My New Blog

When the housing crisis hit, everyone was in a panic trying to determine what was going to happen.  In retrospect, I don't believe that there was any one commentator or analyst who had it exactly right.  But that's neither here nor there.  This is about you, that is, if you rent.  You need to know A) What is a good investment; B)  When's a good time to buy in Madison?  C) How much can you afford to take on? 

Here's a simple equation to tell you whether you should buy or not:

ANNUAL RENT / PURCHASE PRICE = 3%  DO NOT BUY

ANNUAL RENT / PURCHASE PRICE = 6%  THIS MIGHT BE OKAY

ANNUAL RENT / PURCHASE PRICE = 9%  BUY A HOME!!

Madison, WI is NEVER a bad area in which to purchase a home.  Our market does not follow the extremes that the coastal metropolitan areas do when it comes to home values and pricing.  Additionally, the stability afforded to homeowners with the seat of our State Government as well as the University of Wisconsin-Madison and other large enterprises help to ensure a more-stable housing market than the rest of the nation traditionally speaking.

With interest rates reaching all-time lows, it's definitely a great time to buy a home!  If you or someone you know is searching for a home, please have them contact me and I'll see what I can do to help!

For more information on the calculations above, click here.

In the month of June 2010, Madison, WI the average sale price for single family homes rose 5.6% over those in May 2010 according to the Multiple Listing Service. May 2010 showed the lowest average home sale price of 2010 at $154,254.  As of noon today June 2010 closings were at an average of $162,911. 

Is this cause for celebration?  Possibly, but it is important to keep in mind that typically the first quarter of any given year represents the lowest average sale prices for homes in Madison.  Second quarter sales in recent years have DROPPED.  Historically, however, they've risen when the housing economy was healthy.  So the fact that 2nd quarter prices are averaging higher than first quarter is a promising sign.  Given the volatility of the global market, it is definitely too soon to tell.

Madison, Wisconsin will most-definitely remain a buyer's market for single family homes and condos for some time as the inventory is still significantly higher than five years ago. 

We will be providing more information on 2nd quarter closes here next week.  Stay tuned!

Want to know what the Madison Housing Market is doing?  We took a snapshot for you of average quarterly home sale prices from 2006-2010 broken down  by quarter.  Read below to see what's happening to the value of your home.

Single Family Home Average Sale Prices by fiscal quarter 2006-2010 for Madison, Wisconsin  USA. 
_{Information provided by MLS.}

	1st QR	2nd QR	3rd QR	4th QR
2006	$160,272	$148,829	$149,201	$153,335
2007	$164,655	$144,391	$151,711	$154,227
2008	$170,851	$141,395	$143,976	$139,901
2009	$177,771	$133,649	$128,102	$130,256
2010	$172,802	$129,291

Average prices of sold homes have been fluctuating drastically since the start of the housing crisis almost two years ago.  Madison, however seems to be rebounding this month as average home sale prices are up sharply over the last several months and currently higher than they were in January.

Here's the breakdown by month in 2010 for average home sale amount:

JANUARY                            $204,450
FEBRUARY                          $224,986
MARCH                                $207,187
APRIL                                  $161,292
MAY                                     $154,254
JUNE (1st - 14th)               $226,432

Source:  Multiple Listing Service (MLS)

The low values in April and May are most likely in correlation to the end of the tax credit and distressed properties needing to be reduced in priced in order to move them prior to the end of the credit.

By the end of June, we should have a better idea of what our market will do moving forward.

Stay tuned for more information!

The market in Madison is definitely starting to move in the right direction.  Property investment here over a 5-10 year period of ownership is rarely a gamble.  If you're able to hold onto the property you buy, even during a recession as significant as this, you'll be rewarded with significantly higher sale prices in the long run.

Single Family Homes have been much steadier in climbing in value here.  The condo market, even downtown, has been on a smaller version of the national housing market's roller coaster.

Downtown Madison, Wisconsin Home and Condo Sales:

SINGLE FAMILY HOME SALES IN DOWNTOWN MADISON, WISCONSIN
Year-to-year comparison for month of May

                  Avg              Median       Qty Sold
2010        $322,305        $201,000          17
2009        $195,431        $192,000          22
2008        $213,671        $179,900          19
2007        $267,337        $186,000          31
2006        $192,890        $173,000          21

CONDOMINIUM SALES IN DOWNTOWN MADISON, WISCONSIN
Year-to-year comparison for month of May

                  Avg               Median      Qty Sold
2010        $225,711        $211,500          20
2009        $205,758        $178,450          18
2008        $206,652        $201,000          16
2007        $302,088        $256,450          26
2006        $289,370        $229,900          37

The apartment to condo conversion phase that lasted in Madison continued well after many larger cities had experienced the bust of this housing trend.  Madison, WI  currently has a five-year inventory of condominiums on the market.

While condos are beginning to rebound, many Realtors don't anticipate they will be up to the 2007 values for quite some time.

If you're planning on investing in a condo, a general suggestion would be to ensure that you're living in your condo for at least 5-7 years prior to planning on selling it in order to get a good return on your investment.

Here are the statistics for sales of Single Family Homes in the City of Madison, Wisconsin for the month of May 2010:

**FSBO statistics are not included**

Total number of sales:            213
Average List Price:                 $245,596
Average Sale Price:                $237,487  (96.6% of asking)
Average # of days on market:  74

Median* List Price:                  $214,900
Median* Sale Price:                 $208,005  (96.7% of asking)
Median* # of days on market:   41

Highest Home List Price:        $1,895,000
Highest Home Sale Price:       $1,700,000
Highest # of days on market: 493

Lowest Home List Price:        $54,000
Lowest Home Sale Price:       $52,000
Lowest # of days on market:  0

TOTAL SALES FOR MAY 2010:  $50,584,735.00 (USD)

*Median is the average of only the middle two or three numbers in the list of sales.  It helps to remove the extremes that can be present in an average.

When you're looking to buy or refinance your home, you need to be aware of what the interest rates are doing.  This is perhaps the largest factor in the equation because when it varies, the impact is exponential. 

Tenths of a percentage point on the interest rate can vary the payment by quite a bit.  The more you borrow, the more exponentially you're impacted.  For example:

Interest rate:  4.6% (I chose this because this was the interest rate on Friday offered by a number of lenders) A 30-year fixed rate mortgage, with no PMI and no escroll of taxes on a 30-year fixed-rate mortgage of a home where you're borrowing $200,000.00 the payment would be:  $1,025.28.

Interest rate:  4.83% (The interest rate being offered today by a number of lenders) in the SAME scenario as above.  The payment would be:  $1,052.96.

The difference between the two payments is only $24.68 BUT there are 360 payments on a 30-year loan so the actual difference is $8,884.80!!

The change of just .23% in this case changed the total paid for the home and loan by over $8,884.80!!  That's more than the first-time homebuyers tax-credit.

To find out if you qualify for a refinance you can speak to a lender.  Many of them will direct you to a website application you can complete which will immediately tell you whether or not you're approved.

IF YOU'RE WAITING FOR A BETTER TIME TO PURCHASE A HOME OR INVESTMENT PROPERTY, YOUR WINDOW FOR THE BEST FINANCING DEALS OF OUR LIFETIME IS QUICKLY PASSING YOU BY.  THE CURRENT INTEREST RATES WILL NOT BE SUSTAINED AND WILL RISE.

Madison, Wisconsin is more unique than just its culture, geography and diversity.  Madison is unique among cities in Wisconsin for the fact that only 48.3% of people actually own the home they live in.  That means that most of the people that live here are renting from someone.

What's more is that with some of the lowest mortgage rates in decades, TODAY is the day to sieze the opportunity to purchase that property you've been thinking about.

The economic crisis in Europe is driving European Investors to purchase U.S. Treasury Bills which is the cause for the low mortgage rates.  But economists all agree that this is a short-term problem.

Today, as of 11:00 AM CDT (12:00 PM EDT) Treasuries have been fluctuating throughout morning trading.  There was a slight decrease in purchasing, however which translates to higher mortgage interest rates.

Carpe Diem . . . Sieze the Day!  There may not be another opportunity like this for our generation again!

Due to the European debt crisis, mortgage rates are at historic lows!!

The current average rate for a 30-year fixed loan is 4.87% according to Bankrate.com.  That's the lowest rate for the 25 years since Bankrate started keeping track.

Even jumbo loan rates (loans for more than $417,000) have fallen.  The 30-year fixed jumbo loan is at an average rate of 4.5% which is down from nearly 6% at this same time last year.

"It's the best time in our generation to buy . . It may be the best time in any generation.  Mortgage rates are so low and with homes prices down and lots of inventory, you couldn't pick a better time to buy or re-finance." -Mark Zandi, Chief Economist, Moody's.

Europe's debt crisis is behind the drop.  Nervous investors are flocking to the security of US Treasury Bills, which pushes down their yield and influences a host of consumer interest rates, including those on mortgages.

The decline is also good news for homeowners looking to refinance, particularly those who owe more on their mortgage than their house is worth. 

"There's a tremendous window on re-financing . . . That's particularly true for people who can take advantage of the government's Home Affordability Refinaance Program (HARP) which allows home owners to refinance into low mortgage interest rates even if their property value has gone down.  Think of the benefits if you buy or refinance now.  Locking in now at the lower rates means more bang for the buck and more breathing room for homeowners when it comes to payments." -Greg McBride, Chief Economist, Bankrate.com

But the decline in rates probably won't last long, analysts say.  So homeowners need to act quickly.

HARP, which was due to expire at the end of June has now been extended through June 30, 2011.

"I think they won't last much longer than a month or two at the best.  I can see them going up to 5.5% by the end of June if not sooner." - Lawrence Yun, Chief Economist, National Association of Realtors

The reasons?  Yun says the worries over Europe will be fading soon and investors will be looking at other assets besides US Treasury Bills.  The U.S. Deficit will also push up Treasury Yields which will also have a major impact on Mortgage Rates.

Source:  CNBC

An offer for Madison / SouthCentral Wisconsin owners selling their own home:

With the expiration of the first-time and move-up homebuyer’s tax credit, the available number of buyers looking to purchase their first or new home has significantly decreased. The number of qualified buyers leaving the market outnumbers the number of buyers entering the market daily. What does this mean for you? Fewer people looking to purchase a home.

I’m not soliciting you to sell your home! I want to help you to the best of my ability because I live in the Ridgewood Drumlin Neighborhood and have had clients buy and sell other homes near yours. I know this area and have a vested interest in ensuring that you get the most money in the sale of your home and that your house doesn’t stay on the market for too long!! If you should decide at a future date/time to list with a realtor, I’d like to be considered before any other realtor for your business.

How I can help you to sell your home on your own:

• There will be no contract and no verbal or written commitment of any kind until you ask me to list your home and act as your Realtor.
• A free consultation to come look at your home and make some suggestions to help with your home’s marketability.
• I’ll talk to you about comparable homes that have just been sold/purchased in the area so you know what you can expect to get from your home realistically.
• I’ll loan you or get you a copy of a DVD I have for Realtors on how to best prepare a home for showings.
• Information on the market your home is in and what’s happening in your market. We call this a ‘Market Analysis’ and it will give you some idea of what homes in your area are currently selling for.
• A FREE website for your home and ONLY your home that you can post a link to on Craigslist.
• A FREE Information Voice Recording (IVR) and text messaging sign to better gain information on who’s trying to find out more about your home.

If you sell your home on your own, you owe me nothing for all of this. All I ask for in return is that if you choose to list your home with a Realtor in the future, you consider me as your first resource. And if you hear of friends / family who want to sell their home using a Realtor, you’ll give them my information. I’m going to try to make it possible for you to do it all on your own, but the fact remains that in Wisconsin only 8% of homes listed For Sale By Owner actually make it all the way to close. (Source: Wisconsin Realtor’s Association)

If you’d like to take advantage of this offer, please don’t hesitate to contact me. Time is of the essence and more buyers are leaving the market than are coming onto the market daily. The sooner you can market your home more effectively, the sooner you’ll start hearing your phone ring for showings.

The BIG question is, What do you have to lose? I look forward to hearing from you!