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.

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.

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.

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.

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.

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.