Real Estate Advice: Sell Now!
NAR Chief Economist Lawrence Yun is supporting what I have been telling consumers for the past few months:
(1) Home sales will grow modestly this year, but a continuing inventory
shortage will keep upward pressure on prices and make it hard for many
people to buy, even though interest rates remain low.
(2)
Inventory shortages continue to be a main driver of price increases,
which were almost 7 percent nationally last year. The increase far
outpaced wage gains, which were up o
nly about 2 percent. Yun is forecasting prices to rise another 4.5 percent this year.
(3) Continuing low interest rates are a bright spot, but Yun warned
that when inflation picks up, mortgage rates will follow suit. Yun said
today’s low consumer price index (CPI), at about 1.7 percent, doesn’t
reflect the rise in prices people are seeing on everyday items because
low gas prices are keeping the broader index down.
Summary/Projections:
* Today: Low Inventory + High Demand = Increasing Values (Seller's Market)
* Increasing Values > Wages = Real Estate Becomes Unaffordable
* Unaffordable Housing + Higher Projected Mortgage Rates = Projected Less Demand
* Projected Supply > Projected Demand = Projected Decreasing Values (Balanced Market - Real Estate Becomes More Affordable)
* The pendulum will continue to swing from Seller's Market to Buyer's
Market back to Seller's Market as we continue to recover from the Great
Recession
On the fence about selling? Advice: Sell now.
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Disclaimer:
All data and information provided on this site is for informational
purposes only. The author makes no representations as to accuracy,
completeness, currentness, suitability, or validity of any information
on this site and will not be liable for any errors, omissions, or delays
in this information or any losses, injuries, or damages arising from
its display or use. This is a personal weblog. The opinions expressed
here represent my own and not those of my broker (Shorewest, REALTORS®)
Attend Our Free First-Time Homebuyer Seminar
Are you considering a real estate purchase but don't know where to begin? Sign up today for this
free, no-obligation seminar!
* Learn what it takes to buy a home (or condo) of your own
* Learn about the benefits of owning
* Join us to learn how to qualify for a loan and the various financing programs available
* Find out how to take advantage of low interest rates
* Learn about various home owners insurance programs available
Experts will be on hand to answer your questions!
Date: Tuesday April 28, 2015
Time: 5:30pm
Place: Shorewest Realtors - North Shore Office (4559 N Oakland Avenue, Shorewood)
Please RSVP to dray@shorewest.com by April 21, 2015.
Presenters:
David Ray
Broker Associate, REALTOR®
Shorewest, REALTORS®
Assisting home buyers & sellers with their real estate needs since 2005
Daniel Berzsenyi
Loan Officer
Wisconsin Mortgage Corporation
Assisting home buyers & home owners with their mortgage needs since 2007
Joe Woelfle
Insurance Agent
State Farm
Assisting home owners with their insurance needs since 2010
Mortgage Rates & Purchase Price
Timing is everything in real estate. Since April 22, 2014, mortgage rates have steadily declined to its lowest level of the year.
April 22, 2014 Quote: 4.500% (30-year fixed)*
Current Quote: 4.000% (30-year fixed)*
* Rates depend on various factors (e.g. financing programs, credit scores, down payment, income/debt ratios, etc.). Rate information provided by Wisconsin Mortgage Corporation (http://wimort.com/).
Assume you're in the market to purchase a $200,000 home.
In April 2014, your
mortgage payment (principal & interest only) would have been
$810.70 per month (assuming a 30-year fixed-rate mortgage, 20% down payment).
Today,
that same home would cost only $763.86 per month (same terms as above). A
$46.83 savings per month!
Another way to look at rates?
For the
same monthly payment of $810.70, you can afford a nicer home at a sales
price of $212,250 (30-year fixed-rate mortgage, 20% down payment).
Unlike
monthly rent payments, monthly mortgage payments will never change over
the course of your mortgage term. Real estate taxes and homeowners
insurance will change, but your monthly principal & interest is
locked in for the life of your loan.
Don't think you'll live in your new home for 30 years? Seven-year ARMs are also available at 3.125% (per Wisconsin Mortgage; depending on credit scores, down payment, income/debt ratios, etc.).
Many analysts are projecting that rates will increase to 5.000% (30-year fixed) by the end of 2015.
Questions about mortgage rates or the real estate market in Metro Milwaukee? Feel free to leave a comment.
Disclaimer: All data and
information provided on this site is for informational purposes only.
The author makes no representations as to accuracy, completeness,
currentness, suitability, or validity of any information on this site
and will not be liable for any errors, omissions, or delays in this
information or any losses, injuries, or damages arising from its display
or use. This is a personal weblog. The opinions expressed here
represent my own and not those of my broker.
Radon Gas: Should we be concerned about the air we breathe in the future?
Radon gas is a deadly gas found everywhere - but in higher concentrations below Earth's surface. People who spend a great deal of time in their basements should be concerned with the levels of radon in and around the foundation walls.
The real estate industry is aggressively tackling the issues regarding radon gas. In Wisconsin, our real estate purchase contracts were recently revised to pull the radon testing contingency out of the generic testing contingency into its own separate contingency. Home inspectors are offering radon testing services with their inspection (for an additional cost).
Home owners can install a radon mitigation system which will quickly emit radon gas from the drain tile to above the home's roof line. Basically, a radon mitigation system works similar to a smokestack. If every home has this smokestack, will the air we breathe in 20 years be more harmful outside than it is inside?
Ironically, the one area of your home that we are all concerned about today might be the safest place to live in the future.
Have any thoughts on this topic? Feel free to leave a comment.
Disclaimer: The author of this blog is neither an environmental specialist nor a healthcare professional. All data and information provided on this site is for informational purposes only. The author makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. This is a personal weblog. The opinions expressed here represent my own and not those of my broker.
Downtown Milwaukee Condo Market: Looking Back on 2013
The condominium market in downtown Milwaukee showed signs of turning the corner in 2013.
Milwaukee's Westown neighborhood experienced the sharpest increase in Average Fair Market Value (FMV) per Square Foot in 2013 thanks to the newest condominium development in downtown Milwaukee, The Moderne. Per Metro MLS, developer Rick Barrett sold half of the total number of condominium units during 2013 (FMV range between $214,000 for a one-bedroom unit and $1,060,000 for a three-bedroom unit).
Milwaukee's Lower and Upper East Side neighborhoods experienced impressive gains during 2013 as well. Key sales include units at 1522 On The Lake, Landmark On The Lake, and a few smaller condominium associations located in Milwaukee's Upper East Side neighborhood.
Milwaukee's East Town and Brewer's Hill (including Milwaukee's Beerline) neighborhoods experienced modest gains during 2013. Key sales include units at BreakWater, Kilbourn Tower, University Club, and The Edge (the Beerline's newest condominium development).
Average FMV per Square Foot remained fairly flat for Milwaukee's Historic Third Ward, Walker's Point (including Fifth Ward), and Riverwest. Key sales include units at Harbor Front, Hansen's Landing, Marine Terminals Lofts, The Point, Waterfront, and Hi-Fi Lofts.
In all, five of the ten neighborhoods located in and around downtown Milwaukee experienced price increases in 2013 (Average FMV per Square Foot). Average FMV per Square Foot leveled off in three neighborhoods and decreased in only two neighborhoods (Bay View, Halyard Park).
Why do I analyze the real estate market using Average FMV per Square Foot? In my opinion, this allows me to analyze trends of comparable units across various neighborhoods. This figure includes all units - regardless of price point, size, room count, parking, and any other amenity. To determine the FMV of your home, other analyses must be performed. The above analysis focused on a small sub-market of Metro Milwaukee (the condominium market in and around downtown Milwaukee) and can be performed in other markets for both homes and condos.
Curious about market trends in your neighborhood? Interested in learning more about the value of your home or condo? Please contact me at dray@shorewest.com or (414) 412-7980.
Disclaimer: All data and information provided on this site is for informational purposes only. The author makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. This is a personal weblog. The opinions expressed here represent my own and not those of my broker.
Is It Better To Own Real Estate Or Rent?
To
help answer this question, it’s good to know the path that is in front of you. Where
will you be in five years? Ten years? One of the primary factors in making this
decision is to consider the length of time you plan to live in your current
community.
Over
time, your biggest investment – your home – will appreciate in value. Those who
purchased real estate near the peak (2006-2007) may not necessarily feel this
way as many of those homeowners experienced a decline in housing values. However,
similar to other types of investments (e.g. stocks, bonds, precious metals,
etc.), real estate values fluctuate over the short term, but has steadily
increased over the long term. In a recent article titled “Renting vs. Buying a Home: Which Is Smarter?” (U.S. News & World Report, December 13, 2013),
Geoff Williams asks a few questions which takes into consideration where you
are in your life – based on your age, family status, and career goals.
Depending on how you answer these questions will determine your future plans
and whether or not it makes sense to purchase a home.
Once
you have determined your level of commitment to your career and community, the
next factor to consider are trends (e.g. housing values, mortgage rates). Is it
wise to invest now?
Investors
know that timing is extremely important for investing – buy low; sell high. During
the past year, demand for homes exceeded supply which caused values to
increase. Many analysts suggest that the increase in demand was created due to
several factors including rising mortgage rates, rising home values, stronger consumer
confidence, among other economic variables. The Wisconsin REALTORS® Association
published their “2013 November Home Sales Report" (dated December 23, 2013) and
it was noted that “prices were…higher in November, rising 4.7 percent above the
same month last year…”
Although
owning real estate has become less affordable in 2013 due to rising mortgage rates
and housing values, rates and values remain near all-time lows. Mortgage rates
and housing values are expected to increase throughout 2014 (many analysts are predicting that mortgage rates will be near 5.000% by the end of 2014). Major changes to lending policies (e.g.
Qualified Mortgage, The Feds eventual elimination of purchasing mortgage-backed
securities) may also make borrowing money more expensive in 2014. After lean
inventory levels in 2013, I anticipate that more and more sellers will enter
the market in 2014 as home values continue to increase and owners recoup lost
equity since the real estate bubble. A slight decrease in demand due to tougher
lending policy changes and an increase in supply will balance out the
marketplace in 2014 and values are expected to increase at a slower rate than
what we experienced in 2013.
Downtown Milwaukee Condo Market | Average FMV Trends
Mortgage Rate Trends (Provided by Wisconsin Mortgage Corporation)
If
you’re committed to staying put in Milwaukee, should you buy or rent? One of my
current clients owns a downtown-area condo that appears to be priced very
competitively for prospective buyers who may be considering this very question.
To
illustrate the difference between owning and renting in downtown Milwaukee, I
will compare my client’s condo at Union Point and a comparable property that is
available to rent (details provided by Heather Johnston, founder and CEO of
Find My Spot).
Union
Point #205 – 1 Bedroom, 1 Bath, Indoor Parking, Balcony, Central Air | $126,900
Union
Point is FHA-Approved – which means that borrowers are able to take advantage
of low downpayment requirements (3.5%) and competitive mortgage rates (4.125%
per Wisconsin Mortgage Corporation, quoted December 27, 2013*).
*
Rates and fees are subject to adjustments based on your credit score and the
loan to value ratio. Rates and fees are also subject to change without notice.
Other rates and loan programs are available. All applications are subject to
current underwriting guidelines and credit approval. EHL
Total
Money Required (includes downpayment, closing costs, and prepaid expenses):
$6,499
Total
Monthly Payment (includes initial principal and interest, escrows, and condo
dues (which also include cable)): $1,258
According
to Johnston, a comparable one-bedroom apartment in Milwaukee’s East Side
neighborhood is available for rent at $1,386 per month (and parking is not included).
Owning
Unit 205 of Union Point (with garage parking) provides a monthly savings of at
least $128 over renting a comparable unit in Milwaukee’s East Side
(without parking).
The
figures above are based on the minimum requirements for FHA financing. Below, please find a chart prepared by Wisconsin Mortgage Corporation that will provide
other financing alternatives (Conventional financing with 5.00%, 10.00%, and
20.00% downpayment).
Moving
in 2014? Please contact me at 414.412.7980 or dray@shorewest.com for more information about the
Milwaukee Metro real estate market!
Disclaimer: All
data and information provided on this site is for informational purposes only. The
author makes no representations as to accuracy, completeness, currentness,
suitability, or validity of any information on this site and will not be liable
for any errors, omissions, or delays in this information or any losses,
injuries, or damages arising from its display or use. This is a personal
weblog. The opinions expressed here represent my own and not those of my
broker.
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* Large, Partially-Fenced Private Yard
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For More Information, Call or Text: (262) 814-1400 (PIN 63084)
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