August 2017
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Patti Kessler
(608) 393-4994

First Weber Group Realtors


Home sales and prices hit record levels in June even as inventories remain tight

Home sales and prices hit record levels in June even as inventories remain tight

Wisconsin REALTORS Association,

The Wisconsin housing market continued its expansion in June, with both sales volume and prices reaching record levels. June home sales were up 0.9 percent compared to June last year. Home prices continued to grow at a robust pace in June, with the median price increasing 6.3 percent over the past 12 months to $186,000. These figures represent the highest levels for price and sales volume since the WRA recalibrated its methodology for data collection in 2005.

"We have a very strong state economy, which has fueled housing demand, but the shortage of homes on the market has kept sales only slightly above the very high levels established last year," said Erik Sjowall, WRA board chairman. The Wisconsin seasonally adjusted unemployment rate stood at 3.1 percent in May, which is well below the U.S. rate of 4.3 percent for that month. It ranks among the lowest rates in the upper Midwest. "Inventories are in good shape in the rural parts of the state, but they are very tight in the cities," noted Sjowall. Average days on the market fell to just 73 days in June.

"The Fed, with some help from low energy prices, has managed to keep inflation under control," said WRA President and CEO Michael Theo. He noted inflation did tick up this year with the annual inflation rate in the range of 2.2 percent to 2.8 percent between January and April but dipped to 1.9 percent in May as oil prices moderated.

Expect housing affordability to continue to slip over the remainder of the year.

Home prices mount at slower pace

Home prices mount at slower pace


Home price growth continues to mount, though at a slower pace, up 5.5 percent year-over-year in April, down from a 5.6 percent gain in March, according to the latest S&P CoreLogic Case-Shiller Indices.

Is growth beginning to grind to a halt? Home prices could hit a ceiling, according to S&P Dow Jones Indices Committee Chairman and Managing Director David M. Blitzer, but not give way to collapse. “As home prices continue rising faster than inflation, two questions are being asked: Why, and, could this be a bubble?” said Blitzer in a statement. “Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up. The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising. At the same time, the supply of homes for sale has barely kept pace with demand and the inventory of new or existing homes for sale shrunk down to only a four-month supply. Adding to price pressures, mortgage rates remain close to 4 percent and affordability is not a significant issue.

"The question is not if home prices can climb without any limit; they can’t,” Blitzer said. “Rather, will home price gains gently slow or will they crash and take the economy down with them? For the moment, conditions appear favorable for avoiding a crash. Housing starts are trending higher and rising prices may encourage some homeowners to sell. Moreover, mortgage default rates are low and household debt levels are manageable. Total mortgage debt outstanding is $14.4 trillion, about $400 billion below the record set in 2008. Any increase in mortgage interest rates would dampen demand. Household finances should be able to weather a fairly large price drop."


Confidence in Real Estate Market Rises

Confidence in real estate market rises


Optimism toward the economy and real estate market is growing across all generations of current and prospective homeowners, but rising interest rates continue to be a concern among prospective homeowners, especially millennials, according to Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey. Overall, 62 percent of prospective homeowners and 61 percent of current homeowners say they are satisfied with the economy, with respondents from both groups overwhelmingly reporting that the general economic outlook is a critical factor impacting their real estate decisions

Nearly half of current homeowners cited lower interest rates as the top reason for their favorability toward the market; 43 percent of this group also pointed to the increased value of real estate as a factor driving favorability. Respondents are also encouraged by accelerating home construction.

"Optimism in the real estate market and economy are at levels we have not seen since we first began fielding this survey in 2015," says Gino Blefari, president and CEO of Berkshire Hathaway HomeServices. "Mortgage rates remain near historic lows even with recent upticks, and we’re seeing rising wages, job growth and construction rates, which continue to make homeownership a compelling and realistic investment for many Americans."

Tips for buyers in a tight housing market

Tips for buyers in a tight housing market


Determine and stick to a budget.
Before beginning the house hunting process, prospective homebuyers should receive preapproval from one or more lenders to verify the amount of money they are qualified to borrow. Then, after taking into account additional costs of ownership such as taxes, utilities and insurance, buyers should determine a final budget they can comfortably afford. When listings are scarce, bidding wars can drive up prices, so buyers must be prepared to walk away if the asking price surpasses their budget.

Identify desired neighborhoods and home wants versus needs.
When housing inventory is tight, buyers may need to compromise on what they believe they want from a home. Certain wants, such as stainless appliances or hardwood floors, can be added later; however, if a buyer wants to be in a specific school district or have a decent sized backyard, those cannot be addressed later and must be taken into account during the house hunting process.

Be ready to make a decision quickly.
In a seller’s market, homes rarely stay on the market long, so when a house that is in their budget, and checks off all their needs, comes along, buyers should not hesitate. Buyers should be ready to submit an offer quickly, or they may risk missing out on the home altogether.

Bid competitively and limit contingencies.
It is tempting to submit a low offer as a starting bid, but in a seller’s market, buyers need to put forward their highest offer from the very beginning or they are likely to lose out on the home. It is also important to remember that in multiple bidding situations it is not always the highest offer that is most attractive to the seller but the one with the fewest contingencies. Removing restrictions related to the sale of a current home and being flexible with things like the move-in date can make a bid stand out to a seller.

Work with a REALTOR®.
All real estate is local, so it is important to work with a professional REALTOR to get the competitive advantage needed in a tight market.

5 tips for first-time homebuyers.

Grants and programs for first-time homebuyers


FHA Loan
Since the FHA insures this type of loan, lenders receive a layer of protection and won’t experience a loss if you default on the mortgage. FHA loans typically come with competitive interest rates, smaller down payment requirements and lower closing costs than conventional loans.

This type of loan focuses on residences in certain rural areas—and no, you don’t need to purchase or run a farm to be eligible. There may be no down payment required, and the loan payments are fixed.

VA Loan
The VA Loan helps service members, veterans and surviving spouses purchase homes. VA loans offer competitive interest rates and require no down payment. There isn’t a minimum credit score needed to be eligible.

Good Neighbor Next Door
Sponsored by HUD, this type of loan focuses on providing housing aid for law enforcement officers, firefighters and emergency medical technicians and pre-kindergarten through 12th grade teachers. Through this program, you could receive a discount of 50 percent off a home’s listed price in specific regions known as "revitalization areas."

Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac are government-sponsored entities (GSEs). They work with local lenders to offer mortgage options that benefit low- and moderate-income families.

Energy Efficient Mortgage
The key advantage to this grant is that it allows you to create an energy-efficient home without the need to make a larger down payment. The amount is rolled into your primary loan.

Federal Housing Administration 203-k-
If you want to purchase a fixer-upper, the 203(k) rehabilitation program may be a solid fit.

Native American Direct Loan
Since 1992, the Native American Veteran Direct Loan program has helped Native American veterans and their spouses purchase homes on federal trust lands. The VA serves as the lender.

Local First-Time Homebuyer Grants and Programs
Many states and cities offer help for first-time homebuyers. Before purchasing a home, check your state or city’s website for information on housing aid available in your area.