the betting line, betting against it and winning big when the nag loses. So what if you get fined $285 Million, if you made $700 Million? That is, after all, capitalism at its finest.

How are these things related? Well they both have home mortgages at their core. Both illustrate the government casting about for answers or direction, yet unwilling to take on the corporate corruption that is at the center of much of the mess that we are in. Government at its most basic level is supposed to represent the governed – the people. Our system has devolved to the point where it represents those who can afford to buy the attention of the politicians – special interest groups (who most often bully rather than buy that attention) and wealthy corporations. They are too big to fail or too loud to ignore. In either case their voices and demands most often drown out the voices of regular people.

Given the place where we are at right now, there is little hope that real solutions to the current housing crisis are forthcoming from Washington. Instead, we will likely see the slow process of correction play out in the form of continued high foreclosure rates and short sales. The only group that apparently is not too big to allow to fail in the eyes of our politicians is that group mentioned in the front of the U.S. Constitution, “We the people…”

How does life strike you?

2011-11-14T15:25:00.000-05:00

“Happiness depends more on how life strikes you than on what happens.” (Andy Rooney) from the Jack’s Winning Words blog.

I liked Andy Rooney, even if he was considered to be a curmudgeon; and I certainly agree with this quote from him. Stuff happens, some of it good and some of it bad; and, it’s how you perceive things (how it strikes you) that makes the difference in life. If you are the laid-back type, who can role with the punches that life doles out; you’ll probably be around to see many more of them that the type that fights and rants and rages at every adversity.

My wife and I kid all the time about me being a laid back kind of guy (which I am not). Just her poking me about a rant that I might be on helps me stop and relax a bit and see the humor in the situation. Sometimes you have to look really hard to see any good or humor in a particular situation. And sometimes the most humorous thing to see is yourself on a rant about something meaningless that you can’t change anyway.

As I get older I’m getting better at controlling my reactions to things that I can’t control anyway. Perhaps that is one of the secrets of life or at least of prolonging life. So, be happy and see the humor in life.

Entering the slow season off a lull...

2011-11-07T07:27:00.000-05:00

Recently, the NAR chief economist, Lawrence Yun, said the housing market is being excessively constrained. “A combination of weak consumer confidence and continuing tight lending criteria held back home buyers…” Yun was commenting on the reports that pending homes sale declined in September, down 4.6 percent from the month prior, even though they are up year-over-year as compared to September of 2010.

The report indicated that the largest decline was seen in the Midwest, which fell 6.2 percent for the month. The South and Northeast were a close second and third, falling 5.5 and 4.7, respectively. The West held up the best in pending sales for September, declining only 2.1 percent.

Yun cited the usual suspects – tight lending practices and buyer fears about the economy – as well as the confusing U.S. monetary policies and Fed actions that have actually served to hurt the market by lowering the lending limits before jumbo rates are imposed.

Finally, and certainly no surprise, he cited uncertainty about employment and the stubbornly high unemployment rate as another factor. The old “no job, no problem” lending days are long gone, seemingly replaced by the new attitude of lenders – “good job, so what – show me the money.” Lenders are demanding higher down payments and certainly much more documentation about a buyer’s wherewithal.

One thing that he didn’t cite is that the seller side is contributing to the problem, too. So many homeowners are underwater that the normal flow of homes into the inventory pool from people who want to move has just about dried up (at least in this area). These are people who would normally be selling to downsize in retirement or perhaps selling to take a new job or maybe even selling to move up the housing ladder. They are all stuck right now; so, they are selling or buying. The lack of good, move-in-ready inventory from those types of sellers is also restricting the market by giving would-be buyers much less to choose from.

The Fed seems to be casting about looking for ways to help get the housing market re-energized, but to little avail so far. A part of the reason is that they are also trying to keep their buddies in the banking industry whole. Remember that these are the clowns who created the free-lending environment and the monetized pools of mortgages that helped precipitate the housing bubble and subsequent crash. Just about everything from raw bail outs to new lending programs are still designed to protect those same bankers/investors. After all, they make the big campaign contributions and as John Arbuckle used to say, “You get what you pay for.”

One simple way to kick start the housing market, and likely help the economy overall in the long run, would be to force the banks/investors to write down the lost value of the loans that they are holding and refinance at the current value. Right now they are holding those loans on their books as assets at the old value of the loan. That equity value is gone for them and the homeowners involved.

Currently it’s a standoff between the homeowners and the banks to see who blinks first. Most of the time it’s the homeowner who blinks, because he either has to sell or can’t afford to service the loan at the old value. Only then does the bank “recognize the loss”, which is has known about all along. There are avenues available through regulations or changes in accounting practices that could force the banks to recognize those losses now and let everyone get on with life. Would that be painful? Yes. Does it have to be catastrophic? No. There are ways through bank capital requirements policy and federal tax policy that those losses could be softened for the banks. Yes, they would still be losses and the banks are fighting to avoid that with all of their lobbying money.

So, as we enter the Holiday season, which generally signals a slowdown in real estate business, we are faced with another season where a lump of coal is al lthat is slated to show up in our stockings. It doesn’t have to be that way, but first we’ve got to get mean old Mr. Scrooge (the banks) turned around somehow. Anybody know any good ghosts?

October is in the books...

2011-11-02T08:12:00.000-04:00

I finalized the local area sales report for October last night and published the figures on my Web site www.movetomilford.com , so another month in 2011 is in the books. It “felt” like October was dong a little better as we were going through it, so I decided to look back and see how it compared to September of this year and also compare it to October of 2010. I would look at August numbers too, except that August is a “last minute rush” sales month as people try to get into houses before school starts.

The sales for three of the townships that I track were as follows:

Milford –

October 2011:

20 sales (45% distressed), with an average sale price of $180,990, at an average price of $85/Sq Ft

September 2011:

14 sales (43% distressed), with an average sale price of $174,815, at an average price of $93/Sq Ft

October 2010:

14 sales (36% distressed), with an average sale price of $188,366, at an average price of $86/Sq Ft

I didn’t keep the same statistics back before 2010; however, I did keep enough to be able to discern the number of sales in Milford in October for the last few years – 19 sales in 2009, 18 in 2008 and 11 in 2007.

So, perhaps the feeling that things are getting better has merit. Sales are up in Milford, even if a significant portion of them involve distressed homes. That is just an unfortunate fact of life these days.

Highland –

October 2011:

20 sales (50% distressed), with an average sale price of $160,303, at an average of $78/Sq Ft

September 2011:

32 sales (37% distressed), with an average sale price of $180,575, at an average of $91/Sq Ft.

October 2010:

11 sales (55% distressed), with an average sale price of $114,036, at an average price of $81/Sq Ft

So, Highland is doing significantly better than last year; although sales were down a bit from September of this year.

Commerce –

October 2011:

33 sales (52% distressed), with an average sale price of $172,916, at an average price of $84/Sq Ft.

September 2011:

44 sales (42% distressed), with an average sale price of $203,000, at an average of $98/Sq Ft

October 2010:

29 sales (45% distressed), with an average sale price of $187,220, at and average of $74/Sq Ft.

So sales cooled a bit in Commerce Township from September to October for this year, but did better year over year as compared to last year.

To see all of the statistics for these and the other 6 townships that I track, go to my Move to Milford web site and click on the “What has sold in the area” choice.

Although the statistics that I tracked changed over the years, there is sales data there going back 4 years for some of the markets.

New feature - follow by email

2011-10-31T12:10:00.000-04:00

I've received many requests for an easy way to follow this blog, so I added a "Follow by Email" gadget at the top of the blog. As I understand it, once you click on that you'll be asked for an email address and you should start receiving emails whenever I post a new blog entry. I hope this helps those who want to follow along my life's journey in real estate (and other things in my life).

Now, I'll have to come up with some more intersting topics to write about. Today I also received notice of a new Blog by the Capital Title folks which I've signed up for at - http://www.titleexperts.blogspot.com/

This should be a good source of information about real estate title issues and the changing face of real estate from that perspective.

By the way, I'll be posting the sales statistics for October for the 9 township markets that I track on my MoveToMilford Web site tomorrow. I actual already have it updated through Sunday, but with today being the last day of the month, I expect that there will be a flurry of closing activity today, which I'll add in tomorrow.

Here's a little bit that I wrote for my paper-based newsletter -

We appear to be experiencing what someone has dubbed to be a “Catfish Recovery” in the local housing market. We are bouncing along the bottom—up one week and down the next—however the general trend is in the upward direction.

A recent market study of the Village of Milford market for starter homes, done by local appraiser Glen Betts of 1st In Michigan Real Estate Appraisal Services—http://www.1stinmichigan.com/ looked at the sales data for starter homes in the Village over the last five years. What Glen’s research showed is a market that has had almost monthly ups and downs, but which has been on an upward trajectory since January of 2009.

You may recall that January of 2009 is the month that the First Time Buyer Tax Credit expired. It is also the month in which the bottom dropped out of the market for the last time in this recession. It was the low point, at least for the Village of Milford starter home market. Since that time the market has bumped up and down but always following a fairly traditional overall appreciation curve.

Thanks to Glen for his research on this and his study report. You can see his study at my http://www.movetomilford.com/ web site, under the Local Real Estate Statistics choice. His study confirms what we’ve been seeing in the market—ups and downs in the local townships markets, but generally trending in an upward direction. It may be an ugly recovery, but it’s a start back.

Investing in Detroit

2011-10-27T14:19:00.000-04:00

The city of Detroit is ripe with opportunity. A current and momentary lack of liquidity in the mortgage market has created unprecedented market conditions. Investors are dictating acquisition prices while rent levels stay constant. The result of these factors is above average rental yields with the potential for long term capital appreciation. One can acquire a fully renovated property in this market for 25% of what it once traded for. A well informed investor will understand the phenomenal opportunity in this market because of a unified and strategic effort of revitalization of key neighborhoods by the city, state, and federal governments.

In Detroit's heyday it was second only to New York in terms of population growth, wealth, etc. Its infrastructure was built for a population at that time of 2MM people. There are only 800,000 people living in Detroit at this time. The population has slowly gravitated towards more stable neighborhood "pockets" however there are still many people who are living in areas where homes are boarded up, burnt out, or falling down. These are homes that were thrown up because of the city's significant growth in a short period of time due to an economy fueled by the automotive and manufacturing sectors creating a boom period in the areas like Detroit. Many of these "shotgun" homes were stick built; frame styled and only built to last 50 years or so. They are not viable anymore. These are the homes that you can find on an internet auction for $1k. Not worth buying though.

Many banks and institutional organizations who have been forced to become property owners do not see the differences in stable areas and not so stable areas. They see an address on a balance sheet and “write-off” great homes because of negative perceptions based on zip codes. By taking advantage of what you could say is a glitch in the banking world's accounting and strategically acquiring in the best neighborhoods, you are in essence insuring future capital appreciation because as the city's infrastructure shrinks around certain core neighborhoods, the values in the areas will only appreciate.

One company that is taking the lead in this area of investing in Detroit is Precise - Properties of Detroit. Visit their web site for more information about their investment programs for Detroit real estate.

MIchigan Treasurer says Fannie and Freddie must pay...

2011-10-26T08:01:00.000-04:00

In Michigan , as I’m sure may be the case in many other states, the GSE’s Fannie Mae and Freddie Mac were exempt from paying some of the local taxes imposed by counties on the transfer of real estate properties. The GSE’s claimed the exemption under the widely held theory that Federal Governmental bodies cannot be subjected to local taxes.
In a recent ruling, the Michigan Department of Treasury was asked by certain registers of deeds whether particular entities, such as Fannie Mae, were subject to the county and state real estate transfer tax. On October 4, 2011, the Treasury advised the Emmet County Register of Deeds that the answer was yes – Fannie Mae and Freddie Mac, as sellers of real estate in Michigan, must pay county and state transfer tax.

Apparently, Fannie Mae and Freddie Mac had previously avoided paying both county and state transfer tax relying on an exemption in both those statutes for “written instruments which this state is prohibited from taxing under the constitution or statutes of the United States.” In its letter, Treasury indicated that federal law generally prohibits the taxation of these entities by state and local governments. However, Treasury has concluded that the real estate transfer tax is not a tax on real property, but instead is an excise tax on the instrument that is being recorded. Thus, the Treasury concludes that government sponsored entities, such as Fannie Mae and Freddie Mac are not exempt from real estate transfer tax.

The law provides that a seller is responsible for payment of county and state transfer taxes. However, a seller can contractually agree to have a buyer assume that obligation. Generally, Fannie Mae and Freddie Mac use addendums which impose all liability for transfer tax on buyers. Thus, in pending purchases for Fannie Mae and Freddie Mac, buyers most likely will now need to deal with a new obligation, i.e., payment of county and state transfer tax as reflected on the HUD-1.

This ruling does not apply to HUD, so sales of HUD-owned hoes will still be exempt from paying the transfer taxes.

Does every deal have to be a struggle?

2011-10-20T11:08:00.000-04:00

I was so happy 45 days ago to finally get a “regular sale”, a sale that I even thought would be an easy sale. I have a buyer who has a great credit score and who is putting about ½ down on the property and I still am have headaches getting this sale through the ubiquitous and mysterious “underwriters.” I’m not even sure that we’ll close next week as planned.

What has happened to make this process so hard that even good buyers on good sales of good properties is a major pain in the behind? I know it drives the loan officers mad too and they end up tearing out their hair trying to meet all of the requirements of the dreaded underwriters. Underwriters must belong to the same secret society as the oft sited “investor” that sits behind the scenes in short sales and foreclosures.

I keep getting the story that all of the banks have dramatically increased the documentation requirements and have instituted multiple layers of review for everything. They have turned a process that a couple of years back could have been accomplished in 15-30 days into a 45-60 day nightmare. OK, so maybe mistakes made during the 15-30 day era also led to the home value meltdown debacle; however, that is no reason to clamp down so tight that would-be borrowers are strangled out of the market.

I suspect that part of the problem is educational – both for real estate reps and home buyers. Neither group has received much information about the new rules and requirements, so both are still operating under old assumptions about the process and the timetables involved. However, a bigger issue may be that the process has shifted from being customer service oriented (towards the borrower) to being protect-the-investor-at-all-costs oriented. Underlying all of that is an unspoken “buyer be damned” attitude. Apparently all buyers are now viewed as untrustworthy by the underwriters. If they have cash for a down payment they have to prove that it’s not from some money laundering scheme or, heaven forbid, a gift from mom or dad.

The new reality is apparently that 60 days is the new 30 days for non-distressed sales. For distressed sales – foreclosures and short sales – we all pretty much know that there are no rules – it could be 90 days, it could be 9 months. Patience beyond that required for Sainthood is the norm for them.

Like any system that is still seeking a new equilibrium, the mortgage process has now overshot on the over cautious side and needs to come back towards some middle ground. That may not require abandoning any of the new documentation requirements, those are probably a good thing; however, the review and approval and move the paperwork along parts of the process need some attention, as does the lack of transparency in the entire process. It seems to me that he underwriters also need to be refocused upon customer service to the borrowers and not just concern for the interests of the investor.
We need a process for regular sales that is more transparent, easier to understand and explain and closer to the old 30 days to close model. Otherwise, the underwriters are going to evolve to be the undertakers of our business.

Old institutions and ideas in our lives dying out...

2011-10-16T20:30:00.000-04:00

It seems that all around us things that we (or at least I) grew up with and thought would last are withering away, losing influence or in some cases disappearing altogether. This includes institutions like the U.S. Postal Service and the original Big-3s of our youth – GM, Ford and Chrysler in the automotive world and CBS, NBC and ABC – the original Big-3 networks – in the entertainment world. Certainly Borders bookstores come to mind around here, as does the Summit Place Mall in Pontiac and home delivery of newspapers seven days a week.

Some would say that this is just progress – a natural progression of things in life – as new technologies and new lifestyles lead people to different products and different ways of spending their time. I guess that is true. Still one can miss some of the things that are gone or no longer hold sway in our lives. Do I miss the personal interaction with the teller inside the bank to stop using the drive-up or the ATM? I guess not and I seldom think about it any more.

One quaint idea from our past that I miss somewhat is the concept of retirement. I grew up in the era where you worked hard for 30-40-50 years and then you got to retire. They gave you the ceremonial gold watch, had a retirement party for you and off you went into your so-called Golden Years with your pension in hand; your comfort and security guaranteed by the company retirement plan.

Well that sure didn’t work out the way I thought it might. The companies that I worked for most of my career shifted everyone to a lump sum payout retirement plan and then ended up laying most off anyway when they were bought out by other companies that had no retirement plans either. So, now it appears that I’m in a fairly large group of somewhat older Americans for whom the concept of ever retiring is, as Ernie Harwell might have put it, “Long Gone.”

That’s a shame for several reasons, not the lease of which is that older workers having to hang on to their jobs longer means less opportunity for younger workers who are just starting out. It has also impacted the housing industry, with fewer people making the shift to retirement homes and the travel industry as fewer older people have the money to travel as they thought they might when they retired.

I suppose that the good news in all of this is that many older workers didn’t want to retire in the first place. It turned out to be really boring for many and they often returned to the workforce in some capacity after having burned themselves out on endless rounds of golf or on trips to places that didn’t turn out to all that great. I have often heard from really old people who are being interviewed about the secret to their long lives that continuing to work every day was what kept them going. I’ll have to admit that I’d be bored silly if I didn’t have the jobs that keep me occupied right now.

So, I guess I’ll just roll with the punches, jump on as many of the new technology bandwagons as I can and shift my focus from the old media to the new while I continue to get up and go to work everyday. The alternative, it seems to me, is much worse. I guess as life goes on one might be best served by remembering a recent popular motto attributed to the Navy Seals - Deal With It.

In the middle is good…

2011-10-12T08:06:00.000-04:00

I get lots of real estate news feeds. There always seems to be stories about the Top 10 this or that. There’s usually at least one a week about the 10 worst real estate markets and maybe one about the Top-10 real estate recovery markets.

For the longest time the Detroit area market seemed to make every story about dismal markets. Then places in Nevada and California and Florida took over those positions. We haven’t consistently made the Top-10 good markets stories yet; but it feels good to be mired somewhere in the middle and not making as much news anymore.

Like many places, Michigan is seeing an inconsistent market right now. We have townships that are doing well right next to townships that are still seeing far too many short sales and foreclosure sales. Those sales are driving business volume and many companies like the one I work for are reporting strong year-over-year unit volume, albeit with lower dollar volumes in most cases.

Our inventory level is down and still dropping, which is an indicator that too many people are still underwater on their mortgages and don’t feel like they can afford to sell. The low-end category – under $100K – is still the best selling housing category; although the luxury end has held its own, too. Apparently the “trickle-down” economic theories don’t apply to real estate; because our mid-market is virtually frozen.

Still, it’s good to be in the middle and not being the subject of articles and press releases. We actually got some good press in the last Case-Schiller Report, with positive home value growth showing up for the Detroit-area market for first time in years.

Now if we can just get something good going on the jobs front (hint, hint Congress), we seem to be poised for a housing recovery locally. We appear to be in what someone dubbed a “catfish recovery” – bouncing along the bottom of this recession and bottom feeding on distressed home sales. We need to get the fish jumping out of the water again. Until then, being in the middle of the pack is good.

The two faces of a schizophrenic housing industry…

2011-10-09T20:51:00.000-04:00

Four stories in last Friday’s Realtor Magazine Online news feed provided a somewhat schizophrenic view of the housing industry. The first reported that The national Association of Home Builders says that 23 major markets across the US showed improvements improvement in housing permits, employment, and housing prices over the last six months. Great News!

The second story reported that fixed, 30-year mortgage rates are now below 4% - the lowest that they’ve been in years. More good news for housing, right?

Story three however reported that fully 30% of all mortgage apps are being turned down these days. The last story reported (to no one’s surprise) that homeownership is sinking fast and is on a downward pace not seen since the great depression.

Of course, when one reads the stories one finds that housing improvements are taking place in some areas that have had near-death experiences. And even though the rates are low, mortgages are being rejected for reasons such as bad credit or no job – reasons that were not sufficient to reject mortgages just a short while ago. And as for home ownership, the story reports that young unemployed people are the least likely to own a home – well duh!

Home ownership hit its peak at about 70% during the Clinton and Bush years when home ownership programs by both of those Presidents encouraged the lending behavior that eventually led to the housing bubble and the bust. It is now down to 65.1% and falling fast, according to the latest census information.

The biggest issue right now seems to be the falling and/or low inventory in many areas, due in large part to so many current home mortgages being underwater. We are a long way from a balanced market, but not just due to tighter credit. The same would-be sellers who can’t afford to put their homes on the market used to be our move-up buyers or they are the boomers that we expected to be selling, so they could downsize in retirement.

Now those would-be sellers are stuck and even those with real stories of hardship are finding the road to short sales blocked by incompetent and understaffed lenders who are incapable of making simple selling decisions. Adding to the confusion is the back-end mess created by the pooling and selling of mortgages to investors, which could take decades to clear up or get off the books.

So are things good bad or just ugly right now. I’d vote for ugly. It’s a great time to buy a house, if you have a down payment and can get a mortgage and if there is something on the market that you might like. Those are big ifs right now. It’s actually also a good time to sell a house (due to the low inventory) if you aren’t underwater on it. Don’t even think about waiting until next year to see if the lost value will magically come back – it ain’t gonna happen. AS Dr. Phil might say to would be sellers, “It’s time to get real.”

And what about Realtors® in this market? I listen to them at social gatherings telling prospective clients that things are great, that they’ve never been busier. That’s true. Most Realtors in this area are working their tails off, many selling more homes than they’ve ever sold… and making less money at it that they ever made. It’s a schizophrenic business to be in and we’re all lovin’ it and hating it or both.

Thinking beyond the headlines and reading between the lines…

2011-10-06T15:26:00.000-04:00

Today’s Realtor Magazine news feed had four headlines (among others) that caught my attention. On the surface they seem to be innocuous little articles, but when you read the stories and think about what is being said or suggested they bring some further thoughts to mind.

1. Housing Can Be 'Key Engine of Job Growth' – This story is basically about the National Association of Home Builders lamenting the fact that credit has tightened up so much that they aren’t build houses. They are claiming, as one might expect that if the current credit crunch were eased the housing industry might be able to lead the country out of its economic doldrums.

I’m not sure that this isn’t one of those chicken or egg conundrums and is certainly is a view that is way to simplistic. Even if there was credit available to build and maybe even to buy there is still a fear factor hovering over potential buyers that is driven more by job concerns.

It’s prophetic that the story that this Realtor Magazine article is based upon is titled “Do not harm…” and makes the argument that many of the Federal housing and homeowner bailout programs so far have not followed that caution. They have, in fact caused more problems (harm) than they have helped.

2. Bill May Help Home Owners Tap Retirement Accounts – This story really has some really bad possible future consequences that are not pointed out. On the surface it sounds initially like the right thing to do to let people use their retirement savings without a withdrawal penalty, which is its big benefit) to fund their current mortgage obligations. Sounds reasonable initially, but, you don’t have to think about it for long to see that allowing (even encouraging) them to strip retirement accounts now just means that they will be standing there a few years from now, hat in hand, asking what we’re going to do to help them out in retirement. It seems to me that it might be better to encourage distressed homeowners to bite the bullet now and downsize into a situation that they can afford, without decimating what little savings they have.

3. Lawsuit Accuses Banks of Cheating Veterans – This story is about practices that are so wrong on so many levels that these banks ought to have the book thrown at them. It is no surprise that the biggest three mentioned in the story were Bank of America, Chase and Wells Fargo. These are the same big-3 that are front and center in most of the other current cases and law suits over wrong doing and possible fraud.

Perhaps this time they’ve finally dug a hole that they can buy their way out of with political contributions. All 30 of the banks referenced in this investigation need to be punished big-time if these allegations are proven. No wrist slapping this time, get out the big paddle and head for the outhouse.

If there’s one thing that I don’t want to see it’s yet another Senate or Congressional committee hearing were the CEOs of the big banks are dragged in for a public flogging and then walk away whole. That is just political theater designed to give each political hack their 5-10 minutes of TV exposure. It would be appropriate if those hearings are held to just use cardboard cut-outs of the big bank CEOs sitting at the table.

4. More Kids Turn to Parents for Mortgage Help – This bank of mom and dad story would fall into the cute category if it weren’t for the same issue as the Retirement Accounts story above. In this case it’s the kids who are asking mom and dad to strip their savings (many times their retirement savings) so that they can get a house before they can really afford one. Obviously the same issues will eventually come up, except in this case at least mom and dad should be able to move into the nice home that they helped junior or princess buy with their retirement money. Just make sure they get that extra bedroom or in-laws suite.

This is something that retirement planners and financial advisors all usually advise against (unless mom and dad have lots and lots of money). It’s also something that, while well meaning, can add so much tension to the family situation that family breakups might result.

I’ve put the links below to the source stories upon which Realtor Magazine based their articles.

1. Based upon Do no harm…

2. Based upon an article at Housingwire…

3. Based upon a Washington Post article…

4. Based upon an article in USA Today…

OMG another dumb real estate euphemism…

2011-10-01T07:43:00.000-04:00

In the land of euphemisms the new real estate term “Reverse Staging” may rank up there close to the top of the rankings of obfuscous language.
What is reverse staging and how does one do it? Well, it is a polite euphemism for destroying your own house to decrease its value. It basically means that some people de-content their own homes and possibly even cause physical damage to them in an attempt to lower the appraised value for purposes of supporting a short sale.

The reason why people do this is obvious to all, including the banks involved; so it is viewed (correctly) as a form of fraud. The reason why someone in the real estate business decided to come up with this term to somehow make what is happening sound less sinister is less obvious. It’s just people destroying their own homes, just like vandals would. Why call it anything else?
I suppose that one could legally reverse stage one’s own house by substituting lower value light fixtures or making other changes to try to lower the perceived value, without causing damage; however, good appraisers, or good BPO writers, will be able to see past those weak efforts.

So, add yet another obscure term to the real estate lexicon. I guess we need terms like reverse staging to impress the general public that we somehow know and understand things that are going on in real estate better than they do.

Channeling Houdini...

2011-09-30T07:09:00.000-04:00

Well, it seems that my new dog Sadie is channeling Harry Houdini, the great escape artist. She managed to escape and disappear twice yesterday.

The first time she slipped out of her collar while on her dog run and, well, ran. We searched for over two hours and couldn’t find her. That’s because we live in a small town with friendly, helpful and well-meaning people. A lady on her way home from work found her wandering about two blocks from our house in the downtown Milford area and picked her up. The lady took her out to a local vet clinic that is about 4 miles north of town.

I would never have looked out there or thought to call there, but I did finally think to call the local police and asked if they had any lost dog sightings. Sure enough they had, since the vet had called them to report a found dog that fit Sadie’s description. We went to pick her up and had her “chipped” while we were there. Now she has a microchip that most vets have scanners to read. That chip will give them a number that will allow them to contact me. I suspect that this will be money well spent.

So, anyway, I next went out and bought one of those dog halters that look to be much harder to get out of and put it on her. Less than an hour later she slipped out of that while on her overhead run and was off again. This time my wife, while our looking for her, encountered a couple who were driving around looking for her someone who might be missing a dog. They had her in their van. She is so freindly that she'll hop in with anyone. Again she was picked up less than two blocks from home.

Now she has both the halter and a collar, both tightened up snuggly and attached to each other. If I did much more, she’d end up looking like Hannibal Lecter when they transported him from prison in the movie”Silence of the Lambs”. I don’t even know if they make little, doggy straight jackets or not; but, I’m resolved not to end up pushing Sadie around on a furniture dolly like Hannibal.

So, lesson learned today. Sadie is a cutie, but she’s also a hound and hounds like to escape and run away. They aren’t so much running away as just running – on a scent or just out of curiosity. We’ll have to watch her like a hawk when she’s out on her run.

She also showed her true (hound) colors when we encountered a particularly annoying squirrel today on one of our walks. I didn’t know that dogs could climb trees, but she sure tried. It didn’t

help that the squirrel took great sport in coming back down the tree a ways to taunt her. If I thought she’d come back I’d let her off to really chase some of the pesky squirrels that we have around here. I have no dou

bt that she fast enough to catch a few of them.

I guess we’ll need to schedule a few more trips to the bark park to let her run off some of this energy. Like a human baby, she’s at her cutest when she’s curled up asleep on the bed. So, Sadie, Sadie, Pretty Lady is now Sadie, Sadie, Houdini Lady. We can’t trust her anymore, but we can still love her.

Introducing JAMCO 7 – a new program for bank-owned homes

2011-09-29T09:22:00.000-04:00

The market is full of foreclosed homes, many of which are bank owned and in need of repairs, sometimes before they can even be lived in. Until now, the only option for homebuyers was to try to get an FHA 203K loan. The 203K loan program is a great way to get the money needed for home repairs, but it has its own set of issues and fees/costs, plus many buyers just didn’t qualify. Click here to go to the HUD site and read about the 203K loan program. Now there is an alternative to explore if you want to buy a bank-owned house that needs some minor repairs, or maybe a new roof.

Introducing a new John Adams Mortgage program called The JAMCO 7. The JAMCO 7 allows you to close on a bank owned transaction, with John Adams, prior to some repairs being done! The repairs and our re-inspection need to be done within 7 days after closing. A roof, some painting (non lead based paint) and cracked windows are just a few of the items we will allow to be done after closing. John Adams will allow this to be done on FHA and Conventional deals.

There are some restrictions with this program as follows:

1) The buyer would need to put up to 1.5x's the estimated repair amount in escrow (John Adams holds the money). When the repairs are done, we send the appraiser out to verify and reimburse the escrow to the buyer

2) Must be a bank owned property. (No redemption period)

3) FHA and conventional loans only.

4) No VA or MSHDA loans are allowed

5) "Major" repairs are not allowed, including foundation, mold and lead base paint issues.

John Adams underwriters and management holds the right to make the final decision. They have, however, done quite a few of these over the past 12 months and feel very comfortable in what they can, and can't, do. Bank owned homes are still a large part of this market. The JAMCO 7 may help more buyers with financing on homes that they otherwise just couldn’t buy.

In the Milford, Commerce, Highland, White Lake and West Bloomfield areas, call Agnes Miesch of John Adams Mortgage at 248-684-5581for more on this great new program.

If you can dream it, you can do it...

2011-09-28T10:17:00.000-04:00

So, you want to be a Realtor®. Well, you’re in luck. Real Estate One is offering the 40-hour pre-licensing classes in the Brighton/Milford area to meet the classroom requirements by the State of MI to get your real estate license. This training will prepare you to take the Michigan Real Estate License test.
Classes will be October 3, 5, 6 in the Brighton office & October 10, 12, 13 in the Milford office – from 9:00 am to 4:30 pm. There is some flexibility in time for those people who may have to be home to pick up children after school, etc. The cost is $99.00 for the class & $30.00 for the book. The instructor will be Pat Bean, who started her career at Real Estate One. Pat has a high pass-rate for the test for those who have been through her training.
If you are interested and the schedule for these classes fit for you, call Mary Nicole at 1-800-370-5816 for details and to sign up. Call today!

A new member of the family...

2011-09-28T07:02:00.000-04:00

Over the weekend Carolyn and I welcomed a new member to our family here is Milford - Sadie.

We went to the Pet-a-palooza at the Detroit Zoo. We left thinking maybe we'd find a male, lab puppy and came home with a 4 year old, female, German Short Hair Pointer - go figure. Actually she adopted us, or at least Carolyn, while we were looking around.

Sadie (our name for her) is a real sweetheart. She's basically pretty laid-back, but he does have lots of energy, which means lots of walks each day. I'll definitely get my exercise with her. We've taken her to the bark park a coupe of times and let her run. She runs herself out eventually and then sleeps really well that night.

Being a hound, she can be a hand full to walk. She's constantly finding scents to track or seeing squirrels that need to be reminded that they should be up in the trees. I got one of the new head halter leads for her and that solved the pulling issues immediately. I highly recommend them.

So, say hello to Sadie; the newest member of our little Milford family.

A wonderful trip to Canada...

2011-09-22T11:43:00.000-04:00

My wife and I went to The Stratford Festival Theater on Tuesday for a matinee performance of Camelot and then spent the night in Woodstock. What a nice day. Stratford is a delightful little town about 20-30 minutes northeast of London, Ontario. The Stratford Festival is an annual series of plays – featuring the plays of Shakespeare and other plays. There are three theaters in Stratford, with varied play bills. The Stratford Festival repertory company is purportedly the largest permanent repertory company in the world.

The Festival Theater that we went to is set is a beautiful park and we resolved to bring a picnic lunch the next time that we come. It is an easy 4 hour drive from Milford, with only a few construction detours, mostly in Canada. We didn’t have time on this trip to spend time downtown in Stratford, but a quick drive-thru showed us that there appear to be lots of cute shops and restaurants, so that’s another thing on the to-do list for next time.

I can certainly recommend this as a great day trip. The season is almost over for this year, but next year we plan to go back to see several plays. There were bus-loads of seniors at the matinee, I suspect for the same reason as we chose it – it’s easier to stay awake for a matinee performance than for one at night. I also wanted to have daylight to drive to Woodstock in, since we were going cross country on back roads to get there. I’d have gotten lost for sure if it was dark.

One frustration for me was the consequence of me buying a cheap GPS years ago. The GPS that I have doesn’t work in Canada or at least I couldn’t figure it out. Apparently I only bought the maps for the U.S. Live and learn. I could have used my smart phone GPS, but the roaming charges in data mode add up quickly, so I had printed off a bunch of Google maps at home and used them. They worked fine.

The only complaint that I have about the Canadian experience is that I think I got ripped off at a gas station – the attendant charged me 10% to do the money exchange of my $20 US, turning it into $18 Canadian. The rate that we hit elsewhere was very close to a 1 to 1 ratio. I guess there those types of crooks in every country.

What a great weekend in Milford...

2011-09-19T08:06:00.000-04:00

This past weekend was sort of a last Hurrah for Summer in Milford, Michigan. We had something for everybody going on over the weekend.

On Saturday and Sunday the 2011 Milford Home Tour provided access to five of our Village homes (four of them historic homes), plus visits to the Milford Historical Museum and the Log Cabin was open next to the fire station, with a display of how the original settlers lived in Milford. The Pettibone Creek Powerhouse was also open for tours visits both days and the Friends of Oak Grove Cemetery provided a cell phone based walking tour of the homes of some of Milford’s Civil war heroes, all of whom are buried in Oak Grove Cemetery.

Saturday evening the Milford Downtown Development Authority (DDA) held a reception in Center Street Park to launch the installation of several Detroit Institute of Arts (DIA) Old Masters art reproductions in locations around Milford. The DIA will leave the reproductions on display for a while and people may order reproductions for their homes at several locations around Milford. The DDA reception featured wine and food samples from Milford’s fine restaurants and a walking tour of the installation sites – all in downtown Milford. You can come take the walking tour of the DIA sites anytime for the next couple of months.

Then on Sunday, with all of the events mentioned above still gong on, there was the Tractor Show out at the Huron Valley State Bank and the huge Milford Car Show, which took up all of Main Street all the way through town. Awards were presented for cars voted best in several categories and for best in show. In addition the Rotary held their annual Duck Race fund raiser, with over a thousand little yellow rubber ducks racing down the Huron River. Prizes were awarded to duck ticket holders for the first few ducks to complete the race. My ducks must have pulled a hamstring or something – they finished out of the money.

So it was a great weekend in Milford, Michigan, with something for everyone to do. Start planning now to be a part of this great tradition next year. We’re already starting to plan for next year’s events. So, come on out to Milford and see why it is one of the greatest places in Michigan to live. I’ll even find you a new home while you are there.

A service worth looking into…

2011-09-15T14:43:00.001-04:00

I hear about all sorts of services these says, some of which don’t make much sense to me or which seem to be pretty poor candidates for business success – the pooper scooper people come immediately to mind in that latter category. I mean, I know that people are busy these days, but give me break on that one. Do enough people really need someone to come to their home to scoop up pet poop to make that a viable business model? Maybe, maybe not.

I recently had a nice sit-down with a lady in one of my Chamber of Commerce groups that is with a nationwide outfit called The Fiscal Concierge, LLC. Their motto, “Live your life…We’ll pay the bills”, gives a fairly straightforward and easy to understand explanation about a key part of what they actually do for people and businesses. Basically they take over the responsibility of tracking and paying the monthly bills (the accounts payable) for people and businesses. In addition, for small to medium businesses, they also offer payroll services.

As I discussed this service with Debbie Stroup, the local rep for The Fiscal Concierge (click on the name to go to their corporate web site) it became clear why the family caregivers for an older person might want to use this service to make sure that bills get paid on time. The caregiver role can be overwhelming and taking this duty off of their plate helps immensely. It also makes sense for active seniors who might be off fulfilling life long dreams of travel not to have to worry about the bills going unpaid back home.

Unlike having automated bill paying set up through a bank, this concierge service pays all of your bills, not just those that offer automated payment and the concierge assigned monitors your bank account to make sure that there is enough money in the account to make the payments. Your concierge takes action to alert you or your caregivers when additional funds may need to be transferred into your account to cover the bills.

In addition Debbie mentioned that users of this service receive free identity theft protection from Lifelock (click here for more on the Lifelock identity protection services). These services end up providing great peace of mind to either group of seniors (and caregivers). Identity theft is a huge problem for all and especially for seniors.

Debbie also explained that many small to medium sized businesses find their Accounts Payable service to be a God-send and go on to also use their payroll services, which they offer through ADP Payroll. Small business owners have enough o worry about without having to spend time dealing with accounts payable and payroll issues. Maintaining a good record for making on-time payments is key to establishing the credit worthiness of any business. The Fiscal Concierge has also teamed up with Guardian to provide alarm services for small businesses at a very good rate to further protect your business. They could also provide the Guardian health monitoring services for homebound seniors.

So, as services go, The Fiscal Concierge seems to have very real value and is worth looking into if you are a caregiver for a senior or if you are an active, on-the-go senior. It also makes sense if you are a small to medium business owner. Give Debbie Stroup a call at (248) 366-4811 or email her at dstroup@thefiscon.com and tell her that you read about it on this blog. You won’t get any special discount, but Debbie will be happy to hear that her time spent explaining this all to me was worthwhile. I’m sure you’ll enjoy meeting Debbie, too and discussing your bill paying/accounts payable needs and maybe your payroll needs, if you are a small to medium business.

Singing in the lifeboats of life...

2011-09-12T09:14:00.000-04:00

From Voltaire comes today’s advice ditty: "Life is a shipwreck but we must not forget to sing in the lifeboats."

Don’t forget to sing in the lifeboats was the title of a recent little book by Ross & Kathryn Petras that provided advice taken from the sayings and writings of great people through the ages about dealing with hardships. The main theme running through the book appears to be keeping a positive attitude and a sense of humor in the face of adversity.

We can all certainly use both in the midst of the economic shipwreck that we are living through right now. I often find it comforting to sing (if only in my head) some of the little songs that are a part of the church service at my church. Many of them are little 2-4 line songs used to introduce some part of the service, so they stick in your head quite easily. Sometimes snippets of other, more popular and secular songs seem to help.

What songs do you sing in the lifeboat?

We’ve all fallen down the rabbit hole…

2011-09-10T06:59:00.001-04:00

A bunch of us were discussing the current real estate market in the office the other day, when it hit me that we’ve all fallen down the rabbit hole and are now wandering around in Wonderland with Alice. That would seem to be the only logical explanation for the madness that is real estate these days. Surely the insanity that we face each day in the realm of short sales defies any other explanation.

For a while, I was using the analogy of the man behind the curtain from The Wizard of Oz to explain the great and powerful Investor – the man behind the curtain to whom everyone bowed and scraped and whose actions and pronouncements no one understood.

But, perhaps the richer set of characters in Alice in Wonderland would provide more opportunities to give face to the various banks and characters that we encounter in our real estate lives today – the Cheshire Fat Cat and the Mad Hatter would seem to be especially appropriate to represent some of the short sale bankers and negotiators that I’ve hit.

The sad conclusion that we all came to in our discussion is that this is no longer an anomaly, but rather represents the new reality of our market. I suppose the sooner that one comes to grips with that the better. As one who is naturally a bit of a cynic and can appreciate the absurd this Dali-esk landscape s beginning to look natural – “Look is that a clock melting over the side of that table? No, it’s a clock measuring the time passing on a short sale!”

What did the bank say about our offer? They said to lower the offer and resubmit it. OK, which way to the tea party, Mr. Hatter?

Post Irene - what was really covered?

2011-09-01T15:35:00.002-04:00

One major aftershock of Hurricane Irene (See you didn’t know that hurricanes can have aftershocks, too, did you?) is that homeowners are discovering that much of the real damage caused by Irene is not covered by their homeowners insurance policies.

While those who took a direct hit by the high winds that Irene packed will likely be covered (but not necessarily); the majority of Irene’s damage was caused by flooding (either tidal surges or rain-swollen streams and rivers) and that is almost never covered (unless you have flood insurance or a flood rider on your policy). Those in land locked Vermont, who were ravaged by swollen rivers, are particularly out of luck. Most did not have flood insurance, since they did not live in normal flood zones.

The other thing that sometimes comes into play is where a possession is when the damage occurs. If your car is sitting out in the driveway and the flooding from Irene’s rains inundates it, ruining it and causing a total loss, then your car insurance policy will likely cover the replacement. However, it you parked it in the garage to avoid any possibility of hail damage and that same flood water inundated it in your garage, it would fall under the homeowners’ policy and may not be covered since you didn’t have flood insurance. There was a good article in the Sacramento Bee about the gaps in insurance coverage that are letting insurance companies off the hook for most of Irene’s damage.

Irene is one of hundred-year events that we’ve been seeing a lot of lately. If nothing else it should cause all of us to question what is covered and not covered when big natural disasters hit. If my car is in the driveway when the tornado goes through uprooting a big tree that falls on it is it my car insurance or my homeowners policy that I should turn to for coverage and a replacement? What about if it was in the garage at the time and the tree crushed both the garage and my car?

Most of us probably suffer from the FDH syndrome when it comes to insurance – Fat, Dumb and Happy. We really don’t know what is covered and what’s not. Perhaps we don’t really want to know. But, in this case; what we don’t know can hurt us. Check your coverage before it’s time to try to file a claim.

Another miracle of real estate…

2011-08-31T12:02:00.000-04:00

I had the opportunity to hear all about yet another miracle of real estate. It seems that the property that I visited recently on a potential listing appointment was somehow overlooked by the angry gods of real estate and spared any apparent loss in value. Nestled in a neighborhood that was ravaged by those same angry gods to the tune of 45% value losses over the last few years, this property was somehow passed over and has retained its peak value, according to the homeowner.

Not only have the gods of home devaluation smiled upon this house, but many of the minions that associate with those gods have also decided that this house will be the exception. The god of home mechanicals has determined that the 30 year old furnace probably has another 30 years in it, so there is no need to replace it, nor the water heater which is after all on 15 years old. The goddess of roofs has decreed that 30 years have not diminished the sturdy shingles that make it up and indeed she has directed many of the shingles to curl up in smiles in celebration. The goddess of the galley kitchen has joined the celebration by assuring the owners that retro-look vinyl countertops are back in favor and that Harvest Gold appliances are again all the rage in kitchen design.

The owners also took offense at my suggestion that replacements for their old aluminum framed windows might add value. They have been assured by the window spirits that aluminum is much sturdier than those new-fangled vinyl windows. They also assured me that air conditioning is not required, since it only gets hot a few weeks each year and the goddess of comfort is perfectly happy with just opening the windows during those warm stretches.

Needless to say, we could not arrive at an agreement on a listing price. They certainly felt sympathy for the unfortunate other homeowners in their sub whom the gods had not passed over and who have sold in the last 2-3 months for so much less than their home is worth; but they opined that they certainly aren’t going to give their home away, so they’ll find someone else who will appreciate its value more than I did.

I thanked then for their time and wished them luck and stood outside for a while looking for any visible sign that the gods may have used to mark this house for the various miracles that have occurred for it. I couldn’t see any through the overgrown bushes that completely obscure the front of the house.

Reading market reports can give yo a headache...

2011-08-29T06:38:00.000-04:00

Every week starts off with reports issued by various groups like the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) and others trying to analyze and report what it going on in the real estate market. Reading those reports can leave you scratching your head and wondering, “What did they just say?” That is especially true if you read any of the compilation reports where the Arthur combines 2-3 of the other reports.
This morning’s RealtyTimes report had one such article in which the author, Carla Hill juxtapositioned bits and pieces from some of the official releases of various learned groups. Reading any two sentences in a row almost makes your head spin. Delinquency rates are up, but they are also down (new delinquencies vs. 90+ day delinquencies). Home affordability is the best it’s ever been, but no one can afford to buy a house. Huh?

Both NAR economist Lawrence Yun and MBA chairman Bob Nielson agreed that tight credit requirements by banks, in addition to continued economic weakness are the major culprits. Overall sales of existing homes declined by 3.5% in July from June in the U.S. Of course there are some bright spots – a couple of the regions that both groups track are in positive territory – the Midwest with a 1% growth in existing home sales and the Northeast with 2.7% growth. The Midwest even saw 31.3% year-over-year growth in existing home sales.

I guess it’s best just to ignore all of these higher level reports and focus upon the market that’s right in front o me. I report on it every week on my Web sites. Even in my little patch, which covers only 9 townships in Southeastern Michigan there is great variability. A few of the townships – West Bloomfield, Highland and White Lake – are still mired in foreclosures. A few are just putzing along with relatively low sales activity even if their homes are more affordable that ever – Milford, Green Oak and Hartland. A couple are doing OK, with reasonable sales activity – Commerce and Brighton – and one is doing fairly well by today’s standards with new build home sales driving its market – South Lyon. You can see all of the statistics that I report about those markets at www.movetomilford.com.

Home prices nationally are still declining and that is generally true in my little patch too; although, the rate of decline has dropped into the low single digits, which is a good thing. I also seeing more and more homes sell for well above their assessed value, which is an indication more than anything that the assessors may have overshot the mark on lowering home values for tax purposes. Low bank appraisals also continue to be a major issue in my market and that issue is not helped by the lower assessed values. Both assessors and appraisers are now using distressed home sales as comps, which has created sort of a downward spiral effect.

Low inventory is becoming a real issue here, too; especially in our traditional market sweet spot of $200-400K. The people who own those homes now are under water on them and reluctant to put them on the market. So, what “move-up” buyers we have out looking are finding pretty bare shelves in this market. The lease market inventory has also almost dried up, since so many displaced people have been renting while they try to rebuild their credit. It’s very tough to find anything in the lower end of the rental market (under $1,500) that is suitable for a family to live in.

As a Realtor, I guess I benefit from one of the bad news-good news statistics, too. The bad news is that many licensed agents have left the business (especially the part timers). The good news is that I get more of what little business is left. That seems to be true across the country too, with the number of Realtors down considerably and fewer coming into the business. Of course brokers don’t like that, since there are fewer agents to collect monthly fees from to sustain the broker business model. Maybe that will force some changes to that whole model.

So, that’s my report from the hinterlands. Things are good. Things are bad. Things are up and things are down. Everybody knows why, but nobody knows how to change anything. Blame the banks. Blame the government. Blame anybody but me.

Getting ahead of the email from Libya…

2011-08-26T20:45:00.001-04:00

I thought that I would post this to allow fellow Realtors to get ahead of the curve on he next big eMail fraud campaign that you can expect.

“Hello fellow Realtor. I need your help. I was a very successful Realtor in Tripoli, Libya until just recently. My major clients – the Qadafi family – were major property owners; however, an unexpected change of fortune made it necessary for them to liquidate their holdings recently. I was able to get short sale approvals pushed through rather quickly during the changes that recently overtook the country and was successful in selling over $50 Million worth of prime Tripoli properties to advancing rebel investor groups.

In the ensuing chaos of the rebellion, the Qaddafi family assets and my commission of some $5 Million dollars U.S. was frozen by The United States and other NATO countries. I am assured by the bank that my commission is safe and that it will be released to me within a few months, if I post a 10% surety bond - $500,000. U.S. .

I am hoping that you can help me with that bond. Since I had to flee the fighting in my country I have no current access to my own bank accounts in Libya, which I assure you would be sufficient to past the surety bond. I am prepared to offer a large premium for your support. I have arranged with four other Realtors in various locations around the world for loans of $100,000 each for a period not to exceed 6 months, with a payback of $200,000 at the end of that period.

As you can tell, I am a very generous man and more than willing to reward those who assist me through this unfortunate time in my life. If you can help, please let me know via return email and I will forward instructions on how to wire your funds to my transfer agent, the firm of Dewey, Cheatum and Howe, in London. Thank you for your support.”

A nation hunkered down...

2011-08-22T07:16:00.000-04:00

In today’s Bloomberg News there is a story about homebuyers “hunkering down” in today’s economy instead of buying homes. The story used the definition of hunkering down as hiding in fear. The reporter sited instances where buyers even pulled back offers, based upon the turmoil in the stock market and the resulting uncertainty overall with the economy. People are hunkering rather than buying.

I guess the news is bad. NAR reported that July sales fell to the lowest point this year and Karl Case of the Case-Shiller report even was quoted in the Bloomberg article as stating that another recession may happen if the housing segment continues its swoon.

Indications of the malaise included the fact that applications for mortgages to buy homes dropped to a 13-month low in the week ended Aug. 12, even with rates at historic low levels, according to the Mortgage Bankers Association. The article reported that Bloomberg Consumer Comfort Index sank to the lowest since the official recession. In addition the stock market has been down for 4-5 weeks, so many people have seen their down payment nest eggs disappear. Even with low mortgage rates there has also been a huge increase in cancelled deals due to low appraisals according to the story.

The result of all of this gloomy news is a nation hunkered down, doing nothing until this all blows over. However, this is one of those chicken or egg situations. In the past, the economy has always been led out of recessions by the housing industry. Improvements n home buying led to increases in building which led to better employment and on and on. This time no one is buying, so few builders are building and the whole mess is feeding upon itself.

Even attempts by the government to encourage home buying by keeping rates low and promoting program after program to encourage lenders to loosen up have not worked. The encouraging news that foreclosures were down the last couple of months was driven as much as anything by the lenders’ reaction to the various robo-signing investigations into foreclosure irregularities, not by shifts in the fundamentals of the housing market.

So, what’s a Realtor to do in this hunkered down world? In my area at least, there are still sales happening – they are just low-end sales to investors and first time buyers. So I focus upon them. There are few move-up buyers (those in the move-up sweet spot in this market of $200-400K) out looking, but I do get an occasional one or two. They are usually very finicky and are really looking to steal a move-in ready house at “destroyed foreclosure” prices. It’s just the nature of the market.

Many of the buyers in the move-up price range in this area aren’t the classic move-up buyer with a house to sell or who just sold; they are the people who lost their own homes to foreclosure 3-4 years ago and now have repaired their credit enough to start looking top buy a home again. They have to be vetted carefully with a good mortgage person, so that I don’t waste a lot of time with wishful thinkers instead of real buyers. More than once my mortgage person has had to tell them that they still have work to do on their credit before they should be out looking.

I guess that Realtors need to use the other definition of “hunkered down” that I found on-line in the Urban Dictionary – “to get to work, to focus on the job at hand.” We have to hunker down to the basics and work harder at sales that return less in order to get through this mess. If there is any good news to come out of all of this it’s the exit from the real estate business of the marginal, would-be Realtors and part-timers. That has concentrated what little business there is out there to the Realtors who have hunkered down to ride this thing out. So, hunker down fellow Realtors and let’s work our way through this recession. And for all of you would be home buyers, I'd say, "Get out there and do the patriotic thing - buy a house and help America get out of this recession."

The good ole days were always that good...

2011-08-19T06:39:00.000-04:00

“How easy it is to think that the good old days were only good.” (Herb Chilstrom), from the Jack’s Winning Word blog.

Herb had a good point. We hear a lot about the good ole days in real estate and we tend to think about and mention only the fond memories; however, all was not always good in the old days. Those who have been in the business for longer than the last 8-10 years can tell stories that will make you cringe at the thought of going through what they went through in some of those old days, especially the days of hyper-inflation when mortgage rates were well above 10%.

I’m not sure that I can point back to good ole days, since I‘ve only been doing real estate for 10 years. It seems to me that I’ve been in what has consistently been described as a buyers market for all of that time, although certainly not as bad as it has been for the last few years. I’ve heard stories about the days when there were sellers markets and how frenetic the pace was back then, with bidding wars for almost every house. The Realtors who lived through that era don’t make it sound all that good either.

I suppose the best that one can hope for, in terms of perhaps a rational market, would be a “normal” market, whatever that it. I’ve seen differing definitions of what a “normal” market might look like, usually expressed in terms of inventory levels, days on market levels, mortgage rate levels, a balance between buyers and sellers and other factors. It must be a rather elusive mix because I haven’t seen it in 10 years. Perhaps the balanced market is like Bigfoot, often talked about but seldom, if ever, seen.

I suspect that people describing the “normal market” are actually reminiscing about some time in their personal lives that they remember as happy times and they associate those times with the real estate market. You really can’t turn back the clock, so longing for the good ole days is really a waste of time. Better that you should put that energy into figuring out how to deal with the days that are in front of you – for some, these are the “good ole days” that we’ll all tell our grandchildren about some day.

Hello, I’m an experienced Realtor and you’re an idiot…

2011-08-16T15:34:00.000-04:00

Did you ever hit one of those long-term Realtors who thinks that everyone else in real estate is an idiot because they don’t all do it the way he/she does? It’s particularly maddening when they are also the type that starts most sentences with “I’m not going to let my buyer(seller) do that… or maybe I won’t even show my buyer (seller) your ridiculous offer, unless… or maybe I would never let my buyer (seller) use that type of mortgage company, I’m going to require them to get pre-approved by…

Some of the Realtors that I’ve hit lately, especially in the short sale market have been condescending to the point of being just plain rude. It’s certainly true that I don’t know everything about short sales, but I do think I know right from wrong and how to advise my clients to do what’s right – for them. Perhaps that is the issue; it may not be “right” for these old timers’s clients, at least not in their minds.

This is really a form of bullying, which many Realtors use as what they believe is a negotiating tactic. It’s as tiresome as the agent who whines their way through a litany of issues large and small that they have with the property that you represent as preparation for some low-ball offer that they may have advised their client to thrown in. Both waste time and both are really ego-driven attempts at misdirection to see if they can get the other side to blink or tire out and capitulate.

I’ve even had one of these prima donnas dress me down in front of her client because I didn’t have my client offer the best home warranty for her client – not the one that she always offers her clients. HELLO. I represented the other side, honey. I did the best I could for my client. You saw the warranty well ahead of closing, why didn’t you advise your client to upgrade it, if it wasn’t what you would have offered.

I guess it’s all just human nature. There will always be people in any profession who see it as a zero sum game – in order for them to win, you have to lose. I hope that I try to play the game such that everybody can feel like they won.

I’ve only been at it for 10 years, so I guess that old school agent with 20-30 years in the business will always see me as an idiot who doesn’t know what he’s doing or who is doing it wrong. So, I smile and try to stay calm and let them rant and rage and vent until they’ve run out of steam…and they always run out of steam, because once the hot air is gone, so is the steam. There. See, I feel better already.

Homeowners are just collateral damage in this fight...

2011-08-15T10:02:00.000-04:00

The Sunday Detroit News had a front page story in the Sunday paper with the headline Homeowners Forced Out While Seeking Relief, with the sub-headline – Fannie Mae Pressures Banks To Foreclose, Contrary To Promises To Keep Families In Homes, Preserve Neighborhoods. The story took up three pages inside the paper, including lots of back story information about Fannie Mae and Freddie Mac and FHA and all of the other government organizations with fingers in this pot.

Newspapers love to take potshots at large government organizations, even if they are easy targets. There is usually enough ineptitude to flesh out the story. Throw in an All-America family with a hard luck story and you have the makings of what passes for journalism these days.

The gist of the story was that this local family fell on hard times and got a year behind on their mortgage. They were in the process of negotiating a HAMP loan modification when the bank foreclosed on their home, supposedly under pressure to do so by Fannie Mae. There’s a lot of fuzziness in the story and everyone who might have had really good first hand information refused to be interviewed for the story. One telling comment that was captured in the story was made by a Fannie Mae official who said that Fannie Mae needs to keep pressure on the banks to speed up their HAMP processing, so they push for foreclosures to motivate the banks. Notice that no mention was made of the families who are in those homes.

The truth is that all of these bureaucrats, whether with the banks or the GSE’s or other government organizations, just see these cases in the abstract. These are assets to them, not people’s homes. They have rules that need to be blindly followed, not individual situations that need to be evaluated on a case-by-case basis. I’m absolutely sure that the bureaucrat who made the decision to foreclosed on the home that was featured had (and has) no idea about the family that lives there, what they when through to get into that situation and what they were trying to do to make things right.

The bureaucrat at Fannie Mae doesn’t care. It’s not their job. They just know that the bank had requested yet another extension to the foreclosure process - one too many in their estimation – so, it was time to show the bank who’s boss and force the foreclosure. Nor did the guy or gal at the bank care. To them, it was just another asset that went into foreclosure. After all those people out there (whoever they are) would have probably just defaulted on the new loan, too.

So, “those people” out here sued. They sued the bank. They sued Fannie Mae. They sued anyone that they thought might be part of the giant conspiracy to throw them out of their home. And they made noise locally, which the local newspaper picked up on and decided would make a good story.

Will they get to keep their home? Will the bank, Fannie Mae, Freddie Mac and others be held accountable for actually following the rules of HAMP? Will pigs fly? We’ll probably never know. The story has run and the paper is on to tomorrow’s headlines.

The bureaucrats involved are used to shrugging off pesky people and lawsuits like this. After all the Federal Government can’t really be sued no mater how stupidly or egregiously it behaves. And, the bank is too big to fail and has pockets that are too deep to really try to win a lawsuit against. So we have the Don Quixote homeowners tilting against the bureaucratic windmill. Little do they realize that they are but collateral damage in the real fight between the Washington bureaucrats and the bank bureaucrats. That fight is not about the homeowners anyway – they are just assets to both sides – it’s about power, who has it and who can make whom blink.

Stinking up the place...

2011-08-09T05:52:00.000-04:00

Today’s issue of RealtyTimes contains an article titles “Short Sales Still Irritate” by Bob Hunt. It cites a recent survey by the California Association of Realtors (CAR) that not surprisingly showed continued and growing frustration on the part of Realtors with the short sale process and the banks involved with them. I suspect that “Short Sales Still Infuriate” would have been a more apropos title.

The Hunt article discusses the work that CAR (supported by NAR) has done to try to get changes mandated to the banks, thus far to no avail; and their recent spate of advertising imploring the lenders to get their act together. It also gives statistics from the CAR survey that indicate that the overwhelming majority of survey respondents have had unsuccessful or unsatisfying experiences trying to do short sales. At the end it also cites that the survey says that the vast majority of the Realtors surveyed said that they would never recommend the lenders that they’ve had to deal with on short sales – as if the lenders cared.

Therein lies a part of the problem – the lenders just don’t care. They don’t care if Realtors don’t like them or their process. They don’t care if their own clients don’t like them or their process. The only people they care about are the politicians that they buy to make sure that they are kept whole in the current economic mess. The article pointed out that legislation backed by CAR to mandate specific decision timelines for short sales - H.R. 1498, "Prompt Decision for Qualification of Short Sale Act of 2011" - is bottled up in some House sub-committee in Congress, where undoubtedly some loyal lender-sponsored toady will probably keep it off the agenda until it dies.

So, being dissatisfied and unhappy with short sales is, and will be, a fact of life for Realtors and their clients on both sides of the deal for the foreseeable future. I guess we need to get over it and get on with things.

For Realtors who just don’t want to deal with them directly, short sales will be like the skunk that walks around your house at night. You may not have dealt with it directly, but the smell is always there and it stinks up the whole area. Short sale lenders are our skunks as Realtors. Some Realtors will figure out ways to work with them without getting sprayed. Some will try and back off after getting sprayed a time or two and many will just have to continue to do business in the area surrounded by the smell of the skunks that they don’t deal with directly. It stinks, but it is reality.

A reasonable alternative...please!

2011-08-03T11:32:00.000-04:00

I saw an article yesterday in some news feed that I get from somewhere (it may have even been a blog) that had the headline "When did America become so cautious?" The article was lamenting the lack of out-of-the-box thinking in American politics. Of course, it was focused upon the recent debit-ceiling crisis and the lack of original ideas and their rigidity of the approaches of the two sides in the debate.

I would submit that this is because all of the money and lobbying influence has lined up behind the extreme wings of the two parties. Members of either party who stray from the party hard-line are reigned in or threatened with the loss of committee assignments and campaign support. There is little room left for compromise or common sense.

I do believe that we are in a technology environment right now that would allow the creation and the success of a more moderate, centrist party. The ability of the Internet to support massive crowd sourcing, as evidenced in the recent uprisings in Egypt and elsewhere in the Middle East, could be used to bypass the need for as much on-the-ground party apparatus as has been required in the past. If Ashton Kutcher can get over a million people to sign up to follow him on Twitter in just as few weeks, I can imagine a charismatic politician being able to do even more.

What we have lacked is that intelligent and charismatic person who is willing and able to take on the established parties. Ross Perot tried it years ago with some success. He was eventually undone by his lack of the necessary political and communications skills to express a clear and credible alternative. He became a caricature.

So, we just need to find that independently wealthy, reasonably intelligent and charismatic person who sees personal value in serving his/her country to form the nucleus of a new centrist party and rally around him/her.

I'd sign up to follow him/her on Twitter and help them get other rational and moderate people elected to Congress.. Heaven knows we need someone better to follow that the clowns that we have in Washington now.

“Ignorance is innocence - stupidity comes with experience”

2011-08-02T06:00:00.000-04:00

What a great quote to follow up yesterday’s post about short sales. As I look back on things, I think I can claim innocent ignorance in my first couple of short sale experiences. Now that I’ve had a few short sales, I must now admit to the stupidity that comes with experience. That’s one reason that I sought out a partner for the negotiation portion of the short sale business. The more that I experience what goes on in short sales, the more stupid the whole process appears to me.

The main speaker at the recent ConEd class that I attended on short sales made the point early in his presentation that one must leave common sense out of the process. He had great stories about the nonsense that his company runs into all the time in dealing with the lenders on short sales. There is little place for logic or common sense in the process.

Perhaps the most telling indicator that common sense might not prevail is the classification of all of these homes by the lender as “assets.” They are not someone’s home, they are assets. They are not a lovingly cared for family treasures, they are assets. They are not the single most expensive and important possession in someone’s life. They are assets. Once they are abstracted to the status of assets and then lumped with other assets into investment instruments that become the possessions of investors, all connection with reality and common sense is lost.

Assets, after all, must be dealt with using rules and computer models and their fates be decided by committees. Asset managers must be assigned. Committees must meet. Databases of the assets must be created and reports must be generated. Decisions cannot be made in haste with assets. And decisions must be made in an orderly fashion and with the consent of the investors in these assets. An organizational structure must be created to deal with these assets, perhaps even special Web sites created. Why, an entire industry could grow up around these assets – and has.

Meanwhile out in the asset in question it’s been two months and no one has heard anything back from the lender about the short sale offer. Dad still hasn’t found work and the old family asset is starting to deteriorate. The family is innocently ignorant of the stupidity that is going on in the experienced land of asset management.

And yet that is our world of real estate. We do the best that we can to counsel patience and persistence to the people living in the assets. We hold hands with them. We commiserate with them. Sometimes we may cry or pray with them. Out at our end these assets are still someone’s home.

Short Sales are with us for a while...

2011-08-01T07:56:00.000-04:00

I took a Real Estate Continuing Education class last week that was put on by the owner of a company that does short sales negotiations. He had lots of interesting statistics and stories about short sales, both the horror stories and the good ones. The thing that I took away more than anything else is that this issue will be with us for many years to come. I guess that was pretty obvious because of how far home values have fallen (at least in this area). Locally we are at about 1995 home value levels, which is about 40% lower than the 2006 peak values. So almost everyone who bought in the late 1990's and early 2000's is pretty much guaranteed to be under water. The presenter at this training opined that short sales will be with us (and probably will represent the majority of our business) until at least 2020. I have no reason to doubt that prediction.

I'm not a big fan of short sales. Let's face it, they are a pain in the rear; however, they are also a fact of life in real estate and so much better than a foreclosure. So, after checking them out further, I decided to partner up with this short sale negotiations outfit and re-institute my short sale Web site as a way to generate some business. I own some interesting URL's oriented around short sales and they tend to generate leads. I had turned off ny short sale web sites because the last set of short sale negotiator partners that I had turned out to be sleazy operators, even though they were attorneys (maybe that shouldn't have come as such a surprise).

I'm also theorizing that an improving economy will increase short sales, since there has to be lots of pent-up demand to sell in the Baby Boomer segment that is at, or near, retirement. They need to downsize for retirement and their loss of job income may qualify as their hardship. Certainly many have put themselves in untenable mortgage positions, with most believing when they did so that property values would continue to rise. There also has to be a huge group that needs to move somewhere to take advantage of work opportunities that should start opening up in an improving economy. They'll need to sell here in order to move for jobs.

It's possible that the programs that are being experimented with by some of the big banks to reset loans amounts as part of a loan restructuring will catch on. So far those are aimed at letting the people with toxic ARMs refinance and I'm sure the banks are not real big fans of them either. The banks used to offer a deed-in-lieu option too; but, that has largely fallen out of favor.

So, if you are in Michigan, go to mishortsales.com and check out our short sales program. Doing a short sale certainly beats letting the place go into foreclosure or being really stupid and just walking away.

Well duh! Have they finally figured it out?

2011-07-28T06:44:00.001-04:00

Broderick Perkins reported in an RealtyTimes article this morning that Chase and Bank of America have begun programs to offer mortgage modifications to homeowners that involve real reductions in principal. According to his article they have even extended this program to some homeowners who had not yet even ask for relief.
Now that last line generally falls under the “hard to believe” category – big banks helping out underwater homeowners by reducing their loans without them having to ask. Perkins did set that up a bit by explaining that both banks have been under pressure from Washington because of their terrible performances with foreclosures and short sales in the past. I’m sure many Realtors can attest to that.

So, are these real “change of direction” programs or just window dressing to assuage Washington? The article seems to indicate that these programs are being used primarily for customers that had bought into some of the Option ARM products of Washington Mutual and Countrywide, two of the outfits that when bust and were bought out by Chase and BoA respectively. These ARMS were some of the most toxic of mortgage products sold during the “crazy times” of 2003-2006 and are now coming due. Many of these ARMS featured little or no payment against the principal, which put homeowners even further under water.

It’s certainly probable (and much more believable) that Chase and BoA are dong these programs primarily to placate Washington and to avoid having even more Federal programs shove down their throats. The “goodness of their hearts” argument just doesn’t fly.

Many of us in the business have been saying for some time that biting this principal reduction bullet is the only way out of this mess. It’s not clear whether or not these and other banks have some sort of deal with the government to be reimbursed for some or all of the losses that they will be declaring. It seems like I remember that there were provisions in some of the bailout legislation for the banks to be paid out of some of the economic recovery funds for some losses, but I cannot recall the details.

I have had several clients who would have stayed in their homes and been good paying mortgage holders had programs like this been offered to them. Instead they are now living in apartments or rental homes and trying to rebuild their credit. They are part of a tragedy in America that could have been avoided if common sense had prevailed. Of course, common sense seems to be a commodity in short supply these days, especially in Washington.

Let’s hope that this article presaged a true shift in strategy and direction for these and other big banks and that these programs will provide the basis for a way out of the housing mess in which we currently are stuck.

Is the Internet actually getting in the way of real estate?

2011-07-25T11:53:00.000-04:00

I work with a number of buyers, most of whom are avid Internet users. That has actually proven to be a bad thing, rather then the good thing that one might have thought it would be. Many of these enthusiastic would-be buyers spend hours searching various Web sites each day in hunt of those illusive deals that I somehow have failed to send to them in my search results.
Of course, they find them. Then they pop off messages to me asking about this house or that, which they found on ObscureRealEstate.com or some other site that claims to have all of the real estate listings (Zillow and Trulia are a couple of biggies that many use). A helpful MLS listing number is seldom included in their messages, just a partial address or a link to some web site that itself doesn’t give much information unless one signs up to have an agent call.

This practice of trolling the Internet in search of previously unmentioned homes for sale has become an obsession for some, but for the most part it is a giant waster of time – theirs and mine. The main reason is that most of the Web sites that people end up on are woefully out of date and are set up mainly to draw the unsuspecting house hunter in so that a “lead” can be give to a agent somewhere.

About 30-40% of the time the great house that the would-be buyer has found has actually been sold for some time. Most of the big real estate sites are terrible at keeping updated, especially those that let agents upload their listings (agents are terrible at keeping things updated on those sites, too). I usually advise my local buyers to at least use the Realtor.com or Realestateone.com - sites that I know are updated every day.

The links to sites with the perfect house on it often resolve to some agent’s personal web site or some local web site of a franchise operation. In those instances there is usually not enough information to even figure out where the house is without signing up to be called by an agent. Those sites are there to generate leads for the franchise agents. They are also most often out of date, so go somewhere else.

Sites like Homes.com and Housevalues.com and Justlisted.com are for-profit lead generation sites whose sole purpose is to lure in unsuspecting buyers and sellers so that they can sell their personal information as leads to hungry Realtors. So, the bottom line is that a lot of time and effort is wasted, both by would-be buyers and by the Realtor that they may be working with in their house hunt. If you find yourself on a site that won’t supply information like the address or the MLS listing number, unless you sign up for something, run (don’t walk) away and find another site.

The Internet is a wonderful thing, but just because you saw something there doesn’t make it true. Just because you see a house “for sale” on a Web site, doesn’t mean that it’s still available. And, just because the pictures that you saw posted there looked great, doesn’t mean that you won’t walk into a real pit, if you visit the place. Let your agent do his/her job and you won’t end up wasting your time or your agent’s time.

Is Facebook already “so yesterday”?

2011-07-19T19:43:00.000-04:00

I got an Anonymous Blog comment today on one of my Blogs that caused one of those “uh-oh” moments. This unsolicited and somewhat annoying comment informed me and anyone that might read it (had I actually posted the comment, which I did not) that one can now “buy Facebook Likes”. Perhaps lots of people already knew about this, but it was news to me and a sure indication, in my mind that Facebook has already peaked and is now, so yesterday.

Why do I say that in the face (pardon the intended pun) of ongoing evidence that Facebook is still growing and may exceed 1 billion members this year? Because it is yet another indication that the “suits” have taken over. Try as they might, the Facebook crowd will not be able to stay “cool” once the really cool people find out that they are being had by people who buy “Likes” on Facebook.

There are two things that really tick off the cool people who are the advance guard of success (and the first to abandon ship on a failure or fraud) – companies (sites) that sell out (and sell them out in the process) and companies (sites) that get taken over by the suits – people who figure out how to game the system in order to get to the users with targeted ads. There certainly is an argument to be made that both have occurred with Facebook.

Why does this matter? The truth is that Facebook can coast along on momentum for a couple (maybe a few) years – gaining new members and expanding revenues by selling access to those who sign up; however, it also true that the really cool people who jumped in first are likely to jump back out first, once they figure out what is happening. These are the bleeding-edge adopters and they’ll find the “next big thing” to jump onto.

This is actually quite a natural pattern. Bleeding-edge and early adopters are always looking out for the next cool thing on the Internet or elsewhere in life. They jump onto new things early. They are often fervent supporters and make lots of noise about how great whatever it is that they’ve embraced is. Eventually the rest of us not as cool people jump on the bandwagon, because we’ve read all of these great things that were written by the bleeding edge and early adopter people and we say “I want to be cool, too.” That is when the bulk of the people who jump on anything arrive on the scene. We won’t even talk about the late adopters, who are still unsure about this whole Internet Social Media thing and haven’t jumped on a bandwagon since that got on board with mobile phones, just recently.

So, now Facebook is not about being cool and communicating with your friends. It’s about targeted ads and knowing what you “like” and trying to get you to buy what your friends buy. In other words, it’s not cool anymore because you’ve been sold out and all of the really cool people have moved on. Where did they go? Don’t ask me; I haven’t been cool since 1972. I’m still trying to figure out this Wall thingy on Facebook and have no idea why so many farmers are always asking me to buy something for their sheep. I may move on to the next big thing before I even figure this one out.

It’s not the end of the world…

2011-07-18T07:33:00.000-04:00

This morning, as I perused my inbox, I took note of two entries that through pure happenstance were positioned one after another. One headline read - Real Estate Outlook: Housing Market Struggles, which was from Realty Times, while the next entry from the Jack’s Winning Words blog carried this lead quote - “Everything will be OK in the end. If it’s not OK, it’s not the end.” (Carolyn Myers). Sometimes Jack’s winning words are more prophetic than others.

Indeed the Realty Times article went on to provide lots of statistics about the economy – slowly improving, but with many issues still evident – and the housing market as a mjor component of the economy – still stalled by employment insecurity and lending difficulties. The article laid out a litany of issues, from the new requirement for higher down payments to the looming threat of the end of the MID and including the still large overhang of distressed houses on the market depressing prices as contributing factors in the continued housing malaise.

Like a broken record the articles about the moribund housing market are getting really old; which makes the words of Jack’s blog even more meaningful, especially to a Realtor. While I hate the popular saw “It is what it is”, in fact it is and, you know, what it’s not is the end of the world. It might be the end of life ands we knew it, but that just means that we need to learn how to live with this new reality and get on with life.

So, bring it on. Hike the down payment requirements, rescind the MID, make home ownership a privilege that people have to strive top achieve and not some sort of subsidized entitlement. It’s not OK, but it’s not the end. We’ll all figure out how to live in this brave new world.

Lookin' good to feel good...

2011-07-13T16:04:00.002-04:00

“What we see depends mainly on what we look for.” (John Lubbock) from the Jack’s Winning Words blog. Jack is a retired Lutheran pastor and his blogs are always full of great advice for life. Since the real estate business is just a part of life, the pithy little sayings that he finds and uses always seem to have a real estate bent to them.

We look at a lot of real estate market data and read lots of market reports and articles and some times (maybe most of the time) what we “see” in all of that data and information is what we want to see – what we were looking for. That works well for eternal optimists, since they always seem to find a silver lining in everything that they look at. For others who might be skeptics or pessimists or worse, there is certainly plenty of bad news to be seen and that maybe what they are looking for to begin with. For many of these people the old saw that misery loves company provides them the only opportunity for company; so, they go about trying to make others miserable so they will have company.

So, the choice boils down to finding a reason to be optimistic and happy or finding a reason to be discouraged and down. Hmmm. How much of a no-brainer is that? Don’t worry, be happy. Don’t look for the bad. See the good instead. Try it, you might even like the results.

Are bank accounting rules prolonging the agony?

2011-07-07T16:53:00.000-04:00

It seems to me that the long, drawn-out agony of the current recession is being exacerbated by the accounting rules that let the banks off the hook for the loss of value in the housing market, so long as they can stretch things out and don’t have to recognize the losses that have occurred. The silly thing is that everyone knows that the value is gone.

The homeowner certainly knows that the value of his home is about 60-70% of what it was a few years ago. The assessor knows that the value is gone; that’s why the assessment and taxes are down. Even the bank knows that the “assets” that they have on their books are no longer worth what they are on the books for; however, they don’t have to admit that until such time as the homeowner defaults and they have to foreclose or the homeowner forces the issue with a short sale. Certainly the government knows that up to 30-50% (depending upon what area the home is in) of the value of American Homes has vanished; yet program after program refuses to deal with that reality head-on.

The simple truth is that all of the holders of the mortgages on these assets need to be forced to adjust the value of those assets, take their losses and get on with life. Would that be painful – of course it would be. But is this “death of a thousand cuts” method of dealing with the situation any less painful – no, it’s just pain in slow motion. The government certainly has it in its power to help the lenders get through what might be called a reset of their books, but relaxing some of their capital requirements temporarily while they eat the big losses involved and reset or re-issue all of the mortgages involved at the new values and perhaps at today’s rates.

Would implementing this massive reset idea be a huge undertaking and costly for the lenders involved? Sure, but likely no more costly that the slow process of taking losses one foreclosure or short sale at a time. In fact an argument could be made that this method could be less costly than the cost of all of those foreclosures.

What about the stock holders in those institutions, you may ask? Well, it’s like they are standing proudly in front of a Hollywood set – you can see the front of an impressive looking building (the “assets” that are on the books at false values), but you can’t see that it is just a façade with nothing behind it. Like on a Hollywood set. Are the stockholders really any better off holding stock in a company with assets that are at hugely overstated book value but of much less real value? I think not.

I’m sure that the lenders will say that this is impractical, that the losses would be too great. To them I would respond that the losses have already happened and that just covering your eyes and refusing to see them won’t make them go away. The hundreds of thousands of underwater loans are not going to magically regain all of that lost value if you just wait a few months or even a few years. It’s gone. You’re $400,000 ”asset” is now a $250,000 liability and you need to deal with that and not try to ignore it.

Bored? Go visit a museum!

2011-06-27T20:50:00.000-04:00

Many of my blog readers know that, in addition to being a Realtor, I’m also the President of the Milford Historical Society out in Milford. I appreciate history, but can’t claim to be a history buff. However, when Carolyn and I travel we’ll often spot a museum that peeks our interest and stop in. Sometimes we even make those venues our destination, as we did recently when we set out to see the Norman Rockwell Museum in Stockbridge, Massachusetts.

That trip was a wonderful success. Stockbridge is one of the small towns in the Berkshire Mountains of Massachusetts that the rich and famous of the 1800’s in New York made their summer getaway. In those days, one didn’t just visit for a weekend; families stayed on for the entire summer season, enjoying the cool mountain breezes in the area. Little towns like Stockbridge and Lee, Lennox and Great Barrington and others in the area attracted artists and the rich alike from New York.

The Norman Rockwell museum was everything that we thought it might be, with all of his works (mostly ion prints but with some key originals) on display and his last studio open for tours too. We also visited the nearby home and studio of Daniel Chester French, a noted sculptor of the 1800’s who created the Abraham Lincoln statue that sits in the Lincoln Memorial in Washington. Both of them and all of the historic stores and homes in the area were fun to visit. You get a better since of place and tie when you see that many of their historic homes have been there since the 1700’s.

On our way there I noticed that the JELLO museum was just off the highway in the historic town of Leroy, New York, so we stopped there on the way back. Leroy was the summer getaway for rich people from Rochester and Buffalo, New York. The JELLO museum is housed in a historic building that was once part of the JELLO factory complex that was in Leroy.

The museum is full of artifacts and pictures and stories about the early days of JELLO and the man, Pearle B. Wait, who invented what his wife dubbed Jell-o in 1897. He failed as a salesman of his new invention and sold it in 1899 to Frank Woodward for $450. It was Woodward who figured out how to market the product and made a fortune off of it. The displays of the history of JELLO had many of the familiar TV and print ads for JELLO that I remember as a kid. In the basement of the JELLO museum is a display of carriages and an antique car from Leroy of the late 1800’s, as well as pictures of Leroy in its summer retreat heyday.

Carolyn and I often aim for, or stumble upon, unique museums as we travel. In Florida on one trip we came upon a little place called Sponge-O-Rama. It is located in Tarpon Springs, Florida, which was the sponge capital of the world for a while (or so they claim). Sponge-O-Rama focuses upon the history of the sponging industry in America and specifically that in Florida, which was the sponge capital of the U.S. It also has some information about sponging in other parts of the world and has fascinating displays of the hard helmet diving outfits that were used for much of the sponge diving in Florida waters. Like many other things that people do, the sponge industry basically over worked the sponge beds until the killed off their own livelihood and the industry died.

On another trip, this one around Lake Michigan (a part of the Great Lakes Circle Tour) we stopped in at Circus World in Baraboo, Wisconsin, the winter home of many of the great touring circuses in the late 1800’s and early 1900’s. From their Web site comes this history - The Ringling Bros. Circus was founded in Baraboo, WI, in 1884 by five brothers: Al, Otto, Charles, John and Alf T. Ringling. Ringlingville was the name for the original Ringling Bros. Circus winter quarters in Baraboo. The buildings, standing along the north bank of the Baraboo River, date from 1897 through 1918 and are the largest surviving group of original circus structures in North America. Circus World's collection of circus artifacts is perhaps the largest in the world. It includes over 210 original wagons and vehicles once used by American, English and Irish circuses.

Circus World houses an exceptional collection of circus ads and posters, with over 9,500 multi-colored circus posters that range in size from half-sheets to a large 80-sheet Buffalo Bill Wild West poster measuring 9' high and 70' long. The collection also includes thousands of journals, manuscripts, business records, original fine art oil paintings, hand bills, heralds, programs, artifacts of circus performers and a collection of rare photographs and negatives.

On a trip that is closer to home, we went to the Merry-Go-Round Museum in Sandusky, Ohio, where they have interesting displays of carousel history and on the art of carving carousel animals. They actually have animals being carved, so that you can watch the carving techniques used. Of course they have a working carousel, so you could take the kids and let them ride. There is another museum dedicated to carousels and it’s actually called he Carousel Museum. It’s out in Bristol, Connecticut, which I dare say will now become a must see destination for a future trip. The Carousel Museum claims toe have the worlds largest collection of carousel animals and is dedicated to collecting, restoring, and preserving carousel art and memorabilia.

Of course, even closer to home is the Dossin Great Lakes Museum on Belle Island, which provides a fascinating look at the life at “sea” on the Great Lakes. You could also drive to Vermillion in Ohio to Located in the nautical town of Vermilion, Ohio Its Inland Seas Maritime Museum is a key attraction on Ohio's north coast, and is a focal point of the historic Harbour Town district of Vermilion. Visitors to the museum come from around the world as well as from the U.S. and Canada. The museum contains one of the world's largest collections of Great Lakes historical maritime artifacts, documents, ship models, and original artwork. And just a couple of hours north of us is the Great Lake Lore Maritime Museum in Rogers City, Michigan.

Without even leaving the area there are a bunch of great museums and historical attractions that document what life was like for the pioneers in this region. The Milford Museum, in downtown Milford; the Waterford Historical Society’s display of buildings and artifacts in Fish Hatchery Park and Greenmead Historical Park are three good local destinations. Since most of these smaller museums are run by volunteer organizations, it is best to look them up on the internet first to see when they are open. Of course we also are blessed with the Henry Ford museum, which is large enough to require several trips to take it all in.

So, the next time you’re bored, go find a local museum and learn something new. Maybe you can find a museum that focuses on some specific person or product or other obscure bit of our history. It’s great to see how kids take to some of these sites. Since they get so little exposure to history in school any more, and most of that at a national or international level; many of them know nothing about the history of the towns and villages that they live in or about the lifestyles of the pioneers and early settlers. Take the kids and show them how their great, great great, grandparents lived. Then they can ask mee-maw the next time they see her if she churned her own butter or carried water into the house in wooden buckets for a bath.

Fail your way to success...

2011-06-21T06:04:00.000-04:00

From the Jack’s Winning Words blog come this tidbit of wisdom - “I have failed many times, and that’s why I’m a success.” (Michael Jordan).

Michael would be right at home starting a career as a Realtor®, since learning by failures seems to be the methodology of choice for training of new agents. I suppose that there is really little choice about that, since it would be impossible to cover every variation that comes up in a real estate deal. The nature of the beast is that every deal is different, with unique challenges. How do you teach that? Most companies with good training programs cover all of the basics and focus some on problem solving and using available resources wisely to resolve issues. Some even have mentoring programs which pairs up experienced agents with rookies. I’ve done that with several newbies.

A key to succeeding in an environment like real estate sales is not of be afraid to make those mistakes, to fail, so that you learn. Most mistakes can be corrected. A common reason for failure among new agents is that the fear of failure prevents them from even trying. They get frozen in place by the fear that they’ll look stupid in front of a potential client. “What will I say if they ask me how long I’ve been an agent or how many homes that I’ve sold?”, is a common question for new agents. That’s where the mentoring programs can help a lot by providing that seasoned veteran to ride along and provide a crutch to lean on, if needed. Another fear is how to compete for listings against seasoned agents. Here again, having a strong company behind you, like Real Estate One in Michigan, is a great equalizer. You are a part of a bigger, stronger team than any of those competitors.

One key for Michael Jordan and for new real estate agents is to learn from those failures. What worked and what didn’t. What could you do differently next time – and remember that there will always be a next time. What tools or resources could you have used and how will you work them into your future business opportunities.

The other key to success is to keep trying. Don’t let failure get you down, it’s just part of the job. It means you’re doing something – maybe not right yet, but at least something. Hearing a NO from a potential client, is better than not hearing anything at all because you never tried. So, get out there and fail today. Today’s failure will help you succeed tomorrow.

Finally some good market news to share

2011-06-19T12:02:00.000-04:00

http://tinyurl.com/dx2nq5I finally have some good news to share about my little patch in the overall real estate market. Consistent with reports at the national level, distressed sales, as a percentage of overall sales in my market areas are down. In fact, for the first time this year I have more local markets below 50% distressed sales than those above that mark. I still have one market that is mostly distressed sales (70%), bit even it is showing signs of stabilizing.

See the June, 2011, market sales results for June in the Southeastern Michigan markets of Milford, Commerce, White Lake, Highland, South Lyon, Green Oak, Brighton, Hartland and West Bloomfield at http://tinyurl.com/dx2nq5

You'll find the Year-To-Date statistics for those markets there, too. Anecdotal evidence also points to a slow down in value loss in these markets, with more sales taking place at the assessed value or higher than has happened in a long time. Since they are closing, the homes must be appraising for those higher values, too.

The issue now may quickly become the lack of inventory as would-be sellers still seem to be reluctant to list and we are running out of diestressed inventory. We had another pause in foreclosures in MIchigan when the Attorney Genertal announced that he is investigating the whole MERS and robo-signing mess for Michigan foreclosures. Hopefully that will be over quickly and we can work our way through the foreclosure overhang and get back to a more normal market.

The boy who cried wolf grew up to be a Realtor

2011-06-15T21:14:00.001-04:00

I’m feeling a bit like the boy who cried wolf from the children’s story. In his case he started crying “Wolf” to attract the attention of the town’s people, so that they would come running and he wouldn’t be lonely. He was lonely and bored spending all of his time tending the sheep with nothing much happening and no one to talk to.

As a Realtor, I look back over the last 3-4 years and can see how many times I cried “Wolf” or at least a real estate equivalent of that – “we’ve bottomed out and it’s time to sell.” I know that I’ve written blog posts to that affect at least four times in the last few years. I also know that I’ve been wrong all four times. In fact, things just kept getting worse – home values continued to sell, foreclosures and short sales continued to dominate the market and would-be sellers continued to sit on the sidelines.

In my case I suppose it was hope that things had bottomed out as much as anything, that motivated those posts; although it did get pretty lonely there for a while, with my listing inventory down to just one home for a while. I guess I was trying to convince myself as much as any reader of the posts that things had finally taken a turn for the better; or, at least, that they had stopped getting worse as fast. In fact the last couple of times it was that statement that the bleeding hadn’t stopped, but at least it had slowed that served as the most “positive” aspect of the post.

The other things that I noticed is that the recovery was like a mirage – always on the horizon, but never reachable. Starting in 2008, and based upon the combined opinions of the pundits of our industry, I predicted that 2010 would be the turn around year for real estate. Then it was to be 2011 for sure. Now a recovery starting in 2012 is iffy, but is still being held up by various economists and experts as at least the level off and start back year. We’ll see.

One thing that I’ve been fairly consistent about is that any recovery isn’t going to quickly recapture the lost value that this recession cost all of us. I’ve been saying a least a decade and now it looks more like two decades to get anywhere 2006 value levels. In some areas that will never happen. I’ve also been citing this recession as a fundamental reset of our economy in many areas, especially in the rust belt.

One can only get so far using analogies for the current situation, since analogies depend upon being able to relate the object of the analogy to something that has happened before that people are familiar with. We don’t use the Great Depression all that much (other than for convenient statistical comparisons, because most people alive today didn’t live through the Great Depression.

After the Great Depression economist calculated that it took 17 years for homeowners to recover the home value lost with the economic collapse. It may well take that long this time, too, to recover the value that we’ve lost. That will vary state by state and city by city. I saw a repot today that stated that homes in some areas like Pittsburg had lost as little as 1% of their value during this recession; while other areas, like Detroit or Las Vegas have lost 50-60% of pre-bust home values. Unless hyperinflation is allowed to run wild during a recovery, it is easy t see why it will take so long to recoup those kinds of losses.

So, is that dust on the horizon the cavalry of a recovery riding to our rescue or more recession Indians here with more loss arrows? I gotta go with the theory that 2012 is the year of the turn around; otherwise, it gets too depressing. I can see the bottom from here.

Yep. That’s my story and I’m stickin’ to it.

Living at the bottom of the heap…

2011-06-14T07:38:00.000-04:00

The recently released Clear Capital (www.clearcapital.com) monthly Home Data Index™ (HDI) Market Report reported on the hottest real estate markets and the worst in the U.S. I guess I wasn’t expecting the Detroit area to be in the first bracket, but I also wasn’t thinking that we’d be the worst – the market that continues to have the highest devaluation of homes in America – but there we were.

Now, the Clear Capitol report defines the Detroit area market as Detroit, Livonia and Warren, so I guess there’s some wiggle room for me to say, “Yeah, but that’s not Milford.” But the point of the report is that our whole area continues to suffer home value declines. In the report the Detroit metro area is shown as suffering a 13.2% Quart over Quarter drop and a 12.6% Year over Year drop compared to 2010. The report also shows what they call the REO saturation point (the % of homes sold that are foreclosures) as 58% - the highest rate on the charts.

The report continues: Midwest markets of Detroit, Cleveland and Columbus continue to be hit particularly hard, posting three of the largest quarterly price declines. The nationwide uptick in distressed home prices were absent in these three markets. REO saturation rates well above 40 and 50 percent (Detroit, 58.0%; Cleveland, 44.3%; Columbus, 45.6%) pushed these markets to double-digit quarter-over-quarter home price declines.

My own data out in my little market area tends to agree with the saturation percentage, at least in some of the markets that I cover. So far in June, the Highland market is running at 70% distressed sales (I define distressed as foreclosures and short sales, the majority of which are foreclosures right now). Milford is at 60% so far, with Commerce Township running at 50%, West Bloomfield at 48% and White Lake at 46%. However, the median sold values charts in most of those areas show an increase the last couple of months, which says that more expensive distressed homes are selling now.

The report talks of an average forecast value loss in the midsection of the country of about 8% for this year, as compared to double digit losses in the past and I think I can agree with that figure. We seem to be losing value at a slower rate this year. The bleeding hasn’t stopped, but it has slowed. Of course that could be that we’re running out of blood, too.

The report doesn’t try to explain the root causes of the continued decline other than some generalities about the auto industry problems and continued high unemployment rates in the rust-belt states. I’d certainly add that FUD (Fear, Uncertainty and Doubt) still reins in Michigan, even with Captain Sunshine as governor.

So here we are again – worst in the nation, again. At least we have no where else to go but up, once we stop falling.

The pump has rejected your card…

2011-06-10T16:45:00.002-04:00

I just returned from a short vacation over to the Berkshires in Massachusetts. Carolyn and I went there to visit the Norman Rockwell museum and to take in the other local attractions, of which there are many. The area of the Berkshires that we were in – Lee and the Stockbridges (East and West) and Lennox – was in the late 19th century a favorite summer spot for the wealthy of New York. They would come in May and stay until September to enjoy the mountain vies and the cooling breezes that blow year around in the hills around the area.

We enjoyed the stay and the Rockwell museum. We also visit the home and studio of the man who created the Lincoln Memorial statue of Abe Lincoln that graces the National Mall – Daniel Chester French. It was fascinating to see the many variations that he tried before getting to the design that sits on the mall now. There were lots of other interesting historical building and homes to visit in the area, so we had a full three days of exploring and sightseeing. It’s a visit worth making, if you need a destination for a vacation.

It was in the return trip that I had the experience of being rejected by a gas pump. Perhaps I should say that my credit card was rejected by the pump, not me. What a frustrating experience that was. Now I hasten to add that I likely brought much of this on myself. We had been traveling for some time on I-90 in New York and it was time to get some gas. I pulled in to the Sunoco Station at one of the thruway service centers. It had one of the self-service pumps that we are all experienced at using. I pushed in my card and quickly took it out (as instructed) and then did the unthinkable – I took the hose off the hook before the pump had finished it’s authorization routine. Apparently that really ticked off the pump, because things went downhill from there.

After the pump cycled through a couple of more questions and indicated that it was “Authorizing” my transaction, it must have noticed that I had jumped the gun and taken the hose off the hook early. It got mad! It told me to replace the hose to the hook. Then it told me that it could not authorized my transaction. I suppose that I should have supplicated myself to the pump at that point; but, instead, I just put the hose back and tried to start the transaction over. No way, said the pump. Your transaction cannot be authorized.

Frustrated, I put the hose back on the pump again and went inside to speak to the attendant. His was response was “The pump has rejected your credit card.” Well, I asked, can’t you override it and let me charge this and get on my way? “No,” he said, “the pump has rejected your card.” Sensing that further conversation with this minion was worthless, I said fine and returned to the pump. Determined to get gas I used a different card and followed the instructions of the pump to the letter.

As a follow-up, I immediately called the card company and inquired as to why the credit transaction had been rejected. It had not. They had no record of the pump even trying to contact them. The pump made the decision on the spot and in real –time to reject me and my card because I had not followed its instructions. Of course the human on the scene had no authority or inclination to do anything to overrule the pump.

We got our gas and continued on our journey; but, it is a sad commentary on where we have arrived as a society when human-based common sense has been programmed out of the decision making process. The guy behind the counter is just there because the pump apparently can’t handle the register and the candy sales. Otherwise the pump rules.

Case-Schiller - Schmiller we don't need no double dip

2011-06-06T07:43:00.001-04:00

The recent Case-Schiller report on the national real estate market showed real evidence that the market has indeed entered a double dip- a second decline in home values, after a short "recovery" earlier in the year.

Of course all real estate is local, so the national trend may not apply in your area. In fact, in my home market of Milford, Michigan, we appear to be defying the odds - see chart below from Altos Research:

Milford home values turned around earlier in the year and continue to rise and the inventory in the local market is going up, too. Inventory is still low, compared to historic levels, but more people are apparently feeling good about listing their homes (or maybe they just gave up waiting out this mess).

Such is not the case right next door in Highland. There the home value decline turned around in April, but inventory continues to decline.

And if one looks at the White Lake market it is hard to see more than a tiny blip that even looked like things were getting better. The malaise continues in that market.

Finally, there is the Commerce Township Market, which has taken off so fast that the inventory can't keep up with the demand. Since April the Commerce market has come roaring back, in terms of median sold home prices and the inventory has struggled to keep up.

Both White Lake and Highland also continue to top the 50% mark in terms of the percentage of home sales that are foreclosures or short sales - not an encouraging sign of things getting better.

I certainly hope that our market is a leading indicator of a robust recovery (at least in some of the sub-markets) and not just lagging the national scene. I've listed five houses since the turn of the year, which is good; however, I still have all five on the market, which is not so good. We still need more buyers in the mid-price range ($200-$400K), which is where most of my listings are priced.

So Mr. Case and Mr. Schiller can report all they wish about a double dip in housing. We seem to have been happy with our Single, prolonged dip - thank you very much. We're off to a new, better market without them.

Stalled and languishing the Michigan market decline continues

2011-05-23T07:44:00.000-04:00

According to a recent report by Zillow’s Chief Economist Dr. Stan Humphries, first quarter Real Estate Market Reports, median home values, as measured by the Zillow Home Value Index, fell 3 percent during the first three months of the year. This decline was large enough to cause Zillow to push back its forecast. Previously, we anticipated a bottom in home values by the end of 2011. But with values falling by about 1 percent per month so far, it’s unlikely that will happen. We now believe a bottom will come in 2012, at the earliest.

The continued falling home values have caused more homeowners to slip into negative equity. By the end of the first quarter, 28.4 percent of single-family homeowners with mortgages were underwater, up from 27 percent in the fourth quarter of 2010. Read the entire Zillow report here.

One consequence of the underwater mortgage situation is that homeowners who otherwise would have tried to sell their homes in order to move on with life now feel trapped by the negative equity in their homes. Many have made the mistake of thinking that they could ride out this recession and that value would return quickly. Not true, with home values slated to continue to slide, waiting is actually a very bad option that is likely to make matters worse.

Right now, in my market area, we are actually suffering from a lack of available housing inventory to show potential buyers. That is particularly true in the mid-price market of $200-400,000. These have always been a sweet spot in the market. They represent “move-up” homes for most buyers, but too many buyers have been afraid of job losses and too many sellers are too far underwater to be able toe sell. So, we have a stagnant market in that price range.

Most of our market activity is taking place on the low end (mainly in distressed home sales) or at the luxury end. Much of our market has also become a cash market, with mortgage money still tight and with lots of investors roaming around looking for bargains on the distressed market. Even the low end has taken a recent hit as many inexpensive foreclosed homes were pulled from the market due to being involved in the MERS mess. In Michigan MERS-initiated foreclosure processes were declared to be void by an Appellate Court, so now we have to await a Michigan Supreme Court decision to clear things up.

So, right now, we have a disgruntled bunch of Boomers who feel trapped in their underwater McMansions and a younger middle class who are still cowering in their starter homes, afraid to take the risk of moving up to a larger home mortgage obligation. We have a market that continues to decline in value and a foreclosure mess caused by MERS that has stalled that portion of the market. And of course we have the government types running around trying to make everything harder for everyone by suggesting that we do away with the Mortgage Interest Deduction and make everyone pay 20% down in order to get a mortgage. Sounds like a scenario out of Dante’s writings doesn’t it?

May seems to be off to a slow start…

2011-05-16T07:40:00.000-04:00

I know that this is only an anecdotal observation, but May seems to be off to a very slow start this year, so far as home sales go. That could well be attributed to the terrible (and at times cold) rainy weather that we’ve had. It certainly hasn’t been all that good for open houses so far this month.

For six of the nine markets that I track this year I have multiyear data, which at least lets me look back at a fairly gross level at year-to-year comparisons.

We are half way through May, 2011 and this is how those markets compare to May 2010, in terms of sales:

Milford –

Homes sold far in May 2011 – 3

Homes sold in all of May in 2010 – 18

Highland –

Homes sold far in May 2011 – 9

Homes sold in all of May in 2010 – 19

Commerce –

Homes sold far in May 2011 – 20

Homes sold in all of May in 2010 – 46

White Lake –

Homes sold far in May 2011 – 13

Homes sold in all of May in 2010 – 36

Lyon/South Lyon –

Homes sold far in May 2011 – 4

Homes sold in all of May in 2010 – 28

Brighton –

Homes sold far in May 2011 – 12

Homes sold in all of May in 2010 – 18

The numbers would seem to indicate that Commerce and Highland are on about the same track as last year with Brighton actually ahead of the pace of 2010. My home market of Milford, along with Lyon/South Lyon and White Lake are lagging the 2010 pace for home ales in May right now.

Some of this might be attributed to the lower inventory levels this year and the temporary slowdown in foreclosure sales as the industry tries to sort out the MERS mess in our state. MERS is the holding company created by the banks to provide a holding company (some would say dumping ground) for their bad loans. MERS was the entity that foreclosed on many people and now the Michigan Appeals Court has ruled that it did not have standing to initiate those foreclosures, so it nullified them. Chaos has ensued has lenders and buyer alike scramble to figure out if the foreclosures that MERS was involved with will have to be redone. The Appeals Court decision is being appealed.

So whether it’s the weather or confusion over foreclosures, something seems to be holding back the market a bit here in the start of what should be our best selling season.

April 2011 redux...

2011-05-07T07:45:00.000-04:00

The month of April 2011 was perhaps a tuning point in the process of recovery in the Southeastern Michigan real estate market. The results for April, 2011, in six local markets that I have been tracking for over a year are shown below, along with up-to-date Altos Research charts of the median sales prices and inventory for those markets. If you looked at the numbers by themselves you would not see the turnaround in four of the six markets.

Milford

Number of homes sold (above $20K) – 18
Percentage of sales that were distressed – 35%
(foreclosures or short sales)
Median Sale price - $240,000
Average SEV multiplier – 1.9174
Average sold $/Sq Ft - $112

The Altos Research chart for Milford –

Let's hope that was an inflection point in April and that the Milford Market has turned the corner. Distressed sales are well below 50% and the $/Sq Ft and the SEV multiplier numbers are the strongest in the area. Of course some of that is due to stubbornness on the part of sellers who refuse to drop prices to sell. That's why this is such a small market right now.

Highland

Number of homes sold (above $20K) – 15
Percentage of sales that were distressed – 53%
Median Sale price - $175,000
Average SEV multiplier – 1.8280
Average sold $/Sq Ft - $97

The Altos Research chart for Highland –

Highland (along with White Lake) continues it's role as a poster child of the bad market. Distressed Sales still made up over 50% of total sales, although the $/Sq Ft statistic was up in April.

Commerce

Number of homes sold (above $20K) – 51
Percentage of sales that were distressed – 51%
Median Sale price - $138,500
Average SEV multiplier – 1.5662
Average sold $/Sq Ft - $74

The Altos Research chart for Commerce –

Commerce continues to be a roller-coaster ride for would be sellers, but it is currently on an uptick, both in sold Median Prices and Inventory levels. Hopefully that is a harbinger of a better summer selling season; although Distressed Sales still make up too much of this market.

White Lake

Number of homes sold (above $20K) – 27
Percentage of sales that were distressed – 67%
Median Sale price - $148,000
Average SEV multiplier – 1.5590
Average sold $/Sq Ft - $69

The Altos Research chart for White Lake –

The chart shows White Lake to be a market that is still in serious distress. After and end of year recovery of sorts last year, things have been consistently down in 2011. That is consistent with the numbers for SEV multiplier and the $/Sq Ft.

South Lyon/Lyon Twp

Number of homes sold (above $20K) – 16
Percentage of sales that were distressed – 31%
Median Sale price - $200,500
Average SEV multiplier – 1.7587
Average sold $/Sq Ft - $82

The Altos Research chart for South Lyon –

Inventory is headed up while Median Sold Prices are falling, an indication that all is still not well in this market.

Brighton (City and Twp)

Number of homes sold (above $20K) –23
Percentage of sales that were distressed – 39%
Median Sale price - $150,000
Average SEV multiplier – 1.6233
Average sold $/Sq Ft - $88

The Altos Research chart for Brighton –

The Brighton Market is one of the few in the area that is headed in the right direction, with both median sold prices and inventory headed up.

Milford Real Estate Market Report April 2011

2011-05-02T07:32:00.002-04:00

There were 17 homes that sold for more than $20,000 in Milford, Michigan in April, 2011. Of those 35% were distressed sales – either foreclosures or short sales.

The Average Sale Price was $368,556 and the Median Sale Price was $240,000. Those figures (the Average was greatly influenced by one sale for $1,350,000)

In general, home sold for 1.9174 times their State Equalized Value, which is supposed to represent ½ of the assessed value.

Homes sold for an Average of $112/Sq Ft in April.

On average the sales prices were 93% of the asking prices in Milford.

In 2010 the numbers were –

Average sale price - $146,832, and Median sale price - $144,450

In 2010 the average sale price was 1.2949 times the SEV and homes sold for an average of $83/Sq Ft

So, we’re making progress in Milford in getting out of the real estate market malaise. For all of the data on the Milford market, as well as 8 other surrounding markets, go to my Web site – http://www.movetomilford.com/ and click on the What has sold locally choice.

Here’s a chart from Altos Research which shows the trends for home sale median values and the inventory level in the Milford market.

You can see that late March and most of April were back into positive trends. Perhaps we've seen the inflection point for theis market and not even recognized it at the time.

Has MERS Met its Match in MIchigan? Maybe.

2011-04-30T18:05:00.000-04:00

A national company name Mortgage Electronic Registration Systems or MERS is both the holder of record of many mortgages across the country and the major filer of foreclosure actions in most states. There have been several law suits involving MERS and many headlines claiming that they used robo-signers and had no authority to foreclose anyway.

Some of the suits were probably brought by the same clowns who loudly proclaim that the U. S. Government has no legal right to collect taxes. There will always be a vocal cadre of ignorant people shouting nonsense about legal issues for about which they don't have a clue. MERS has prevailed in most cases, but they now face a series of cases in Michigan in which the Michigan Court of Appeals has rules that they did not have standing under Michigan law to file for foreclosure.

Read the details below, which contain the comments from Dan Elsea, President of Brokerage operations for Real Esatate One, Michigan's largest real estate company.

MERS Michigan Case Details

The general theme of this case is the interpretation of the statue as it applies to the entity Mortgage Electronic Registration Systems, Inc. (MERS) and their legal ability to act as the nominee for the lender in the foreclosure action, even if named as the mortgagee. In spite of the opposite ruling in the two prior courts, the Michigan Court of Appeals recently held that MERS is not "the owner of the indebtedness, or of an interest in the indebtedness secured by the mortgage, or the servicing agent of the mortgage" 9MCL 600.32 04(1)(d). The court also held that MERS as the mortgagee only held an interest in the property as security for the note, not an interest in the note itself. (remember that the note is the promise to pay)

The Michigan statute requires that ALL of the provisions of the statute must be met to permit foreclosure by advertisement versus judicial. Specifically, it requires that the party foreclosing is 'THE OWNER' of the debt , or the OWNER of an INTEREST in the debt secured by the mortgage or the SERVICING agent of the mortgage. In MERS case, they acted on behalf of many lenders as nominee or mortgagee of record. Their role was to supervise and report on the moving around of the beneficial ownership interest or servicing rights which were often transferred amongst members. It appears there were never any specific recordings of these transfers in a public forum, only electronic tracking services. In Michigan the opinion is that the Legislature REQUIRES ownership of an interest in the NOTE before permitting foreclosure by advertisement.

One reason the Michigan Legislature wrote the language the way it did was to prevent the possibility that borrowers would be obligated under the note to more than one entity and potentially be subject to double exposure. In other words, one could potentially lose the property through MERS, and still be sued by the NOTE HOLDER for the amount of the debt because MERS technically does not have the authority to discharge the NOTE.

The conclusion of this case (3 judges-1 dissenting) was that MERS did not OWN the indebtedness, did not OWN and interest in the INDEBTEDNESS SECURED BY THE MORTGAGE OR EVEN SERVICED THE MORTGAGE. The court concluded that MERS' inability to comply with the statutory requirements renders the foreclosure proceedings in the cases VOID ---ab initio. (For example, if something is said to be void ab initio,the thing was never created or valid to begin with) Remember-- there was a dissenting opinion from one judge and there are options for another hearing that may reverse this current opinion or uphold it.

Until the case winds its way to the Michigan Supreme Court, we won't know for sure whether the Appelate Courts decision will represent the law in Michigan. Clearly this is a mess in Michigan, as it is elsewhere, and will need to be resolved. Like Dan, I believe that homeowners might have at best a temporary moral victory. Whether it be by MERS or the banks directly, the deadbeat homeowners will eventually be foreclosed and evicted. Of course, many of these same deadbeats see this as a way to get another 6-8 months of free housing, which is the kind of mind set and thinking that got them into this situation in the first place.

The victory, however temporary the stay of foreclosure might be, it to be found in the principal that the banks cannot treat the system of recording and maintaining a documented trail of evidence of ownership as lightly as they have been. A recent article in Bloomberg Businessweek by Hernando deSoto. a renowned Peruvian economist, makes a convincing case that the recent financial meltdown was caused as much as anything by the breakdown of the public record keeping and transparency for debt of all kinds, not just mortgages. Mr. deSoto explores the lack of transparency and accountability in several sectors of what he claims has become a $15 Trillion underground parallel economy. The MERS scenario. along with huge pools of risk in arcane derivatives that were not understood by anyone and largely undocumented (at least in public), just set the stage for the eventual worldwide financial meltdown.

Let's hope that someone or some state eventually prevails against the lunacy of MERS and other attempts to obliterate the trail of documented ownership that is critical to the concept of begin able to pass "clear title" to a new owner. As it stands, the MERS mess gives title companies pause when considering the issuance of title insurance for homes that have mortgages that have been included in these bundled mortgage instruments. It might be difficult for a homeowner to prove that he really owns the property and has the right to sell it.

Seeking fairness for the loss of equity

2011-04-23T06:34:00.001-04:00

The world of law often establishes guilt, settles disputes or establishes precedents by exploring and proving theories. There is a somewhat obscure and arcane branch of law called equity law. It takes place, when it happens at all, in special courts called chancery courts or in special sessions of the more normal civil courts. Only two states still have formal chancery courts – Mississippi and Delaware. The remainder of the states rolled their equity courts in the common law civil court after the Federal Rules of Civil Procedure were published in 1938. Chancery courts are sometimes appointed by the governor of the state.

The concept of equity that is separate from common law comes to us from our English heritage. In England people found reason to appeal directly to the King for redress of issues that were not dealt with fairly in the courts of common law. The King created Chanceries to hear the pleas of the people for fairness on matters that weren’t dealt with well under Common Law. The idea of appealing for “fairness” is core to the concept of equity in this branch of law.

According to The Free Dictionary by Farlex - In its broadest sense, equity is fairness. As a legal system, it is a body of law that addresses concerns that fall outside the jurisdiction of Common Law. Equity is also used to describe the money value of property in excess of claims, liens, or mortgages on the property.

There is also a concept under the broad heading of equity called waste. This concept is associated primarily with real estate equity in these courts.

Again as defined in The Free Dictionary:

Waste is an unreasonable or improper use of land by an individual in rightful possession of the land. A party with an interest in a parcel of land may file a civil action based on waste committed by an individual who also has an interest in the land. Such disputes may arise between life tenants and remainder persons and landlords and tenants.

The four common types of waste are voluntary, permissive, ameliorating, and equitable waste.

• Voluntary waste is the willful destruction or carrying away of something attached to the property.

• Permissive waste is an injury caused by an omission, rather than an affirmative act, on the part of the tenant.

• Ameliorating waste is an alteration in the physical characteristics of the premises by an unauthorized act of the tenant that increases the value of the property.

• Equitable waste is a harm to the reversionary interest in land that is inconsistent with fruitful use.

I read some about the background and theories that are involved in this peculiar branch of law after a potential client, who happens to be a lawyer, suggested that the concept of waste under the laws of equity might provide the legal umbrella under which successful class action lawsuits might be brought by homeowners who find themselves in positions of greatly reduced home equity due to no fault of their own.

Even though the concept of waste is usually applied towards an owner or a tenant, the theory here is that it can be extended to cover the mortgage holder who certainly is a person with “an interest in the property.” The line of reasoning in seeking redress would be based upon the premise (theory) that certain lenders willfully, knowingly and unfairly engaged in practices that caused a loss of equity for the owner.

There is already some evidence and a few admissions on the part of some lenders that they knowingly (and in some cases fraudulently) made risking loans and then packaged those risky loans together with pools of normal loans and sold the resulting investment instruments without proper disclosure of the risks to unsuspecting investors. When a high percentage of the bad loans went into default the pools themselves went bad and the whole house of cards that was based upon those investments came crashing down. The increased foreclosure rates caused by the bad loans had the effect of pulling down the value of those other homes in the pools, and the rest, as they say, is history – the housing crash and recession followed.

A few of the big lenders even created hedge instruments that allowed them to bet that the bonds for the mortgage-backed pools would fail. So, they made money selling the bonds based upon the pools of mortgage AND they made money by selling bonds (mainly to themselves and friends it would appear) that bet that those mortgage-backed bonds would fail due to high default rates.

Now, supposing that this behavior on the part of the lenders and the resulting loss of equity can be proven to the satisfaction of a chancery court judge (jury trials are not required in these courts, just a hearing in from of a judge or panel of judges) the directed redress from the court might well involve restoring the lost equity to the homeowners, which is usually how equity cases are settled.

Since it is literally impossible to restore the equity, even by court order; the next best solution might be for the court to direct that the lost equity be forgiven by the errant lenders involved and resets of loans to the current equity levels (which their actions caused to happen) should take place. While that is financially painful for the lenders involved, it does have a ring of fairness about it and it is what many experts have been saying needs to be done to get out from under the current cloud of negative equity. The banks aren’t about to do that on their own.

A solution based upon a court of equity decision wouldn’t necessarily apply to all mortgage loans everywhere. There were and are many lenders who did not engage in the practices that led to the crash of home equity. These might be smaller regional banks or credit unions which made mortgage loans and held on to them. They watched in horror, along with their mortgagees, as the home market tanked. They and their mortgagees probably have no chance for redress under actions that might be taken in the court of equity; however, these homeowners might join the class of actual customers of those lenders who caused the problem and claim that their actions tainted the entire mortgage pool and thus impacted their own equity. How that would be redressed is problematical.

So, what, you may ask, is the point of all of this? Well, the tobacco companies were able to thwart the legal efforts of many individuals and some early class action suits until lawyers finally found an argument (a theory) that they could apply across the class of smokers who became cancer victims even after the tobacco companies had plenty of evidence (and lots of juicy internal emails to boot) that their products were a cause of greatly increased risk of cancer for smokers. In other words they knowingly caused waste to the health of their customers. When enough States Attorneys General jumped on that bandwagon the big tobacco companies caved and they settled.

Perhaps the same cause-effect theories can be shown and proven for real estate under the concept of waste by the lenders causing the loss of equity of the homes of mortgage borrowers across America. It’s worth a shot by some good lawyers somewhere. Imagine the juicy emails that would come out of the disclosure process for that Chancery Court hearing.

To read more about this interesting, if somewhat obscure, branch of law just Google “waste and a legal term” and follow the links.

Break out the bubbly, the bleeding has slowed…

2011-04-21T07:18:00.000-04:00

Today’s Detroit Free Press has a story under the headline – Oakland Co. housing set for rebound, report says. The story is based upon a report that shows that assessed housing values in Oakland County dropped less last year than the year before; with a forecast of an even smaller decline in the assessed value for next year. The story also reported the decline in our foreclosure rate. The assessed value drop reported for 2011 was 9.18%, which was les than the 11.75% for 2010. The 2012 forecast drop in assessed values is only 3%. Foreclosures peaked in 2010 at 9,292 in Oakland County and are forecast to be down about 11% this year. There were even two markets in which the assessed values actually went UP! The city of Northville (at least the portion in Oakland County reported an increase of .53% and the city of Pleasant Ridge was up .60%. Below are the numbers for the markets that I track in Oakland County:

Milford Township: -5.42%

Highland Township: -6.87%

Commerce Township: -3.84%

White Lake Township: -6.50%

Lyon Township:-2.73%

City of South Lyon: -5.55%

West Bloomfield Township: -7.33%

While it may seem strange to celebrate while declines in assessed values are still taking place, the decline to low single digit losses in value are good indicators that the market is in the process of leveling off and about to head in a positive direction. There are still some sore spots in Oakland County. Pontiac, for instance is off 22.89% in assessed values. Other hard hit cities include Hazel Park at -17,74, Oak Park at -14.81, Fenton at -13.95 and Southfield at -13.20%. Of the Oakland County townships, Waterford was the hardest hit at -11.70%, with Novi also in double digits at -10.18%

The Free Press story went onto chronicle some of the tax base consequences and the difficulties that local governments are having dealing with the revenue losses, due to lower taxes. It’s hard for homeowners to be too empathetic to the trials of local governments when many find themselves trapped in homes with negative equity; however, those reduced local budgets are starting to manifest themselves in reduced local services and local infrastructures that are badly in need to attention.

So, what are we to make of stories like this? Certainly everyone is searching for the bottom of the current economic and housing malaise. Some of the stories that we see about increases in existing and new homes sales are caused by the seasonal nature of real estate – more people just finally get out and start looking to buy it eh spring. However, if you look across the whole spectrum of articles that are finding small positive signs of recovery, yo can’t help but be hopeful. There is sufficient evidence in the decline of bad things, whether it be the rate of foreclosures or the lower rate of assessed value loss; and, the stories of increases in applications for mortgages and housing starts going up and inventories going down, to find reason for optimism that worst is over in this long winter of discontent.

I think I have personally written at least 3-4 blogs over the last few years asking the question, "Are we there yet?” about the bottom of this dreary market. Well, I’m not sure that we’re there yet, but it feels like we’re damned close. It may not be time to break out the Champaign , but maybe I’ll pop the top on Bud (after all it has bubbles, too).

Olly, Olly All In Free...

2011-04-20T07:13:00.001-04:00

There is some disagreement about that phrase. It is often written as Olly Olly Oxen Free; but, whichever, the phrase yelled at the end of a game of hide and seek told the still hidden that it was safe to come out of hiding now...that the current game was over and it was time to restart the game.

Well, it's time for a big "OLLY OLLY ALL IN FREE" cry to go out to the housing market. The current housing depression game is over and it's time to start a new game. The problem is that too many would be sellers are still hiding out, hunkered down and waiting to put their homes on the market. Well, Olly, Olly All In Free. It's time!

Our local inventory has been dropping for several quarters and now we find ourselves with a severely depleted inventory of non-distressed homes as well as distressed homes. The distressed homes have been selling so briskly that they are now subject to bidding wars as more investor money chases the falling inventory. And so-called "normal" sales have been good enough to more than absorb what little inventory that has been hitting the market. The result is an inventory as we enter the spring selling season that is pathetically thin, especially in the middle prices. Olly, Olly All In Free! Let's get out there people.

Many homeowners who would like to sell have been trying to guage the market bottom; but, as stock market analysts will tell you, trying to time the market is a fools' game. Stockmarket pundits can tell you with great certainty when the market changes...about a quarter ago. They look back at data that is months old and finally see the inflection points. We'll probably be able to do the same thing in the housing market. I'm sure that Lawrence Yun, the NAR economist, will be able to provide great scholarly proof of what happened and when, about 2-3 months after the fact. In the mean time Olly, Olly All In Free! It's changing people.

Somehow buyers seem to know that the end of the buyer's market may be near. They are out in a frenzy buying up distressed homes in my area, with many now involved in bidding wars over HUD houses and foreclosures. An would be move-up buyers are calling, looking for help because they can't seem to find what they're looking for as they wander around searching for lawn signs. That's because the sellers are still hiding. Olly, Olly All In Free! Come out, come out, where ever you are and join the new game.

Dramatic differences when distressed sales removed

2011-04-18T09:21:00.000-04:00

I track and report upon several local real estate markets. In general I report on all of the sales in each market, which obviously includes a big slug of distressed sales - foreclosures and short sales - these days. Potential customers often complain that they shouldn't be lumped in with those distressed sales when I'm evaluating a market price for their home. They are partially correct. The distressed sales do have an impact on the overall market by lowering everyone's value. But by how much and what is the difference between the two categories - total market and non-distressed only sales? I decided to review my data to see if I could see that difference.

I must admit that I was not prepared for the dramatic differences in some key metrics. In general the median non-distressed homes sold for $40,000 or more than the total market median price. The impact on the SEV multiplier is even more dramatic, rising between .35 to .5 depending upon the specific market. The difference in price per square foot is also dramatic, ranging between $16-26 per square foot for non-distressed homes. Below are some of the markets and the differences.

Milford Overall Market
Median Sold Price - $200,000
Average SEV Multiplier - 1.5316
Average Sold Price/Sq Ft - $80

Milford Non-Distressed
Median Sold Price - $240,000
Average SEV Multiplier - 1.8775
Average Sold Price/Sq Ft - $100

Highland Overall Market
Median Sold Price - $97,000
Average SEV Multiplier - 1.4881
Average Sold Price/Sq Ft - $72

Highland Non-Distressed
Median Solf Price - $235,500
Average SEV Multiplier - 2.0011
Average Sold Price/ Sq Ft - $102

White Lake Overall Market
Median Sold Price - $136,425
Average SEV Multiplier - 1.5937
Average Sold Price/Sq Ft - $75

White Lake Non-Distressed
Median Sold Price - $179,375
Average SEV Multiplier - 1.8624
Average Sold Price/Sq Ft - $87

Commerce Twp Total Market
Median Sold Price - $154,000
Average SEV Multiplier - 1.5943
Average Sold Price/Sq Ft - $80

Commerce Twp Non-Distressed
Median Sold Price - $225,000
Average SEV Multiplier - 2.0028
Average Sold Price/Sq Ft - $96

So there is a case to be made for keeping the two markets separated for purposes of advising would be sellers what their home might fetch on the market. In general sellers still want to start out too high, but not as bad as one might have thought. I looked at the Days on Market figures too and not unexpectedly the non-distressed homes are on the market longer, although that is a statistic that is so often gamed by the listing agents (keeping the listing "fresh" by re-listing rather than extending) that ii is not always a very accurate indicator.

Up popped the devil we know…

2011-04-11T07:05:00.001-04:00

My gut told me that March was a tough month, just based upon the high percentage that I saw in the data for my little patch (9 townships that I track), and the headline in today’s local paper confirmed that feeling. Foreclosures jumped back up in March, after having been down in January and February. There were 955 foreclosures in Oakland County in March of this year, as compared to only 915 in March last year. January 2011 started out with only 558 foreclosures in Oakland County, which gave us some hope that the worst was behind us. It was not to be. We seem to be in that confused and confusing state of change that occurs near the bottom of any recession. We haven’t quite reached the inflection point or at least not one that has proven to have legs. We keep bouncing along near the bottom, moving up and down in what appears to be a random pattern, but with distressed sales – foreclosures and short sales still dominating the markets. Last week was the first time in a long while that distressed sales made up less than ½ of my market. I took that to be a good sign. Another good sign is the fact that houses above $200K are selling again, even if they aren’t distressed. That’s good for two reasons – 1.) it says that move-up buyers are back out in the market, and, 2.) it will encourage more would be sellers of midrange homes to get them on the market. We have actually had a very low inventory on the market locally of good mid-range homes that are not distressed. A good portion of the newspaper article about the foreclosure spike in our area focused upon the impact on the tax base and revenues of local governments. This was another year of declining assessed values in our area, with properties down 8-12% depending upon the area. That not only impacts the tax base, but the ability of many owners to even consider selling. The value declines are a real mixed blessing. They mean lower taxes, which everybody is in favor of; however, the continued decline in values continues to put “innocent bystander” homeowners underwater. Now many people who did nothing wrong, who did not overextend themselves or buy more than they could afford; find themselves in the some boat as the people who supposedly caused this mess. I guess, if you are on the Titanic, you never know who you’ll end up in the lifeboat with when the ship goes down.

Census uncovers size of the problem in affluent neighborhoods…

2011-04-07T07:36:00.001-04:00

Articles in today’s Detroit News reported on the surprisingly high percentage of empty homes in some of Detroit’s more upscale suburbs. Places like Bloomfield Hills and Birmingham with upscale homes have always been considered to be somewhat immune to economic downturns. After all these are not places where hourly workers live, don’tcha know.

The News articles reported empty hoe rates of of 9.4% in Birmingham and 10.2% in Bloomfield Hills. One interesting note in the article was the fact that this issue is masked somewhat in those areas because the local governments make sure that the lawns and exterior of the empty homes are maintained, so as to keep up a good impression for the neighborhoods. One resident was quoted as stating, “Even our blight is better.”

These are neighborhoods where owners are walking away from $1.5 Million homes that are nor only worth $600-700,000. These are mainly occupied by what were (and still are in most cases) wealthy Baby Boomers who are now retiring. Many are people with money who are making “strategic default” decisions (see my blog on that topic here). Some are older and may be headed to elder care homes. There are many reasons sited for the high vacancy rates in these rich suburbs, but the bottom line is that many of the people who were apparently wealthy weren’t as well off as we thought or they aren’t as willing as the average Joe on the street to sacrifice in order to keep up payments on underwater assets. That is perhaps the main reason – they see these houses more as assets than as homes and they are willing to cut their losses with those assets just as they would with a poorly performing stock. After all, they can go live in their 4,000 Sq Ft cottages in Traverse City or Aspen until this all blows over. One is hard pressed to feel much sympathy for those now “homeless” people.

In the same Detorit News issue there was also an article that claimed that much of the current home buying in America right now involves cash sales to foreign investors. Apparently they see the U.S. housing market as a golden opportunity to park money in something that they feel has better potential for income (rentals) or eventual appreciation than stocks or bonds. We certainly all know that it is great time to be a buyer, especially if you come with cash in hand. So if you see a foreign buyer wandering around you market with a bag of money, send him my way – have I got some houses for him.

Get over it...

2011-04-06T06:49:00.001-04:00

“Sometimes you’ve got to say to someone, ‘Get over it.’”(Anon) from the Jack’s Winning Words blog.

I’ve blogged in the past about Anon, the world’s most prolific author. The words of Anon seem particularly appropriate in today’s real estate market.

I spent the weekend basically telling potential seller’s to get over it as it concerns the lost value of their homes. Sometime you will hit a fairly realistic homeowner – one who has watched what is gong on in the world and does not believe that somehow there was a miracle and his house was spared the ravages of the current market. However, more often I hit the older couples who just can’t come to grips with the fact that between 1/3 and ½ of their nest egg of home equity is now gone. Moreover, many of them are holding on to the false hope that the dust on the horizon is the cavalry riding to their rescue with an immediate return of value, rather than just more Indians joining the battle to pick over the remains of their equity.

I use lots and lots of facts and comps and charts and other data driven stuff to support the “news” that I have to break to them; however, I continue to get the push-back that , “my house is different, it’s better, it certainly hasn’t lost that much value.” It has. Get over it!

Now, obviously, I’m seldom that blunt or insensitive to the pain that my market pricing analysis brings into the discussion about selling and moving on. In fact, I’ve cried with recent divorcees who have to sell and move their children as part of a settlement and prayed with recent widows who found out that their deceased husbands didn’t provide well enough for an untimely death. I’ve had long, empathetic discussions with husbands whose losses of jobs have forced them to the brink of bankruptcy and into feelings of failure and inadequacy. Even in all of those circumstances one eventually comes to the point of having to say; OK, we’ve had our cry; now, get over it and let’s move on.

So, I’m off to present yet another market analysis to yet another underwater pair of sellers who recently retired. I’ve got my hankies ready. We’ll get over it. That’s how real life works.

Using distressed sales as comps – some states say no…

2011-04-05T07:00:00.003-04:00

In today’s RealtyTimes email is a story by Bob Hunt about several states passing or looking at passing laws that try to govern how appraisers might use (include or not include and how to factor) distressed sales – foreclosures and short sales. Click here to read the entire article.

The legislators in the states involved undoubtedly believe that they have the best interests of their citizen at heart – legislators, after all, always seem to think that they know what’s best for us. However, as Hunt points out in the article, these state laws may put the appraisers at odds with Federal laws which state that they must use all available sales in establishing the local market pricing. Hunt goes on to point out some of the complexities that appraisers already need to figure out in order to comply with the Federal guidelines under the Uniform Standards of Professional Appraisal Practice (USPAP), and how these new state rules would further complicate things.

Hunt uses the figures 30-40% of all sales as his measure of what percentage of all sales involve distressed properties. In my area that is still running well about 50% and reaches as high as 70% in some markets. It would be almost impossible to find enough comps to do an analysis without using distressed properties in my markets. The challenge for Realtors® and appraisers alike is figuring out how to factor in the impact of neglect or intentional damage to these distressed houses when using them as comps.

One might make the argument that even if one is diligent in not using distressed homes as comps they still have a large impact on value, since they are now heavily influencing assessments in most areas, causing home values to continue to drop. It is also somewhat ingenuous to think that these homes are not a major part of any local market, especially in my area where they make up such a large portion of the actual sales. I have seen figures that show that they make up less than 25% of the overall inventory on the market in my area and yet they constitute 50-70% of the actual sales in 8 out f the 9 markets that I track.

When I’m doing CMA’s for local clients I try to take out the most egregious examples of distressed homes – those maybe selling for $40-50/Sq Ft in a neighborhood that averages $90-100/Sq Ft. Those are usually the homes that have been trashed or stripped by angry ex-owners and should not be included. I trend to leave short sales in the analysis and foreclosed homes that look like they brought reasonable prices. Those are arbitrary calls on my part, but then the whole home valuation process is much more arbitrary these days that in “normal times”, whatever that was.

A tale of two townships - Green Oak and Hartland

2011-04-03T06:43:00.005-04:00

Two of the townships that border on Milford, Michigan are in Livingston County on either side of Brighton. They are Green Oak, which is just west of Lyon Township in Oakland County and Hartland Township, which is just west of Highland Township. Green Oak and Hartland share some characteristics in common. They are both what might be considered to be "bedroom communities", that is to say that they don't have any strong central town/city/village downtown areas around which they revolve.

While Hartland Township does have an unincorporated little area that calls itself Hartland and another unincorporated area called Pharshallville, neither little "village area" has a strong downtown and were likely never much more than a small farm towns. There are few businesses in either to attract anyone. Green Oak has even less of what could be called a central core and was always a fairly rural area. I supposed that it could be argued that the Village of Whitmore Lake is Green Oak's "commercial center." Both tend to be heavily influenced by the City of Brighton, although both do have commercial, shopping strips. Green Oak is served by three different school districts - Brighton, Whitmore Lake and South Lyon - while Hartland does have its own consolidated school district.

One would assume that the real estate markets in these two little suburbs of Brighton would be fairly consistent with that of Brighton itself. In fact, Green Oak is not even tracked and reported separately from Brighton by the Altos Research folks, from whom I get my market charts. However, Hartland is reported separately and is on a completely different track than that of Brighton. The chart shows what appears to be a bottoming out of the market in Hartland after a sustained fall in median home values of sold homes and a continued drop in inventory.

The Green Oak market is included in the Brighton chart, which shows a remarkable recovery of median home prices late last year,, with a bit of leveling off early this year and a continuing decline in inventory.

So far this year, there have only been 31 homes sell in Green Oak Township above $20,000 (my arbitrary cut-off point for tracking purposes) at an average price of $84/Sq Ft and an SEV multiplier of 1.6206. That means that homes that the assessor says are worth $200,000 have been selling on average for about $162,000 in Green Oak or about 81% of the value that they are assessed for. Distressed sales - those that are short sales or foreclosures - made up 46% of all sales in Green Oak so far this year.

In Hartland Twonship, only 30 homes have sold thus far in 2011 at an average SEV multiplier of 1,6255 and at an average of $74/Sq Ft. Hartland has seen distressed sales of 53% of all sales so far this year.

Green Oak has benefited a bit from being out along the I-96 corridor, which makes is a good commuter location for those oriented towards Detroit for work. Hartland is along the M-59 and M-23 corridors, which is not nearly as accommodating for Detroit-oriented work commuters.

South Lyon - a market that refuses to die...

2011-04-02T07:38:00.002-04:00

The South Lyon/Lyon Township market has proven to be remarkably resilient in the face of the worst recession since the Great Depression. much of last year found the South Lyon market on an upward trajectory in median sold values and inventory. Near the end of the year, when most other local markets tanked, the South Lyon market stubbornly refused to be dragged down. It stabilized and has been bouncing along at that level every since.

A good part of the ability of this market to continue to prosper is based upon the fact that is was the fastest growing new-build market in the area before the bust. There are still new subs being built there and even though most slowed to a crawl in the depth of the recessison, most developers there did not go bankrupt, so they are still building as we come out of the recession. Many other areas saw developers and builders exit the business and leaving unfinished projects in the lurch.

The Lyon/South Lyon area also benefits from its location out along the I-96 corridor. It is relatively easy to access I-96 and get to where ever one wants to go from South Lyon. It is also perhaps feeding off buyers who work in the Brighton area, since it is right next door to Green Oak and Brighton Townships.

So far in 2011, 54 homes above $20K have sold in the Lyon area at an average price of $89/Sq Ft - well above surrounding areas and an SEV multiplier of 1.8638, also well above neighboring townships. South Lyon has had a lower percentage of distressed homes sell, too; which helps keep those numbers up. It is currently running at only 32% of all sales that are distressed, about half the rate of neighboring townships.

In White Lake Michigan the swoon continues...

2011-04-01T07:07:00.002-04:00

After a brief respite at the end of last year, when things looked like they had stabilized and might be turning around, median home sale values in the Township of White Lake are again headed down and is inventory on the market

White Lake continues to suffer a high percentage of distressed home sales, with distressed sales making up almost 70% of all sales in March. So far this year, there have been 55 homes sell at an average SEV multiplier of 1.5992. That means that a White Lake home that the assessor says is worth $200,000 actually sold for an average of $159,920 or about 80% of what the assessor thinks it's worth on the market. Home sale prices also averaged about $75/Sq Ft, which isn't all that bad when compared with other local markets.

White Lake is a fairly populous suburb and the last one along M-59 before you get into what might feel more like rural areas - Highland and Hartland are the next two townships out along M-59. White Lake features some very good shopping areas along the M-59 corridor.

What's up with West Bloomfield?

2011-03-31T20:28:00.003-04:00

A visitor from another planet who just looked at the real estate charts and statistics for West Bloomfield Michigan might conclude that this must be a poor area with a badly distressed economy. I suppose that last part might be partially true, but West Bloomfield is anything but a poor area. It is just an area that has been hit hard by the recession and which is still reeling, with distressed home sales (foreclosures and short sales) running above 70% of all home sales thus far in March and about that same level so far year-to-date.

The Average Median Price of homes sold in West Bloomfield has struggled back up a bit since the new year started, but the high percentage of distressed sales is keeping things artificially low right now. West Bloomfield homes have sold so far this year for an average of 1.5369 times their SEV values and about $72/Sq Ft. That means that a home with an SEV of 150,000 that the assessor says is worth $300,000 would likely have sold this year for $230,535. No wonder Tums sales are up in West Bloomfield.

West Bloomfield is an older, fairly well built out community, with many "upscale subs that were built in the late 70's and 80's. Those homes, many originally built for around $85-100K (big money back then) had appreciated to nearly $300,000 before the bubble burst. Now sellers are lucky to get $130-150K for them. Unfortunately for many, the value of their homes was a large portion of their retirement nest egg - a nest egg that has largely vanished. For others, their homes were like piggy banks that they kept taking money our of to pay for various other toys and now many are trapped in homes which are severely underwater on value vs. the mortgages.

Highland does the double dip...

2011-03-31T19:57:00.006-04:00

Real Estate in Highland, Michigan has been hammered by the recession and now appears to be going into a second swoon - a double dip.

Both Median sold home prices and the Inventory level are back on their way down, after a brief run-up in the 4th quarter of last year. The huge spike in new inventory can probably be attributed to the a burst of listings by sellers who have been like a little boy holding his breath and needing to take a deep breath. In this case the brief run-up in sold prices spurred and over-response by would be sellers to get in on that market - a market that turned out not to really be there.

So far this year, 41 homes priced above $20K (my arbitrary cut-off price) have sold. The average SEV multiplier so far in 2011 is 1.5079, which means that house that the assessor says is worth $200,000 would have actually sold for $150,790 or about 75% of the value that the tax man thinks it is worth. Obviously the local assessors are playing catch-up with the market. That house would have sold for an average of $72/Sq Ft, compared to all of last year at $74/Sq Ft. Of course last year homes sold for an average of only 1.3949 times their SEV, so I guess the assessors are getting closer to market value.

Foreclosures and short sales continue to make up a significant portion of overall sales, but they are running at under 50% for March, which is good and the first time that they've been below 50% in some time.

The clarity of hindsight…

2011-03-30T07:08:00.001-04:00

An article by Clara Hill in today’s Realty Times release uses statistics released by the National Association of Home Builders to quite confidently discuss events that took place in February. According to her article, sales of newly-built homes declined by a staggering 16.9 percent in February; as reported by the U.S. Commerce Department. That was a national average with the Northeast hitting a record low, falling 57.1 percent last month. The Midwest was down by 27.5 percent.

This “news” followed reports earlier in the month which stated how confident the NAHB was that things are getting better. Now, of course they discuss in great detail all of the factors that have stalled out new home sales. Hindsight is a wonderful thing.

The pronouncements based upon hindsight are also the only truths that sometimes get reported. There are many guesses or hopes that also make the news, usually positioned as forecasts by various learned men or groups. They actually provide some of the best fodder for the hindsight writers to feast upon later – sort of the “what were they thinking” tag line.

I’m reminded of the recent statements that have been published by Daniel Kahneman, Nobel laureate in economics, which quite correctly pointed out what a buffoon Alan Greenspan is and always was when he repeatedly sat in from of various Congressional panels spouting total nonsense, which of course they took in with wonder and adoration.

Greenspan was, after all, “the smartest guy in the room”; even thought not one of the Congressmen or Senators had any idea what he had just said. Alan, as Kahneman pointed out, has mastered the art of talking in economic gobbledygook to such a level that not only did no one know what he was saying, they didn’t know how to question or refute it. It is only though the clarity of hindsight that anyone has come forward and stated – this guy led us down the garden path to recession.

It’s just too bad that in the midst of the hindsight driven witch hunt that is now gong on for scapegoats in the banking world that there isn’t some way to drag Greenspan into court for his role in perpetrating this mess upon the country. One can only imagine the appropriateness of Alan Greenspan sharing a cell with Jeffrey Skilling or Bernie Madoff – two other smartest guys in the room – although they are pikers compared to the damage that Greenspan did to the U.S. economy. Now that would be a sight worth seeing.

MIA - First time buyers

2011-03-29T17:23:00.002-04:00

According to a recent National Association of REALTORS® (NAR) article, in January, first-time home buyers made up 29 percent of the market, the lowest since NAR began tracking first-time buyers on a monthly basis in 2008. First-time buyers normally make up 40 percent to 45 percent of all purchasers. Where'd they go? USA Today also had a recent article that highlighted some of the factors that have first-time home buyers sitting on the sidelines, even though home prices continue to all and mortgage rates are near their all-time lows. USA Today sited: • Tougher lending standards – Not only have lenders tightened up their requirements, but they have also backed away from most of the down payment assistance programs that used to allow these buyers to get into a home. • Expired tax credits – The tax credits were the tipping point for many first time buyers, especially with programs in some states that allowed the credits to be taken up front as part of the transaction. • Competition from cash buyers – While HUD and the GSE’s have programs that give first-time owner-occupants the edge over investors for really low-cost houses that have been foreclosed, investors are waiting like a tree full of vultures to swoop in as soon as the initial 10-14 day period for O-O buyers is up. I would add to this list that it is my gut feel that most of those first-time buyers who were really ready (with money saved up to take the plunge) have already bought. There is not an endless supply of first-time buyers, especially those that have been fiscally responsible and have been saving up to buy. I might add that I’m seeing the same thing start to happen with investors, especially smaller investors. They have tapped themselves out in cheap houses and are now pulling back to regroup a bit. There are still investor pools out there buying; but many of the small-timers are fully invested at this time. I suppose that, if there is a silver lining in the statistics, it’s that mid-range and upper end buyers are making up a higher percentage of buyers overall. The mid-range buyers (our traditional move-up buyers) seem to be testing the waters more and more as they become more confident in the overall economy. They are finding some great bargains in the market, although much of what is holding them back is that they can’t find t a first-time buyer to buy their current home. The Boomers are widely reported to be sitting on their McMansions, hoping for a miraculous recovery of lost value. That’s not likely to happen and it may take a few more years before they finally give up and swallow the losses. I suspect that most can hold out for a year or two once they retire before they realize that not only are they missing their dream retirement plans, but may also be stripping their savings to pay for those houses at a rate that will put those plans permanently out of reach. Having a highly leveraged a big house just doesn’t look nearly as smart, once you go on a fixed income. The upper end of the market has not been immune to the effects of the recessions either, with some really big homes falling into foreclosure; however, there is still a reasonable market for luxury homes and condos in this area. I suspect that it is much worse in Florida and Nevada and California. Still, one can get great deals in the $750K to 1.5 Million range for homes that were $1 – 2 Million. Ahhh, if only one had that 1.5 Million to invest. So, I see the buy-side of the market in my area in sort of a settling out and settling down phase right now. Even though values are still dropping, many would-be low-end buyers are already tapped out and need to sit the market out for a bit. Midrange buyers are cautiously reentering the market and the upper end is still puttering along like it always has. I suspect that by mid-year the market mix of buyers will reflect a more traditional percentage split between first time buyers, move up buyers and high-end buyers. As for the sell side, we are already seeing a drop in the number of foreclosures taking place locally; however, short sales have kept the distressed segment of the market over 50% of sales in my area. Leases also make up a much higher percentage of transactions than would historically have been the case, as owners who want to avoid a short-sale try to hold out for a return of lost value. The mid-range market continues to see low inventory as underwater owners also hold out (probably unrealistically) for lost value to return. Lots of second homes/vacation cottages are also sitting on the market in summer resort areas. That's what I see happening in the local market in the Milford Michigan area.

2011-03-28T07:03:00.001-04:00

“Optimism doesn’t mean everything is going to be great. It means that we can respond to everything with greatness.” (Elimelech Goldberg) from the blog - http://jackswinningwords.blogspot.com/ Perhaps this saying that Jack featured today on his Jack’s Winning Words blog should be today’s words to live by. Certainly we all have many opportunities these days to respond to things happening around us that are not great. We can’t change them, but we can change how we respond to them. I sometimes struggle with staying positive in these times, but it is a struggle worth continued effort. One has only to look about to be able to find people in situations that are worse than ours. Doing something to improve their lot will also improve yours. The key is to do something and not to just sit still, wallowing in self-pity. So, find some things to respond to with greatness today and see if you don’t feel better at the end of the day.

And still the champ...

2011-03-24T20:14:00.000-04:00

I’m in the midst (three months in) of yet another short sale involving the worst bank in America to deal with in that sort of situation and they have proven again why they are still the undisputed champions of short sale misery.

Yesterday I got a request to have my buyer (at least I’m on the good side of the deal) sign an amendment that states that the sale is subject to the bank’s approval. Now, mind you this is three months into the approval process for the deal and the Purchase Agreement included a Short Sale Addendum which clearly stated that the sale is subject to the approval of all lien holders. I suppose that this particular bank doesn’t want to be lumped generically in with all of the other potential lien holders and certainly not without being specifically named (one would assume for branding purposes).

So now we had to jump through yet another inane hoop put in the way of progress by some buffoon somewhere, who presumably has not even taking the time to read the complete offer package. Is there any wonder why this particular bank has such a well earned reputation with so many Realtors® as the worst bank of America?

If the pace of the decision making process stays on this course, we should have a decision on this sale by mid-June. Of course, every month or two they stop the process and come back out asking us to update the bank statements that the buyer provided to prove his worth for this all cash sale. Fortunately his money is not in that particular institution, otherwise there might be cause for valid concern. I’m tempted to advise my client to revise his offer downward every month or two to take into consideration the continuing decline in property values, but that is way to logical to be understood by this bank.

Monday morning bits and pieces…

2011-03-21T07:08:00.000-04:00

New Build Starts Down Again - According to figures from the U.S. Commerce Department, housing starts declined 22.5 percent from January. Builders said the decline is due to concerns over interest rates, energy costs, and tightened lending standards. At the same time, the Commerce Department reported an overall up-tick in builder confidence for the future – based upon what the Department really didn’t say.

Where’s the people go? - A recent report in Forbes Magazine listed the six most vacant cities (as of the end of 2010)

1. Orlando
Home vacancy rate: 4.3 percent
Apartment vacancy rate: 23.6 percent

2. Las Vegas
Home vacancy rate: 5.5 percent
Apartment vacancy rate: 13.5 percent

3. Memphis, Tenn.
Home vacancy rate: 4.7 percent
Apartment vacancy rate: 16.1 percent

4. Riverside-San Bernardino, Calif.
Home vacancy rate: 6.4 percent
Apartment vacancy rate: 10.4 percent

5. Dayton, Ohio
Home vacancy rate: 3.3 percent
Apartment vacancy rate: 26.4 percent

6. Phoenix
Home vacancy rate: 3.4 percent
Apartment vacancy rate: 15.5 percent

Nationwide, the single-family vacancy rate ended the year at 2.7 percent while rentals were at 9.4 percent.

The Forbes article asked the question, “Where’d all of the people go?” That’s an interesting question in general and I think it points to the size of our nation’s so-called “underground economy.” At least in my area there has been lots of investor buying of foreclosed properties and most of those properties are being bought as rental units. Those kinds of rental units don’t normally show up in the local real estate statistics, because the owners don’t use Realtors to list and rent them – they just stick a For Rent sign in the front lawn with a phone number on it. I suspect that many of the displaced people ended up in those homes and will be there for the next 2-3 years, rebuilding their credit scores.

Where’d the money go? – As reported in the Dow Jones Business News of last week - A congressional panel looking into where the money went that was allocated for helping distressed homeowners has concluded that much of it went nowhere. The Treasury Department allocated $45.6 billion for three major housing programs to help home owners, including the Home Affordable Modification Program (or HAMP), a refinancing program run by the Federal Housing Administration to aid underwater home owners, and a program designed to help hard-hit areas. But the Treasury Department only spent about $1 billion in TARP money for the foreclosure prevention effort, the panel noted. Amidst much Harump, Harumping from the Republican lead panel, increased oversight of the use of bailout money was promised, along with promises to do away with most of the programs and the Government Sponsored Entities (i.e. Fannie and Freddie). Democrats were appropriately unset at any mention of ending the programs and the GSEs.

Doing the civil suit shuffle – According to a story reported last week by the Associated Press, Federal bank regulators (the FDIC) reported that they are suing three former top executives of Washington Mutual, accusing them of allowing risky mortgage lending. In the civil lawsuit, the Federal Deposit Insurance Corp. accuses the three former executives of Washington Mutual Bank of risky lending practices that caused the bank to make mortgages "with little or no regard for borrowers' ability to repay them.” Well, duh! Wasn’t that what everyone was doing back then? Washington Mutual, which was the largest U.S. bank ever to fail, collapsed in September 2008. The former bank officials have released statements calling the lawsuit “baseless” and “political theater.” Of course it’s political theater, but maybe it’s as close to the perp walks that those clowns should be taking that we’ll ever get.

Fresh update of market stats

2011-03-20T10:32:00.004-04:00

I just completed the weekly updating of the market data that I track for 9 markets in my area - Milford (Village and Township combined), Highland Township, White Lake Township, Commerce Township (including Walled Lake and Wolverine Lake), Lyon Township and South Lyon, and West Bloomfield Township in Oakland County; plus, Green Oak Township, Brighton and Brighton Township and Hartland Township in Livingston County.

You can see all of the latest data, plus historical data for many of those markets at my Web site - www.movetomilford.com . I collect and show the last listed price for the house and the sold price, from which I calculate the percentage of sold vs. list to see how close listed homes are to the actual market price. I also look up the SEV (State Equalized Value) and calculate the sold price vs SEV ratio. In theory, since the SEV is supposed to represent 1/2 of the assessors estimate of the homes market value, I should always get 2.0 as the ratio. In practice we have been consistently running between 1.5 to 1.8 times SEV as the actual sold market price.

I also capture and report the Square Footage of the homes and the calculated price per Sq Ft as listed and as sold. Most homes in areas that I track are selling in the mid $80/sq ft range, some much lower. That is a reflection of the impact of distressed homes on market pricing.

The way I display the data is to focus on this month's sales and then also have PDF files available that show the year-to-date statistics for each market. In the Current months data I also calculate the percentage of sales that are distressed - either foreclosed or short sales - and show that at the bottom of the data for each market.

If you are thinking of selling this is a valuable place to get a feel for the market and where you need to price your home in order to be competitive. You can price it any way you wish, of course; but, remember that this data is showing you what is actually selling, not what is listed and just sitting on the market.

If you are a buyer, this data can give you a good feel for what to bid in any market, since you will have a good feel for what sellers are ending up taking for homes. You can use the price per square foot data to at least find the ballpark that you might want to start your bidding in. Of course, most non-distressed homes will sell higher tan the averages that are shown, since they include lots of distressed sales (distressed sales are making up 50% or more of all sales in most markets).

The Milford Michigan Real Estate market

2011-03-18T07:33:00.001-04:00

The market in Milford, Michigan continues to track downward, at lease as far as median sold home value are concerned. The inventory on the market bounched up at the beginning of the new year. but has again started down - perhaps an indication of dashed hopes of would-be sellers.

So far in 2011 the average price per square foot for sold homes in the Milford market remains well below $100 at $82/Sq Ft, with the median value even lower. The SEV multiplier is currently averaging 1.5454, which means that homes are selling at about 77% of their assessed values.

On average sellers are accepting offers that are 95% (the median is 93%)of the asking price at tht time of the sale. I don't track how many times the the property has had price reductions before it sells, but my observation is that homes are starting out way overpriced when they are initially listed and only sell once they are reduced into a reasonable price range. That tends to drag out the listing days on market. Some price bands are well into 2 years as averages for days on market.

See all of the details for the Milford real estate market and eight other surrounding markets at my Web site - www.movetomilford.com

Is the New Home Market bi-polar?

2011-03-16T16:05:00.000-04:00

The Daily Real Estate News, a publication of that well respected voice of the real estate industry carries reports from The Commerce Department (and others) that would seem to indicate a severe case of bi-polarized market behavior (or at lease of bi-polar public releases). A quick look back over the last 4-5 months shows how confusing these releases can be on the state of the real estate market. In this case I just looked at the articles which were released in the Daily Real Estate News about every 20-30 days concerning the state of new home starts, along with the learned projections of the so-called experts in the National Association of Home builders, among others.

Daily Real Estate News - March 16, 2011
New Home Construction Plunges in February

New-home construction in February dropped 22.5 percent from the previous month, the lowest in nearly two years and marking the second lowest level on record, the Commerce Department reports.

Builders broke ground on a seasonally adjusted 479,000 homes last month. Economists consider 1.2 million units a year a healthy building pace.

Daily Real Estate News - February 16, 2011
Housing Starts Jump 14.6% in January

Housing starts in January reached their highest rate in four months, increasing more than analysts expected the Commerce Department reports. Housing starts jumped 14.6 percent to a seasonally adjusted annual rate of 596,000 units

Daily Real Estate News - January 26, 2011
New Home Sales Surge

New single-family home sales in December rose to their highest level in eight months and prices were the highest since April 2008, raising cautious optimism for a housing market recovery.

The Commerce Department said sales jumped 17.5 percent to a seasonally adjusted 329,000 unit annual rate after a downwardly revised 280,000-unit pace in November. Economists polled by Reuters had forecast new home sales rising to a 300,000-unit pace in December from a previously reported 290,000 unit rate. Compared to December a year earlier, sales were down 7.6 percent. Overall 2010 sales dropped 14.4 percent to a 321,000-unit rate.

Daily Real Estate News - December 29, 2010
Housing Starts Predicted to Hit 3-Year High

Housing starts will probably reach a three-year high of 739,000 in 2011, creating about 500,000 jobs and helping trim the unemployment rate to 9.1 percent, said David Crowe, chief economist for the National Association of Home Builders, in an interview with Bloomberg.

Daily Real Estate News - November 29, 2010
New-Home Sales Slide

Blah, blah, blah…
Well you get the picture.

Is it any wonder that the public perception of the market is so confused – it’s up , it’s down, oops it’s back up again…no, no, no it’s down.

Of course the existing home market reports are just as confusing and just as bi-polar. It may well be that we are in the phase of the market that was predicted when we would bounce along the bottom for a while – up and down, up and down.

It would be a relief to get some sustained market movement in one direction or another, just for the reassurance of momentary consistency.

Moving towards equity loss write downs...

2011-03-14T07:37:00.002-04:00

The RealtyTimes News feed this morning had a story about how builders are abandoning the traditional McMansions in favor of smaller, more affordable new homes. That’s a good sign overall that the industry is adjusting to the needs of the current economy. Another part of the same story talked about negotiations that are on-going between states and major lenders to try to get the mortgage industry to bite the bullet and write down some of the lost equity value on underwater houses. That’s a strategy that makes a lot of sense.

There is a significant portion of the market that is frozen in place by the current negative equity situation – people who want to sell, but can’t because they are so far underwater on their mortgages. While a few greedy, or maybe not so intelligent homeowners, did treat their homes like piggy banks and took equity out for other uses; the vast majority of underwater homeowners are innocent by-standers who did nothing wrong, but who got caught up in the tsunami of the current economic mess.

The lenders have been waiting all along for the Federal government to figure out a program that will take on their losses or at least share the losses. In the interim, they got caught cheating on foreclosures and now face disciplinary action by the states. Perhaps that stick is big enough to spur them into action; especially if the feds can figure out a way to add a little bit of carrot into the equation.

Since the banks have concerns about the write downs impacting their capital requirements, something as simple as the Fed’s coming up with a way to allow the lenders to move the loses off their books would probably provide the needed push to get this going. Maybe they can get some of the Enron people out of jail to help them with that issue. After all the Enron management team are the guys who figured out how to move all of their bad debt off their books.

Until this issue is resolved, we have a nation of people who are delaying retirements or job moves or other decisions that involve selling their homes; because they can’t afford to take the losses involved. We can’t really turn things around in the economy either, until we get people out from under this huge debt load and get rid of the bunker mentality that surrounds this issue.

Local businesses and communities will continue to feel the impact of their citizens being basically unable to spend on much other than their mortgage payments. Short sales and foreclosures will continue to have a huge negative impact on local communities and local governments. We need the financial reset that can only occur if lenders are allowed to modify mortgages at lower principal levels and write off the lost equity. Then we can start growing again.

The biggest hang up right now seems to be that no one can figure out how to triage the situation – how to determine those who will get help and those who just won’t qualify. Fairness or at least the perception of fairness is very important, if any program is to work. There will be people who would try to game the system, no matter what the system is; and there will be people (tax payers) for whom there is just no benefit at all (people who have paid off their homes or held them so long that they are not under water); no then no system is completely fair. The important thing is to get on with it, so that we can get the American economy out of neutral and rolling again.

Where to go to get the facts...

2011-03-08T06:23:00.002-05:00

It's that time of the year when peoples thoughts turn to...

fighting their assessments.

If you're not happy with what the local assessors have come up with for the value (especially taxable value) of your home, you may want to get an appointment to challenge that assessed value. If you're going to do that you should first take the time to talk to the assessor and find out what method he/she used to arrive at the assessed value. You should also ask about the appeal process and what the expectations of the appeal board will be for your presentation to them of your appeal. Then you'll need to go find the actual market data to support your case.

Fortunately, if you live in one of the areas that I track, you can find that market data on-line at my Web site www.movetomilford.com

I have been tracking the sold houses in Milford (Village and Township), Highland, Commerce, White Lake, Lyon/South Lyon, and Brighton for some time now and recently added Green Oak, Hartland and West Bloomfield. There's probably not enough data on the sight for those last three yet, but there is 2-3 years worth of data for the other six. You generally only need to go back 6 months.

You'll have to pick out the homes in your immediate area from the data that is there and you can't just use distressed sales (they are marked as "F" for foreclosures and "S" for short sales). In general the assessment boards want to see market data for your immediate neighborhood or area, certainly no more than 2-3 miles away and in the same school district. You'll be able to find the listed prices, the sold prices, the SEV's the square footage and other data on my site. Again, make sure that you understand what things are important to the appeals board.

Fighting your assessment is somewhat of a two-edged sword. You may succeed in getting the SEv (and taxable) value reduced; however, you should then not complain that your house is worth more when it's time to sell. In the current economic environment about the only place where your home has retained it's old "value" is in it's replacement value for insurance purposes. It almost always costs more to rebuild your house right now than it's worth on the market.

Realtors are not allowed to provide you with a comparative market analysis for the purposes of appealing your tax assessment. They can provide you with the raw data of what has sold in a particular area, which you can then use to make your own market analysis; but why bother them, just go to my Web site and look under the choice "What has sold in the Milford area" if you live in one of the areas that I track.

It’s more than a matter of taste…

2011-03-01T11:30:00.002-05:00

Where is the line that marks the difference between “shabby chic” and just plain tacky? How modern is too modern? What do you tell a homeowner whose house is a tribute to Graceland that an oil painting of Elvis on black velvet is not appropriate in every room? Can you suggest taking down the horny heads and putting away the stuffed dead animals to the Great White Hunter? What do you do with the Princess bedroom that is painted pink and has glow in the dark starts on the ceiling? Is it appropriate to suggest alternate colors for the sports team themed bedroom done in maize and blue? How do you deal with “custom-built,” when the result looks like the lounge at a cheap motel? What do you tell the owners who just love their Victorian themed purple and turquoise paint job?

These and many other questions beg the issue of when things are just a matter of taste and when they become impediments to the sale of a home. Somewhere near the center of the universe of good taste is a bland little patch of off-white. Everything else is something else and the further out you go, the further you get away from that happy little neutral patch. The farther away you move from that center point, the lonelier it gets, too. There are fewer and fewer buyers who will share your tastes and appreciate that all black room that your moody teenager chose for himself.

My challenge as a Realtor is to help the owner see that imposing their tastes and preferences on potential buyers is basically an exercise in exclusion. Every personal choice that is expressed in a room color or décor may drive away those who don’t share in that choice. The avid hunter often can’t understand why someone would be offended by the dead, stuffed mounts that are spread around the house. Yet many women won’t even go into a house if they see these trophies all over the place. And many single women who’ve lived in a house alone for a while can’t understand why male buyers are turning off by frilly frou-frou all over the place.

I’ve tried several approaches with owners who are over the top in their home décor, including taking in home stagers to provide “professional advice” above and beyond what I may have told them. Quite honestly, even that seldom works and often the owner is offended by the advice that they remove or tone down the personal touches and content of their house – especially if it involves advising that they take down and store most of the family photos that may have lined the walls of a stairway or, perhaps, that they paint over the cute little marks on the kitchen doorway that documented the growth of their children.

The bottom line is that when they put it on the market it is no longer a home, it is a house – a product that is competing against other houses on the market and the owners must be able to look at it that way. For some this is a tough emotional transition to make – letting go of the “home” aspect of the house and getting comfortable with that aspect living on in memories. This is where taking the sellers to a few other, well staged homes would probably help them see what you need them to do for you to make the house more marketable. Sometimes it just takes time and giving the owners a few weeks to get over this hump and make the changes needed is probably the best thing to do. Sometimes the seller never does agree with what needs to be done to sell the house and in those cases it's a long and frustrating wait, tryin gto find those few buyers who have matching tastes.

A Confusing Market

2011-02-28T06:55:00.003-05:00

Perhaps A Confused Market would have been a better headline. Each week new and often contradicting data and opinions about the state of the real estate market is released by various groups that surround the market. While existing-home sales rose again in January and are outpacing year-ago levels, we are still seeing a drop in home prices across much the country.

Existing-home sales increased 2.7 percent in January and are 5.3 percent above January of 2010.

Regionally, the West saw the largest existing-home sales increase. In the West they rose 7.9 percent and are 7.0 percent above January 2010. The Midwest and South also saw monthly rises -- up 1.8 and 3.6 percent respectively. The Northeastern region is down 4.6 from December and down 1.2 from year ago levels.

The most recent reports from the Case-Shiller Index have brought on a slew of comments from the experts. The Case-Shiller quarterly index showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010.

So, what is happening in the local real estate market? Well the best answerr is to check things out on one of my Web sites—www.themilfordteam.com or www.movetomilford.com. I’m tracking nine local markets this year— Milford (of course), Commerce, Highland, West Bloomfield, White Lake, Lyon/South Lyon, Green Oak, Brighton and Hartland.

I track what has sold each week in those markets and keep running year-to-date totals, too. I record all of the houses that have sold above $20,000 in those markets, as well as what they were listed for at the time. Then I calculate the percentage of the sold price vs. listed price.

I also record the latest SEV value for the home and calculate the sold price vs. SEV ratio. In theory SEV should equate to 1/2 of market price. In practice sold prices are running 1.4 to 1.7 times the SEV. That is a measure of how far behind the assessors are, compared to the actual market values. Finally, I record the Sq Footage of the sold homes and the listed and sold price per square foot. Those are running well below $100/Sq Ft in every market.

Here are a few representative averages for those markets, so far in 2011:

Market .......................Ave. SEV ..............................Ave. Sold
......................................Multiplier .............................$/Sq Ft
Milford ..........................1.4472 .....................................$80
Commerce ....................1.6822 .....................................$89
Highland .......................1.4829 .....................................$69
White Lake ..................1.5828 .....................................$74
West Bloomfield ..........1.5703 .....................................$73
Lyon/South Lyon .......1.7964 .....................................$85
Green Oak ...................1.6138 .....................................$78
Brighton .......................1.5595 .....................................$87
Hartland ......................1.6450 .....................................$79

How is this data and the derived numbers of value to you or someone you may know? If you are thinking of selling, this will give you a good feel for the market in your area (if you are in one of the ones that I track). You should not believe that somehow your home has been magically spared the collective pain of this market. It has not. These numbers can help you avoid wasting time by listing your home too high.

If you, or someone you know is looking to buy a home in one of these markets, you can get a good feel for what homes may really be worth, no matter what the current listed price is. Almost all sellers start out priced too high when they place their homes on the market. Equipped with this data you can make a stronger case for making a more realistic bid and back it up with facts.

In either case, call me and I’ll help you get the pricing right.

Clearing up the confusion

2011-02-24T20:38:00.002-05:00

It's always funny to me ( I was goingto say amazing, but littleamazes me anymore in real estate) how mixed the messages are that come out of our industry every week. Depending upon what you read and from whom, the market is up or it's down. Existing home sales went down, then they went up and next week who knows what wil lbe reported. RealtyTimesreports one thing and Realtor.com reports another. RealtyTrac reports doom and gloom in the foreclosure market and NAR reports that Lawrence Yun (the National Association of Realtors house economist) is optimistic that things are getting better.

I suppose part of the problems is that so many different groups or sources are reporting from so many different perspectives. If you're a foreclosure oriented company you're going to focus upon and report upon foreclosures and distressed properties. If you represent the real estate industry and are trying to convince buyers and sellers to jump into the market, "Now" is always the time. If you're an economist you seldom know what's going on today until you can look back with 6 months of perspective and try to tell us what you think happened and why. Of course location has lots to do with what you hear or see, too. We are still in the pooper in Michigan, yet I get emails from agents in other parts of the country who tell that things are boomingand some who claim never to have had a depression at all in their housing market. Now, that is amazing.

So what's the casual observer to think of all of this confusion and contradictory information that they see reported in local papers or read on the Internet? Well, for one, that's probably what makes them a little skeptical. As an industry Realtors don't appear to have our act together - again exacerbated by the great local differences. Still, I think it's incumbent upon me as a local Realtor to be able to answer the questions "How real estate these days?" within the context of both my local markets and the greater national market that the clients hear about. Whatever they see on NBC or read about on Zillow or read about it in a local paper sets a backdrop for them when they ask that question of us.

I believe that you need more than just your good looks and a quick wit to deal with those questions. While I still have my wits about me, the looks have long ago faded. That's why I spend so much time tracking my local market - collecting data and creating statistics that don't exist anywhere else. You can't just claim to bathe local expert. You have to have the facts and the insight into what's happening in your neighborhoods and market. I can't get that just from my personal experience or the sales that I make. There's no shortcut - I have to collect the data, organized and analyze the data, maybe chart the data, but most importantly understand what the data is saying about my market. Then, I can go out without fear and present myself as THE Realtor for this market. It's up to me to clear up the public's confusion.

So, if you live in my market area in southeastern Michigan, go ahead and ask me - "How's real estate going?" I know and I'm ready to help you understand the real estate condition around here, too.

California takes on the alphabet soup of real estate designations.

2011-02-23T07:33:00.000-05:00

An article by Bob Hunt in yesterday’s RealtyTimes was written about the California Department of Real Estate (the DRE) taking on the issue of all of the recent designations, which are mostly for marketing purposes, of so-called experts and even certified experts or specialist in such things as short sales or foreclosures. The DRE is apparently concerned, and rightfully so, that many of these advertisements are misleading and involve agents who have done little more than pay to attend some class somewhere (usually for a day or less) and have then begun portraying themselves as somehow now being experts at handling distressed home sales. One has only to read the advertising that agents use on Webs sites and in blogs to see what the DRE is concerned about.

There are real estate related fields in which one can become trained and claim some level of unique expertise; however, the legitimate one usually require much more training and may even require a period of supervised apprenticeship. Most of these distressed property designations require nothing more than a few dollar and a few hours of the agent’s time. At that point one can say, “Yesterday I didn’t know what a Distressed Property Expert was, now I are one.” Good for the California DRE for taking on this issue.

There are certainly lots of designations that one can earn as a Realtor that are worthwhile and meaningful and most of them are sanctioned by NAR. Then there are all of these little specialty designations which really just represent some entrepreneur’s idea for making money from Realtors. Too many of these are just sham designations that represent no particular skill or expertise and certainly no experience, just a willingness to pay the going rate and spend a few hours in class, in order to use the impressive sounding letters after your name.

The RealtyTimes article contained a few of the questions that potential clients should ask, such as, “ So, tell me, Mr. expert, how many of these distressed property sales have you done? And, how many were you successful at?” “What kind of test did you have to pass or apprenticeship did you have to serve to earn this designation?” “What makes you a n expert or specialist in this type of sale?” The RealtyTimes article points out that there is apparently a 12 question list that the DRE has put out. Let’s face it, 80-90 percent of the folks running around touting these credentials in their ads couldn’t pass the muster of 4-5 of these questions, much less all 12.

So why do it? Why try to pass yourself off as something that you’re not? Well it is good advertising and, after all, agents using these designations know that most potential clients wouldn’t know about the 12 questions, so why not go for it? The “why not” is that it’s basically dishonest. You’re not an expert or a specialist because you paid your $99 and took the three hour course. You’re just a fake. And that’s what the DRE is saying. Many so called “Experts” and “Specialist” and “Certified Distressed Property Salespeople” are just part of the larger fraud being foisted on a trusting and unsuspecting public. Eventually this will come back to haunt the so-called experts when they get their day in court to try to explain how they lead some clients so horribly astray due to advice based upon their certified “expertise.”

Is it time to hunt vampires in your home?

2011-02-22T07:03:00.004-05:00

Many people have have become more energy conscience. They have replaced drafty doors and windows, caulked everything in sight, put in extra insulation, replaced regular light bulbs with new CFL’s and maybe updated major appliances to EnergyStar rated ones. Maybe it’s also time to go vampire hunting through the house.

Walk through your home at night with the lights off and you may be surprised by the amount of light put off by “standby” lights or blinking lights and digital displays on various appliances and electronic devices. Because these devices are ready to operate or receive signals at all times, they act like vampires silently sucking away energy even when they are turned “off.” Each blink as you walk through the room is a little voice mocking you and singing out “Hey, look at me; I'm sucking the money right out of your wallet..”

A 2007 article in Greetips advised that wasted energy, known as standby or phantom energy loss, represents a relatively small but growing percentage of an individual home’s electricity use (about five percent), but taken across all U.S. households, adds up to an estimated 65 billion kilowatt-hours of electricity each year. This extra electricity costs consumers more than $5.8 billion annually and sends more than 87 billion pounds of heat-trapping carbon dioxide into the atmosphere each year. That was 4 years ago and devices that operate in a standby mode have proliferated.

Some of the biggest energy wasters in most homes are the adapters that come with rechargeable battery-powered cordless phones, cell phones, digital cameras and music players, power tools, computer peripherals and other electronic devices. Most draw power whenever they’re plugged into an outlet, regardless of whether the device battery is fully charged—or even connected. Other culprits include appliances or electronic equipment with standby capability (such as televisions and computer monitors), a remote control, and/or a digital clock display (such as microwaves, DVD players, and stereo systems).

You can tell you’re wasting energy, even if there’ no light on the device because most of those little charging or power bricks will be warm or hot to the touch. Computer peripherals also consume a lot of standby energy, keeping printers ready to print, speakers ready to speak and disk drives spinning endlessly.

So what should you do if (or I should say when) you find that your home is indeed infested with power vampires? Turn them off! Most of these little power suckers are doing nothing worthwhile most of the time. It may be a small inconvenience to have to go back to them and turn them back on, rather than sitting across the room with a remote in hand a clicking a button, but it can save you money over time. For those devices that are close together, plug them all into a power strip that can be switched off. For the charging bricks, don’t just unplug the device that was charging – that leaves the brick plugged in and those charging bricks never stop providing a charge, even when the device that they are there to charge is unplugged; they just divert that charge to a resister and make heat out of it. Unplug the brick or put a bunch of them on a switched power strip, too, and turn it off when nothings plugged in to charge.

Not all instant on devices that have standby power running to them all the time can be unplugged without suffering the consequences of having to reprogram them; however, a great number of devices that we use only occasionally – a DVD player or video game, for instance- might as well be unplugged between uses. After all, there is no purposed served by leaving them plugged in and there certainly is a cost involved.

Now you may be saying, but Norm, come-on these aren’t really big bad vampires sucking massive amounts of energy. I an agree with that, they are more like bedbugs, scurrying around while you sleep each with a tiny bite that if left uncheck can make you miserable. So maybe I should have entitled this blog post – Don’t; Let the Bedbugs Bite.

Assessed Values – a double edged sword

2011-02-20T11:28:00.000-05:00

It’s that time of the year again in Michigan when people line up at their local townships to take their 5 minute shot at getting their property taxes lowered…yet again. The local assessors have been lowering property values rather dramatically the last coupel of years, especially since they switched over to using a single year’s worth of sales data, instead of using the old two years worth method. Still, they are running behind, because their data is always behind and property values continue to drop on the market.

The current assessed values may be as much as 20-30% high, compared to what the market will bear for you home. How can I say that? Well, I track what hoes in my market areas are selling for and look at how the sale prices compared to the SEV at the time of the sale. Remember that the SEV (State Equalized Value) is supposed to represent ½ of the local market value; at least that’s the theory.

The assessors look at what comparable homes have sold for in the local area over the last 6 to 12 months. They assign values based upon several factors – the value of the land and the value of the improvements (the house and any outbuildings) on the land, being the two biggest factors. You should ask to talk to the assessor to find out exactly what factors s/he used in reaching a value for your property.

In general, if everything were “normal,” one should be able to double the SEV for a home to arrive at a reasonable approximation of its market value. Things have not been “normal” for quite some time. In the heady days of rapid appreciation leading up to the bust the Sold price to SEV ratio was often well over 2.0 – averaging about 2.2 in this area. That meant that one had to bid more than twice the SEV in order to buy the house. The assessors couldn’t keep up with the rapid appreciation in those days.

When the bubble burst and home values began dropping at double digit rates, just the opposite happened. In fact, because of the old method of assessors using two years worth of sales data, they actually overvalued the market by a full year, until the new, lower prices sales data caught up. So, SEV’s actually continued up even thought the market had started tanking. Ever since, the assessors have been playing catch-up with a continually declining market.

So, here we are in 2011 with market values still declining and SEVs still trying to catch up (or catch down, if you prefer). The best guess by local economists and pundits is that it will be 2013 before we see the return of positive appreciation in local housing. What you can see coming is another miss of the change in direction by the assessors. They are now using one year’s worth of sales data, but that year will still be the past year, once the change happens. Why is that bad? Why have I called it a two-edged sword?
In addition to being used as the basis for calculating your taxes, the SEV is often used by buyers and Realtors® to give them a feel for the value of the house and to guide them in making bids. The current multiplier is not 2.0. It has been running around 1.6 to 1.8 in most of the surrounding markets. If you take into consideration the distressed homes that have sold in those markets, it is actually lower – between 1.4 – 1.6 times SEV. So, a house with an SEV of $100,000 is not worth $200,000 on today’s market, but rather about $160,000 to $180,000, according to current sales data.

What happens if, in the next couple of years, the market turns around and starts back up; but, your assessed value keeps going down, let’s say to $80,000, instead of the $100,000? Now the buyers and agents see your house as being worth only $128,000 to $144,000.

You may have been happy initially with the lower taxes on the reduced SEV value, but now you want to sell at a price that you perceive your home to be worth (which is always higher than the real market value and is now also higher than the SEV value would indicate). It might take a full tax year for the local assessor to catch up with the now appreciating value of your home and adjust it in an upward direction.

This is one of those “can’t have your cake and eat it too” conundrums. If you keep fighting and fighting to get your SEV lowered, so that your taxes are lowered, you are also lowering the perceived value of your home in the market. The turn around, when it does come, is not expected to result in quick, double-digit appreciation that will recoup lost value quickly. Instead a return to the historic appreciation curve of about 3.5-4% per year appreciation is expected.

So, if you are successful at your challenges to the SEV and taxes on your home and succeed in getting your $400,000 home (at 2005/6 peak prices) reduced to a SEV value of $110,000 for tax purposes; don’t be disappointed if no one will pay you $300-400K for it when the market turns around. You have established that you house is only worth between $176,000 and $198,000. You might have to wait a decade or more to regain the lost value.

It’s not home invasion, it's in the mortgage...

2011-02-17T06:58:00.001-05:00

Every now and then a story like the one that appeared February 14th in the Buffalo News comes along to remind us that no matter how outrageous the act may be, banks have the right to a form of hme invasion under the provisions of the mortgage. OK, maybe that term is a bit outrageous, too; however the story seems to support the homeowners’ claims that their mortgage company entered their house without their permission and threw away a bunch of their stuff (they called it a ‘Trash-out” of the home), even though the home was not yet in foreclosure. They got most of the stuff back, by the way. Read the whole article at http://www.buffalonews.com/business/article341101.ece

The banks said, “Oops, sorry about that”, but claims to have the right to enter the home and protect their own interests in it, since the sellers had moved out. The sellers had moved to another state almost a year earlier, but claimed to be keeping the property up and paying utilities and taxes, even though they were behind on the mortgager payments. The sellers claim that they had been trying to negotiate a short-sale of the property and had not abandoned it, even though they were behind on payments and technically in default.

One of the points that is made in the article was that banks do, in fact, have the right to enter homes upon which they hold mortgages, if they have sufficient reason to believe that the home has been abandoned and that their interest in the property may be at risk from vandals or thieves. I’ve hit this locally many times and have had to tell delinquent owners who’ve called me for potential short-sale advice and listing to be on the watch for the vultures that the banks hire to circle delinquent properties to see if they are abandoned. Once you are delinquent, you can’t even afford to go away for along weekend, for fear that you’ll come home to a house with changed locks than may have been “trashed out”.

So, apparently, if you have a mortgage and somehow get behind on your payments your home is subject to being entered and worse by your bank, because you apparently agreed to that in the fine print of the mortgages that no one ever reads. The message from the bank is – “Don’t go hollerin’ rape if you agreed to the arrangement in the mortgage at the front end.”

The homeowners in this case have sued everyone in sight and a few parties that were just peripherally involved, so we’ll see eventually what the courts say about all of this. In the mean time the bank involved and the property management company that entered the house and trashed it out on the bank’s orders are trying to do PR damage control and promising better reviews and controls against future mistakes – all the while still claiming to have had the right to do this to protect the bank’s interest.

I’m sure that each state probably has laws or guidelines in place to govern when and how a bank can do this type of thing. In Michigan it starts with posting an abandoned property notice that gives the owners 48 hours to call the bank (or it’s property management company) and make the case that the place is not abandoned. That’s why vacations are risky for homeowners in default. I’ve had to watch more than one short-sale house on behalf of homeowners who had to be absent and had one case where I needed to call them on vacation so that they could call the wolves off before they changed the locks.

I’m not totally against the banks having this right to protect their interests, if indeed the property has been abandoned; however, many banks forge deals with really sleazy operators out in the field and don’t seem to have much of an oversight process in place to make sure that this type of things doesn’t happen. It gets back to the thought that these distressed properties are just “assets” to the bank and not thought of as someone’s home. So, even if I somehow agreed to it in the mortgage documents; I’d still feel violated if you did this to me.

Moving the finish line again...

2011-02-16T08:02:00.000-05:00

I read a story today in one of our local papers (the only one that delivers 7 days a week anymore) that the folks in the state equalization boards who are charged with trying to keep property assessments in line with the prevailing market values now see 2013 as the turn around year for the current property value slide. Wow. Move the finish line again.

I recall that in 2008 I opined in my local real estate blog that it would be 2011 before we saw the bottom of the value decline and started a turn around. At the time that seemed like a long time to wait and a long time for things to continue to decline. We are already down between 35-45% from the 2005/6 highs in our market, with some hard hit areas well below 50%. The article forecast two more years of near 10% declines for property values.

Of course, these pundits could be wrong. They rely on computer models and inputs from the real estate organizations about what’s going on in the market. There is certainly contrary evidence to be found in some of the reports from real estate companies of improving sales levels in our area. There also appear to be a few new build projects getting back off the ground; however, there is also still a huge overhang of distressed properties on the market and more looming in the future.

The moratorium on foreclosures late last year gave our market what I would call a “false positive” set of data for a few months. The median home values of sales being reporting shot up as if the recession was over and many articles were written about the market having reached the bottom and starting back. In fact, if you take most of the distressed homes off the market and out of the data, of course things will look better; and, that’s what happened. When the banks resumed foreclosing and putting those homes back into the mix, we got a “double dip” effect in the data and on the sales charts. Once again the sky was falling in Michigan!

So, now we are told that instead of things turning around in 2011, we have to look out to 2013 before we see the bottom and a return to some small level of positive appreciation in our local real estate4 market. The story went on to say that the models were projected out to 2020 and that they still see values of homes to be below where they were in 2004/5 when they hit the peak locally. That does square with the advice that I’m giving would be sellers that trying to wait out the return of value is a losing and long-term strategy.

Older homeowners who need to sell or who really want to sell, in order to get on with life, need to just bite the bullet and take what is left out of the equity in their homes. Many of them own their homes outright and are clearly disappointed in the current value of their “nest egg” investment. Unfortunately the conventional wisdom that home values always go up proved to be as wrong as many other pieces of conventional wisdom that have proven to be false over time. As Dr. Phil might say – “Get over it and move on.” For many there is another finish line looming and you may not want to wait to see which one you reach first.