Looking Back at 2011: What Were the Numbers?

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Now that 2011 has ended and we are looking forward to successful year in 2012, I wanted to take a moment to look back at the real estate numbers that we got for December 2011.  People ask me all the time how the real estate market is doing, and now we have some concrete numbers that I'm able to share with you.

In the summer of 2011, the greater Milwaukee area saw 832 single-family homes go under contract.  That's actually a 27% increase over December of 2010.

In fact, we sold more homes in December that we did in November of 2011.  That's a great improvement and shows an uptick in the market.

In the summer of 2011, the Roth team actually sold 19 homes.  It is now mid-January, and we've already gotten 14 accepted offers for the month.  That shows that 2012 is off to a great start in our real estate marketplace.

Another interesting and encouraging number is that we are now at the lowest level of standing inventory since 2009.  Our area has under 9000 homes on the market currently.  That means that it is a great time to buy or sell right now.  Sellers will have much less competition on the market, and buyers still have plenty of homes to choose from that are holding their values.

Of course, buyers are always interested in what the interest rates are doing.  Right now we are seeing 30 year fixed interest rates as low as 4% and 15 year fixed interest rates as low as 3.25%.  Believe it or not, there are also adjustable rate mortgages as low as 2.75% interest.

As always, we want to help you with any of your real estate needs.  Please give us a call or drop us an e-mail if you have any questions or concerns.  We also love your referrals, so please continue to send your family and friends our way.

Exploring the Main Differences That Makes a Short Sale a Better Choice Than a Foreclosure?

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Just a couple years ago, most people usually thought they had to give up their home in a foreclosure when they faced a financial stonewall.  However, since then the phenomenon of short sales has been on the rise, leaving homeowners a bigger, better and brighter option for the present and future.  In this article, we explore the comparative differences between the two so you can gain an edge when deciding which is better for you.

Purchasing Power

After walking away from your mortgage through a foreclosure, you can expect to feel the negative impact of it for five years, in terms of being able to purchase another home.  Even then, like a bankruptcy, a foreclosure is something you will perpetually have to report no matter how long it has been since the home went into foreclosure.  

Though these days you see a lot of talk about the financial and credit impact foreclosures have on homeowners, the unseen part of it is something to be dealt with.  Going through this process can leave a lasting emotional hole in people who otherwise were law-abiding citizens, going about their normal lives when all of a sudden they are faced with severe financial hardship and must resort to extreme measures.  That, or if the value of their home has dropped well below the amount they paid for it and they see very little hope for the future.

Short sales are much simpler.  They will affect your purchasing power for a mere two years, often just the amount of time it takes to get back on one’s financial feet.  Not only that, there is no requirement to report a short sale transaction.

Credit Outlook

There are two main areas that are of concern when it comes to your credit – your credit score and your credit history.  In case of a foreclosure, credit scores drop a whopping 200 to 300 points.  This can have a significantly negative impact on your ability to purchase big-ticket items or secure loans in the future.   Not to mention it takes years to rebuild a credit score that has dropped that low.   In terms of credit history, a foreclosure remains visible on your credit report for anywhere from ten years or more, rendering each future potential lending transaction either useless or very hard-pressed at getting approved.  The overall impact you will see on your credit will be for about three years.

Short sales are far easier on your credit outlook, in that the point drop is only about 50 on average and the transaction itself will impact your credit profile for as relatively little as 12 to 15 months.  The one thing to keep in mind is that if you have defaulted on any payments or if you already have a weak credit profile, the post-short sale point drop on your credit report can be more than just 50.  Also, there is no formal reporting or declaration of a short sale on your credit report like a foreclosure although the transaction will show up as either settled or not paid in full.

Amount Still Owed

Usually there is a gap in the amount owed after owners walk away from a property and the bank assumes responsibility.  In case of a foreclosure, given the amount of processing time and resultant vulnerability and exposure of the property, the value can and often does drop greatly after vandalism and from sitting there unused.  The Deficiency Amount (also called Judgment Amount) is the difference that remains after the bank calculates what was owed on the property at the time of foreclosure and when they sold the home. Because of this vandalism and vulnerability, the amount of value drop is far more than with a short sale, when the homeowners are still residing in the property during processing.  The bank has the legal right to pursue homeowners for the amount difference.  

Short sales differ in that not only is the deficiency amount much less but also, your Realtor can negotiate a waiver of that amount so you don’t have to pay for it.

What's Going On In Our Real Estate Market These Days?

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One question I get asked all the time is, “How's the real estate market?” Now more than ever, this question has special meaning. People have been afraid of all the tumult in the real estate and job markets over the last few years. We all know that when the housing market bounces back, it means that other parts of the economy are likely to be making a big comeback as well.

Interest Rates are Fantastic

The first trend that I want to talk about is interest rates. They are at an all-time low right now, which is a great thing for both buyers and sellers. I looked at a rate sheet just today, and it showed 15 year fixed rates at just 3.5%. It also showed 30 year fixed rates at only 4.125%. There are even programs as low as 2.75% interest on a 3 year ARM. Never before have we seen such opportunity with these low interest rates!

Whether you are looking to buy or sell, these low rates are beneficial. Obviously, if you are a buyer, the benefit is a huge money savings over the life of your loan. As a seller, having low rates opens up the marketplace to more qualified home buyers. This means more people are available to purchase your home!

Homes Are Selling

I also get asked whether homes are actually selling anymore. The answer is a resounding YES! Look, buyers will always have to buy and sellers will always have to sell. People will always need a place to live. Home are still selling. In fact, I checked the stats in our local market and saw that 530 single-family homes sold in November. My team sold 17 of those homes, so I know first hand that homes are selling.

One example of this is a listing we took recently. They had an accepted offer in less than 2 weeks at 97% of asking price. Another home we had was listed for 30 days and sold at 96.7% of asking price. The key is price and marketing.

This time of the year, the inventory levels drop because of the holiday season and colder weather. I took a look at those stats and saw that the levels drop about 10%. That means there are still plenty of homes for buyers, but way less competition for sellers! That is a win-win.

My team and I would love to help you whether you need to buy a home, sell a home or just have question. Give us a call today!