Dealing with Google

I'm not sure if I'll have a problem with this blog after today or not. I have been inundated with stuff from Google telling me about all of the wonderful things that they are doing for me (un-asked I hasten to add) and requiring that I change from my simple Blogspot-only account to a full Google Account. I don't really want or care to do that. I don't need or want most of the other stuff that is involved with a full Google account; however, they are as insistent and I am resistant.

If you discover that I've suddenly appeared to have "gone silent" on this blog, it's likely that the Google gods have cut me off do to not adhering to their demands. If that happens, check on my web sites - www.movetomilford.com or www.themilfordteam.com for a link to whatever new blogging site I end up using.

Hopefully this issue with Google won't come to that. Today is the Google imposed deadline to do something. I choose to do nothing. So we shall see what happens.

Hapenings in Milford...

There's lots going on in the Milford area and there's a great place to keep track of community events that are coming up - the Move To Milford web site. The next big thing is Ladies Nite Out in MIlford, which is coming tomorrow night - April 26. This bi-annual event is always a fun time and this year there will be a shuttle available to transport ladies to the South Town Market in south Milford to enjoy the chocolates, teas and oither goodies that are featured there. Don't miss that, ladies. And check out the new Downtown Clothes store in the Center Street Mall on Main

I've set up a whole column on the home page just for upcoming community events, so go visit. I've also created a mobile version of the site that is oriented to the smaller screen of smartphones and makes it readable and easy to navigate. Check that out, too.

More on yesterday's topic...

Yesterday I wrote about how to interpret the news that one reads about the housing market. Perhaps the most misleading have been the stories that carried headlines like "Average Housing Values up 19% over last year." Many (if not most) people took may have looked only at the headline and come away with the impression that the price that people can expect to get for their house when they sell is up 19%. That is not only not true, but it really isn't even what the headline or the story actually says.

 If you read the accompanying stories to those types of headlines you will find that the headline was based upon the fact that the average of the sold prices for houses in the area went up 19% when compared to the averages for sold houses in the same area the year before. Isn't that saying the same thing? No. the averages being referenced take all home sales in the area into account. Those sales include short sales and foreclosures, both of which are at substantially lower prices than regular retail sales. As the number of short sales and foreclosures has drifted down as a percentage of all sales, the AVERAGE price for the total sales has gone up. The prices for non-distressed sales in many areas have bottomed out and have even started back in some places; however, the values of those houses has not jumped 19%. In places where we are seeing positive appreciation again, we are seeing 4-7% rises in sold values, not 19%.

So there is good news. The market locally seems to have bottomed out in most places and there are lots of instances where positive appreciation has begun again. But, if you read those rosy real estate stories and think that you can now somehow get a much higher price for your house, maybe even what you bought it for in 2005/6 – think again. That ain’t gonna happen.  If you bought your house during the peak years (2005/6) it has likely lost between 30-50% of the value that you paid for then, depending upon where it is located. So your market value for that $250,000 house is now likely in the range of $160,00 to $170,000. If you are lucky enough to find someone willing to pay above market for it, say $175 – 180K; you still have to hope that it will appraise for enough to justify that purchase price. Right now that is pretty much a fools bet, since appraisers are still leaning to the conservative side and many are still baking in further value loss into their appraisals.

My advice is to work with a good Realtor to establish a fair market price (one that an appraisal would support) and then decide if you can afford to sell at that price (or maybe decide to do a short sale at an even lower price). No amount of wishfully positive news stories is going to magically restore your home’s value to where it was 5-6 years ago or where you wish it was. If you can’t afford to sell, see if you could at least take advantage of one of the new government mandated re-financing programs. Some of them deal with the loss of equity and could put you in a much better position to sell later.

What to make of what you see, read and hear about the real estate market

We all see, hear and read stuff almost every day about the real estate market. You can't go to a party without encountering conversations about it and you almost can't pick up a paper or tune into a newscast without something being said - almost all of it different. What are you to make of that?

Well, for one you really need to pay attention to the source of what you are seeing, hearing or reading. Many news organizations tend to focus on the negative stories, because they seem to have more drama than the good news. There's nothing like a good tear-jerking story about yet another family being foreclosed and thrown out of their house to fill time on a slow news day. Then again some stories keep trumpeting the good news of the housing recovery - "home values raise again!" Of course, buried deep within that story is the "news" that the number home sale were also down again because of the lack of inventory on the market.

So what’s the truth? All of it. Average home values for sales in Michigan have been going up in this area for months, driven mostly by the fact that, with few houses on the market, sale prices have been bid up by multiple bid situations. Is that good or bad? Again the answer is, Yes. It's good for the sellers who are getting more for their homes (I've recently seen headlines that average home sale prices are up 19%); however, if you're a buyer there are fewer homes to choose from on the market. Rising average sale prices also do not reflect true positive appreciation in the market in general, although that too is occurring in some markets.

If you are at a party or gathering and happen upon a Realtor and ask "How's the market?", expect a positive answer - "It's great. We just need more houses to sell." That's also true. There are fewer Realtors left in the business these days and the ones that are left are quite busy. You may hear some grumblings from real estate people about the short sale process or foreclosure sales, but in general they will pitch a positive view of the market. And why not? Good Realtors can make money no matter what the market, if they can adapt to the needs of the market.

A good, honest Realtor would likely ask whether the questioner s a buyer or seller and adjust what they say accordingly. It's still a great time to be a buyer, in terms of the mortgage rates and lower costs of houses. Buyers can still find real bargains in the debris of the short sale and foreclosure market. The challenge for buyers right now is finding the right house in a very tight supply-side market. For sellers there is no magic bullet that will restore the value lost in this recession. Even if they get multiple bidders for their market-priced house they aren’t going to be made whole by the sale. Today’s market price is greatly impacted by foreclosures and short sales and then the sale must pass the appraisal test, too. Appraisals are running behind market pricing in most markets, which is a reflection of the overly conservative approach to risk that most banks have adopted since the housing meltdown.

So, “how’s the real estate market these days?” My answer would be – “It’s much better than it has been and seems to be headed in the direction of a recovery.” How long will it take to recover? If, by that you are asking how long will I have to wait to recoup my lost home equity; I’d advise you that it’s likely to take a decade or more to get back to the 2005/6 levels in our local markets. If you’re asking as a potential buyer; I’d say jump in now, before prices rise too much, but be prepared to be patient in your search.

So like Charles Dickens opened the Tale of Two Cities:

“ It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

Dickens had likely been to a bar and encountered a Realtor there.

Charting the distribution of real estate sales...

In a span of less than a decade the world of real estate was turned upside down by a recession so deep and so widespread that, like a tsunami, it overwhelmed everything in its path, destroying decades of value and toppling the myth that real estate prices always go up. Looking at the charts below it is easy to see that perhaps our staring point might easily be labeled “fat, dumb, and happy.” Real estate sales prior to the meltdown were essentially retail sales (91.5%), with little activity in the foreclosure or short sale areas and only moderate leasing activity.

When the stuff hit the fan, most Realtors didn’t know what to make of the changes and most missed the boat on foreclosures and short sales. By 2008 the market was dominated by “distressed sales” – foreclosures and short sales and the leasing side had been driven up by the need for all of those displaced people to find a place to live, while they rebuilt their credit. 

Locally the distressed sales percentages totaled over 50% for over a year, hovering around 60% for most of that time. This basically was how the market looked through 2010, with foreclosures and short sales both running at 30% of sales and retail down to 22%.

We started to see the market bottom out in 2011 and by the end things looked like the chart to the left. Distressed sales still make up almost 50% of all sales and leases are still going strong; however, the retail side of the business – what some are want to call “regular sales” have made a comeback and now represent 35% of all sales again. To be sure, at a combined 47% of sales foreclosures and short sales still dominate the market and heavily influence prices for the entire market. So, where are we headed? I guess it depends upon how far out one looks. For the next few years (2-3 years at least) we will be dealing with the aftershocks of the big recession – the release of foreclosed inventories by banks who were holding back as well as new foreclosures and lots of short sales. It will likely take a decade or more for values that were decimated by the recession to creep back to pre-recession levels and some may never make it back. Many areas locally lost 30, 40, even 50% of the values at the peak in 2006 and many homes will suffer from obsolescence or deterioration that will limit how much of that lost value is regained. 

When will the real estate market get back to “normal” for Realtors? An argument can be made that this is the “new normal” for us. I suspect the better question might be when will some level of stability and positive appreciation return to the market? I’ve seen various opinions by learned “experts” that seem to point to 2014 for a return to positive value growth, but then I wrote similar words in 2009 that pointed to 2011 for the same thing.

Many have been waiting for a magic bullet from the Federal Government, but so far most Federal programs have seemed to be shooting blanks. There is little political will in Washington to force some of their biggest campaign contributors to bite the big equity reduction bullet that needs to fired off.  So, we’ll continue to muddle along with dissatisfied middle class homeowners trapped in their underwater McMansions and more and more honest, hard-working, but tapped-out, people being forced into short sales or foreclosures. Sometimes being a Realtor is like being the weatherman who is to predicting rain on the day that you have an outdoor wedding planned.

Don't be timid about your goals

From my favorite blog – Jack’s Winning Words – come these two sayings, which I thought were perfect to juxtaposition.

“A goal should scare you a little and excite you a lot.” (Joe Vitale)

“To the timid and hesitating everything is impossible, because it seems so.” (Sir Walter Scott

We all start (or should start) each year with goals in mind. I think those goals need to be set so that they scare you a little, but let you get excited about the results of actually achieving them.  Many times, however, we get timid about setting our goals too high and end up not setting them high enough. There is little satisfaction in reaching goals that were set too low. Let’s face it, mediocrity is relatively easy to achieve; it is greatness that is difficult. If you don’t aim for greatness how will you ever achieve it?

So let’s end this little post with two more sayings to get the day started –

“You measure the size of the accomplishment by the obstacles you had to overcome to achieve your goals” -Booker T. Washington.

“Shoot for the moon.? Even if you miss, you will land amongst the stars” – Ralph Waldo Emerson.

Milford's French Connection

Another new business open this week in Milford - Le Rendezvous – a French Bakery and Bistro. This new bakery and eatery is the culmination of a dream for Donna Rizk, a French ex-patriot who now lives in the Milford area. Donna trained as a pastry chef in France and worked for a while at that profession before moving to the U.S.

Le Rendezvous will feature a variety of crêpes  for breakfast and lunch and Donna plans to have the bistro section open for breakfast and lunch, plus dinner for private parties or special occasions. In the summer she will have an outdoor seating area available. I’ll have more on Donna and her plans when I get the chance to interview her. For now, check out the pastries and the wonderful crêpes at this new Milford bakery/bistro.

Le Rendezvous is located on the corner of Main and Liberty, where the Sweet Life Bakery was located (right next to the Posh Salon), in downtown Milford. This is yet another reason to visit our wonderful little Village.

We are expecting three more restaurants to open soon – The Blue Grill, where the old Stucchi’s used to be; The Palette, where the old O’Callaghans was located; and Tequilaritas in the old Ruggles location. What a great place to live (and eat).