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Milwaukee metro area home sales increased 17%

Prudential real estate ranks highest by J.D. Power

August 5, 2010

J.D. Power and Associates announced July 28 that the Prudential Real Estate Network ranked “Highest Overall Satisfaction for Home Sellers among National Full Service Real Estate Firms” in J.D. Power and Associates' 2010 Home Buyer/Seller Study. This marks the second time in three years that the Network ranked highest in seller satisfaction.

The annual study measures customer satisfaction of home sellers and buyers with major national real estate companies. Overall satisfaction is determined by examining four factors for the home-selling experience: agent (44%); marketing (30%); office (15%); and services (11%). Among home sellers, Prudential Real Estate scored highest on a 1,000-point scale and received particularly high ratings from customers in the marketing and agent factors.

PRERS Chairman Jim Mallozzi said the award speaks for the quality and consistency of the Prudential Real Estate Network. “Affiliate to affiliate, our sales professionals are the local-market experts who market and price homes right, while providing attentive service,” Mallozzi said.

Source: Prudential Real Estate Affiliates, Inc. | PREA Center

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HUD homes for sale

July 24, 2010

By Sonya Mays

HUD properties are government owned assets that provide great opportunities for homeownership.  HUD homes were previously FHA insured mortgages that went into default status and eventually foreclosed on.  They are very similar to foreclosures in that they are sold "AS-IS", without warranty, and typically at a reduced or discounted price.  They also require a valid and recent pre-approval or proof of funds verification with the offer. 
 
In addition to the low price, HUD properties are typically offered to owner occupants first, but if there are no offers from owner buyers, they will consider all offers, including investor buyers. 
 
HUD properties also come with an independent inspection report, which is great for buyers because it provides a very detailed, thorough analysis of the property condition which may reveal the pros and cons about the house.  However, all buyers are strongly encouraged to conduct their own inspection for informational purposes and not as a bargaining strategy as these properties are sold in "As-Is Where-Is" condition.
 
For a list of available HUD listings, please contact me or send me your email and I will send you the most recent list.  As always, I'm more than happy to arrange a showing at your convenience.

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President Obama signed tax credit extension into law

July 6, 2010

By Sonya Mays

On 7/2/10 President Obama signed the amended bill HR 5623 extending the homebuyer closing deadline to September 30.  Under the Homebuyer Assistance and Improvement Act of 2010, homebuyers who had a previously accepted offer as April 30 will now have an extra 3 months to close on their purchase and claim the tax credit.  First time homebuyers could qualify for up to $8,000 and existing homebuyers could qualify for up to $6,500 if eligibility requirements are met.

Source: www.inman.com

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Homebuyer tax credit extension passed by the Senate

July 1, 2010

By Sonya Mays

On the night of June 30, the Senate approved an amended bill to extend the homebuyer tax credit closing deadline to September 30. This comes just one day after the House passed the bill in a 409-5 vote.

The approved extension gives homebuyers an extra 90 days to close on their purchase and still qualify for the tax credit. The bill does not help anyone currently shopping for a home. Buyers must have entered into a valid binding contract and must have a signed accepted offer as of April 30 in order to qualify for the tax break.

First time homebuyers could qualify for an $8,000 tax credit, while existing homeowners who qualify could receive a tax credit of up to $6,500 for their purchase.

The National Association of Realtors estimates that over 180,000 people could have missed out on the tax credit if the extension was not granted. The extra 90 days will give lenders time to process the mortgage applications and close the deals that are still pending in the pipeline.

The bill passed by a 58-38 vote. President Obama is expected to sign the measure passed earlier this week by the House.

Sources: www.realtor.org, www.cnnmoney.com, www.finance.yahoo.com  

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Homebuyer tax credit extension passed by House, bill moves on to Senate

June 30, 2010

By Sonya Mays

On June 29, 2010, the United States House of Representatives passed bill HR 5623 by a vote of 409 to 5.  Under the Homebuyer Assistance and Improvement Act of 2010, the amended bill extends the deadline for the closing tax credit on eligible transactions from June 30 to September 30, 2010.  The extended deadline only applies to homebuyers who already had a signed contract or accepted offer as of April 30.  The National Association of Realtors estimates over 180,000 homebuyers would miss the June 30 deadline to close, so this would allow lenders to process the backlog of loan applications and paperwork to close out those deals. The bill now moves on to the Senate for voting. 

Source: www.realtor.org 

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Housing recovery about 6 months away

May 26, 2010

By Sonya Mays 

According to a recent poll of 92 industry economists and analysts, the housing recovery is expected to start in 2011.  The New Jersey-based analytics firm of MacroMarkets LLC, a subsidiary of Case-Shiller Home Price Index, polled the group of housing industry experts to determine the projected price recovery in U.S. single family residential homes. The forecast suggests that home prices will rise at least 12% between now and 2014.  The survey results also revealed an up-trend in prices beginning in 2011 but that there is still a certain amount of continued volatility and risk in the current U.S. housing market.  A chief economist at Deutsche Bank projected that home prices could rise by as much as 37% over the next four years. This survey comes after the homebuyer tax credit expired so any aggregate national home value increase will have a direct impact on consumer balance sheets in the months and years to come. 

Source: www.dsnews.com

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Wisconsin housing market outperforms the nation and Midwest in 1st quarter

WRA PRESS RELEASE - 5/11/10

Madison – 2010 started like 2009 ended for Wisconsin’s housing market, with strong sales and stable prices, according to first quarter data released by the Wisconsin REALTORS® Association (WRA). Sales of existing homes rose by 16.8 percent in the first three months of 2010 compared to the same quarter last year. This percentage outperforms the nation, which grew at 11.4 percent, and the broad Midwest region which increased 10.8 percent over the period. Median prices were essential unchanged, increasing less than 0.1 percent.

WHEDA re-launches new Fannie Mae loan product

May 15, 2010

By Sonya Mays 

The Wisconsin Housing and Economic Development Authority (WHEDA) recently announced a new mortgage product known as the WHEDA Fannie Mae Advantage.  This product will help homeowners realize the dream of ownership with as little as $1,000 out-of-pocket expenses and 100% financing options available with competitive interest rates for those who qualify. The 30-year fixed loan offers mortgage payment protection in the event of a job loss, and a minimum $1,000 down payment.  Responding to the changing needs of consumers in tough economic times, the product is customized to make home ownership affordable and attainable by partnering with Fannie Mae to offer less traditional products.  There are various eligibility guidelines and income limits that apply.  The program appears to be a good business model that will help create economic wealth and stabilize neighborhoods as they continue to implement and execute these strategies.  

Source: www.wheda.com

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Top 10 features in new homes

April 3, 2010

By Sonya Mays 

What do today’s home buyers want in a house? According to MarketWatch, the kitchen is still king, next to “cost-effective architecture”, useful space, green homes and, of course, attractive and affordable price points. An annual survey of home buyer preferences was conducted by Paul Cardis, CEO of Avid Ratings Co, which identified key features in new homes that buyers are looking for, and without further ado, here’s the top 10 list:

1. Large Kitchens, With an Island

"If you're going to spend design dollars, spend them where people want them -- spend them in the kitchen," McCune said. Granite countertops are a must for move-up buyers and buyers of custom homes, but for others "they are on the bubble," Cardis said.

2. Energy-Efficient Appliances, High-Efficiency Insulation and High Window Efficiency

Among the "green" features touted in homes, these are the ones buyers value most, he said. While large windows had been a major draw, energy concerns are giving customers pause on those, he said. The use of recycled or synthetic materials is only borderline desirable.

3. Home Office/Study

People would much rather have this space rather than, say, a formal dining room. "People are feeling like they can dine out again and so the dining room has become tradable," Cardis said. And the home theater may also be headed for the scrap heap, a casualty of the "shift from boom to correction," Cardis said.

4. Main-Floor Master Suite

This is a must feature for empty-nesters and certain other buyers, and appears to be getting more popular in general, he said. That could help explain why demand for upstairs laundries is declining after several years of popularity gains.

5. Outdoor Living Room

The popularity of outdoor spaces continues to grow, even in Canada, Cardis said. And the idea of an outdoor room is even more popular than an outdoor cooking area, meaning people are willing to spend more time outside.

6. Ceiling Fans

7. Master Suite Soaker Tubs

Whirlpools are still desirable for many home buyers, Cardis said, but "they clearly went down a notch," in the latest survey. Oversize showers with seating areas are also moving up in popularity.

8. Stone and Brick Exteriors

Stucco and vinyl don't make the cut.

9. Community Landscaping, With Walking Paths and Playgrounds

Forget about golf courses, swimming pools and clubhouses. Buyers in large planned developments prefer hiking among lush greenery.

10. Two-Car Garages

A given at all levels; three-car garages, in which the third bay is more often then not used for additional storage and not automobiles, is desirable in the move-up and custom categories, Cardis said.

Sources: MarketWatch and Yahoo Real Estate

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Rewards for on-time mortgage payments

4/1/10

By Sonya Mays

Are you paying your mortgage on time?  Have you not missed a payment for the last 5 years?  Have you gotten back on track after a few missed payments and are now paying on time?  If so, the Handshakes for Homeowners program is being launched just for you!

As part of the health care reform legislation that Congress passed on March 21, 2010, this initiative will extend a hearty handshake and pat on the back to over 200,000 homeowners within the next 12-18 months.  Local neighborhood lenders and regional centers are expected to be staffed with "Handshake Helpers" to offer greetings, certificates, and "I pay my mortgage" t-shirts to select homeowners who continue to pay their mortgage on time. So don't expect a new toaster or a cutting board, but a firm handshake and other positive reinforcement strategies for diligent homeowners.  Some lenders may even offer free tickets to sporting events and concerts as additional incentives.   

Source: www.inman.com

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Commercial Real Estate Updates

2/9/10

By Sonya Mays

Mission Village of Menasha, a senior housing complex located west of Kenwood Drive off Midway Road in Menasha, WI, recently broke ground on the seven-acre, $11.7 million complex, which will consist of 66 affordable housing units for area seniors.  The project was co-developed with $2.42 million in Tax Credit Assistance Program (TCAP) dollars from WHEDA as part of the federal American Recovery and Reinvestment Act (ARRA), along with over $7 million in WHEDA-allocated tax credits and financing.  It's co-developer, Dustin Bowie, with 10 percent ownership, will collaborate with Commonwealth Companies, based in Fond du Lac, to complete the development project. Once completed, the senior apartments will provide affordable, safe, housing options for residents. There are currently 75 potential residents on a waiting list. Rent in the units will range from $400 to $595 per month. Mission Village will be energy efficient, solar-powered, with a 2,500 square foot clubhouse, fitness center, library and beauty shop.

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New FHA Changes Announced

1/25/10 

In October 2009, Federal Housing Administration announced that its capital reserve fund had fallen below the congressionally mandated level of 2 percent. On January 20, 2010, the FHA announced major changes to ensure its long-term financial soundness. The FHA is trying to balance three fundamental objectives: 1) financial soundness of the FHA insurance fund, 2) fulfilling its mission of serving borrowers not adequately served by the private sector and 3) facilitating the recovery of the housing industry and the over-all economy.

The new changes are a victory for homebuyers because the FHA has carefully balanced the need to make financial reforms with the need to keep the FHA available to a large segment of consumers. This is exemplified by the 3.5 percent minimum down payment requirement and the ability to finance the up-front mortgage insurance premium.

The FHA announced changes in the following areas:

• The upfront mortgage insurance premium (UFMIP) will increase to 2.25 percent up from 1.75 percent. The FHA will continue to allow the financing of the UFMIP.
• Borrowers with a credit score below 580 will be required to have at least a 10 percent down payment. The minimum down payment will remain at 3.5 percent for all other borrowers.
• The FHA will seek legislative authority to increase the annual premium (currently capped at .55 percent). Over time, increasing the annual premium may allow FHA to reduce the up-front premium.
• Seller concessions will be reduced to 3 percent from 6 percent.

Source: www.realtor.org

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New IRS Homebuyer Tax Credit Form Released

1/25/10

On January 15, 2010, the Internal Revenue Service released the new Form 5405 that eligible homebuyers need to claim the first-time homebuyer credit this tax season and the repeat homebuyer $6,500 tax credit and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the homebuyer credits. Owners of existing homes -- specifically, taxpayers who have occupied the same property as a principal residence for five consecutive years during the previous eight years -- may be eligible to claim the $6,500 tax credit on a purchase of another house they intend to use as a principal residence.

IRS Form 5405, “First-Time Homebuyer Credit and Repayment of the Credit,”  (http://www.irs.gov/pub/irs-pdf/f5405.pdf) is very helpful because it reveals many of the qualifications for the first-time homebuyers $8,000 tax credit and the $6,500 tax credit for repeat homebuyers – the same form is used for both. The instructions at http://www.irs.gov/pub/irs-pdf/i5405.pdf are also well worth the read. One good way to answer a homebuyer with questions about the credit may be to provide these two documents because they are very complete in covering the revised rules.

Now that the new form and directions are available, homebuyers claiming the credits can begin to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements – they will not be able to file electronically.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

• A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
• For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law requires eligible repeat homebuyers to show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

• Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements.
• Property tax records.
• Homeowner’s insurance records.

Congress mandated all this extra documentation after audits uncovered widespread abuses by applicants for the $8,000 credit. Among these were fictitious home purchases in which taxpayers or tax preparers sought -- or obtained -- credits on properties that never were sold or bought. This time around, the IRS says it will rigorously investigate all claims filed, starting with a review of the documentation submitted.

The new IRS rules also spell out situations in which recipients of tax credits may have to repay them:

• Taxpayers who sell their houses within 36 months after purchase.
• Owners who convert their principal residence to a rental or business property.
• If the lender forecloses on the house.

THE TIME HAS COME FOR BUYERS TO GET MOVING! THERE ARE ONLY 14 WEEKS LEFT TO SIGN A CONTRACT AND JUST FIVE MONTHS TO CLOSE!

Source: www.wra.org

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2010 Commercial Real Estate Market Projections

1/10/10

By Sonya Mays

According to the 2010 Real Estate Forecast Reports released on 1/4/10 by Grubb & Ellis, the commercial real estate market will start its recovery in 2011. The report indicates that the labor market will begin to recover during the second half of 2010, followed by the commercial market rebounding in the beginning of 2011. For investors who may be liquid or non-liquid, this year may present prime opportunities to implement new investment strategies and capitalize on commercial investments.

Nationally, there are four market segments that will rebound in sequential order starting with multi housing/apartment units, which have forced many unsold condos to be offered for rent. The industrial market segment is expected to bottom out by year end, followed by retail space which has had less tenant demand. Lastly, office segments will continue to experience peak vacancy rates during the first half of 2011 and low level rents in the second half of 2011.

The national office vacancy rate is expected to increase this year by 1.1% while national rental rates are expected to decrease by $1.23 per square foot.

Locally, the vacancy rates dropped from 8.2 to 8.1 percent. Average rental rates are expected to decline to approximately $4.20 per square foot for Milwaukee industrial markets, and $16-$18 per square foot for Milwaukee and suburban office rental rates, leaving some office investors concerned about suburban falling rents. Madison reported $23.06 per square foot for Class A metro office rental rates. Discounted rents, moving allowances and free rents will comprise standard lease negotiations as vacancy rates continue to fluctuate.

It is clear that the real estate market cannot begin recovery until the labor market recovers and employers begin re-hiring. While investors are bracing for a slow economic recovery, nearly 59% of survey respondents believe that "government solutions are creating a delay in the discounting and sale of commercial real estate assets", according to the 2010 Real Estate Investment Outlook. Over 78% of commercial investors believe that a large volume of distressed or foreclosed assets will hit the market this year, with widespread distress in the suburban office sector, followed by retail malls and undeveloped land.

The most optimistic are apartment and mixed-used/multi-unit investors, where valuation declines are not expected to be as drastic. The full impact of the market recovery strategies will further materialize throughout the year as buyers and sellers continue to come to the table and rise to the occasion.

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2010 Residential Real Estate Market Projections

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$9.2M to City of Milwaukee to address foreclosures

April 2009

The City of Milwaukee recently received $9.2 Million in stimulus dollars to help stabilize and strengthen local communities affected by foreclosures, according to the Milwaukee Foreclosure Partnership Initiative. The funding is being allocated to the Neighborhood Stabilization Program and is specifically earmarked for the purchase and rehab of foreclosed properties in an attempt to help move distressed inventory off the markets and revitalize neighborhoods.

As part of the Mayor’s Foreclosure Partnership Initiative, the City of Milwaukee is partnering with local REO Realtors, attorneys and other distinguished entities in an effort to combat the foreclosure issues facing many communities. The efforts will focus on prevention, intervention and stabilization. In essence, programs will seek to help promote homeownership, assist homeowners currently facing foreclosure, and address vacant and abandoned properties in City neighborhoods.

Buyers and investors may qualify for funding assistance in purchasing and rehabbing foreclosed homes through specific programs, such as the "Homebuyer Assistance" program and the “Buy in Your Neighborhood” program, which matches dollar for dollar.  For rehab/investor purchases, there are rent and income guidelines for tenants, such as a landlord cannot charge more than $899 for a 3 bedroom in the target areas.  For homeowner purchases, certain occupancy guidelines will apply. For example, some loans being offered are “soft loans” and will be forgiven after 5 years of occupancy. Other program guidelines apply.

This partnership effort hopes to positively impact and strengthen City neighborhoods while strategically addressing increased foreclosures. It will be an on-going project that will require all hands on deck to make the communities stronger and more viable.

By Sonya Mays