Credit crunch? - part 2

Marv Balousek from the Wisconsin State Journal interviews several local lending professionals in this article. Takeaways:

• Lending standards have tightened, but mortgages are available for those with good credit, a good job, and a good down payment.
• Conventional financing with no down payment is no longer available, although zero down loans are available through the Veterans Administration and Rural Development programs.
• Other loan programs, such as the Federal Housing Administration program, now offer mortgages that require a 3% down payment.

How long does the foreclosure process take?

We took a look at the 107 Dane County foreclosure cases that were closed in the month of September, and here's what we found:

• The average foreclosure case took 4 months to resolve.
• The shortest foreclosure cases took one month to resolve.
• The longest foreclosure case took 19 months to resolve.

If you're concerned about making your mortgage payments, you'll find the Dane County Housing Authority to be a useful resource. The DCHA offers counseling and workshops to help you assess your situation and understand your options. The DCHA also provides a document that explains the foreclosure timeline for homestead property in Wisconsin. You'll find that here.

A lot of commercial inventory on the market

The economic slowdown is affecting the commercial real estate market, too.

Drive east along Odana Road from West Towne to Whitney way and you'll see 20 different signs that advertise real estate for sale or for lease. That's a lot for a short drive on the west side of Madison.

All of these signs have prompted us to see what we can learn about the commercial real estate market from data available through the South Central Wisconsin MLS. We've been able to learn a few interesting things, and we'll be ready to share our data soon. More to come...

Credit crunch?

Much has been written about the global credit crunch, but my experience here in Madison is that people are able to get the loans they need when it comes to buying a house or car. I'm working with first-time and relocating buyers right now, and they've been able to obtain the financing they need without any problems. I know of another person who just refinanced his home, and another who just purchased a car with dealer financing. Again, no problems.

On the flip side, WHEDA has temporarily suspended rate locks, and I do know of individuals who have recently had their home equity lines of credit frozen by national lenders.

But all-in-all there are still plenty of mortgage options available for those with good credit. In fact in the month of September we witnessed a huge influx of first-time home buyers who took advantage of the $7,500 tax credit (more on September coming soon).

If you have any questions about your mortgage options, try calling a couple of local lenders and see what they have to say about your situation. You may be pleasantly surprised by what they have to offer.

Get the latest mortgage rates with these useful links

Mortgage rates have been bouncing around lately with all that is going on in the market. Fortunately the web makes it easy to track rates on a daily basis. Here are some links from local lenders that include information on the latest rates:

• Associated Bank
• Anchor Bank
• Capitol Bank
• Great Wisconsin Credit Union
• UW Credit Union

You'll notice most of the above sites offer rate updates via email. Great Wisconsin Credit Union and UW Credit Union also offer RSS feeds for those that prefer to use a reader.

I've found all of these sites easy to use, but by no means is this an exhausitve list. If you have another useful site to share, feel free to add a comment to this blog entry or send me an email. I'll update the list above with more entries based on your recommendations.

You'll also find all of the above mortgage rate links at DaneCountyMarket.com (go to buying real estate > mortgage rates). I'll be happy to update the list at DaneCountyMarket.com, too.

100 foreclosures, 41 different lenders

One hundred new Dane County foreclosures were filed in the month of September. Here's what we found when we dug a little deeper into the numbers:

• Nine different lenders accounted for 54 of the 100 filings.
• A total of 32 different lenders accounted for the remaining 46.

That's 41 different lenders who filed foreclosure suits in the month of September. It's clear from these numbers that foreclosures are affecting a broad range of lenders.

It's also clear that a minority of the lenders are accounting for a majority of the foreclosures. This graph shows the 9 lenders who filed 4 or more foreclosure lawsuits during September. Note how most of these lenders represent large national or multi-national companies.

Foreclosures grew at lower rates in Q3 2008

Dane County and Wisconsin foreclosures are up by 47% and 24% respectively on a year-to-date basis through the month of September.

However, foreclosure growth rates showed some signs of moderation during the third quarter of 2008 (July through September):

• Dane County: Q3 2008 foreclosures increased by 18% from Q3 2007.
• All of Wisconsin: Increased by 6%.
• Milwaukee County: Decreased by 3%.

Thanks to Russ Kashian, Andy Lewis and Ryan Wade for allowing us to publish their data. You can view the results of their research for 71 Wisconsin counties on the economic trends page at DaneCountyMarket.com.

Dane County foreclosures increase by 20% in September

A total of 100 new foreclosures were filed in Dane County during the month of September, up from the 83 that were filed in September of 2007 - an increase of 20%.

The good news in these numbers is that the growth rate has moderated in recent months. The bad news is that the number of foreclosures that we're seeing on a monthly basis more than doubles what we were seeing in 2005.

We'll take a closer look at foreclosure growth rates in our next post. For more information on Dane County foreclosures, check out the economic trends page at DaneCountyMarket.com.

Dane County housing starts increased in September

Dane County had a total of 62 housing starts in September, compared to 53 in September of 2007.


Although housing starts were up from last September, they remain at historically low levels. Here are the number of housing starts for each of the last 10 Septembers:

• September 1999: 141
• September 2000: 194
• September 2001: 170
• September 2002: 197
• September 2003: 239
• September 2004: 202
• September 2005: 195
• Sepetmber 2006: 73
• September 2007: 53
• September 2008: 62

A special thanks to Dominic Collar from MTD Marketing Services of Wisconsin for allowing us to publish his data. For more information, check out our monthly housing start report on the real estate trends page at DaneCountyMarket.com.

Some encouraging market news

The National Association of Realtors released its pending home sales report for the month of August, and for the first time in 35 months the pending homes sales index showed a year-over-year increase.

The index is designed to be a forward looking indicator of sales activity. Based on the results of the August report, existing home sales for the month of September should show a corresponding increase. In fact our preliminary review of the Dane County data suggests that single family home sales in the month of September may very well end up at or above the sales levels from September of 2007. More on the September numbers later this month.

Two nice FSBO advantages

We've covered how buyers can use MLS data to research the listing history and price changes for a particular property. That's because the MLS is essentially a database that contains a ton of information about every listing in the system. And it's easy to retrieve that information - even for listings that have become ancient history.

One nice advantage of a For Sale By Owner listing (one that does not use the MLS) is that there is no such history available to the general public. Buyers and buyer agents can't research your listing and find out how long your home has been on the market; they can't research how many times your price has changed.

Another nice FSBO advantage is that you can easily "start fresh" with a new listing should you ever decide to change your marketing approach. For example, let's suppose that for whatever reason you decide to end your listing with fsbomadison.com (a very popular site that sells a large number of properties each year), and you decide to list your home with a real estate brokerage. When you end your FSBO listing, everything about your listing - most importantly your price - is deleted from the FSBO site. Now you're free to start a fresh listing with your real estate agent. And based on the results of your market analysis, you and your agent can select a price that won't be impacted by your previous FSBO price. In fact many homes that started out as FSBO listings do end up selling at a higher price on the MLS (while of course others don't).

Unless you've made improvements to your home, it's much more challenging to raise your price once you've already established a history on the MLS. For example, check out the listing history for this home currently on the South Central Wisconsin MLS (property details have been omitted to protect the seller):

• This home was listed in March for a price of $399,900.
• The listing expired, and a new listing was started in May at a price of $415,000.

Not surprisingly this home is still on the market. Buyers and buyer agents who come across this home no doubt are wondering how the current price can be justified when the home was previously listed at a lower price. And rightfully so.

Track the market with these useful resources

We've recently covered how understanding real estate trends at the national level can help us know what to expect from our own local market. We've just launched a new blog - Trending Real Estate - that covers the latest national trends. At the moment we have 5 reports that we update monthly - existing home sales, inventory, months of supply, pending home sales, and median price reports. All of these reports come from the NAR housing statistic series. We'll be adding on to our menu of reports using other data sources in the near future.

Of course you can track the latest Dane County home and condo trends each month at DaneCountyMarket.com. For our full menu of reports, visit the real estate trends page - which now includes the latest Dane County trends updated through the month of August.

Understanding home values in your neighborhood

Are home values decreasing in your neighborhood? Here are 3 tips to help you answer this question.

1) First, get to know the months of inventory in your area. A neighborhood with a high level of inventory (greater than 9 months) is more likely to experience price pressure than a neighborhood with less inventory. You can start by viewing these home and condo updates which track inventory levels by MLS location. Taking this a step further, you can ask a realtor to zero in on the months of inventory for your specific neighborhood. Calculating the months of inventory is a quick exercise for anyone who has access to MLS sales and listing information.

2) Review the sales history in your neighborhood. Can you find any homes which sold in 2006 or 2007, and then sold again in 2008? If so, did these homes sell for more or less the second time around? If you find evidence of homes selling for less, this is an indication that home values may be decreasing in your area.

3) Review the inventory of active listings in your area. Were any of these homes bought within the last two years? If so, is the current list price at or below the recent purchase price? If you find homes listed at or below the most recent purchase price, this is another indication that home values may be decreasing in your neighborhood.

Here's an example of how a friend and I used the above steps to evaluate home values in her neighborhood, a newer subdivision in Waunakee.

1) We calculated the months of inventory for her subdivision - 14.5 months. Definitely high.

2) We found 4 homes which sold in 2008 that also sold in either 2006 or 2007. Two of these homes sold at a slight increase. The other two homes sold at a decrease - one for $10,000 and the other for $30,000 less that the most recent purchase price.

3) We found one active listing for a home that was purchased in the last two years. This home was listed for $29,000 less than its most recent purchase price.

Adding it all up, my friend has a good picture of the market in her neighborhood, where home values are definitely feeling the pressure of the slower market. We'll be performing this same exercise a few months down the line as she gets ready to sell her home. Based on all of the information we have now, we know she'll need a a very aggressive marketing plan and a well-chosen price point.

And one final thought. The example above is about someone planning to sell, but this exercise can also be useful for someone planning to buy. For example, a buyer going through a similar exercise may use the results to determine when and where she chooses to buy. She might also use the results of her research as a bargaining chip when it comes time to negotiate. If she has market information which clearly shows homes selling for less, she might choose to share this information with the seller. Food for thought...

WHEDA temporarily suspends new rate locks

This comes from local mortgage broker, Jeff Statz:

Effective immediately, WHEDA will not accept new rate locks. WHEDA will continue to accept preapproval requests and underwrite. Current volatility in the capital markets is impacting WHEDA's costs and access to capital. Once the capital markets stabilize and WHEDA's access to low-cost capital resume, rate locks will resume.

WHEDA executive director Antonio Riley does a nice job of explaining this decision in a short video that is available from the WHEDA home page.

Dane County condo months of inventory reaches a new high

Dane County home and condo listings continued to trend lower, but the months of inventory for both homes and condos remained high due to fewer home and condo sales in recent months. In fact the months of supply for Dane County condos reached a new high - 18.4 months.

Months of inventory can vary tremendously by location. For more information, visit our inventory reports by location for both homes and condos at DaneCountyMarket.com.