Wisconsin Realtors Association: Home sales stabilize in 2011 as median prices fall

Wisconsin Realtors Association: Home sales stabilize in 2011 as median prices fall           1/23/2012
For More Information Contact: Michael Theo, WRA President and CEO, 608-241-2047, theo@wra.org or David Clark, Economist, C3 Statistical Solutions and Professor of Economics, Marquette University, 414-803-6537, dclark@c3stats.com

 

MADISON, WI – The Wisconsin real estate market improved in 2011 with home sales totaling slightly above 2010 levels, according to a year-end report released by the Wisconsin REALTORS® Association (WRA). Sales of existing homes for 2011 were 0.2 percent above 2010, and the median price of homes fell 6.4 percent to $132,000, according to the report. Monthly trends in home sales ran well above 2010 levels throughout the second half of the year.

“Remember that home sales were pushed into the first half of 2010 due to the Federal Homebuyer Tax Rebate program, so we expected the first half of 2011 to look weak and the latter half to look stronger by comparison,” said Rob Keefe, Chairman of the WRA Board of Directors. “What is encouraging is to see monthly home sales continue to outpace last year’s levels,” he said, noting that home sales in December were 11.3 percent higher than December 2010.

Regionally, sales were typically within 5 percent of 2010 levels. The strongest growth in home sales was found in the Southeast region where existing home sales rose 3.4 percent over the previous year, followed by the North region where sales grew 2.1 percent. Sales in the Northeast region were even, with an increase of 0.1 percent with last year, but sales were slightly lower, down 1.2 percent, in the South Central region. Finally, annual sales dropped 4.8 percent in the West region, and fell 6.1 percent in the central part of the state. Median prices for the year were below 2010 levels in all regions of the state, with prices falling between 3.6 percent and 5.5 percent in five of the six regions. In contrast, the Southeast region dropped 9.1 percent over the period.

The WRA’s report said other economic factors impacting the housing market also showed signs of improvement. “We are seeing some promising signals in the state labor market,” said WRA President and CEO, Michael Theo, who noted that the statewide unemployment rate dropped more than a half percent over the last two months to 7.1 percent in December. “We are actually seeing private sector job growth in excess of the lost local government employment for 2011, and with net job growth outpacing the growth in the labor force for the year, the rate of unemployment has been falling,” said Theo. “If home sales are to continue to grow, we will need more robust job growth going forward, but a falling unemployment rate is a welcomed sign,” he said.

Another bright spot in the WRA’s report showed inventories of unsold homes dropped to 12.5 months of supply in December, which is the first time it has been below 13 months since the WRA began tracking inventory levels in May 2010. In addition, the Wisconsin Housing Affordability Index, which shows what percentage of a median-priced home a buyer with the median family income can afford, stood at 269 for December 2011, up from 230 in December 2010. “The Wisconsin housing market is still very much a buyer’s market, and the decline in median prices in December combined with 30-year mortgage rates below 4 percent has pushed affordability to very high levels, which is great news for buyers who qualify for mortgage credit,” said Theo.

The Wisconsin REALTORS® Association is one of the largest trade associations in the state, representing over 13,400 real estate brokers, sales people and affiliates statewide. All county figures on sales volume and median prices are compiled by the Wisconsin REALTORS® Association and are not seasonally adjusted. Median prices are only computed if the county recorded at least 10 home sales in the quarter. All data collected by Wisconsin REALTORS® Association are subject to revision if more complete data become available. Beginning in 2010, all historical sales volume and median price data at the county level have been rebenchmarked using the Techmark system which accesses MLS data directly and in real time. The Wisconsin Housing Affordability Index is updated monthly with the most recent data on median housing prices, mortgage rates, and estimated median family income data for Wisconsin.
See detailed stats and charts

– Shared by Eliason Realty of the North, of Vilas County, WI.  Meet our Eagle River and St Germain sales agents.

Eagle River Sales Team: John Ariola, Keith DeVos, Denise Goldsworthy, Brian Hotmar, Bob Merz, John Misina, Brenda Schmidt, Debbie VanCaster, Norm Warner

St Germain Sales Team: Ted Gregg, Bernie Kazda, Tim Kruse & Richelle Eliason Kruse, Rick Lovdal, Chris Nickolaou

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Meet our Eagle River and St Germain, Wisconsin sales agents:

Eagle River Sales Team: John Ariola, Keith DeVos, Denise Goldsworthy, Brian Hotmar, Bob Merz, John Misina, Brenda Schmidt, Debbie VanCaster, Norm Warner

St Germain Sales Team: Ted Gregg, Bernie Kazda, Tim Kruse & Richelle Eliason Kruse, Rick Lovdal, Chris Nickolaou

5 Real Estate Trends to Look for in 2012

by The KCM Crew on January 3, 2012

Predicting trends during the most volatile housing market in American real estate history is no easy task. We strongly believe these are the five real estate items we should keep an eye on in 2012:

1. Buyers Will Return

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

2. Foreclosures Will Increase

The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

3. Prices Will Soften

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

• They will eat up some of the buyer demand in the market.
• They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

4. Short Sales Will Increase

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

5. Great Agents Will Be VERY Successful

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.

– Shared by Eliason Realty of the North, of Vilas County, WI.  Meet our Eagle River and St Germain, WI sales agents.

Eagle River Sales Team: John Ariola, Keith DeVos, Denise Goldsworthy, Brian Hotmar, Bob Merz, John Misina, Brenda Schmidt, Debbie VanCaster, Norm Warner

St Germain Sales Team: Ted Gregg, Bernie Kazda, Tim Kruse & Richelle Eliason Kruse, Rick Lovdal, Chris Nickolaou

Property foreclosures down in Vilas and Oneida in 2011

Property foreclosures down in Vilas and Oneida in 2011

By Gary Ridderbusch News-Review Editor Mortgage foreclosure filings in Vilas and Oneida counties dropped 17% in 2011, ending a four-year climb for the number of filings, court records show. The drop in filings is good news for a slow residential real estate market, which is still working through an abundance of foreclosed homes, according to Peggy Johnson-Wiessner, president of the Northwoods Association of Realtors. “If we have seen the peak of the new filings and this is not just a temporary dip, it should mean we can get the foreclosures sold, and we can get the prices up (on other listings),” said Johnson-Wiessner. In Vilas and Oneida counties last year, there were 379  filings compared with 458 in 2010 — when the foreclosure filings peaked out. The 2011 figure was even lower than 2009, when there were 420 filings. Court records from the two counties show there were 331 filings in 2008 and 263 in 2007. Foreclosure filings in both counties dropped in 2011, with Oneida County posting a 23% drop from 265 in 2010 to 204 last year. Vilas County filings fell 9% from 193 in 2010 to 175 last year. Vilas County saw a steady increase in foreclosure filings starting in 2007, when there were 94 filings. That figure climbed to 137 in 2008 and 166 in 2009 before peaking out at 193 in 2010. Oneida County also saw a steady climb as the nation’s economy struggled late in the decade, with 169 foreclosure filings in 2007, 194 in 2008, 254 in 2009 and the filings peaked out at 265 in 2010. Economists say the slower pace of filings eventually should help restore a more normal housing market, but there still are too many foreclosed homes for sale, according to Johnson-Wiessner. “We still have a tremendous amount on the market,” she said. “That forces us to drive down prices.” Johnson-Wiessner said with a glut of foreclosed properties on the market and banks just looking to get their money back from the mortgage, the prices drop on the other properties. “Normally, the lender is the successful bidder on the foreclosed properties, and they are in it to just recoup the mortgage,” she said. “The seller has to compete with those declining prices.” The foreclosure figures are for civil cases filed in the county circuit court offices using the class code of a foreclosure. An office spokesperson in the Vilas County Clerk of Circuit Court office noted that some of the cases could have gone to bankruptcy and dismissed, or the property owner could have come to an agreement with the lender. Nonetheless, the figures give an indication to the trend in mortgage foreclosures on residential properties, condominiums and vacant land. Economists say a gradual improvement in the labor market should provide some support for the housing market in the North Woods. Real estate professionals say that as people gain confidence in the economy in the cities, they tend to purchase second homes and cabins in the North Woods. Johnson-Wiessner said the drop in the mortgage foreclose filings is something positive for the North Woods real estate industry. “As least if we are not adding new filings at the same rate, maybe that’s a positive,” she said. Meanwhile, Johnson-Wiessner said there is more good news for the North Woods real estate industry. “Overall, we have seen an increase in sales in 2011 in the number of units sold,” she said. For people looking to purchase a home, real estate professionals note fixed-rate mortgages are at record lows. The interest rate on a  30-year fixed mortgage is about 3.875% from  lenders.

State Lawmakers to Consider New Nonconforming Structure Regulations

– from the Wisconsin Realtor Association – Jan 2012 Issue

At the request of the WRA, the Wisconsin Legislature will soon consider legislation that seeks to provide owners of legal, nonconforming homes and substandard lots with greater certainty as to how they can repair, maintain and improve their property. This legislation would accomplish these goals by (a) defining “nonconforming structures,” (b) allowing property owners to repair and maintain legal, nonconforming homes and buildings, and (c) codifying the standards in NR 115 related to the expansion of nonconforming structures and building on substandard lots in shoreland areas.

Background

A “nonconforming structure” is a home or building that does not meet one of the dimensional requirements found in the current zoning ordinance. This could be a setback requirement, height requirement, lot coverage ratio, impervious surface requirement or any other regulation relating to the size or the placement of a building on a lot. Generally, a building becomes nonconforming because a community changes the regulations after the home or building is constructed.

When a home is classified as “nonconforming,” significant restrictions are often placed on the ability to improve, expand or replace the building. These restrictions impact the value of the property because purchasers are obviously unwilling to pay the same amount for a home with these restrictions as they would for the same home with no restrictions. In addition, lenders are reluctant to offer financing because these homes are considered “higher risk” due to the fact that restrictions placed on the ability to maintain, repair and improve these structures reduces the functional life on the structures. Current law protects the ability of property owners to rebuild their nonconforming homes and buildings if destroyed by natural disaster. See Wis. Stat. §§ 59.69(10m) and 62.231(5m). However, the law does not protect the ability to maintain, repair and improve these structures.

Proposed Legislation

To provide owners of legal, nonconforming structures with greater certainty regarding the use and value of their property, the proposed legislation would include the following changes to state law:

Allowing property owners to perform unlimited maintenance and repair: While zoning ordinances will change over time, such changes should not prevent or place artificial limits on the ability of property owners to maintain and repair their existing homes and buildings. Protecting the ability of property owners to keep their homes in good condition and make necessary repairs will help encourage greater investment in homes, buildings and older neighborhoods. Accordingly, the legislation would allow owners of nonconforming structures to maintain and repair their homes without limitations on the dollar value of such maintenance or repairs.

Codifying NR 115 Standards for Nonconforming Structures and Substandard Lots: Wisconsin’s shoreland zoning regulations were recently revised to include a more reasonable approach to regulating nonconforming waterfront homes and substandard lots. Under these recent changes, nonconforming waterfront homes and substandard lots are subject to the following requirements:

• Unlimited maintenance and repair is allowed.
• Expansion behind the 75-foot setback.
• Vertical expansion (to a maximum height of 35 feet) only between 35 feet and 75 feet of the water if local mitigation requirements are satisfied.
• No expansion between 35 feet and the water.
• Substandard lots may be built on as long as they have never been merged with adjacent lots.

While these regulations achieve a better balance between private property rights and environmental protection, Wisconsin’s shoreland zoning regulations are only minimum standards. This means that local governments can adopt more restrictive regulations on nonconforming waterfront homes, including the 50 percent rule. In fact, many communities continue to enforce the 50 percent rule today. Moreover, local government can prohibit building on all substandard lots or require them to be merged with adjacent lots owned by the same person.

To provide owners of nonconforming waterfront homes with greater certainty as to how their property can be repaired, maintained and improved, the legislation would codify the regulatory framework set forth in NR 115 into state statutes. By placing this framework into the statutes, local governments would be effectively prohibited from enacting and enforcing regulations that are more restrictive.

For more information on this proposed legislation, please contact Tom Larson (tlarson@wra.org) at (608) 241-2047.

Tom Larson is Vice President of Legal and Public Affairs for the WRA.

Published: January 04, 2012
http://www.wra.org/WREM/Jan12/NonconformingHomes/

– Shared by Eliason Realty of the North, of Vilas County, WI.  Meet our Eagle River and St Germain sales agents.

Eagle River Sales Team: John Ariola, Keith DeVos, Denise Goldsworthy, Brian Hotmar, Bob Merz, John Misina, Brenda Schmidt, Debbie VanCaster, Norm Warner

St Germain Sales Team: Ted Gregg, Bernie Kazda, Tim Kruse & Richelle Eliason Kruse, Rick Lovdal, Chris Nickolaou

Comparing Real Estate To Other Investments

 

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Comparing Real Estate To Other Investments by The KCM Crew on January 4, 2012

We recently posted Real Estate: Today’s Golden Opportunity comparing the current housing market to the market for gold about a decade ago. Some commented on the fact that you can’t compare gold to real estate as an investment as gold is a very liquid asset and it would take more time and effort to sell a house. We were not trying to make the case for real estate vs. gold as an investment in our blog. We were just showing that all investments go through cycles and that the best time to buy any investment may be when everyone is saying not to.

However, since the subject of comparing real estate to other investments has come up, let’s take a closer look. There are two major advantages to investing in a home of your own rather than another option:

You Can’t Live in Your IRA

When you buy your own home you are not taking available dollars away from another investment. You are replacing one housing expense (rent) which has no potential for a return on investment with another (mortgage payment) that does give you an opportunity for a return. We realize that there has been research showing that over the last 30 years renting has been less expensive than owning. That research also says that if you invested the entire difference between the rent payment and mortgage payment you may have done better financially.  There are two challenges with this conclusion:

1. Today, in the vast majority of the country, renting is actually more expensive than owning a home.
2. History has proven that tenants DO NOT invest the difference in their rent and mortgage payments.

Today, study after study shows that owning a home is no more expensive than renting a home. However, even if this wasn’t the case, history shows that owning a home creates greater wealth.

Paying a mortgage creates what financial experts call ‘forced savings’. The Joint Center for Housing Studies at Harvard University released a study last year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners:

“[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

There Are Tremendous Tax Advantages to Investing in a Home

There is no doubt that selling an investment such as gold is easier than selling your home. However, this liquidity comes at a price. The price is called capital gains. That is the tax you pay on any financial gain you receive from the investment. This tax doesn’t apply the same way when you sell your primary residence:

Theresa Palagonia, a CPA and the Accounting Manager for the firm G.S. Garritano & Associates, was good enough to explain the Home Sale Exclusion Rules:

“You may qualify to exclude from your income all or part of any gain from the sale of your main home. 

Maximum Exclusion

You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true:

• You meet the ownership test.
• You meet the use test.
• During the 2 year period ending on the date of the sale, you did not exclude gain from the sale of another home.

If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions listed above.

You may be able to exclude up to $500,000 of the gain on the sale of your main home if you are married and file a joint return and meet the requirements. (Special rules apply for joint returns.)

Ownership and Use Tests

During the 5 year period ending on the date of the sale, you must have:

• Owned the home for at least 2 years, and
• Lived in the home as your main home for at least 2 years

Certain exceptions exist in which you may qualify for the exclusion without satisfying the tests listed.”

Bottom Line

Every investment has pros and cons. That is why there is such an assortment of great opportunities. Real Estate has been, is and always will be one of those opportunities.

http://www.kcmblog.com/2012/01/04/comparing-real-estate-to-other-investments/

– Shared by Eliason Realty of the North, of Vilas County, WI.  Meet our Eagle River and St Germain sales agents.

Eagle River Sales Team: John Ariola, Kent Collett, Keith DeVos, Denise Goldsworthy, Brian Hotmar, Bob Merz, John Misina, Brenda Schmidt, Debbie VanCaster

St Germain Sales Team: Ted Gregg, Bernie Kazda, Tim Kruse & Richelle Eliason Kruse, Rick Lovdal, Chris Nickolaou

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– Offered for sale by Eliason Realty of the North, of Vilas County, WI.   Meet our Eagle River and St Germain sales agents:

Eagle River Sales Team: John Ariola, Kent Collett, Keith DeVos, Denise Goldsworthy, Brian Hotmar, Bob Merz, John Misina, Brenda Schmidt, Debbie VanCaster

St Germain Sales Team: Ted Gregg, Bernie Kazda, Tim Kruse & Richelle Eliason Kruse, Rick Lovdal, Chris Nickolaou

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