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Friday, June 29, 2012

The parade will go on thanks to local business support

Independence Day in Milford, Michigan will be celebrated with a parade again this year, on the 4th of July. Lots of people just take for granted that the parades, festivals and other events in Milford will go on, not realizing how much work goes on behind the scenes to organize the parade or that there is considerable expense involved. All of the parades that take place in Milford are put on by organizations that are generally non-profit, mostly volunteer groups.

The three major parades are put on by the American Legion (the Memorial Day parade), the Milford Historical Society (the Independence Day parade) and the Chamber of Commerce (the Christmas parade). The smaller parades are conducted by groups like the local Little League(the parade of little league teams down Main Street) and Milford High School (the Homecoming parade). Then there are the events that close some Milford streets, like the upcoming Summer Palooza, the Farmers Market, the Milford Memories Festival and others.

For most of these events the Village of Milford supplies Department of Public Works (DPW) and Police support. The DWP workers put up the detour signs and place the traffic barriers (and later remove them), as well as doing some extra clean-up after events. The Village Police provide traffic and crowd control as needed. Some of the events, like the Memorial Day and Independence Day parades take place on official holidays; so, those workers get overtime to work on those events.

The Village of Milford used to provide the DPW and Police support without charging the event organizers. These are community events that are put on for the citizens to enjoy, so paying for them out of tax dollars made sense when times were good and money was available. The Village’s tax base dramatically shrank in the recent “Great Recession”, so two years ago the Village Council voted to restrict the Village’s “in-kind” contribution to these events to the first $500 of cost. They cost much more than that; especially since the union contracts that both groups work under give them double time for working on holidays.

So, each group that runs these events has had to turn to soliciting financial help through sponsorships from the local community and business groups and from the citizenry. I’m happy to report that in the case of the Independence Day parade there has been great response and the parade will go on. Major contributions were made by Milford Township and the Feldman Automotive Group (Liberty Chevrolet, Liberty Hyundai and Jay Chevrolet in our area). Key Sponsorship contributors include Hines Park Ford, Lafontaine Cadillac/Buick/GMC and Veterinary Care Specialists and VCS Pet Hospital. Sponsors include The Milford Laundry and The Digital Document Store in Milford. Several individuals also sent in contributions to support the parade.

So the Independence Day Parade will go on for another year and this year it is actually on the 4th of July.I hope to see you there. Please thank and support or sponsors if you get the chance. Also, let the Milford Village Council know that you support these events. There has recently been a proposal by some on the Village Council to stop all in-kind support for future events. I believe that these events area big part of what makes Milford the great place to live that we all love. Let your voice be heard. Email a Village Council member and tell them that you want them to continue supporting our parades and festivals and other events. Click here for a link to the Village Council page on the Village of Milford Web site.

Wednesday, June 27, 2012

A local effort to deal with a national problem…

I recent had lunch with a member of the Board of Directors of a local organization called Onward March. This is a group right here in the area (at 2655 Oakley Park Rd in Commerce, MI) that has taken upon the itself the mission of trying to help veterans who are returning from service in Iraq and Afghanistan (or elsewhere)  and need to transition back into civilian life. The biggest need is for jobs for these ex-soldiers, many of whom have great skills that they learned in the military and all of whom have been through life-changing experiences that force one to mature quickly.

One key idea behind this organization is that of helping many of these vets become entrepreneurs, to start small businesses of their own; businesses which hopefully will add to employment. The group supplies mentoring and coaching to help these budding business men and women get started and understand better how to function in the business world. There are also targeted placement services trying to match up vets with jobs in the community. Finally the group is running a business incubator at their facility which provides office space, infrastructure and coaching/mentoring for the start-up companies until they can get on their feet.  

The problem of returning vets not being able to find work has become alarming, with approximately 248,000 recent veterans without jobs this summer. There are many cases right here in our own community. Organizations like the AmVets and VFW do what they can to help, but most of their efforts are focused upon short term needs like providing food and shelter. Only through programs that provide jobs will these bets get back on their feet in civilian life.

As a vet myself, I can recall the hostile environment that my generation of Viet Nam vets returned to in the 60’s and 70’s. You almost had to sneak back into town if you had been to Viet Nam, what with all of the anti-war protests and anti-military sentiment at the time. I was probably lucky not to be cashiered out right after I got back from Viet Nam and even luckier to have gone through OCS training and getting my commission. I left the Army at the rank of Captain and had just come off a good assignment teaching data processing systems analysis; so, I was able to get a job selling computers for Burroughs (a company that Ernie Harwell might say is lo-o-o-o-o-ng gone).

Today’s returning soldiers are at least greeted as returning heroes, but that doesn’t translate very often into an immediate job opportunity. Many of the vets getting out today have families, as we did back in the Viet Nam era. Some of the vets may suffer from war wounds, either seen or out of sight (or within).  From what I read elsewhere the country isn’t doing all that good of a job in providing care for those with war –related needs, so that just adds to the problem.

I don’t know if Onward March will be successful or not, but at least they are trying. You can read more about them at their web site . I’m sure that they could use more help (mentors and coaches and the like) and they certainly can use more money (there is a donation page on the site). With the 4th of July coming up, it’s probably a good time to remember that what we are celebrating on that day – Independence Day – go all the way back to the original founding fathers/soldiers that got this nation started.  So go to the Onward March site and check them out, then do what you can to help them out. We can’t solve this problem at a national level, but we can sure do something about it locally.

Monday, June 25, 2012

Is it time to list your home?

Everything that you read about the real estate market these days seems positive; so, is it time to list your home? That still depends upon when you bought or what you did when you last re-financed the house and what you still owe on it.  The market has definitely switched over to a sellers’ market. That just means that there are fewer homes on the market than there are buyers out looking. Inventory is down and the pent up demand caused by the last few years of paralysis in the market is starting to manifest itself. Multiple offer situations are the norm right now on low-end houses and even nicer homes in the mid-range.  Sellers are getting at or sometimes above their asking price (if the house is priced to the market).
So, does that mean that you’ve re-gained all of the value lost in the “Great Recession?” No! Values dropped anywhere from 30-50%, depending upon the area. Those losses aren’t going to come roaring back in a few months. While we are seeing positive appreciation in some areas, in general the good news has been that value losses have slowed or stopped and some prices are even inching their way back up. Do the math on how long it will take to recover a 30% drop in value, if he appreciation rate settles in at the historic norm of 3% to 4% and you can see that it will take a decade or more to get back to the 2005/6/7 value levels.

Remember that even with multiple offers at or maybe even above asking price, the place still has to appraise for a value high enough to support the mortgage. That is currently one of our bigger challenges in the market. Appraisers are quicker to adjust than assessors and distressed sales (foreclosures and short sales) are declining dramatically as a percentage of total sales in most markets; so, the “comps” that they use will be a better reflection of the current market and values will not be as impacted by distressed sales. That’s good news. I suppose that you can take the fact that assessors have overshot the mark in the downward direction as good news too, since taxes will be lower longer as their upward adjustments will lag by a year.

The real question remains whether it’s time for you to list. The standard answer is “that depends.” Did you buy at the peak of the market? Did you re-finance at the peak and take the equity value out for other uses at that time? If you answered yes to either of those questions it’s still probably too early for you to consider listing (unless you had a big down payment when you bought and are willing to take some loss on that). Having a house that is now worth less than when you bought it is called being “underwater.” If you are underwater on your home and don’t have the cash to make up the difference a short sale may be your best option.

Many people aren’t really underwater on their homes. They don’t owe more than it’s currently worth. They just can’t let go of the “paper profit” that they thought they had when values were high. I run into many older homeowners who might have bought their home in the 60’s or 70’s for right around $100,000 and watched in delight as it increased in value to around $300,000 in the early 2000’s. Then things crashed; and now they are sitting in a home that might only be worth $170,000 to $200,000. In many cases these people were fiscally conservative and did not cash out equity with refinances; so , many of them owe relatively little on the house.  What they can’t let go of is that “$100,000 loss” that they just took on paper. Sometimes it’s because the value of their home was a big portion of the nest egg that they thought would fund their retirement. So, they are holding on and hoping that the value comes back soon. That’s just not going to happen soon.

The sad thing is that many of the retired folks who feel trapped in their homes would be just as well off to bite the bullet and sell now for what they can get and get on with life. There are so many a deferred dream of retirement that I hear that it’s a shame. That is unfortunately all too true for many Baby Boomers who did treat their McMansions like piggy banks, taking loans out for the boats and new cars and other toys along the way. They really are trapped in their homes and many did not plan well for retirement and have little in the way of funds to use to cover a shortfall at closing. For them a short sale may be the only way out.

For the rest of the would–be sellers in the market the answer remains that the value loss that you might take on the sale of your home will be made up partially or in total by the great value deals that you can get right now on a new home. That works best for those trying to move up in the market. You may be taking a $30,000 hit on your home, due to lost value; however, if you can buy a new home that has experienced a $100,000 loss in value, you are actually coming out ahead when things recover. It’s not so good if you are trying to downsize or maybe move from a house into a condo. You’ll still get a good deal, but you likely won’t make up all of your loss on the two transactions.

The best time to list your home is really more about your life needs. Do you want to retire and get on with life? Do you have to move to take a new job? Is your current home sucking all of your savings down with it?  Are you just tired of taking care of the yard and property? Do you want to move to be closer to family? Has your life situation changed dramatically and now your old home just doesn’t fit? All of those are good reasons to decide to list. You may have to take the course of pursuing a short sale and just get out from under the house.  You may even have to take money to the closing in order to sell.

It’s a good time to sell right now. The real question is whether selling at the current market value works for you. Talk to a real estate professional about your options and which might work best for you. Call or email me for an appointment to discuss your options. If you’d like to read about the short sale option, go to my web site and read through the FAQ section.  If you want to see what houses are selling for inthis are, go to my web site and browse the data under the What have homes in this area sold for

Wednesday, June 20, 2012

Putting your biggest asset at risk...

Our InsuranceOne agent, Annette White, talked recently at a sales meeting at our office about a big risk that many homeowners are taking with their biggest asset. In the current real estate market it has become more and more common for homeowners who want to (or need to) move to a different house (up-sizing, down-sizing or maybe just moving closer to a job) to resort to renting out their current home. Most of the time it’s because they are underwater on the current home or just don’t want to sell for what the current market can bear. In any event, many of them buy the new place and move there, with the plan in mind to fix up the old homestead and then rent it out.

That’s all well and good; however, if the renovation of the old house is going to take longer than a couple of weeks, the owners need to talk to their insurance agent about switching the insurance coverage on that house to a vacant house policy for that fix-up period.  Most normal homeowner’s policies have vacant house clauses in them that state that the house must be occupied or the coverage might be invalidated. Why? Because and empty house is an easy target for vandals or thieves. The vacant house policies are a little pricy, but they cover the owners, should something happen while it is vacant and being renovated.

The vacant house policies usually have a three month minimum, with no refund if you get the renovation done early and get renters in. The policy should be changed again when the renters are in to become master policy covering the structure. The renters should have a separate policy covering their belongings and any damage that they might cause.

This same issue arises if the place is for sale and the owner has left or maybe it is an estate sale being conducted by out-of-state relatives of an owner who has died. It’s still a vacant house, even if there’s lots of the owner’s stuff still inside.  Just having some furniture and other stuff inside doesn’t make it an occupied property and if the insurance company finds out from neighbors or others that the place hasn’t been occupied for some time (usually more than 2-3 weeks) they may balk at paying a claim if something happens.

Call Annette White at 248-795-9152 and talk to her about vacant home insurance.

Monday, June 18, 2012

Half empty or half full or just half way

We are at the halfway point in the real estate year in this area and so far things have shown improvement. Foreclosure sales are down, as are short sales. Home values have stabilized and even started to rise a bit in some of the local markets. Low inventory is still an issue for the local market, but even that seems to be getting better.

I'm seeing many sales with sale price to SEV ratios well above the 2.0 level. That says two things - prices are coming back and the assessors have overshot assessment adjustments ont he low side. You can be sure that they will adjust that as quickly as they are allowed under the Headley Amendment.
Low appraisals are still an issue, too. Appraisers are still using too many distressed sales as comps, but hopefully that will self-adjust as the distressed sales decline as a percentage of overall sales. We are also still seeing too many cases of out-of-area appraisers being assigned to appraisal jobs by appraisal management companies. The lenders are getting better about challenging that practice, so hopefully that too will self-adjust.

Of course the overall slowness of the recovery from the "Great Recession" has impacted real estate, too; however, the pent-up demand that has been building in the market is starting to assert itself, especially in the move-up segment of the market. Because of the lack of inventory, the demand in this segment is helping the new-build segment as more and more stalled out developments are re-energized. The combination of low home prices and low mortgage rates is also propping up the low-end of the market.

So, while we are not out of the woods yet, maybe we can see the edge of the forest. We have flipped over to a seller's market with the low inventory and are seeing many areas with less than a 6 month supply on houses at the low to mid-pricing points. That's good news for sellers but a bit frustrating for buyers. The rest of 2012 should be good also as the economy continues to improve and the market seeks a more state.

Thursday, June 14, 2012

Where to look, where to look...

If you read much about real estate you're already aware that inventory is down in the is area compared to historic levels. That means that there is less to look for, especially in certain price bands. I took a quick look at some of the local markets in and around Milford to see what the inventory situation is in what has traditionally been a "sweet spot" of our market - home in the $100-300 Price band. At the low end of this admittedly wide band ($100-200K) are the better first-time-buyer homes and at the upper end of the band ($200-300K) are the homes that first-time-buyers might move up to as their careers and life situations allowed. I may break those bands out in the future, but for now I've just taken a quick cursory look at the whole $100-300K price band.

Milford (Village and Township combined) has 35 homes in that band currently listed at an average price of $224,760 and an average Days On Market (DOM) time of 147 days. So there is a supply of about 4 months worth of homes on the market and likely more of them are above $200K than below. A six month supply (inventory) is considered a balanced market, so Milford is in what Realtors would call a Seller's Market - demand exceeds supply right now.

Highland Township has 54 homes listed in this range with an average price of $196,533 and an average DOM of 124 days. So Highland, too, is in a Seller's Market, but they have more lower priced homes available.

White Lake Township has 63 homes on the market in the $100-300K range with an average price of $211,224 and a DOM of 189 days. White Lake is right at the balanced market position in terms of inventory and DOM and appears to have an inventory that is pretty close to even above and below the $200K level.

The Commerce market (includes the Township and the Villages of Walled Lake and Wolverine Lake) shows 75 homes in the price range with an average price of $203,542 and a DOM of 117 days. So the Commerce Market is heavily Seller oriented and very balanced in terms of prices above and below the $200K mid-point. The 117 DOM number indicates that things are going quickly ion Commerce Twp and you'd better be ready to make a bid quickly if you find a house that you like. I can tell you that Commerce also still has a higher percentage of "Distressed Sales" that the other Townships in this report. You can see that if you go to my Web site and look at the choice - "What have homes in this area sold for?"

The South Lyon/Lyon Township market has 55 homes for sale in the target price band with a longer DOM of 225 and an average price of $212,059. The DOM number may be impacted by the fact that a higher percentage of the homes for sale there are new-builds and sometimes those sit on the market until they get closer to completion or they are effectively "build jobs" being advertised for sale, but waiting for someone to actually commit to buy the build.

Finally, just across the County line in the Brighton  market, in which I have included the Brighton (City and Township) and Green Oak listings, there are 115 listings at and average price of $217,426 and a DOM of 196. Those numbers put that market at the balance point, too, and suggest that the Brighton/Green Oak area would be a good place to look, if one is willing to live just a little further out along I-96.

Additionally, the West Bloomfield market has 98 homes listed in the $100-300K band with a DOM of 131 days and an average price of $209,917. So if yo want to live much closer in, the WB market has plenty of homes above and below $200K but it is in a Seller's market, so expect to have to get close to the asking price to win a bid.

Tuesday, June 12, 2012

June numbers posted

I've posted the sales numbers for the first 10 days in June on my Web site

The June numbers show a much healthier market overall. Of special note the distressed sales were down as a percentage of sales in every market, even Commerce and West Bloomfield. Distressed sales in those markets are still high, but now less than 50% of total sales.

Median and Average sales prices are creeping up too, due to increased sales of higher priced homes.

Inventory is still very low in all of the markets and is running less than 4 months of available inventory at the current sales rates.

We are still faced with the issue of low appraisals in the market, as appraisers and assessors alike seem to be trailing the upswing by several months. No one complains when the assessors get it wrong on the low-side and your taxes go down; however, you can hear the howls when the appraisers come back and tell you that the house isn't worth what someone has just offered to pay for it.

There are all sorts of reasons that appraisers will give you for their low valuations on homes, but some of it has to be in the very conservative nature of lenders right now who are more likely to question a higher appraisal than a low one. Appraisers, no matter how independent, work to satisfy what they think the people who are paying for the service want to hear.

Monday, June 4, 2012

Real estate statistics that you can use...

Are things getting better in real estate? We see articles in the papers every day about the real estate market. One day it’s up the next it’s down. What are we to think? Well, many, if not most, of those articles are picked up by the local papers from national news services; so, at best, they reflect a national look at the market. In many cases they are actually stories about other parts of the country and in most cases they are stories based upon old data. It takes time to gather and analyze home sales data, so it isn’t unusual to see articles that are excitedly tell you about home sales one of two months ago. I saw one today (June 4, 2012) that was reporting the “News” about home sales in April.

What’s really important is what is happening in your market and what is happening now. I focus upon the little patch that I tend to list and sell homes in within Southeastern Michigan – Milford, Commerce, Highland, White Lake, Lyon and West Bloomfield Townships in Oakland County and Green Oak, Brighton and Hartland Townships in Livingston County. I track sales of all of the homes sold above $20,000 in those Townships every week.  I realize that the $20K number is somewhat arbitrary, but I figure homes sold below that cut-off are probably tear-downs being sold for the land value.

Anyway, I gather data from the local MLS and then do some calculations of my own to allow me to report the data in a way that at least I think is meaningful for buyers and sellers.  I show the home addresses, the asking and sold prices, whether the sale was a distressed sale (marked as S for a Short Sale and F for Foreclosures). I also calculate and show the sold price as a percentage of the asking price and then show the State Equalized Value (SEV), which is a number unique to Michigan that indicates ½ of the assessed value of the property, and calculate the ratio of sold price to SEV. I include the number of days that the home was on the market, the square footage of the home and then show the asking cost per Sq Ft and the sold cost per Sq Ft.

Those statistics when analyzed will give a either a buyer or a would-be seller lots to go on to understand the market that they are in right now. I also show the Y-T-D data for each market and have accumulated about 4 years of month-by-month history that is also accessible. Using this data, you can look at the market in a historical perspective, comparing a month’s sales over multiple years, like below. Or you can go look at a specific market Y-T-D to see how it is tracking this year.

Milford market year-over-year comparison for May 2012 thru May 2012 -

Sold in May 2012 – 22 homes at an average price of $200,487 and an average cost per Sq Ft of $94, with 45% of the sales being either foreclosures or short sales.

In 2011 the same stats were – 15 homes sold for an average price of $185,417 at an average cost per Sq Ft of $79, with 60% of the sales being distressed

In 2010 the stats for Milford were – 18 homes sold (56% of which were distressed sales) at an average price of $188,000 and an average cost per Sq Ft of $96.

Of course this is still all historical data, no matter how recent the history; and it is always difficult to spot trends when looking at very small amounts of data and when things are changing rapidly. One major mission ingredient of the market that I have no way of obtaining the data for is how the appraisals are trending. I can see what has happened to assessments over time in the data and I can now see that the assessors have, in fact, overshot the mark in this area with assessed values that are now too low, compared to the market prices. Since homes are selling for values that are higher than the assessed values, I assume that the appraisers have adjusted faster and better than the once a year assessments would indicate.

I started tracking and reporting sales in some of these markets as far back as 2007; however, the format of what I tracked and how I reported it has changed over time, so it takes a bit of work to do comparisons that far back.

Anyway, go to my Web site to see all of the data and reports for the markets that I track. At a gross level they all appear to be doing better and the statistics that I keep about distressed sales show that there are less and less of them this year in most of the markets; however, the cost per square foot is still relatively low in all of the markets that I track, compared to where they were a few years back.