Out of the Slump?

 (From Traverse City Business News)

Second-quarter signs suggest the worst might be over

By Al Parker

REGION – The uptick is on. After three grueling years of plummeting, then shaky home sale prices (both median and average), and volume sold, the region is looking poised for a comeback.

The proof? Small, but mostly steady growth in the first two quarters of 2011. Residential units in the Traverse City region are selling for slightly higher prices this year than during the same period last year. For the first six months of the year, there were 932 residential units sold in the five-county area, which includes Grand Traverse, Antrim, Benzie, Kalkaska and Leelanau counties.

That volume is down from the same time period in 2010 when 983 units sold. But the units that are selling are generating a slightly higher average selling price ($171,102 to $169,156) and median sale price ($129,950 to 127,000).

The numbers promising  – at least at some levels, says Brad Platt, co-owner of Century 21 Northland.

“I do feel that we have bottomed out. The only debatable point there is which price point. Under $200,000 is a hot price point, and the inventory there is much more limited than, say,  the $300,000 to $400,000 price point.  In my opinion, the worst is certainly behind us.”

However, Platt warns that the positive trend won’t be without some negatives in the months to come. “We will have a lot of foreclosures move through the market this year. Fortunately, they don’t last long on the market.”

That’s for good reason, says Traverse City realtor Jack Lane of Real Estate One: “Traverse City continues to be a sought after place to live. When the decline is officially over, we’ll go back to being a robust market. In comparison to other Midwest markets, we shine.”

Traverse City realtor Meagan Luce of Century 21 Northland is hopeful but wary. “In my opinion, the median and average sale prices are up slightly because there are less distressed properties on the market than there were a year ago,” she says. “Distressed properties, whether they are bank-owned, short sale, foreclosure or auction properties invariably drive prices down.

According to Luce, in the first two quarters of last year 35 percent of the sales in the region were distressed sales, compared to only 28 percent this year. Also, she notes, last year’s sales figures were boosted by a homebuyer tax credit that expired in May, 2010.

“Keeping that in mind, I think that the fact that the number of sales last year and the number of sales from this year are so close is certainly a positive indication of stabilization in our market,” she adds.

So what do realtors see for the rest of the year?

“We are very busy and seeing a lot of pent up buyers looking for a great deal before prices start to inch up and mortgage rates,” says Elk Rapids realtor Stephen Karas of Exit Northern Shores. “Most of my agents, including myself, have been showing homes very consistently for the past few months.”

According to Lane, the underlying fundamentals of the area are growing stronger – population inflow vs. outflow, supply and demand, employment, wages and interest rates. “If our ‘feeder areas’ like Detroit, Chicago, Indianapolis, etc., continue to improve, the appetite for northern Michigan real estate will rebound,” he predicts.

Is it safe to say we are rebounding now?

“In my opinion, we are at the end of the housing slump. However, I think the climb of home sale prices is going to be slow,” says Luce. “We are going to have a new ‘housing market norm,’ and I don’t believe we may ever see the over-inflated prices we saw at the height of the housing market bubble.”

Karas feels warily optimistic about ending the housing market slump. “I am cautious that we are finally starting to see light at the end of the tunnel of the slump,” he says. “It might not be completely over, but we’re definitely a lot closer than in recent years. Our growth in population in our five-county area is helping us inch out much quicker than other parts of the state and country.”

Lane notes that consumer confidence is crucial to ending the slump. “For the past four years, we’ve seen a lot of false starts in consumer confidence,” he says. “When I have four deals headed to closing in the coming week, and ‘60 Minutes’ does a segment on how terrible the real estate decline is, I take Maalox and wrist restraints with me to the office the next morning.”

According to the Traverse Area Association of Realtors, for all of 2010, there were 2,045 residential units sold with an average price of $185,246 and a median price of $137,500. Those homes were on the market for an average of 192 days, just over six months.

There were 1,087 sales in Grand Traverse County followed by 262 in Antrim, 247 in Leelanau, 231 in Kalkaska and 218 in Benzie.

So what type of homes are selling or not selling?

“We have been seeing a lot of waterfront buyers this summer as always,” Karas says. “But even more-so recently.”

Like Platt, most of Luce’s sales have been in the $200,000 to $300,000 range. “Almost 30 percent of my buyers this year have purchased second homes and I currently have several second home sales pending.”

According to Lane, about 80 percent of the sales in this region are under $200,000. “Thanks to interest rates, owning a house in this range is often cheaper than renting…and there are still programs with 0-3 percent down to help with those sales, so that area’s strong,” he says. “Also the family move-up market is pretty strong. There’s been a move to downtowns going on for the past 10 years – but it’s very strong now.”

The weak segment of the market is the higher priced homes at $500,000 or more, according to Lane. To sell those homes, they have to be in top condition and priced aggressively against the competition.

“People move because life happens to them – babies come, empty nesters, retirement, death, divorce or even more lively events,” Lane notes. “In the early years of this decline, sellers didn’t ‘get it’ and buyers thought they wielded a preposterously big hammer. Today, both sides are coming to grips with where the new value levels are and are coming back into the market because, well, life has been happening to them.”

Happily, says Platt, compared to the rest of the state, most of the action is happening here ­– and have a good chance to continue in that direction.

“This is arguably the best real estate market in the state of Michigan,” he says. “Based on the amount of cash deals we are seeing coming out of state – Texas, California, Washington D.C., and Florida, for example) it’s obvious that the word is spreading.                      “People that are sitting on cash are typically very well educated financially and have the patience to wait till the time is right,” he adds. “The only X factor right now is the politicians in Washington and Wall Street. If things move forward positively on those two fronts and consumer confidence has an uptick, our markets may accelerate sooner than expected. Broader access to jumbo loans will also help things along. This is actually a very exciting time in real estate.” BN

FROM UPNORTHLIVE.com 

LEELANAU COUNTY -- Home sales in Leelanau County are hotter than ever this past month.

The Traverse Area Association of Realtors report that June was a very good month for real estate sales.

According to its data base, last month, some 30 units in Leelanau County sold for more than $8 million dollars.

Also a sign that property values are staring to rebound, median-unit-prices in June are at $224,000.

This is an increase of more than $23,000 from last year.

TAAR Vice President Kimberly Pontius says, "What we had in 2005-2006 was not normal, that was the top of the bubble, things were at the other end of the spectrum. In 2009 we kind of bottomed out as far as the market concerned... So now what I’m seeing is a return to normal and I’m very pleased that this is going on.”

REAL Trends

Negotiating Tips for Buyers

Even with the help of an experienced real estate agent, the negotiating process can be frustrating and confusing. Many of us aren't involved in high-level business negotiations in our day-to-day lives, and even buyers who are the savvy businesspersons aren't used to having a personal stake in the outcome. Good negotiating in real estate isn't about coming out victorious over the other side, it's about understanding the seller's motivations and striking a deal that satisfies all parties as much as possible.

The following tips can help you survive the negotiation of a real estate purchase:

Don't focus on price only 

Many buyers make the mistake of thinking that price is the only point up for negotiation. Buyers can often negotiate quite a bit of value into a contract besides the number on the bottom line such as the preferred closing date, whether the seller might be motivated to pay closing costs, concessions for home repairs, and so on.

Don't move too slowly

Real estate can be an aggressive commodity, and buyers who rest on their laurels run the risk of losing out on desired properties. On the other hand, buyers who have their financing in order from the start are best positioned to make aggressive offers and negotiate from a position of strength. The first step to being able to getting a jump on a hot property is having your ducks in a row from the start.

Should you find a property that matches many of you wish list items, don't make the mistake of being overly hesitant. Make a firm, direct and quick offer to a motivated seller, stipulating a time limit for the response, and you just might get the terms you request.

Don't focus on price only

Real estate can be an aggressive commodity, and buyers who rest on their laurels run the risk of losing out on desired properties. On the other hand, buyers who have their financing in order from the start are best positioned to make aggressive offers and negotiate from a position of strength. The first step to being able to getting a jump on a hot property is having your ducks in a row from the start.

Should you find a property that matches many of you wish list items, don't make the mistake of being overly hesitant. Make a firm, direct and quick offer to a motivated seller, stipulating a time limit for the response, and you just might get the terms you request.

Avoid responding on the spot

While you want to move fast, particularly in a hot buyer's market, never respond verbally to an offer or counteroffer. Ask for all offers in writing and respond in kind. You can still move quickly and with the help of your real estate and legal representation, but don't make any "handshake agreements" on the spot may lead to issues later on.

Keep negotiations professional

It can be difficult not to take negotiations personally, especially when you potential home is at stake. The need to stay calm and removed from the situation is a strong reason to have the guidance of a dedicated real estate professional who will represent your interests while keeping an even keel. As negotiations progress, remain composed and direct in all you dealings. Ask the seller to be specific about any terms they aren't satisfied with and ask for simple clarifications regarding the changes they would like to see. If a seller doesn't respond well to that sort of request, be prepared to walk away. Remember that ultimately this is just business, even if from a personal standpoint the stakes are raised.

Don't make a lowball offer without a reason

There can be very valid reasons for making an offer significantly below the seller's asking price. The home may be priced well above comparable homes in the market, may have recently been assessed at a lower value, or may require costly repairs or updates. Making a lower offer under these circumstances is well within reason and, if done tactfully, can persuade the seller to adjust their asking price down.

If you're hoping to get the seller to greatly reduce the price simply to meet your budget or ensure a good "deal", you're not negotiating in good faith and risk alienating the seller entirely. Keep the seller's desire to get good value for their home in mind when submitting an offer below the asking price, and be prepared to justify the difference.

Don't be afraid to ask

Shrewd negotiators assume that nothing is ever truly off the table, at least not entirely. Done correctly, it doesn't hurt to ask the seller for special concessions. Interested in a piece of antique furniture or the barbeque on the back patio? Hoping the seller will pay to replace worn roofing or siding? Ask for what you're want, within reason. As always, be prepared to remain flexible on other terms that the seller may ask for.

Don't obsess

When it comes to the negotiation for what may be your next home, its easy to become anxious and follow the process relentlessly. Try to remember to relax, and if at all possible leave much of the process to your professional guides. Doing so will leave you less stressed and more able to approach the negotiation without frayed nerves

One of the questions that I hear on a daily basis is, "should I sell my home now?"  This is a question that of course varies significantly from person to person, but here are some things to consider if you are contemplating the sale of your existing residence.

1. Your home has lost value over the past several years, this is a known fact.  Your home most likely lose even more value over the next one to two years and it may be as many as 5-7 years before you reach back to the value that your home has today.  If you don't need to sell and you can wait this out, then maybe selling today is not best for you.

2. If you are selling and buying again in the same area, you are trading apples for apples.  In fact if you are upgrading to a larger more expensive home, chances are that the new home you are buying has taken a larger price hit than the one you are selling.  

3. Mortgage interest rates remain at historic lows.  This means that if you sell and buy again in this market then you can take advantage of these low rates. They won't hang around forever.

4. Long term, home ownership remains a great investment.  In these times of economic chaos there are few places that you can place your investment dollars that will have the security and the long term return.  

5. If you are selling in one market and moving to another, there is a chance that the market you are moving to may have taken a larger price hit than the one you are leaving.  This is something worth checking into, because many major Real Estate market areas have taken huge hits on home prices and it just might be a situation that you can easily take advantage of.

The decision to sell a home in this market is a large one for most people, but there are some advantages for many people that they may never see again.  If you are considering the sale of your home and would like some professional advice, please contact me.  I would be more than happy to go over the plus's and minus's of your particular situation with you

February Pending Home Sales Rise

Pending home sales increased in February but with notable regional variations, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator, rose 2.1 percent to 90.8, based on contracts signed in February, from 88.9 in January. The index is 8.2 percent below 98.9 recorded in February 2010. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, says it’s important to look at the broader trend. “Month-to-month movements can be instructive, but in this uneven recovery it’s important to look at the longer term performance,” he said. “Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20 percent above the low point immediately following expiration of the home buyer tax credit.”

Yun notes there could have been some weather impact in the February data. “All of the regions saw gains except for the Northeast, where unusually bad winter weather may have curtailed some shopping and contract activity.”

The PHSI in the Northeast fell 10.9 percent to 65.5 in February and is 18.4 percent below a year ago. In the Midwest, the index rose 4.0 percent in February to 81.1 but is 15.9 percent below February 2010. Pending home sales in the South increased 2.7 percent to an index of 100.3 but are 5.3 percent below a year ago. In the West, the index rose 7.0 percent to 105.6 and is 0.6 percent higher than February 2010.

“We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation, and excellent affordability conditions providing confidence to buyers who’ve been on the sidelines,” Yun said.

Source: NAR

What are real estate professionals saying to homebuyers and sellers about current market conditions? The successful brokers and sales associates are talking about the strengths that exist in the market. Below are positive angles that appeared recently in the media and underscore why it is a good time to buy real estate.

NAR: Existing Home Sales Rise 12% in December

Sales of U.S. previously owned homes jumped more than forecast in December as buyers tried to lock in low mortgage rates before the economic recovery pushed borrowing up further. Purchases of existing houses, which are tabulated when a contract closes, increased 12% to a 5.28 million annual rate, the most since May, figures from the National Association of Realtors showed today in Washington.

"Sales have been recovering steadily from depressed levels," Aaron Smith, a senior economist at Moody‟s Analytics Inc. in West Chester, Pennsylvania, said before the report. "A better economic backdrop should boost confidence and push potential homebuyers off the sidelines."

From Traverse City Business News

Did the sun shine on the northwest Michigan real estate market this summer? There are some signs that the clouds are parting.

From June 1 to August 30, 2010, the Traverse Area Association of Realtors (TAAR) reports that Leelanau County boasted $31.5 million in total dollar volume sales of single-family homes. During that same period in 2009, the county tapped out at $19.8 million. (2008 brought in $28.8, and 2007, $27.4.)

Grand Traverse County didn’t make such a leap. Its single family homes during the 2010 summer months rang in with a total dollar volume of $54.3 million, as compared to 2009’s $53.1 million. (2008 was slightly better with $56.7 million, but 2007 was significantly better, with $70.1 million.)

Though Leelanau’s dollar volume boomed from last summer to this one, its total number of homes sold this summer increased only by three: from 68 (in 2009) to 71. The number sold in Grand Traverse actually dropped a smidge – from 302 in 2009 to 294 this summer.

Average home prices rebounded a bit in Grand Traverse County. After a steady drop from $211,996 in 2007 to $176,108 in 2009, 2010 reversed the fall with a slight uptick to $184,936.

Leelanau’s average home price, meanwhile, which had bottomed out at $292,563 in 2009, rebounded this summer to an average of $443,701 – just a few thousand less than it’s 2008 summer average, and $100,000+ more than in 2007.

And what about all that time homes are supposedly sitting for sale? The average was 184 days in Leelanau and 197 in Grand Traverse – both more than a month longer than 2007’s averages, when both counties saw homes sit for an average of 139 days or fewer.

A number of realtors say most of the numbers are good news – for buyers anyway. “My members are telling me that selection is at the best they’ve ever seen it, the prices are best they’ve ever seen. And there’s great interest rates right now,” says Kim Pontius, TAAR’s executive vice president.

What kind of buyers? Well, the truth may sting a little: “These are the times the rich get richer, ” says Brad Nichols, Associate Broker & Co-Owner of Remerica-Traverse City. “Cash is king again. I’ve had, in the past year, probably half a dozen cash sales. It’s unusual, but we’re seeing those buyers, the folks who have the family money or whatever, come out of the woodwork because they know this is the time to take their cash out and make it work for them.”

Hence, a couple hot spots bubbling: waterfront homes –“We’re starting to see more and more activity there,” Pontius says – and the rental market.

“The rental market has come back into play,” says Nichols. “And all the foreclosure properties are boosting that along. Rental property isn’t just a tax write-off anymore. You can turn a profit because the rates and the prices are low.

“But,” he adds, “the key is finding the financing to make it happen. Those that are cash buyers – this is a real candy store right now.”

As for the rest of us? Time will tell. “We’ve had five months of pretty good activity up here, on par with 2006,” says Pontius. “We just have to watch the jobs, watch consumer confidence, and watch the 4th quarter. The housing market is still precarious right now. But if we see steady activity in 4th quarter, that’s promising. If we don’t, we might be seeing a double dip in the economy and the housing market.”