Madison Foreclosure &#38; Short Sale

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OK. You Win. Stop Listening to Real Estate Agents!

Bill Baker — Tue, 05 Apr 2011 15:35:39 +0000

Each day we attempt to give truthful insight on the current housing market. If we report what is perceived as negative news, some in the real estate community come down on us hard. However, when we explain that we think now is a great time to buy, we get an avalanche of feedback from the general public attacking us for being nothing more than puppets for real estate agents across the country. Today, we don’t want you to listen to what we think about the opportunities that exist for buyers in this market. Instead, we want to report on what some members of the investment community are saying.

The Wall Street Journal

Jim Woods wrote an article earlier this year for Market Watch, part of the Wall Street Journal’s digital network. Its title: Why your best investment is a house. Mr. Woods compared the investment potential of real estate against other asset classes such as stocks and precious metals. Here was his conclusion.

One reason your best investment right now could be a home has to do with the relative upside of getting in on an asset class while it’s at the bottom versus buying into other asset classes that could be near a top. Consider for a moment the tremendous upside we’ve seen in stocks, precious metals and agricultural commodities over the past 12 months…

If you’re a long-term investor looking to put money to work, now is not really the best time to get into any of these three asset classes. However, with home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today…

Mr. Woods went on to talk about the financing portion of the purchase:

Yes, mortgage rates still are near historical lows, but if we see these rates rise, then the cost of a new home could climb significantly. So, now could really be the best time to pull the trigger on that home purchase — and it could also be your best investment right now.

Fortune Magazine

Shawn Tully, senior editor at large for Fortune penned an article last week which was titled: Real estate: It’s time to buy again. In the article, Mr. Tully explained:

Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

Let’s state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction … The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.

Bottom Line

Neither of the two media sources mentioned above has ever been accused of cuddling up to the National Association of Realtors. However, both have come to the same conclusion. It’s time to buy real estate. Perhaps we should listen to them.

Start your search HERE today!

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Once-in-a-Lifetime Opportunity for Buyers

Bill Baker — Tue, 22 Mar 2011 20:00:04 +0000

Business Insider’s Money Game interviewed real estate expert Barbara Corcoran earlier this week. This is what she said about buying in this market:

“We have a regular real estate miracle happening right now. We not only have record low prices, but we also have cheap money.”

A second real estate icon, Donald Trump, just a few weeks ago said:

“This is a great time to go out and buy a house. And if you do, in 10 years you’re going to look back and say, ‘You know, I‘m glad I listened to Donald Trump’.”

Maybe it’s time to start listening to the people who have made fortunes buying and selling real estate. They may know best!!

Start your search HERE today!

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If Prices are Falling, Why are the Rich Buying?

Bill Baker — Tue, 15 Mar 2011 19:50:37 +0000

There is an interesting phenomenon taking place in the real estate market. While house prices are falling, the rich are starting to purchase. DataQuick Information Systems reported last week that sales on homes $1 million or more rose 18.6% last year after four consecutive years of decline. This is at the same time that sales outside of this price point actually fell 2.8%.

And even more amazing is that homes over $5 million have also increased substantially. Housing Wire reported that:

In 2010, 975 homes sold in this bracket, up nearly 14% from the year prior.

Why would the wealthy be starting to purchase especially when everyone is predicting that prices will soften? The people of wealth understand finances. They realize that the COST of real estate is a much more important than its PRICE. With the government attempting to make massive changes to the residential lending business, the wealthy know financing a home may never be better. They realize it is time to buy. They can purchase a million dollar+ home for a rate lower than at almost any time in history.

Rates are at historic lows and the spread for jumbo loans has shrunk dramatically. As CNN Money explained:

Normally buyers have to take out a jumbo loan to finance any mortgage beyond the $417,000 threshold ($729,000 in high-cost cities such as New York). These loans have higher interest rates because they are considered non-conforming — or higher risk — and are not backed Fannie Mae or Freddie Mac.

In 2009 buyers of high-end homes paid 1.8 percentage points more in interest than the average buyer. But in 2010, that spread had shrunk to just 0.6 points more.

They can also fix that rate for 30 years. The 30-year-fixed-rate-mortgage may be a victim of the new lending reforms. Mark Zandi, chief economist of Moody’s Economics addressing the administration’s recent report on reform:

“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages.”

Bottom Line

Let’s assume the rich aren’t just lucky. Let’s assume they built their wealth by making good financial decisions. What have they decided about real estate? It’s time to buy.

Start your search HERE today!

Please call me today at (608) 333-0567 to see any of these properties

Homeownership: What Americans Think

Bill Baker — Tue, 08 Mar 2011 16:19:11 +0000

There is a growing number of people debating whether the government should continue its level of support for homeownership. Mortgage assistance is being pulled back and even the mortgage-tax-deduction is now up for debate. We want to look at how the people of this country view owning a home and the reasons they buy. Last week, Fannie Mae released the National Housing Survey. Here are the survey’s more interesting findings.

Belief in Homeownership

96% of all homeowners said homeownership has been a positive experience.
84% of Americans still believe that owning a home makes more sense than renting. Even 68% of renters believe owning makes more sense.
64% consider buying a home as a safe investment. Buying a home was considered safer than buying stocks by over three times the number of people (64% vs 17%).
2 in 3 Americans believe that lifestyle benefits of homeownership (65%) are superior to the financial benefits (32%).

Top Non-Financial Reasons to Buy a Home

Lifestyle Benefits: The broader security and lifestyle benefits of homeownership, such as providing a good and secure place for your family and children, where you have the control to make renovations and updates if you want, and in a place that’s in a community and location that you prefer.

It means having a good place to raise children and provide a good education
You have a physical structure where you and your family feel safe
It allows you to have more space for your family
It gives you control over what you do with your living space (renovations & updates)
It allows you to live in a nicer home
It allows you to live in a location that is closer to work, family, or friends

Top Financial Reasons to Buy a Home

Financial Benefits: The financial benefits of homeownership: its value as an investment (especially compared to paying rent), its value as a way to build up wealth for retirement or to pass on to your family, and the tax benefit.

Paying rent is not a good investment
Buying a home provides a good financial opportunity
Owning a home is a good way to build up wealth and pass it along to my family
It is a good retirement investment
Owning a home provides tax benefits
Owning a home gives me something I can borrow against if I need it

Bottom Line

The people of this country have always seen great value in owning their own home. They still do. We believe we should never underestimate the importance of homeownership as a crucial piece of the American Dream.

Why do you want to buy? Start your search HERE today!

Please call me today at (608) 333-0567 to see any of these properties

10 Reasons People Decide to Buy a Home

Bill Baker — Fri, 25 Feb 2011 15:51:54 +0000

Renting is a very frustrating way of life. The money you pay every month disappears, leaving you with few benefits other than a roof over your head. Compared to owning a home, renting is a futile exercise that leaves you with nothing after your lease is up. It’s no surprise that people want to get out of the rent race, and here are 10 reasons why people decide to buy a home versus renting.

1. They Want to Build Equity

Homebuyers build equity as their property increases in value over time. This equity has many benefits, including the ability of a homebuyer to leverage equity in lines of credit to make repairs or additions to their home. Equity is a powerful thing and a natural consequence of home ownership. Renters never gain equity in their rental space, and at the end of their lease they are thrown out on the street with nothing to show for years of on time rental payments.

2. They Don’t Want to Throw Their Money Away

Without equity, what does paying your rent on time gain you every month? The truth is that paying rent guarantees a roof over your head for about 30 days and nothing more. In that sense, renting is like an extended stay hotel in that at the end of your rental period or lease you have nothing to show for the money you’ve paid. This makes renting a terrible investment when compared to home buying.

3. They Want More Space

It’s incredible how little you get for your rental payment each month. Most renters are lucky to have even a tiny balcony, let alone roomy closets o storage space. Many homes come with luxurious yards and spacious garages for storage. This makes buying a home an attractive option for those who prefer to stretch their legs.

4. They Want to Make Upgrades

Most leases forbid the renter from altering the rental space. For those do it yourselfers, this can mean a boring living experience. Home buyers are not only allowed to make upgrades, but doing so can be a great investment and raise the overall value of your home. From an investment perspective, this is a no brainer.

5. They Don’t Want to Pay Extra to Own Pets

For those pet lovers out there, renting can be a major financial undertaking Pet deposits can be very expensive, and some apartments add a monthly premium to rent just for having a pet, and separate deposits/premiums for each pet. These fees can add up fast! Homebuyers don’t have to deal with these sorts of fees, and they can also typically provide a better environment for their pets as well.

6. They Don’t Want to Be So Close to Noisy Neighbors

Have you ever lived on the second floor of a 3 story apartment complex? Wild partiers underneath blaring music at 4AM and home fitness gurus doing jumping jacks above you can make you realize just how annoying living so close to your neighbors can be. Homebuyers can sometimes deal with annoying neighbors as well, but at least they’re not rattling your chandelier when they stomp their feet down the hallway.

7. They Don’t Want to Deal With a Landlord

Sometimes dealing with a landlord can be tough. Some landlords are not very friendly or flexible, and won’t hesitate to throw you on the street if rent isn’t on time. Other landlords can be so distant that problems with rent or appliances don’t get resolved for months or even years. As a homeowner, there’s no landlord to deal with and you have the freedom and independence of conducting business on your own terms.

8. Their Hobbies Make Renting a Bad Idea

Drummers and musicians need a place to live, but do you want them living above you in a cramped apartment complex? For those renters who have hobbies or professions that are noisy or require space, renting just isn’t an option for them. Owning a home with plenty of space is their only way to go.

9. They Don’t Want to Deal With Deposits

Security deposits? These never seem to work out in the renters favor and come moving time it always seems like every little problem leads to forfeiture of the sometimes huge security deposits we have to pay just to sign the lease. Home buyers don’t have to deal with this as their home is more closely tied to their assets and their individual independence.

10. They Want to Live the American Dream

Owning a home is a big part of the American dream, and most people would say that the independence, autonomy, and sense of accomplishment that owning a home brings is an essential part of the American way of life. Does renting an apartment do the same?

Are you renting? Don’t wait! Start looking for your new home today?

Please call me today at (608) 333-0567 to see any of these properties

Bill Baker

The Cost of Waiting For Prices to Fall

Bill Baker — Mon, 14 Feb 2011 19:04:14 +0000

Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.

PRICES

The National Association of Realtors (NAR) released their 4^th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.

INTEREST RATES

The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:

“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

Let’s show you what the news means:

By sitting on the sidelines for the last 90 days a purchaser lost:

$89.44 a month
$1,073.28 a year
$32,198.40 over the thirty year life of the mortgage

If you buy a $340,000 home, double all these numbers.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

Start Your Search Today!

Please call me today at (608) 333-0567 to see any of these properties

Bill Baker

Uncertainty in Economy vs. Opportunity in Real Estate

Bill Baker — Thu, 10 Feb 2011 15:33:00 +0000

There are many people sitting on the sidelines right now afraid to pull the trigger on a real estate purchase. Some are first time buyers; some are thinking of moving up to the home of their dreams; others are looking to purchase a vacation home or perhaps a future retirement home. Fear has prevented them from moving forward. Though their concern is understandable, we must never allow fear to ultimately determine who we are nor what we do. We must live our lifes.

The fear causing so many to hesitate comes from three areas:

The lackluster economy
The unemployment numbers
Real estate’s performance in the recent past

Should they stop us from moving forward with our dreams and aspirations.

The Economy

Actually, the economy is doing much better. The news is more positive every day. Consumer Affairs said this:

The U.S. Federal Reserve, which has administered life support to the economy over the last two years, says it’s seeing some promising signs of life.

In its “Beige Book,” containing reports from the twelve Federal Reserve Districts, the central bank finds “moderate expansion” of economic activity at the end of the year.

It said conditions were improving in the Boston, New York, Philadelphia, and Richmond Districts. Activity increased modestly to moderately in the Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and Dallas Districts.

The economy of the Minneapolis District “continued its moderate recovery,” while that of the San Francisco District “firmed further”.

This is most easily seen in the increase in the Dow which has shown a 20.9% in increase in the last twelve months.

Unemployment

Though still too high, the unemployment numbers are getting better. The recent drop from 9.8% to 9% is proof that things are, if nothing else, at least stabilizing. Though the job losses have been deep, they have leveled off. We can see this in the graph below from Calculated Risk:

The greatest fear was created by the uncertainty by many that their job could be in jeopardy; that they could be next to join the ranks of the unemployed. As the economy grows, any increase in unemployment seems unlikely. That should remove most of this fear.

Real Estate’s Performance

There is no question that real estate has had a difficult last five years. However, real estate was never meant to be a great ‘short term’ investment. It has, on the other hand, always been a good ‘long term’ investment. Let’s compare real estate to the returns in the stock market since January 1, 2000.

In the long term, real estate has always been a safe investment.

Bottom Line

We should make sure that the financial uncertainty of the present does not prevent us from taking advantage of the opportunities available in the real estate market currently.

Donald Trump probably put it best last week when he said:

“I’m pretty sure this is a great time to go out and buy a house. And if you do, in 10 years you’re going to look back and say, ‘You know, I‘m glad I listened to Donald Trump’.”

Start Your Search Today!

Madison Single Family Foreclosures

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Madison Condo Short Sales

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Bill Baker

Does It Make Sense to Buy a Home?

Bill Baker — Wed, 02 Feb 2011 17:36:18 +0000

The financial turmoil we have experienced over the last five years has definitely taken it’s toll. It has especially been a difficult time for real estate. Nationally, values have fallen over 25% and there may be more softening in prices to come. We realize that this has caused difficulty, and in some cases, heartbreak for many families. People unable to make their mortgage payments have been forced to sell or, even worse, have faced foreclosure.

However, the thing that has continued to amaze us is the country’s steadfast belief in the benefits of homeownership even in these most difficult of times. The vast majority of Americans still realize that the value of a family owning a home goes far beyond just the financial considerations.

There have been three major surveys done in the last 75 days delving into Americans’ current belief in the value of owning a home:

The National Housing Survey by Fannie Mae this past November.
The Housing Survey by the Gallup Organization completed last month.
The American’s Attitudes About Homeownership (AAAH) study completed by Harris Interactive for the National Association of Realtors.

Each showed the country still believes that buying a home makes all the sense in the world. Let’s consider some of the findings:

Is owning a home good for a family?

In the AAAH study, 87% of homeowners and 64% of renters believed that “owning a home provides a healthy and stable environment for raising a family”.
The Fannie Mae study showed that the main reason people gave for buying a home is that “it is a good place to raise children and provide a good education”.

Has owning a home been a positive experience?

AAAH: The study shows that an astonishing 88% say it has been “a positive or very positive experience”. An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.
Fannie Mae: The study shows that 95% see homeownership as a “positive experience” for them and their families.

Do renters aspire to own a home?

AAAH: Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.
Fannie Mae: 67% of renters plan to purchase a home in the future.

Is now a good time to buy a home?

AAAH: 78% of homeowners and 58% of renters believe now is a good time to buy.
Fannie Mae: 64% of those surveyed said it is a good time to buy a home.
Gallup Poll: 67% of Americans think now is a good time to purchase a home.

Bottom Line

Survey after survey report Americans believe two things: that there is a value in owning a home and that now is the time to buy!! What are you waiting for?

Start Your Search Today!