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:

• Market value versus assessed value in Madison
• Understanding price trends in your neighborhood
• Pricing your home

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.

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.

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:

• Market value versus assessed value in Madison
• Understanding price trends in your neighborhood
• Pricing your home

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

• Partner with your Realtor
• Invest in professional photos
• Invest in a virtual tour
• Consult with a stager
• Post an enhanced listing on craigslist
• Market to your neighborhood

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:

• How mortgage rates have changed over time
• Mortgage rates updated daily

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.

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.

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:

• Partner with your Realtor
• Invest in professional photos
• Invest in a virtual tour
• Consult with a stager
• Post an enhanced listing on craigslist

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.

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:

• Monthly housing start report on the real estate trends page at DaneCountyMarket.com
• Today's update on Madison.com

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.

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.

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.

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.

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.

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:

• Partner with your Realtor
• Invest in professional photos
• Invest in a virtual tour
• Consult with a stager