Housing Recovery?

The evidence continues to mount that we might be on the throes of a recovery in the housing sector. While that will be great for most of us, there are a few things to remember as you read the headlines and hear the TV news reports. Like the downturn of the past few years, a recovery is likely to start regionally. Today you are hearing about large year-over-year increases in sales in the West and the South, particularly Florida. But those area were also the hardest hit and the first to sink in late 2006. Next, keep in mind that the housing recovery will be measured in terms of slight increases over previous years' results. Please do not expect a tremendous bounce in terms of sales volume. What we really need now is a sustained upturn that will last for many years. Finally, keep in mind that as the housing recovery gains strength, the unbelievable opportunities of the past few months will slowly start to fade. Housing prices will likely start to firm; inventories will decline; interest rates will stabilize and start to increase and other market conditions will begin to swing back to a neutral to seller's market. For you buyers, and especially 1st time buyers, the perfect storm may be about to blow out. If you can, now would be an excellent time to dive into the market.

Buy or Rent?

There was an interesting article in this morning's newspaper, Money Section, about how many tenants are finding it more attractive to purchase rather than rent. The article used a formula and I thought it might be interesting to see where Racine fit into this. In a previous post I stated that the median price of a home in the City of Racine was $93,000. Using that figure and the formula outlined in the article, here are the relevant figures I calculated for Racine:

• Purchase price: $93,000;
  
• Downpayment: 10% ($9,300);
  
• Monthly Principal and Interest payment (based on an $83,700 mortgage at 5.2% for 30 years) $459.61;
  
• Real estate taxes (Current city mil rate of $21.805/$1,000 and assuming an assessment of $93,000 with the total annual tax bill being $2,027.87) $168.99;
• Private Mortgage Insurance of $36.27
• Homeowners insurance of $30
  

The monthly total is $694.87. I'm not sure what the median rent is in the City but I would guess it to be somewhere between $600 and $700 per month.

If all of the above is accurate, you could buy a median priced home in Racine for about the same as renting an apartment. Now remember that this assumes you have $9,300 for a downpayment and other dollars needed for closing costs, you feel comfortable in your employment situation and, of course, that you realize that homeownership is not for everyone. But it is an interesting time to be considering a home purchase (and remember, if you have not owned a home in the last 3 years and close before December 1, you could get a tax credit of up to $8,000). Finally, keep in mind that the real estate taxes, mortgage interest payments and some other charges may be tax deductible where rent generally is not. Interesting stuff and it seems to show that Racine compares very favorable with the rest of the country.

American Dream or American Nightmare

I happened to be listening to a discussion on the radio about homeownership and the changes of the past few years. As we all remember, buying a home, raising a family and benefiting from the stability of putting down roots was indeed the American Dream. And the buying the home part was usually the most exciting. But it must be remembered that owning a home was never really designed to be the greatest "investment" one could ever make. Housing is shelter. It is an asset and it gets older every year. I remember a story my father, also a Realtor, told me when I was about 16 years old. I remember him telling me that real estate is a wonderful thing. "We bought this house (our family home) 14 years ago for $12,000. Now we are selling it for $14,000. John, the house is 14 years older than when we bought it, we lived here and raised a family, it provided us shelter AND WE'RE SELLING IT FOR MORE THAN WE BOUGHT IT FOR!" That was the thinking back in the 1960's. Your home was not designed to appreciate in double-digits and provide a source of cash for things like vacations, cars, TVs, etc. The latter, unfortunately, is the thinking of the 90's and 2000's, and it is little wonder that some homeowners find themselves in an American nightmare. I contend, however, that this is not the fault of housing. It is the result of less than wise decisions, an incredible amount of greed on the part of many, including real estate people, lenders and others looking to "get their share", and a press that couldn't tell you often enough how hot the real estate market was.

I suggest to you that the American Dream is alive and well. If you have an opportunity to purchase a home, raise a family and put down roots, please do so and do so now when we have lower prices, lower rates and plenty of incentives in the marketplace. I promise you that, if you use common sense in your decisions, avoid unreasonable expectations as to the appreciation of your house, make regular payments to your lender and expect to live in you home a minimum of 5 years, you will experience the true dream of homeownership and you may just be as excited as my father was about the "value" it adds to your life. Good luck and let me know if I can do anything to help.

Thanks

Thanks Wayne and John for the input on my blogging adventure. I think I have the bugs worked out for now.

June Real Estate News

I received some statistical reports this week from Metro MLS specific to the current market conditions in the City of Racine and Racine County. The data is through June and compares 2009 to 2008. I am making a conscious decision not to go back and compare 2009 to years prior to 2008. I think we all know that numbers were higher in previous times and there is no point in reminding ourselves how far off the peak we are. While historians and statisticians may find such comparisons interesting, as a real estate professional they only serve to deepen the pain. So, since this is my blog, I've decided that the base year will now be 2008 and the positive gains moving forward will be measured against that year.

Through June, closed sales in Racine County are down 20.3% from the same point in 2008. While that is a big number, it is interesting to see that the decline in the month of June was "only" 9.7%. In other words, it is possible that the rate of decline may be, well, declining! In the City, units are down 11.8% YTD and 12.5% for the month of June-pretty close to the same trend. Median sale prices are also falling and at a slightly faster pace in June than YTD: in the County they fell 11.2% in June but only 7.5% YTD. Median sales price at the end of June is now $149,556. In the City, prices fell 17.3% in June and are down 20.9% YTD. Median price is now under $100,000 at $93,000. It is important to note, however, that comparing median sales prices is a dangerous exercise. So many factors enter the equation and the number of foreclosures and short sales have a definite effect on this comparison. Also, remember that we are dealing with median prices for a number of properties, not the actual loss of value of any particular property.

If you are interested in some other market stats, please let me know and I'll post them. It will be interesting to see how things change as move through the balance of 2009. I am guessing that you will start to see positive numbers, year over year, as we move through the rest of summer and into fall/winter. My hope is that some positive trends will help people perk up a bit about the market in Racine. And keep in mind, if you are a 1st time home buyer, you only have until December 1 to close on your purchase to qualify for the current tax credit.

If you have a particular interest in real estate that I can uncover for you, please let me know. My intention here is to provide accurate info that will benefit you in making informed decisions about Racine real estate. Please let me know how I can help.

"Oh Racine, Racine How You Make Me Quiver..."

So here we go...



Blogging! Who would have ever thought that I would actually begin a blog. While it remains to be seen how current I keep this, beginnings always come with the grandest of intensions and so, of course, this blog will be the "come to" place for information on Racine, Wisconsin real estate.



The title of this blog is taken from an informal Racine anthem of the 1960's. The rest of the song is not very flattering of the Racine area (ask someone who grew up here for the balance of this little ditty) but I chose it here because the title serves a dual purpose. Let's get this out in the open right now-RACINE, WISCONSIN IS A BEAUTIFUL AND CONVENIENT PLACE TO LIVE AND RAISE YOUR FAMILY-PERIOD! Some may take issue with that statement but it is, in fact, the truth.

In the interest of full disclosure I am required to tell you that I make my living in selling real estate in the Racine area. I was born here, grew up here (on the corner of 15th and Park), left here for better opportunites out of college (Marquette University) and made the conscious decision to return here when I realized the beautiful community I had left behind. I have tried to be involved in civic and volunteer organizations and take great pride in having had the honor to serve as president, chairman or board member of many of the local organizations committed to improving the entire Racine community. I think I have a unique perspective and I am most interested in providing honest and accurate real estate information to anyone who asks-no commitments, no strings, no charge.

Being new to blogging I'm not real sure where this will go or who will see this. My hope is that people who live in the Racine area will want information on how home sales are going, what may be happening with mortgages and home loans and will want to know about general information affecting Racine. I also hope that those who are considering a move to Southeastern Wisconsin will come here for accurate information on all that the Racine area has to offer. While I certainly do not have the answer to all of your questions, I'm pretty sure that I can find a source that will clearly and honestly provide you with the information you need to make a good decision.

So try me out and give me a chance to be of service. I love Racine and want the entire community to grow and thrive on the western shore of Lake Michigan. This should be fun!