THE HOUSING MARKET IN 2011

According to Dan Elsea, President of Real Estate One, the largest Real Estate Brokerage in Michigan: The November Michigan Real Estate market was down from the frantic activity of last fall, but up over the market bottom of 2008. Values have stabilized (price per square foot) in the past 6 months & available homes for sale have continued to fall, which are both positive signs towards a more stable market. Overall the number of months inventory (MSI) is still in the Buyer's market range, but at 5.1 months, it is getting close to balanced.

The average days on market (DOM) for homes sold has remained about the same over the past 2 years. The reason seems to be a small segment of the market is well priced & selling quickly while the majority remains priced out of the main stream, taking months or even years to sell. For Sellers, that means they need to be fully aware of the total market and focus on Solds over active listings. Those still on the market after 6 months are priced out of the market & not relevant competition.

So what will next year look like for Michigan real estate? We would expect it to look and feel a lot like 2010, maybe down a bit in number of homes sold, but growing stability in pricing. Also a continued decline in available home inventories, but not falling as fast as 2010 (more bank properties and an improving market will bring out those sitting on the fence). If we simply match 2010, that would be a great success, since it would mean our core economic improvement has made up for the artificial market push this year from the tax credits.

WHAT IS THE "CONSUMER CONFIDENCE INDEX"?

The Consumer Confidence Index (CCI) is a monthly release from the Conference Board, a non-profit business group that is highly regarded by investors and the Federal Reserve. CCI is a unique indicator, formed from survey results of more than 5,000 households and designed to gauge the relative financial health, spending power and confidence of the average consumer.

There are three separate headline figures: one for how people feel currently (Index of Consumer Sentiment), one for how they feel the general economy is going (Current Economic Conditions), and the third for how they see things in six months' time (Index of Consumer Expectations).

HOMEOWNERS LOWER THEIR DEBT!

 In the 1/3 quarter of  2010, 33 % of homeowners who refinanced their first-lien home mortgage lowered their principal balance by paying-in additional money at the closing table. This is the second highest "cash-in" share since Freddie Mac began keeping records on refinancing patterns in 1985.

CONSUMER CONFIDENCE AT 6 MONTH HIGH!

In November, University of Michigan consumer confidence rose back to the highest level since June supported by gains in both economic conditions (79.7 from 76.6) and the economic outlook (62.7 from 61.9). According to the first estimate, Michigan consumer confidence rose from 67.7 to 69.3, slightly above the consensus estimate of 69.0. The one-year inflation outlook rose to 3.0%, the highest level since May 2010. The recent positive economic news might have brightened consumer's sentiment, although labor market conditions remain very fragile.

FORECLOSURES IN MICHIGAN

Michigan is among the hardest hit foreclosure states in the Nation. In August 2010, the state’s foreclosure rate increased 128% over August 2009 and it remains among the top five states in the Nation in foreclosure totals. In July 2010 alone, 1 in 241 housing units in Michigan received a foreclosure filing.

GET INDOOR SPACES READY FOR FALL

Maintain your pipes. Wrap your pipes with heating tape every winter. Keep your house warm - at least 65 degrees.
Check your heating systems. Be sure to maintain your furnace, boiler, water heater, and wood-burning stove and have your heating system serviced every year. Change your heating and air conditioning filters regularly.
Know your plumbing. Learn where and how to shut the water off. If your pipes freeze, the quicker the water is shut off, the less chance pipes will bust.

Clean and vacuum dust from vents, baseboard heaters and cold-air returns. Dust build-up in ducts is a major cause of indoor pollutants and can increase incidences of cold weather illnesses.


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GREEN BUILDING TAKES OFF IN REAL ESTATE SLUMP

Green building remains the bright spot in an otherwise dull U.S. real estate market as companies and homeowners look to lower utility bills according to an article in the USA TODAY. In fact, green building has increased from 2% in 2005 to nearly one-third now.


The Washington based USGBC (U.S. Green Building Council) LEED (Leadership in Energy & Environmental Design) program is set up like an arbiter of a sort of building Olympics. Projects earn points for various features. Use renewable cork flooring, for instance, get a point in the materials and resources category. Use paint that doesn't give off toxic substances — score a point for indoor environmental quality. There are categories for water efficiency and energy. Pay the fees, rack up enough points, and win a basic, silver, gold or platinum rating. Around 155,000 designers, contractors, consultants and others have studied up online using courses, and then passed the test to earn the designation LEED Accredited Professional — or "green associate." Employ a LEED AP on a project and you get a point for that.

The number of homes receiving LEED approval tripled last year, from 1,151 in 2008 to more than 3,000 in 2009. Homes, like office buildings, get points for water conservation, energy efficiency, durability, location, air quality and other factors.

WHERE TO FIND A QUALITY HOME INSPECTOR

1) Ask for referrals: Try to gather two or three referrals.


2) Interview the home inspectors: Find out about their education, years of experience, number of inspections they’ve performed and insurance coverage. Also, do they participate in continuing education or stay up-to-date on current laws and building codes?

3) Determine the inspection cost: Ask how much they would charge and what areas of the house it includes.

4) Make sure you are welcome at the inspection:. This is a unique opportunity to see your new home through the eyes of an expert.

5) Get the home inspection report in writing: Ensure that he or she will provide you with a comprehensive report.

INSPECTIONS: how Much Do They Cost?

A professional home inspector evaluates the current condition of a house. It is NOT an appraisal, which estimates the market value of a property.


Many inspectors offer a home inspection for a flat rate based on the square footage, age of home and number of rooms. The price should include a written report, often with accompanying photos of problem areas. The average home inspection should take 2-4 hours and will cost between $250 and $500, depending upon the size of the home. Home inspections do not cover everything. In some circumstances additional inspections may be needed for swimming pools, septic systems, pest report and/or mold inspection.

HOW CAN A PRE-SALE INSPECTION BENEFIT A SELLER??

Easier and more realistic pricing. A professional home inspection helps with pricing in two important ways.
    1. It allows you to see your home through the eyes of a critical third-party and increases objectivity. It helps you to price your home realistically.
    2. The inspection report reflects the current condition of the property – good, bad, or ugly. A seller can take that true condition into consideration and set the price lower accordingly.
Enhanced marketing impact. Prospective buyers are likely to find a pre-inspected home more attractive because the “what if” factor is not as great.
Greater negotiating leverage. Sellers discover any issues that might delay or derail the transaction and can make advance repairs, thus heading off potential price concessions sought by buyers. Even if repairs are not made, disclosing any defects upfront and pointing out that the price is adjusted accordingly can deflate buyer’s objections. You have the time to get reasonably priced contractors or make the repairs yourself, if qualified.
On going safety ensured. It may alert you of items of immediate personal concern, such as radon gas or active termite infestation. Alerting you to immediate safety issues before agents and visitors tour your home.
A professional home inspection helps with pricing in two important ways.
1. It allows you to see your home through the eyes of a critical third-party and increases objectivity. It helps you to price your home realistically.
2. The inspection report reflects the current condition of the property – good, bad, or ugly. A seller can take that true condition into consideration and set the price lower accordingly.
Enhanced marketing impact.
Prospective buyers are likely to find a pre-inspected home more attractive because the "what if" factor is not as great.
Greater negotiating leverage.
Sellers discover any issues that might delay or derail the transaction and can make advance repairs, thus heading off potential price concessions sought by buyers. Even if repairs are not made, disclosing any defects upfront and pointing out that the price is adjusted accordingly can deflate buyer’s objections. You have the time to get reasonably priced contractors or make the repairs yourself, if qualified.
On going safety ensured. It may alert you of items of immediate personal concern, such as radon gas or active termite infestation. Alerting you to immediate safety issues before agents and visitors tour your home.

SELLER INSPECTIONS

A Great Tool for Competing Against Foreclosure Listings!

They Aren’t Usually the Bargain Buyers Expect: Banks will price a foreclosure near appraised value unless there are MAJOR defects. There is almost always a significant investment needed to bring the condition to a "move-in ready" state. Sellers can make their properties more enticing by having them problem free.
It Can Take a Long Time to Close on a Foreclosure: Banks will rarely respond quickly to get these poorly performing assets off their books. It can takes weeks to respond to offers & counteroffers. Prepared sellers will fare well in competition because buyers can close and move in on a realistic schedule.
Disclosure of Defects is Non-existent With Foreclosures: Banks will disclose nothing about the condition of the foreclosure home. Its "buyer beware" even with a home inspection. Some lenders will want some or all of the problems discovered during an inspection corrected before closing. The smart seller will have done their own pre-listing inspection and corrective action repairs.

BRIGHTER OUTLOOK FOR REAL ESTATE WITH JOBS COMING TO MICHIGAN

There are signs of positive growth for the Southeastern Michigan job market.  With companies adding jobs, consumer confidence is also on the upswing and more people are looking to buy or lease in the area.

A recent Free Press article claims "Jobs are trickling back into southeastern Michigan as technology and government-related fields grow. That's great news for local relocation experts, who say they are working with a diverse client base to help employees coming to Michigan find housing. Some are leasing and some are buying.

The companies with employees coming to metro Detroit include GE, General Dynamics Land Systems and Harman International, maker of high-end audio systems. Warren is to gain 1,200 positions from transfers at the Rock Island Arsenal in Illinois, and more jobs are likely in coming years at the Warren Tank-Automotive and Armaments Command."

BY GRETA GUEST

FREE PRESS BUSINESS WRITER
Free Press Article

Lani's July 2010 Real Estate Update

Optimism – “a disposition or tendency to look on the more favorable side of events or conditions and to expect the most favorable outcome"  As the economy recovers, so does the real estate market, buyer optimism and our biggest investment – our homes. This month’s News You Can Use! newsletter contains articles about a glass half full!  To view the newsletter, click on: http://www.lanisussman.com/

To Subscribe to Lani's Monthly Newsletter: respond to lani@maxbroock.com

Our Current Real Estate Market

Sales of Houses in Birmingham, Bloomfield Hills,

Franklin, & W. Bloomfield

JULY 2010 -- 110 Houses Sold - 29% Were Forclosures/Short Sales
Lowest: 2250 Island View - List $35,00 -- Sold $35,250
Highest: 1016 Lake Park - List - $2,748,000 --Sold-$2,450,000
JULY 2009 -- 121 Houses Sold - 54% Were Forclosures/Short Sales
Lowest: 6725 Cooley Lake - List $43,500 -- Sold $34,000
Highest: 360 Woodbridge - List - $2,999,000 --Sold-$2,350,000

THE 2% RULE

The "2% Rule" states that you should never refinance your mortgage unless your new mortgage rate is at least 2% lower than your existing home loan’s rate. That no longer applies. Deciding to refinance a mortgage should be done on a cost/savings basis.
Evaluating your refinancing options tells you how long it will take to recoup your expenses and makes it easier to recognize and avoid junk fees. How do figure out how long it will take to recoup your expenses when refinancing?
1. Figure out what your new monthly payment will be using a basic home mortgage refinance calculator.
2. Subtract your new lower payment from your old payment and you’ve got your monthly savings .
3. Total up all of your closing costs including any loan origination fees you’re paying the person arranging your new mortgage.
4. Divide this total by your savings and you’ve got the number of months it will take you to recoup your expenses from taking out a new mortgage loan.

HIGHER END HOMES BRING MULTIPLE OFFERS

Metro Detroit buyers in the $500,000 plus market are finding in hard to buy "move-in" ready homes. Houses in good condition often bring multiple offers. If they are persistant, they can find a house with all the "extras", but in many cased these houses need some work. The inventory includes many foreclosed and short sales house where the fixtures have been stripped or the condition of the house requires some work. For a great article on this subject, visit "Good deals are at the high end, but finding them takes some work"

What You Should Know Before You Refinance Your Mortgage

It all depends on three factors on a sliding scale:
1. How much you can reduce your interest rate.
2. How much you’ll pay in closing costs.
3. How long you plan to live in the home.
The real key is the break-even point. That’s the number of months you should plan to keep the home after refinancing in order to recover your closing costs. For example, if you pay $3,000 in closing costs and you manage to lower your mortgage payments by $150 a month, you would reach the break-even point in 20 months. As long as you plan to live in the home longer than that, refinancing could be worthwhile. It’s a sliding scale. The smaller your savings, the longer you need to stay put.
There are a couple strategies to tweak the sliding scale by minimizing the price of closing costs when you refinance.
1. Ask your current lender to refinance you. In order to keep your business, your lender may be willing to waive certain closing costs.
2. Ask for the "reissue rate" on your title insurance, a savings of 40 to 50 percent.
3. Ask for an automated or drive-by appraisal, which is cheaper than a full-fledged one.
4. Get your lender to skip the credit check. After all, the company is intimately familiar with your payment record.

REFINANCING - How to Make It Work

If you have decided that refinancing makes sense for you, follow these tips to make sure you do it wisely:
1. Shop around for interest rates. The Internet is a good place to comparison shop, but be wary of unknown companies.
2. Hold the line on closing costs. Some lenders are taking advantage of low interest rates to jack up their closing costs.

3. Start with the bank that currently holds your mortgage. They may give you a good deal just to keep your business.
4. Avoid paying points. When you refinance, you can deduct only a portion of the points each year.
5. Don’t try to outsmart the market and wait for interest rates to hit their low point. If the numbers make sense, jump in!

ZERO COST REFINANCING

Don’t have the ready cash to close on a refinanced loan? Ask the lender to absorb your closing costs by raising your interest rate by an eighth or quarter percentage.
Benefits are:

1. No upfront costs.

2. Immediately cut interest rate & monthly payment with no out-of-pocket expense.
Drawback:
You don’t get lowest possible interest rate.

STAY COOL THIS SUMMER & REDUCE YOUR ENERGY BILL

1. Invest in Ceiling Fans: Ceiling fans help cool you down because they move the air. When moving air meets moisture (like the sweat on your skin) it has a cooling affect that can make you feel 8 to 10 degrees cooler.
2. Use Outdoor Misters: Have a cooling affect that can make you feel 8 to 10 degrees cooler. A mister sends a fine spray of water into the air which slowly evaporates by absorbing energy from the air. The net result is a cooler air temperature in the immediate vicinity of the mister.
3. Give Your Air Conditioner a Check-up. The contractor will clean the coils, make sure you have enough refrigerant, and generally see to it that the system works as well as possible. You should also replace or clean the unit's filters as often as required.
4. Energy Efficient Light Bulbs –Fluorescent light bulbs not only use less energy, & last up to 5 years longer, they don’t emit as much heat as regular incandescent bulbs. In fact incandescent bulbs waste 90% of their energy on the heat rather than on lighting!