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.

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:

• Unemployment update on the economic trends page at DaneCountyMarket.com
• DWD state of Wisconsin unemployment update
• DWD local unemployment update
• WRA Dane County quarterly update
• WRA Q3 Wisconsin report
• NAR Q3 US report
  

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:

• Dane County Housing Authority education schedule
• UW Credit Union education schedule
  

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.

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.

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.

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.

• Single family home inventory by county, community and Madison location
• Condo inventory by county, community and Madison location
• How months of inventory have changed over time
• How active listings have changed over time

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.

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:

• Monthly foreclosure update on the economic trends page
• Monthly housing start report on the real estate trends page

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.

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.

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/.

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.

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.

• Enhance your curb appeal
• Showing well and selling well
• Let your home shine

For related blog articles, check out these posts:

• Partner with your Realtor
• Invest in professional photos
• Invest in a virtual tour
• Why quality photos play a vital role in every good marketing plan

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.

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.

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:

• A year-to-date market snapshot, covering 15 different locations
• How home prices have changed over time
• How home sales have changed over time
• How listing success rates have changed over time
• How marketing time requirements have changed over time

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:

• A year-to-date market snapshot, covering 9 different locations
• How condo prices have changed over time
• How condo sales have changed over time
• How listing success rates have changed over time
• How marketing time requirements have changed over time
  

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.

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.

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.

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:

• Single family home inventory by county, community, and Madison location
• Condo inventory by county, community, and Madison location
• How months of inventory have changed over time
• How active listings have changed over time

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.