Monday, December 29, 2008

How much do foreclosures affect neighborhood home values?

I believe it depends a lot on location.

If a foreclosed home enters the market in a neighborhood where demand is high and supply is low, then the impact of that foreclosure on neighborhood home values will be relatively small. When the foreclosure sells, the lasting effects will be minimal because there are no other distressed properties on the market after the sale.

It's a different story on the other end of the spectrum - when a foreclosed home enters the market in an area where several other foreclosures already exist. When supply is high, and much of the inventory comes from distressed sellers, the impact of those foreclosed homes on neighborhood home values will be noticeable and real.

If you're getting ready to price your home, your Realtor can help you gain a better understanding of the foreclosure and short sale inventory in your neighborhood. You'll also find these articles on the DaneCountyMarket.com selling real estate page useful:

Tips for buying foreclosed homes

This recent article by Marv Balousek highlights the trend toward more and more buyers seeking out foreclosed properties. The article does a nice job of summarizing the challenges and opportunities that come with buying a foreclosed home, and offers a few tips.

Foreclosures will continue to be a big news item in the coming year as they continue to rise steadily (foreclosures this month will far exceed the total from December of 2007). So we can certainly expect to see more buying opportunities in the coming year, and along with that a real estate landscape that becomes increasingly complex. Foreclosures and short sales tend to involve more waiting, uncertainty, paperwork, twists and turns than the traditional transaction. As Marv Balousek's article shows, buyers who are willing to work their way through these challenges can reap some nice rewards.

You'll find our November foreclosure report on the economic trends page at DaneCountyMarket.com. Our December report will be available in about two weeks.

Saturday, December 27, 2008

November 2008: Dane County versus National Trends

Here's how November sales and prices trended at both the local and national levels. Data comes from the South Central Wisconsin MLS and the National Association of Realtors.

Home and condo sales: November Dane County home and condo sales were down 37% from November of 2007. At the national level, sales volume was lower by 17%. One reason for the discrepancy between the local and national numbers is some of the overheated markets out west that fell very hard and very fast have started to rebound with more sales. According to the NAR, November sales in the western region of the United States increased by 9% from the previous November.

Home and condo median price: The Dane County November median price was down 1.8% from November of 2007. At the national level, the median price was lower by 12.3%. Prices in the Dane County market proved once again to be more stable than prices in many other parts of the country.

You can view the NAR national numbers for the month of November here. The local numbers are available at DaneCountyMarket.com.

Sunday, December 21, 2008

Boost your listing idea #7: Time it right and price it right

Sellers will begin to gain more leverage as we work our way into the new year. Take a look at this graph which shows how Dane County single family home sales vary with the seasons. Year in and year out, January is always the slowest month for closings, and June is always the busiest. The spring and summer months are the peak months for sales, with roughly 3 out of every 4 closings occurring between the months that span from March to September.


This means buyer activity will begin to increase very soon as we enter the new sales season. In fact we're already seeing a jump in buyer activity due to the recent plunge in mortgage rates. If you're planning to sell, now is the time to prepare your home for the market. That means getting your home ready for the market by late winter or early spring at the latest.

If you haven't already done so, consult with a real estate stager and start making the changes that will help your home look its best on-line and in-person. And when you price your home, keep in mind we aren't likely to see prices increase in the coming year. If you overprice, you risk missing out on your two big windows of opportunity - low interest rates and the new buying season.

For more pricing tips, check out these articles on the selling real estate page at DaneCountyMarket.com:

For more home-selling tips, check out these previous blog articles:

Saturday, December 20, 2008

Modern, affordable townhomes in Fitchburg

I have a client who purchased a unit at the Parkside Townhomes in Fitchburg in the last year. After looking at many different condos and townhomes, she chose a Parkside unit because of its modern style, sense of space, and overall value proposition. For around $200,000, these units offer a bright and open floorplan with 9 foot ceilings, stainless steel appliances, a gas fireplace, a two-car garage, a screened balcony, and over 1,600 square feet of living space.

You can ask your agent for more information on these units. If you're not already working with an agent, you can contact the listing agent and ask him for his assistance. His name is Gabe Albrecht of Stark Company Realtors. Gabe's email is galbrecht@starkhomes.com and his phone number is 347-8672.

I don't stand to gain anything by giving these townhomes a plug. I mention them now because several units are available, and I was impressed by their overall value proposition when I last toured them.

For more information on the Fitchburg condo market and other local condo markets, you can visit the real estate trends page at DaneCountyMarket.com.

How low will mortgage rates go?

One would think they can't get much lower than their current levels. As of this post, rates for 30 year fixed rate loans are hovering around 5% - about as low as they've ever been.

The graph below shows how rates have trended over the last 20 weeks. Note how rates have dropped by more than 1.25% since October 30th, even though rates at that time were at historically low levels.

As we noted in a recent post, we've noticed an uptick in buyer activity over the last two weeks. Not surprising at all given how far rates have dropped.

For more mortgage-related information, visit these links on the buying real estate page at DaneCountyMarket.com:

Wednesday, December 17, 2008

Buyers took an early holiday in November but appear to be back in business now

Here's what happened to Dane County single family home sales in November. After two straight months of year-over-year sales increases, November sales dropped by 36%.


When you compare November of 2008 to the 4 previous Novembers, it becomes much more clear how much single family sales have dropped since the market peak. Sales in November were 54% off the peak November from 2004.

Clearly buyers stood on the sidelines after all of the tough financial news starting making national headlines in September and October. But now we have another dynamic at play. Mortgage rates have plunged in December (down to about 5% today), and consequently we're seeing a lot of buyer activity in the last two weeks, especially in the more affordable price categories.

Given what we're experiencing right now, I expect the December sales numbers to be lower on a year-over-year basis - as well as January - but I would not be surprised at all to see the February numbers rise to the upside.

Tuesday, December 16, 2008

Deal of the week?

I have a few automated searches of the MLS that I use to identify properties with a potential large value upside. This property at 10 Waltham Circle on Madison's west side came across my radar last night. The price just dropped by $25,000 from $169,900 to $144,900. This home is now priced at more than $47,000 under the assessed value.



This is one example of how a Realtor-assisted search can be a very useful part of a home-buying plan. Realtor's can set up searches of the MLS that provide instant notifications whenever new homes matching specific criteria enter the market, or when existing listings matching certain criteria undergo a price change (such as the property above).
For more information on the above property, feel free to contact the listing agent, Rick Amdahl from Century 21. Rick's phone number is 223-2737. His email is ramdahl@msn.com.

Dane County home and condo sales decrease 37% in November

The financial news that first started making national headlines in September had a big impact on our November numbers. Dane County combined home and condo sales were down 37% from last November.


The median home and condo price was lower by 1.8%.


Our preliminary November report includes more details, including separate breakdowns of the home and condo markets. It's safe to say that buyers hold most of the cards right now, especially in the higher price categories.

Monday, December 15, 2008

Boost your listing idea #6: Market to your neighborhood

Regardless of the market, some neighborhoods tend to have a high demand for housing along with relatively low inventory levels. In these neighborhoods it's not uncommon for residents to recruit their friends to the area. The Sunset Village neighborhood on Madison's near west side is one such neighborhood.

If you live in a similar area, an aggressive marketing plan geared toward the larger neighborhood can make a lot of sense. Here are 4 ideas to consider:

#1: Send a post card to the neighborhood announcing your first open house. The post card does two things. First, it lets people know that your home is on the market. Second, it boosts attendance for your open house.

#2: Make your home visible to commuters passing through the area. Place directional signs at key intersections in the neighborhood to increase awareness of your home.

#3: If you're selling a starter home, send a mailer to local renters. For example, this Sunset Village starter home is a perfect fit for a mailer to local apartment-dwellers.

#4: Use technology to promote your listing. Your Realtor can promote your listing to the larger neighborhood by implementing a combined email and web campaign. For example, we have used email and neighborhood web pages like this to promote listings and provide information to neighbors on the local market.

For more home-selling tips, check out the selling real estate page at DaneCountyMarket.com.

For related blog articles, check out these posts:

Thursday, December 11, 2008

Dane County foreclosures increase by 41% in November

November was the second highest month for Dane County foreclosures - even though the November court schedule was abbreviated due to the Thanksgiving holiday. A total of 127 new foreclosures were filed last month, compared to 90 from November of last year.


You'll find our full foreclosure report on the economic trends page at DaneCountyMarket.com.

Wednesday, December 10, 2008

Dane County housing starts decreased by 58% in November

Dane County housing starts decreased from 84 in November of 2007 to 35 in November of 2008 - a decrease of 58%.

Here's the housing start history for each of the last 10 Novembers:

  • November, 1999: 165
  • November, 2000: 181
  • November, 2001: 164
  • November, 2002: 152
  • November, 2003: 213
  • November, 2004: 179
  • November, 2005: 176
  • November, 2006: 91
  • November, 2007: 84
  • November, 2008: 35

The 35 housing starts in November were down 84% from the November, 2003 peak of 213 starts.

For more information:

Thanks to Dominic Collar from MTD Marketing Services of Wisconsin for allowing us to share his data. For more information, you can contact Dominic at 920-993-8435.

Monday, December 8, 2008

How often do Dane County listings result in a closing?

Data from the South Central Wisconsin MLS shows about one out of every two single family home listings results in a sale. Note how listing success rates vary by location. Locations within and around Madison tend to have success rates above 50%. Locations further away from Madison tend to have success rates under 50%.

In the condo market, about 1 in 3 listings results in a sale.

The listing success rate is one way that we can measure the relative effort required to sell a home. To see how success rates for homes and condos have changed over time, you can visit the real estate trends page at DaneCountyMarket.com.

Saturday, December 6, 2008

Dane County single family stats - updated for 19 different locations

Here's a year-to-date snapshot of 19 different single family home markets. Two things stand out:

Sales are down this year in almost every market. The exceptions are Cottage Grove and McFarland, which are up 9.1% and 17.9% respectively. The other pattern is months of inventory tend to be lowest within and around Madison.


You'll find our full single family home snapshot - including price and days on market info - on the real estate trends page at DaneCountyMarket.com.

Friday, December 5, 2008

Dane County commercial inventory stands at 52 months

Our November 30th analysis of South Central Wisconsin MLS data shows inventory for Dane County commercial real estate stood at 52.3 months, or 4.4 years.



For our full report on the commercial real estate market, check out the economic trends page at DaneCountyMarket.com.

Note: Since our last report, we've adjusted how we report on the commercial market in order to better capture all of the MLS transactions. If you have any questions, feel free to call me at 852-7071 or email me at danielmiller@kw.com. Have a good weekend.

Thursday, December 4, 2008

In a quiet way, Monday was a big day for the real estate industry

December 1st was the deadline for Realtors to renew their memberships with the state and national Associations. And at over $500 per year, membership is not cheap. Sales are down by over 20% this year, so we're likely to see a significant number of Realtors who choose not to renew their membership. When we learn more about the non-renewal rate, we'll share that info with you.

The real estate downturn has certainly hurt a lot of people across the industry, but there are also plenty of people in the field who are working harder than ever to grow their businesses. Strange as it may seem, it's a time of real opportunity in the field of real estate. For those who are able to work through the current market and implement solid plans for the long-term, the benefits on the other side could be big.

Wednesday, December 3, 2008

Boost your listing idea #5: Post an enhanced listing on craigslist

Many FSBO sellers and Realtors advertise on craigslist because it's popular and free. One way you can make your home stand out on craigslist is to post an enhanced listing like this. Include plenty of photos and a link to your virtual tour. Then refresh your posting once or twice a week so your advertisement stays near the top of the list.

For more practical home-selling tips, check out the selling real estate page at DaneCountyMarket.com.

For related blog articles, check out these posts:

Sunday, November 30, 2008

Is now a good time to invest in rental properties?

Our analysis of data from the South Central Wisconsin MLS shows multi-family properties are becoming more affordable when calculated on a per unit basis. The Dane County average price per multi-family unit over the last 12 months was $83,822, down 10% from the average per unit price of $93,163 from the previous 12 month period.


The price decline actually started in 2007, when the average per unit price was $90,851, down 14.7% from the 2006 per unit price of $106,535.

The multi-family market has swung toward buyers in other ways, too. Inventory is high, sales volume is low, and expired listings are way up. Cash-flowing a Dane County property has been a challenge for many investors in the past, but the shift in the market could very well create some new opportunities for those who seek them out.

You'll find our full multi-family real estate report on the economic trends page at DaneCountyMarket.com.

Friday, November 28, 2008

Third Quarter Median Price - Dane County versus Wisconsin and national trends

Here's how third quarter median price trends for homes and condos stacked up across Dane County, Wisconsin and the United States. All data comes from the Wisconsin Realtors Association and the National Association of Realtors:

  • Dane County: median price down 2.7% from Q3 of 2007
  • Wisconsin: down 5.3%
  • United States: down 9%

One big reason for Dane County's price stability relative to the state and the nation as a whole is our local economy. According to the Wisconsin Department of Workforce Development, the October unemployment rate in Madison and Dane County stood at 3.3%, compared to 4.4% for the state and 6.1% for the nation.

We should expect local and national unemployment rates to rise due to news of pending job cuts, but rates in Madison and Dane County should remain well below state and national levels due to our diversified base of public and private sector jobs. That's one thing to be thankful for as we approach a new year in real estate.

For related articles and statistics:

Wednesday, November 26, 2008

First-time home buyer seminars

Both the Dane County Housing Authority and UW Credit Union offer regular seminars for first-time home buyers. You'll find more information with these links:

Note the DCHA has not yet released its schedule for the 2009 year. The next UW Credit Union seminar is scheduled for January 13th.

You'll also find plenty of useful information on the buying real estate page at DaneCountyMarket.com.

Tuesday, November 25, 2008

Mortgage rates fell today

Mortgage rates for 30 year fixed-rate loans fell well below 6% today. If you've been thinking of buying or refinancing, it's a good time to stay in touch with your lender. You can also track rates from local lenders on our mortgage update page at DaneCountyMarket.com.

Sunday, November 23, 2008

Four reasons why now is a good time for first-time home buyers

Here are four reasons why buying your first home now represents a real opportunity:

#1: Mortgage rates are low. A 30 year fixed rate loan is currently around 6%. Read more.

#2: The $7,500 tax credit. The tax credit is essentially an interest free loan that is payable over 15 years. The program expires on July 1, 2009. Read more.

#3: The fall and winter months are the slowest months of the sales year - meaning you have more negotiating leverage right now than you will at any other point of the year. Read more.

#4: Resale is easier with a starter home. Months of inventory are traditionally much lower in the more affordable price categories. Read more.

If you've been thinking of buying but you're not sure where to start, a good first step is to meet with a lender. Learn about your lending options and find out how much home you can comfortably afford.

Also visit the buying real estate page at DaneCountyMarket.com, where you'll find a number of articles and resources that touch on various aspects of buying a home.

Saturday, November 22, 2008

How Dane County home and condo inventory vary by price range - November update

Take a look at the Dane County home and condo months of inventory by price range and you'll see a few patterns emerge.

For homes, inventory tends to be lowest for properties priced under $225,000. In other words there is more demand (relative to supply) for the homes in the lowest price categories.


Condo inventory also tends to be lowest in the lower price categories, but only one price range ($100,000 - $124,999) has less than 12 months of inventory. Condo supply (relative to demand) is high for all price categories and especially so in the upper ranges.

What does this data mean for sellers?

In the single family home market, sellers in the lower price categories tend to have more leverage than sellers in the higher price categories. A fair number of first-time home buyers do end up buying during the off-season, giving sellers in the more affordable price ranges an upper hand over others. As a personal example, I am working with two buyer clients who are purchasing homes priced at under $225,000 in the next 10 days.

In the condo market, the market for sellers is competitive across all price ranges, and extremely competitive in the high end categories - which helps to explain why we are seeing so many buyer incentives in the condo market right now.

For more information on Dane County inventory, check out these reports on the buying real estate and selling real estate pages at DaneCountyMarket.com.

Friday, November 21, 2008

Dane County October median price down 2.2%, sales down 5%

The October median price for Dane County homes and condos was $220,000 - down 2.2% from the October 2007 median price of $225,000. The year-to-date price through the month of October was $215,000 - down 1.1% from last year's median price of $217,500.

Meanwhile home and condo sales totaled 344 in October - down 5% from last October's 362. Year-to-date sales through the month of October totaled 4,781 - down 21% from last year's total of 6,056.

For a breakdown of the home and condo numbers, check out our preliminary October report on either the buying real estate or selling real estate page at DaneCountyMarket.com. Our full report for the month of October will be available on the real estate trends page in early December.

Thursday, November 20, 2008

One source of housing inventory is outpacing another

We know Dane County housing starts are decreasing and foreclosures are increasing, but these trends are especially striking when we can see them together on the same graph.

The graph below shows year-to-date totals (January through October) for housing starts and foreclosures over the last five years. Over this 5 year period housing starts have decreased by 71% while foreclosures have increased by 211%. The end result is foreclosures now outpace housing starts by close to a 2 to 1 margin.


These two trends have changed the real estate experience for everyone - buyers, sellers, agents, attorneys, lenders and builders. Expect more change on the horizon as more and more foreclosed homes work their way through the legal process and onto the open market.

For more information, you'll find these DaneCountyMarket.com updates useful:

Thanks to Dominic Collar from MTD Marketing Services of Wisconsin for allowing us to share his housing start data. For more information, you can reach Dominic at 920/993-8435.

Wednesday, November 19, 2008

Third quarter sales lowest since the year 2000

The Wisconsin Realtors Association has released its data for the third quarter of 2008 (July through September). According to the Association, the Dane County median combined home and condo price was $219,000, down 2.7% from the Q3 2007 price of $225,000.


Perhaps the bigger story is in the sales data. The WRA reports that 1,631 Dane County homes and condos sold during the third quarter, the lowest total out of any third quarter since the year 2000, and the second lowest out of every third quarter dating back to 1997.

You can view the WRA Dane County price and sales figures for every quarter dating back to 1997 here. You'll find our monthly, year-to-date and annual statistics on the real estate trends page at DaneCountyMarket.com. In the next couple of days we'll provide our preliminary report on the price and sales numbers for the month of October.

Tuesday, November 18, 2008

Wisconsin Realtors Association releases third quarter data

The Wisconsin Realtors Association has released its price and sales data for the third quarter of 2008. You'll find more information in this article from Marv Balousek of the Wisconsin State Journal.

Foreclosure Alarm

We've covered how you can research the Wisconsin Circuit Court database to identify new foreclosure filings. A web service called Foreclosure Alarm will automate this process for you. Foreclosure Alarm allows you to specify your own search criteria based on county, zip code, metro area and others. When a foreclosure matching your criteria is entered into the circuit court database, you receive an email update.

In addition to sending you email updates, Foreclosure Alarm allows you to log in and run your own searches at your convenience. You can also download the results of your searches into a spreadsheet.

The service offers a free one week trial period, and you don't need to provide your credit card information in order to get started. Thereafter the charge is $29.95 for each month that you use the service. It's worth giving the one week trial period a spin if you have an interest in locating foreclosure properties - since there's no financial downside to signing up.

For more information, visit http://www.foreclosurealarm.com/.

Sunday, November 16, 2008

What percent of all Madison homes sell for under the assessed value?

We last covered this topic with data from 2007. The data from 2008 shows a greater percentage of Madison homes are selling for below the assessed value compared to every other year this decade.

The bar chart below shows how the relationship between assessed value and market value has changed over time. The blue bar represents the percent of Madison homes that sold for below the assessed value. The purple bar represents the percent of Madison homes that sold for above the assessed value.

Roughly 1 out of every 10 Madison homes sold for below the assessed value during the years 2000 to 2005. This relationship started to change in 2006, when 3 in 10 sold for below the assessed value. The number jumped to 4 in 10 in 2007, and almost 5 in 10 in 2008.

We drilled deeper into the 2008 data for Madison homes and uncovered the following:
  • 29% of all homes sold for a price that was at least $10,000 lower than the assessed value.
  • 40% of all homes sold for a price that was within $10,000 (above or below) the assessed value.
  • 31% of all homes sold for a price that was at least $10,000 above the assessed value.
What does this data mean to you?
  • If you're selling, you can't rely on the assessed value as a reliable measure of market value.
  • If you're buying, realize a list price above the assessed value doesn't mean a home is over-priced. And a list price below the assessed value doesn't mean a home is priced at a good value.

For more information, read our articles on market value versus assessed value and pricing your home, both on the selling real estate page at DaneCountyMarket.com.

Saturday, November 15, 2008

Boost your listing idea #4: Consult with a home stager

We've covered how professional photos and professional virtual tours can aid your listing. Your photos and your tour will be most effective if you've consulted with an interior designer - or real estate stager - well before you put your home on the market.

Here are 5 basic home staging concepts, courtesy of Kathleen Quade from House to Home Interiors:

  1. Enhance your curb appeal by adding some allure to your front entrance. Potted plants and seasonal decorations can help. In many cases a well-chosen color for the front door can create the allure that makes buyers want to see more.
  2. Pack away the items that you do not use on a daily basis. Give your home a "clutter-free" look.
  3. Wash your windows and keep your home clean. Every buyer expects a clean house.
  4. Maintain the original identity of your rooms. If your dining room serves as your office, or your living room serves as your childrens' play room, you'll want to restore these rooms back to their original identity.
  5. Turn negatives into positives. For example, if you have extra storage cabinets lining your kitchen walls, buyers will perceive that your kitchen cabinets do not offer enough storage space. In this example the extra storage units should be removed from the kitchen and the kitchen items that are not used on a regular basis should be packed away.

Consulting with an interior designer is one of the smartest things you can do to enhance your listing. Your stager will help you attract more online interest and get more buyers through your door. And she'll work with you to make sure you home looks its best for all of your showings. Ask your Realtor about using the services of a real estate stager for your listing. We, like many other Realtors, include professional home staging services as part of our basic plan.

For more practical home staging advice, check out these 3 articles from Kathleen. You'll find all of them on the selling real estate page at DaneCountyMarket.com.

For related blog articles, check out these posts:

Wednesday, November 12, 2008

Dane County foreclosures reach a new high in October

Dane County foreclosures reached a new high with 152 new filings in October, up 49% from the 102 foreclosures recorded a year ago. The previous high of 124 foreclosures was recorded in January.

To put this number in perspective, here's how foreclosures stack up for each of the last 5 Octobers:

  • October, 2004: 37
  • October, 2005: 51
  • October, 2006: 73
  • October, 2007: 102
  • October, 2008: 152

That's a tremendous amount of growth. The 152 foreclosures filed in October are over 4 times the number of foreclosures filed 4 years ago.

For our full foreclosure report, visit the economic trends page at DaneCountyMarket.com.

Tuesday, November 11, 2008

Dane County housing starts decrease in October

Dane County registered 52 housing starts in the month of October, down from the 113 registered a year ago. As you'll see from the graph below, housing starts have been on a steady downward trend.



This past October was the lowest month for housing starts out of every October dating back to 1999. Here's how housing starts stack up for each of the last 10 Octobers:

  • October, 1999: 158
  • October, 2000: 147
  • October, 2001: 224
  • October, 2002: 262
  • October, 2003: 243
  • October, 2004: 197
  • October, 2005: 180
  • October, 2006: 112
  • October, 2007: 113
  • October, 2008: 52

Thanks to Dominic Collar from MTD Marketing Services of Wisconsin for allowing us to publish his data. For our full housing start report, visit the real estate trends page at DaneCountyMarket.com.

Monday, November 10, 2008

The Dane County single family home market: 2008 versus 2007

Here's how the 2008 Dane County single family home market through the month of September fared against the market from the first 9 months of 2007. All data comes from the South Central Wisconsin MLS:

  • Median price: decreased by 1.2% from last year.
  • Active listings: decreased by 2.7%.
  • Sold listings: decreased by 19.4%.
  • Months of inventory: increased from 7.4 to 8.9, an increase of 1.5 months.
  • Months of total required marketing time for the average Dane County home: increased from 6.5 to 7.8, an increase of 1.3 months.

The Dane County single family home market varies from the condo market in a few key ways:

  • Months of inventory are much less in the single family home market - by about 50%.
  • The average marketing time is much less in the single family home market - by more than 50%.
  • Sales volume has been decreasing at a slower rate in the single family home market. In fact home sales increased in September for the first time in 32 months.

For more information on the Dane County single family home market, you'll find the market updates below useful. All can be found on the real estate trends page at DaneCountyMarket.com:

Sunday, November 9, 2008

A review of the 2008 Dane County condo market

Here's how the 2008 Dane County condo market through the month of September compared to the market from the first 9 months of 2007. All data comes from the South Central Wisconsin MLS:

  • Median price: increased by .6% from last year.
  • Active listings: decreased by 10.4%.
  • Sold listings: decreased by 27.8%.
  • Months of inventory: increased from 15.7 to 18.4, an increase of 2.7 months.
  • Months of total required marketing time for the average Dane County condo: increased from 15.9 to 19.5, an increase of 3.6 months.

The good news for the condo market is that active listings are down from last year and the median price is holding steady. Of course many condos being sold this year come with very aggressive buyer incentives. That's because there are still a large number of unsold condos on the market as sales continue at a sluggish pace.

If you're looking for more information on the local condo market, you'll find the market updates below useful. All can be found on the real estate trends page at DaneCountyMarket.com:

Subprime loans still a factor in Wisconsin

Here's an interesting article from Paul Gores of the Milwaukee Journal Sentinel. From the article:

  • Wisconsin subprime lending as a percentage of all mortgage loans exceeded the national average in 2006 and 2007.
  • In 2007, subprime loans made up 17% of all Wisconsin loans, compared to 14.9% for the nation as a whole.
  • In 2006, subprime loans made of 39.3% of all Wisconsin loans, compared to 37% nationally.
  • Adjustable interest rates are scheduled to reset on 30.2% of Wisconsin's subprime loans over the next 12 months, compared to 27.8% nationally.
  • Research suggests that a 1% increase in unemployment rates raises home foreclosures in a county by 3% to 9%.

The numbers, from Russ Kashian of the University of Wisconsin - Whitewater, suggest that Wisconsin foreclosures will continue to exist at high levels over the next year or two. Our preliminary review of October data shows that Dane County foreclosures reached a new high last month. We'll be publishing the October data soon.

Friday, November 7, 2008

Associated Banc-Corp may sell stock to US Treasury

According to the Associated Press, Associated Banc-Corp has received approval to sell $530 million in stock to the US Treasury as part of the Troubled Asset Relief Program (TARP). You can read the details here.

Thursday, November 6, 2008

US Bancorp to sell $6.6 million in stock to US Treasury

Local lender US Bancorp will be participating in the Troubled Asset Relief Program (TARP). You can find the details here.

Tuesday, November 4, 2008

How Dane County home and condo inventory levels vary by location

The single family home market continues to follow one very consistent theme: months of inventory tend to be lowest within and around Madison. The Madison West, Madison East, Cottage Grove, Verona and Monona locations all had less inventory than the Dane County average of 8.6 months. Here's how inventory levels stood as of October 31st:


There is no such pattern in the Dane County condo market, which had 18.9 months of inventory on October 31st.

Inventory levels are important because buyers tend to have the upper hand in areas where the months of inventory are very high. If you're thinking of buying or selling, your realtor can help you better understand your market by calculating the months of inventory for your neighborhood or subdivision.

For more information on Dane County inventory, feel free to check out these reports on the buying real estate and selling real estate pages at DaneCountyMarket.com:

Monday, November 3, 2008

The Dane County commercial real estate market is changing with the times, too

As in the residential market, inventory is high in the commercial market, too. Dane County commercial inventory (excluding lease only listings) currently stands at 68 months.

Meanwhile commercial sales have been slowing in recent months, while commercial listings have been expiring more frequently. Sales were down by more than 17% over the last 12 months compared to the previous 12 month period. Expireds were up by 5%.


The trends toward fewer sales and more expired listings are clearer when we look at what has happened over the past several years. Only $20.4 million in commercial real estate sold in 2007 after $51.6 million sold in 2005. A total of $128.3 million in commercial real estate expired in 2007, up from $73.5 million in 2005.



In other words for every $1 million in commercial real estate that sells, another $6 million in real estate expires. This is tough news for some, but for others the imbalance of supply of demand could one day lead to a great deal that helps to grow a business.

For our full report on the commercial real estate market, check out the economic trends page at DaneCountyMarket.com. And stay tuned for our upcoming reports on the "lease only" commercial market as well as the residential income real estate market.

Another way to locate foreclosure real estate

We've covered different ways to find foreclosure properties in previous posts. Another good way to locate foreclosed homes is to work with a realtor who implements a key word search of the MLS owner field.

For example, your realtor can specify an MLS owner key word search that includes the terms *bank*, *lender*, *corp* and *corporate* to surface properties that are owned by lenders after having gone through the foreclosure process. As soon as a property with an MLS owner matching one of these terms either enters the market or undergoes a price change, you will be notified via email of the new listing or price reduction. From there you can view the online listing to learn more about the property specifics.

Remember, the MLS is a database, so you and your realtor can combine a key word search with other search criteria such as price, age, location, style, size, number of bedrooms, number of bathrooms and a host of other criteria.

If you're targeting foreclosed homes, it's best to cast a wide net and use a variety of search strategies. Each method is likely to surface different properties. The more methods you use, the more likely you are to find the property for you.

Wednesday, October 29, 2008

For some, the stakes are high right now

As we enter the month of November I'm struck by the number of vacant homes on the market. The vacancies are due to any number of reasons - job relocations, foreclosures, or sellers who have simply moved onto their new home while they wait for their prior home to sell.

Regardless of the reason, owners of vacant homes all have one thing in common: all incur holding costs for properties they don't use. And holding costs - including mortgage payments, property taxes, insurance, utilities, and property upkeep - add up quickly.

The challenge for sellers with holding costs is we are entering the slowest part of the sales season. And because buyers have all of the leverage right now, many offers made over the next few months are likely to disappoint.

Some may be tempted to wait it out for a better offer, but it could be several months before that better offer arrives. Even so there is no guaranty that the next offer will be any better than the first. It could very well be that last month's "low ball" offer turns out to be next month's dream come true.

Consider the fact that foreclosures in Dane County continue to rise. More and more foreclosed homes are working their way through the legal process and onto the market, applying upward pressure on supply and downward pressure on prices.

If you have holding costs and you receive an offer this winter that's not where you want it to be, make sure your ensuing decision is a well-informed one based on a thorough understanding of the market conditions in your neighborhood. Consider the benefits of taking the sure thing versus the potential risk of waiting for the better offer. Don't base your decision purely on the hope for something better. If you can live with that "low ball" you may very well end up being glad that you took it.

Here's a real example from this week that illustrates this point: I'm assisting a buyer who has become interested in a Madison listing that just dropped $20,000 from the original list price. The owners have moved on. The house is vacant. The listing agent told me (with permission from her clients) that this house is priced to sell because the current list price is lower than the offer the sellers received a few months earlier - which the sellers chose not to accept.

Unfortunately for these sellers the market has changed from the market of several months ago. And the fall and winter sales seasons are much different from the markets of the spring and summer. In retrospect that previous offer wasn't a low ball offer; it was a genuine opportunity.

Local bank to participate in TARP program?

According to this article by Marv Balousek of the Wisconsin State Journal, Marshall & Illsey Corp. has received preliminary approval to participate in the new Troubled Asset Relief Program (TARP).

On a related note, our preliminary review of the latest foreclosure numbers indicates that Dane County foreclosures will reach a new high during the month of October. We'll have the final numbers in a couple of weeks.

Tuesday, October 28, 2008

Boost your listing idea #3: Invest in a virtual tour

Does your home look great? Is it free of clutter and spotlessly clean like these three homes? If you can answer yes to both of these questions then your home is a great candidate for a virtual tour.

A virtual tour offers buyers a great way to view your home on the internet. It presents your home in both slide show and a video-like formats, allowing buyers to see more of your rooms and giving them a glimpse of how your floor plan flows from one room to the next.

For best results, we recommend the services of a professional photographer. We offer our clients a professionally-produced virtual tour as a standard part of our marketing plans. For an example of a professionally produced tour, you can check out this link.

This post was co-authored by Shawn Kriewaldt.

Saturday, October 25, 2008

Boost your listing idea #2: Invest in professional photos

We've covered this idea before. With more than 90% of home buyers viewing real estate online, photo quality can make or break a listing. This is especially true in our current market, where buyers can afford to be very selective.

Take a look at these photos, all of which were taken by a professional photographer.

This Parkwood Hills tudor on the west side of Madison has received a lot of buyer interest this fall, in part because of how the photos show off the features of the home. Note how the photographer uses a wide angle lens to capture all of the details of this family room from front to back, top to bottom, and side-to-side. This photo shows off the ceiling beams and the stone fireplace. It captures the over-sized window overlooking the back yard as well as the pass-through into the kitchen. With a single picture, this photographer captures all of this room's features along every dimension. She also gives us a glimpse of how this room flows into other areas of this house. Not bad for just one picture. This listing had 18 parties show up for the first open house, and four parties have scheduled second showings. A good start for the fall season.


Here's another example. This Middleton listing by Shawn Kriewaldt just went on the market. The kitchen and dinette space is modestly-sized in real life, but the photographer does a nice job of capturing its depth and the open floor plan. This home received 8 showings in 5 days, which resulted in an accepted offer on the 6th day. It is scheduled to close by the end of the month.


Here's one more photo of another modestly-sized kitchen and dinette space. Once again, the photographer does a very nice job of capturing the entire space, giving it plenty of depth and making it appear as bright and spacious as possible. We listed this home this summer. It received 14 showings and 2 offers in 14 days, and an accepted offer on the 17th day.

All of these homes have a few things in common. First, notice the absence of clutter. All three of these homes are spotlessly clean, and all three of these sellers consulted with a home stager prior to putting their homes on the market. Each of these home owners invested a lot of time and energy into making their homes look their best. We, like other realtors, invested our money by hiring a good photographer and a good home stager as part of the marketing plan. Time and money well spent.

We'll cover a few different home staging tips in the near future.

This post was co-authored by Shawn Kriewaldt.

Thursday, October 23, 2008

Boost your listing idea #1: Partner with your realtor

Your realtor can provide you with marketing tools that can help you market your home to your own set of friends, family, co-workers, and acquaintances.

For example, let's say you have a network of friends in the area who are more than happy to spread the word about your listing. You realtor can create a slick electronic flyer like this, which you can email to your friends so that they can promote your listing to their own set of contacts. Alternatively, your place of work may have a classified ad intranet. If so, you can post your electronic flyer to the intranet and promote your listing to all of your co-workers.

My clients tend to like this approach for 2 main reasons:

  • First, it increases the level of marketing that goes into the listing.
  • More important, it enhances the sense of collaboration between realtor and client and encourages creative thinking.

When you partner with your realtor, the two of you may very well come up with some good marketing ideas that neither of you would have thought of on your own. And in this market, creative thinking matters.

We'll be posting additional marketing ideas in the coming weeks.

Sunday, October 19, 2008

What happened in September?

The Dane County median home and condo price was lower by 5.9% (find the details here). We took a closer look at the September numbers and found there is much more to this story than just lower prices.


First, there is some good news in all of this. For the first time in 32 months, Dane County single family home sales failed to decrease. Home sales in September were even with the number of homes sold in September of 2007.

Second, it's clear a large number of first-time home buyers are jumping into the market. In fact home sales in the under $200k price range jumped by 52% in September. Many first-time buyers are clearly taking advantage of the $7,500 tax credit.

Third, home sales in the $200k and above price range remained sluggish. September home sales in this price category were down 22% from last year.

As a result, the percentage of buyers in the under $200k price range jumped from 26% in September of 2007 to 41% in September of 2008. This is why prices were lower in September.
The large increase in first-time home buyers is a good step for the market. Now let's see when more buyers in other price categories start jumping in.