Southern Indiana Real Estate Blog
Schuler Bauer would like to CONGRATULATE & ASHLEY & ROBERT ANKER, winners of our Open House iPad drawing! The Ankers visited an open house at Lakeside Forest, hosted by Bernice Brown, on November 20.
Congrats to Ashley, Robert and Bernice! Many thanks to all who visited an open house, and registered for our drawing.
One lucky Open House visitor between November 6 and December 18, 2011 will win an Apple iPad 2! Registration is easy, just visit a Schuler Bauer Open House, and sign up. It's free to enter, no purchase is required. Drawing takes place on Tuesday, December 20, 2011.
It’s a highly competitive market for home sellers right now. More homes to compete with means that the impression your homes makes - from the curb, and on the inside - matter now more than ever. You can increase your chances of selling faster - and at today’s top dollar - by investing in a select few home improvement projects that have been shown to make a big impact on buyers.
Bad news alert: it might cost you a little time, effort and cash. The good news, though, is that the best projects for quickly increasing your home’s resale value tend to be cosmetic and fairly simple and inexpensive to do. Here are five projects with big-time return on investment for home sellers-to-be, in terms of their power to attract buyers, and to attract dollars from those buyers.
1. Painting: Adding a fresh coat of paint to ceilings and walls is a tried and true way to increase your home’s appeal to buyers. Go for white or neutral tones that help lighten your rooms. (Now is not the time to show off your fascination with fuschia and lime green.) Buyers will have an easier time envisioning how they will infuse their own personalities into your home if they’re looking at a relatively blank slate.
Painting lightens and brightens rooms, instantly removes scuffs and dings and gives every room a fresh, polished feel.
Fresh exterior paint - even if your time or cash budget limits your efforts to accents like eaves, shutters, doors and trims - is also a quick, inexpensive way to polish the look of your home from the curb.
2. Landscaping: Everything you’ve heard about curb appeal is true. First impressions matter - especially if your house is one of eight or nine a buyer has seen in one day. Buyers will be more excited to look at the inside your home if the outside looks clean, charming and inviting. Mow the lawn, trim the hedges, pull the weeds and plant some flowers, bushes or shrubs for the biggest impact - and be diligent about keeping your landscaping very well-manicured throughout the time your home is on the market.
Be sure to keep it low-key, relatively low maintenance and neutral, though. This is not the time to indulge your personal fantasies of living in an exotic paradise, unless that matches the existing look and feel of your home, nor is it the time to install a time-intensive English garden that buyers will love, but not want to take on. Think clean, simple and elegant for the biggest boost in value.
3. Cleaning and de-cluttering: Start by removing all your family photos from the walls and all sorts of tchochkes and clutter from the tops of tables, desks, dressers and counters. Buyers want to be able to envision their lives in the house, not yours. Personal items - and the visual clutter they create - have been shown time and time again to block buyers’ ability to create this vision.
Also, remember that buyers are coming to see the house and evaluate its space, not to bear witness to all the fabulous furniture that means so much to you (no matter how amazing your personal taste). Remove furniture that takes up too much space and fills up rooms. Get rid of clutter such as clothes, boxes, piles of mail and other items.
And then clean - and keep cleaning obsessively, the entire time your place is on the market. Kitchens, bathrooms and bedrooms should look unlived in when they are shown. And don't forget to clean less obvious places like windows, walls, doors and and floors, to dust off shelves and furniture, and to polish appliances.
4. Plumbing repairs and water stain/damage repair: Paying a plumber to make a few stops throughout your home can be well worth the investment. Leaky faucet in the master bathroom? Get it fixed. Does the space under your kitchen sink look like a science experiment? Leaks and water stains definitely provoke disgust and exasperation on the part of the buyers you want and need to impress. And they can be pretty cost effective to fix - ask your agent for a referral, if you need one.
5. Staging: Staging your home can make a dramatic difference in the price for which your home sells. Good staging is equal parts:
(a) removing your personal belongings and replacing it with more artwork, decor and cleaner-looking furniture,
(b) and tweaking the home’s paint, wall coverings and even landscaping to show the place in its very best light.
When done well, staging can convert your home from just another listing on a buyer’s list to the setting for a fresh, new start to the fresh, new life of their dreams. Professional stagers, in particular, have special skills and materials they use, from convincing you to get rid of a bunch of things you value (but read: junk to a buyer), to items like mirrors, plants, art work, lamps, pillows and even furniture that tells a visual story of the life buyers can fantasize about living in your home.
Talk to your agent about staging - some agents have the skill to do this on their own, while others might have a professional stager they frequently work with.
In some cases, you might want to take on even larger projects. Before you go that route, talk with a local real estate agent; they are well-positioned to know what sort of updates and features will make the most impact on local buyers. Not all major, non-cosmetic upgrades to your home will create a significant difference in the price it commands, so take advantage of your agent’s expertise as you make decisions about whichproperty preparation investments to make (and which to forego).
4 Don’ts When Selling a Home
August 22, 2011 by Melissa Tracey · 9 Comments
Filed under: Staging Tips
By Melissa Dittmann Tracey, REALTOR Magazine
Kelly O’Ryan, an office manager for Coldwell Banker in Lexington, Mass., recently highlighted several tips of what home owners shouldn’t do when trying to sell their home in an article at RISMedia. Here are a few don’ts that made it on their list, see if you agree!
1. Don’t slack off on home maintenance. Houses in need of TLC often attract investors or property flippers, which are known for submitting low-ball offers. To attract offers and the highest bids, sellers should attend to any upkeep and maintenance issues before putting the house for sale.
2. Make sure the home isn’t being overshadowed outside. Nothing kills curb appeal more than a home you’re selling that you can’t even see. Be sure to trim trees or bushes to ensure they aren’t blocking any windows or the exterior of the home.
3. Remove wallpaper. Wallpaper and borders can be a nuisance to remove so you might want to take these personal decor touches down before you list the home. Neutralize the homes in subtle colors that will appeal to the most buyers and allow buyers to better visualize their personal decor moving in.
4. Don’t keep an empty home empty. Buyers can struggle in picturing themselves moving in if a home is left empty. Vacant homes can feel cold and rooms can look smaller than they really are. That’s why O’Ryan reminds us why builders spend thousands of dollars staging model homes. If your listing is vacant, consider staging it to bring in furniture and accessories to help define the various rooms functions.
What Not to Do When Your Home Is on the Market
By Kelly O'Ryan Print Article
RISMEDIA, August 9, 2011—There is a lot of advice available for those looking to sell their home these days. Instead of telling you want to do to sell your home in today’s market, let’s focus on what not to do.
1.) Do not defer on basic home maintenance. Slacking on basic home care can be extremely risky and is likely to attract the wrong kind of buyer. Best case scenario, houses that need a lot of work will attract a property flipper, known for their low offers. A house that is run down almost always makes a negative first impression and tends to seem like a headache to buyers.
2.) Do not leave up wallpaper and borders. These personal décor elements, along with murals and specialized painting applications, only work to narrow the seller’s buyer pool. Sellers need to remember the importance of neutralizing their home with modern paint hues that appeal to a broader audience.
3.) Do not block the front of the house with shrubbery. Prospective buyers often drive by homes for an initial viewing, before they decide whether or not they want to make an appointment for a showing. If the house is blocked by trees and bushes, buyers do not get an accurate or appealing view of the home. Curb appeal is an essential aspect to getting the best possible offer.
4.) Do not try to sell an unfurnished home. Builders don’t spend thousands of dollars staging model homes for fun; they do it because it helps sell more homes in less time at a higher price. Buyers want to picture what their lives will look like if they buy your house and if there isn’t furniture they tend to lose concept of size and space. Homes lacking furniture seem sterile and lack appeal and warmth; furniture also helps define a room’s function.
5.) Do not stick around for showings and open houses. When sellers are present during showings, prospective buyers tend to feel awkward and will rush through the appointment. Having the seller present might also discourage buyers from commenting or asking important questions about the house. In addition, sellers in the majority of cases are personally attached to the home and will tend to point out the wrong things to buyers. Agents are trained to showcase selling qualities, not their personal favorites.
Unfortunately there is no perfect formula to getting your home sold, but by following these tips and working with a skilled agent, sellers will heighten their chances at closing the deal quickly at the right price.
Top 5 Things You Should Know to Help Sell Your Home Fast
By Sharon Snyder Print Article
RISMEDIA, August 8, 2011—While many markets around the country continue to experience challenges as the market makes its slow turnaround, Ann Arbor real estate is selling fast, and it’s because we follow some simple rules.
1. Curb appeal is key to selling your home
If it looks rundown from the outside, then it probably is on the inside too. Curb appeal is all about first impressions. Buyers want to feel like they could live in a home from the moment they pull up in front of it. Basic improvements such as exterior painting, cutting the grass and planting some flowers improve the look of a home from the outside tremendously.
Every home has a unique odor, especially if pets are present. Be sure to professionally clean the carpet and the furniture and replace carpets if necessary. Keep pets clean and the home free from dander. Consider taking pets and pet cages if present in the home with you when you leave for showings.
3. Really want to sell your home? Repair and repaint
A little putty and paint can make all the difference. Repair damaged dry wall, gouges in wood surfaces and paint the walls. Bright colors such as those in children’s rooms should be repainted with a neutral color. We like to repaint our Ann Arbor homes with a neutral shade that will be attractive to a wide variety of buyers.
4. Put away your personal collections
Here, the old saying that one man’s treasure is another man’s junk rings true. De-clutter your home by packing up knick-knacks, heirlooms, personal collections, and even family photos. After all, they are special only to you and your goal is to make the home presentable to the widest number of people possible. Expensive collections should be packed away as well to keep them safe.
5. No guns, drugs or valuables
If you own a gun, be sure it’s unloaded and lock it away. Don’t leave it accessible to anyone viewing your home, especially anyone with children. The same is true for prescription drugs, fine jewelry, valuable art work, money and anything else you want to keep safe.
January 1 to June 30 2011
Indiana Realtor Association
Indiana Residential Real Estate Market Analysis
Total State statistics:
While a -11.2% change in closed sales doesn’t look positive it should be noted that Jan-June 2010 transaction numbers were influenced by the “Federal Tax Credit” on home purchases. This accelerated the number of transactions that occurred in the first half of the year and depressed the number of transactions in the second half of the year, so second half comparisons should improve considerably.
It is healthy to note that the median sales price rose, which might signal that fewer low price REO sales were occurring. Also the decline in inventory is another signal that the market is beginning to return to balance and the significant buyers market will lose its leverage as buyers have fewer properties to choose from.
By comparison to the state figures, the Clark County market has not begun to rebound. Inventory has risen and sales declined, which could both lead to the decline in Median Sales Price due to an abundant of properties to choose from causing continued pricing pressure.
Unlike Clark Co. Floyd has fared better this year. Inventory has declined faster than sales have declined leading closer to a balanced market. Although June’s median sales price was down, the YTD median has climbed 5.7%. We expect and hope this trend continues in Floyd Co.
Once again the decline in inventory outpaced the decline in sales in Harrison Co. leaving fewer properties for buyers to choose from. We haven’t seen a rebound in pricing as of yet but a continued reduction in inventory will eventually cause prices to stabilize and rise. Again the YTD median price was somewhat depressed but not near as badly as the June price.
Scott Co. might be the brightest spot but it comes from the most depressed market we cover. Inventory is down considerably, sales are up slightly, but the sever price decline for the year is worthy of further study.
All in all keeping in mind the tax credit acceleration of spring 2010 I don’t believe we could have hoped for a better comparison. There are more and more signs that the market has bottomed, inventory is balancing and prices have firmed and are beginning to rise in some locations. Stay tuned for next quarters results.
Schuler Bauer Real Estate Services
Mortgage rates have held rock steady throughout June at or near lows for the year, as interest rates on fixed-rate loans remained virtually unchanged this week for the fourth consecutive week, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.
A separate survey by the Mortgage Bankers Association showed demand for purchase loans was down slightly last week compared the week before but up from the same time a year ago.
Freddie Mac's survey of 125 lenders nationwide showed rates on 30-year fixed-rate mortgages averaging 4.51 percent with an average 0.7 point for the week ending June 30, virtually unchanged from 4.5 percent last week and down from 4.58 percent a year ago.
Rates on 30-year fixed-rate mortgages hit a 2011 low of 4.49 percent during the first week of June. After hitting an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, rates on 30-year fixed-rate loans surged back to a 2011 high of 5.05 percent in February.
For 15-year fixed-rate mortgages, rates averaged 3.69 percent with an average 0.7 point, unchanged from last week and only a hair above the 2011 low of 3.67 percent registered two weeks ago. At this time a year ago, the 15-year fixed-rate mortgage was 4.04 percent, before plunging to an all-time low in records dating back to 1991 of 3.57 percent in November. Rates on 15-year fixed-rate loans hit a 2011 high of 4.29 percent in February.
Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.22 percent with an average 0.6 point, down from 3.25 percent last week and 3.79 percent a year ago. Rates on 5-year ARM loans hit an all-time low in records dating to 2005 of 3.25 percent in November, before rising to a 2011 high of 3.92 percent in February.
For 1-year Treasury-indexed ARMs, rates averaged 2.97 percent with an average 0.6 point, down from 2.99 percent last week and 3.80 percent a year ago.
In a separate survey, the MBA said applications for purchase loans were down by a seasonally adjusted 3 percent last week when compared to the week before, but up 4.5 percent from the same time a year ago.
In a June 15 forecast, MBA economists said they expect rates on 30-year fixed-rate mortgages to average 4.9 percent during the third quarter (July, August and September) and climb to an average of 5.2 percent during the final three months of the year. The forecast calls for a gradual rise in rates all next year, to an average of 5.7 percent during the fourth quarter of 2012.
Most funding for mortgage loans comes from investors who purchase mortgage backed securities (MBS). Mortgage rates depend on both demand for mortgage loans, and the supply of investment dollars into MBS.
Because payments on most U.S. MBS are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, they are seen as a safe haven in times of economic uncertainty.
Increased investor demand for MBS pushes mortgage rates down, and rates often go up when investors regain confidence in stock markets and MBS fall out of favor.
The Housing Affordability Index reached a record high of 192.3 for February, 2011. Two contributing factors to the Index are the price adjustments homes have experienced in recent years combined with the unusually low mortgage rates make this an outstanding opportunity for buyers who can qualify.
Before the housing bubble burst in 2006, the index average for the year was 108. The high prices and higher interest rates restricted many buyers from purchasing. As the market started to deteriorate, which resulted in declining values and lower interest rates, the index started to rise.
The opportunities are not being seized by buyers and some real estate professionals feel that it's because there is confusion in the marketplace. Buyers are uncertain whether they would qualify and whether now is a good time to be purchasing a home.
All markets are different and every situation is unique. The only certain way to determine would be to investigate your individual situation. You owe it to yourself and your family to visit with a real estate professional who can show you the real cost of housing and recommend a lender.
The National Association of Realtors releases the index at the end of each month with a two month lag time for compiling the information. When the index is at 100, a median income family can afford a median price home. As the index increases, housing affordability increases.
CONGRATULATIONS BECKY MONEY!
Becky Money receives her Grand Prize of $250. Ms. Money registered at an open house hosted by Schuler Bauer agent, Donna Kirchgessner. Visiting open houses really can pay off!!...
Click on the picture to learn why the Hoostier state is doing great!...
INDIANAPOLIS (April 8, 2009) - Lt. Governor Becky Skillman and the Indiana Housing and Community Development Authority (IHCDA) announced today up to $25,000 in zero-interest, non-amortizing loans for Hoosiers to purchase foreclosed homes.
Hoosiers who buy foreclosed homes to use as their primary residence can qualify for a $15,000 loan from IHCDA's Market Stabilization Fund. The Federal Home Loan Bank of Indianapolis has committed to supply matching loans of up to $10,000.
"When Hoosiers open the door to their new home, they open several windows of opportunity," Lt. Governor Skillman said. "This is a unique use of federal dollars that will encourage homeownership while revitalizing communities."
The money comes from HUD's Neighborhood Stabilization Program (NSP), which allocated $84 million to IHCDA. The state will use $33 million of that allocation for the Market Stabilization Fund. Assistance from this fund will be made available to income-qualified individuals and families who choose to purchase foreclosed homes in areas of the state in greatest need of assistance.
The state has identified areas of greatest need, with the assistance of the IndianaUniversityCenter for Urban Policy and the Environment, using a combination of HUD-provided data and proprietary data.
How the Market Stabilization Program Works:
- IHCDA will offer up to $15,000 (not to exceed 20% of purchase price) to assist homebuyers with the acquisition and/or rehabilitation of a foreclosed residential property located within an area of greatest need.
- These funds may be used in conjunction with the IHCDA First Home product, FHA, VA, USDA, or prime fixed rate product. No adjustable rate or subprime mortgage products will be allowed for the purchase of these homes.
- Home buyers may use these funds for closing costs and down payment assistance related to the purchase of a foreclosed home or residential property that will be used as the primary residence.
- To be eligible for rehab funds a residential structure must not meet local building code and therefore is unable to be purchased in its present condition.
- Buyers may use both acquisition and rehabilitation assistance in the purchase of a home, but the combined assistance may not exceed $15,000.
These funds will be in the form of a zero-interest, non-amortizing, second mortgage loan. These funds do not have to be repaid as long as home buyers use the home as a principal residence for at least ten years. If the homebuyer sells the home within the first five years, the subsidy is repayable to IHCDA on a shared net proceeds basis. If the homebuyer refinances within the first five years, the entire subsidy is repayable to IHCDA. After year 5 and through year 10, the homebuyer will retain 20% in equity of the award amount per year.
This funding will be available to home buyers that are at or below 120% of area median income and who intend to occupy the home themselves.
Home buyers will be required to participate in 8 hours of pre-purchase education provided by an IHCDA certified counselor.
IHCDA will utilize participating single-family lenders, the Indiana Association of REALTORS, HomeEC certified housing counseling agencies, and other partners to provide marketing and outreach to potential eligible homebuyers for this funding.
Don't take our word for it, check out the details as reported by USATODAY.COM
CLICK HERE FOR DETAILS!
H.R. 1, the “American Recovery and Reinvestment Act of 2009,” passed the House on February 13, 2009, by a vote of 246 – 184. Later that day, the Senate also passed the bill by a vote of 60 – 38. The President signed the bill on February 17, 2009. The bill is a $780 billion package, with roughly 35% of the package devoted to tax cuts (mostly for 2009) and the rest to spending intended to occur in 2009 and 2010.
Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Frequently Asked Questions
In 2008, Congress enacted a $7500 tax credit designed to be an incentive for first-time homebuyers to purchase a home. The credit was designed as a mechanism to decrease the over-supply of homes for sale. For 2009, Congress has increased the credit to $8000 and made several additional improvements. This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009.
Tax Credit – The Basics
1. What’s this new homebuyer tax incentive for 2009?
The 2008 $7500, repayable credit is increased to $8000 and the repayment feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more qualifies for the full $8000 amount. If the house costs less than $80,000, the credit will be 10% of the cost. Thus, if an individual purchased a home for $75,000, the credit would be $7500. It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.
2. Who is eligible?
Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.
3. How does a tax credit work?
Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 - $8000 = $1500)
4. So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000?
This tax credit is what’s called "refundable" credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference between $8000 credit amount and the amount of tax liability. ($8000 - $6000 = $2000) Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year.
5. How does withholding affect my tax credit and my refund?
A few examples are provided at the end of this document. There are several steps in this calculation, but most income tax software programs are equipped to make that determination.
6. Is there an income restriction?
Yes. The income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return. Individuals filing Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000. Married couples who file a Joint return may have income of no more than $150,000.
7. How is my “income” determined?
For most individuals, income is defined and calculated in the same manner as their Adjusted Gross Income (AGI) on their 1040 income tax return. AGI includes items like wages, salaries, interest and dividends, pension and retirement earnings, rental income and a host of other elements. AGI is the final number that appears on the bottom line of the front page of an IRS Form 1040.
8. What if I worked abroad for part of the year?
Some individuals have earned income and/or receive housing allowances while working outside the US. Their income will be adjusted to reflect those items to measure Modified Adjusted Gross Income (MAGI). Their eligibility for the credit will be based on their MAGI.
9. Do individuals with incomes higher than the $75,000 or $150,000 limits lose all the benefit of the credit?
Not always. The credit phases-out between $75,000 - $95,000 for singles and $150,000 - $170,000 for married filing joint. The closer a buyer comes to the maximum phase-out amount, the smaller the credit will be. The law provides a formula to gradually withdraw the credit. Thus, the credit will disappear after an individual’s income reaches $95,000 (single return) or $170,000 (joint return).
For example, if a married couple had income of $165,000, their credit would be reduced by 75% as shown:
Couple’s income $165,000
The following article appeared in Realtor Magazine Online on April 21. 2008:
Daily Real Estate News | April 21, 2008
Mortgage Rates Hit Low Point
The 30-year fixed rate mortgage currently sits at 5.88 percent, and analysts say they are unlikely to fall any further for the rest of the year.
The rate on the fixed loans is only down a quarter of a point this year, as the credit markets have cut the link between it and yields on 10-year Treasuries; and while skittish investors have moved to Treasuries to trim the yields, mortgage lenders have not eased lending standards.
Mortgage rates are likely to close 2008 at about 6 percent as investors in bonds focus on rising inflation, driving interest rates higher.
Long-term rates will also increase due to the additional supply of Treasuries as Congress borrows to raise money for the growing federal budget deficit.
Source: Kiplinger.com, Jerome Idaszak(04/21/08)
© Copyright 2008 Information Inc.
The latest statistics from the Southern Indiana Realtors Association are hot off the presses. Here is the latest comparison of residential homes sold & closed from January 1 - October 31, 2006 vs. the same time period in 2007.
Residential Sold & Closed 3,053 3,074
Average Sales Price $140,216 $138,413
Median Sales Price $123,000 $124,295
A number of areas in the United States are suffering from terrible real estate markets. SOUTHERN INDIANA IS NOT! While we would prefer to have exlposive growth in the number of sales and sales prices, we are very thankful to have a real estate market with such stability. For months at Schuler Bauer, we have maintained the opinion, in spite of reports to the contrary, that it's still a great time to buy and sell Southern Indiana real estate. We too could buy in to the misconception that the market is down, however, the numbers do not lie. If it's all the same, we'll just stick by the facts.
COO, Schuler Bauer Real Estate Services
When the local media had questions about the real estate market in our area, who did they call? Our own D.J. Hines, of course! It should come as no surprise. In addition to being a Schuler Bauer owner, our CFO, an Indiana Real Estate Commsissioner, real estate developer and entrepreneur, D.J. has spent the past 27 years observing our local real estate market.
The news story aired on Friday, November 2, 2007. The story below appeared on WAVE3.com:
WAVE 3 Investigates: Home foreclosures rates in the Louisville area
By Shayla Reaves
LOUISVILLE (WAVE) -- The mortgage crisis is hitting parts of Kentuckiana extremely hard. Even though you might be on time with your payments, foreclosures in your neighborhood means that your property value goes down. WAVE 3's Shayla Reaves investigates the ripple effects.
It doesn't matter if you've got a good rate and follow the rules. Foreclosure can hit home for anyone. Carol Richardson always dreamed of owning her own home. But after 11 years, she's about to lose the home she shared with her husband Jack. He died unexpectedly and now Carol can't afford the mortgage payment on her own. Carol estimates she's two months away from foreclosure and losing it all. In the latest U.S. market statistics, Kentucky ranks 36th in the country when it comes to foreclosures -- that's one for every 809 homes in the state. It's a number that doesn't compare at all to Indiana. The Hoosier state ranks in the top ten with one out of every 196 homes affected by foreclosure.
You've got a reasonable interest rate and you pay your mortgage on time. So you think this doesn't affect you. Well, you better think again. "Because one foreclosure in the neighborhood really won't affect the overall neighborhoods value. But in a neighborhood where you have 10% of the homes being foreclosed on or more than that, all of the house would have a negative effect of their value," says D.J. Hines, chief financial officer for Schuler Bauer real estate in southern Indiana.
Hines went on to say, "How many people -- when the ecomony was really good -- wanted to buy into the American dream? That's what we all want. And in doing that, they didn't look at the long term consequences. They looked at 'what is my monthly payment going to be next month after I brought this house?' and if it was reasonable, they went ahead with the purchase. Now that the economy has changed, their job situation has changed or their interest rates have come up with some of the types of mortgages out there that have adjusted, they find they can no longer afford it." Hines calls the foreclosures a backlash of helping people achieve the American dream.
Just to give you a better idea of what's going on in Indiana, we contacted the Indiana Association of Realtors. For September 2007, foreclosures are up 11.6% from the same time period last year.
It was Thomas Paine who said “These are the times that try men's souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country.” While we are not fighting for our individual liberty, we at Schuler Bauer are fighting hard. But over time, we forget all that is not important, or relevant, to the situation in which we find ourselves immersed.
Just so is today’s REAL ESTATE MARKET. Having the disadvantage of age, I remember too much, and too well, the bad old days of the past.
Entering the real estate market place as a new licensee in 1980, I confronted a market where unemployment was historically high. Marble Hill had just shut down. What is Marble Hill you ask? It was a nuclear power plant project east of Charlestown that was stopped, throwing the local economy into a dither. Labor unrest at GE, and Ford, also had Louisville’s metropolitan area employment confidence at a low spot. Couple all this with mortgage rates at 16%, due to out of control inflation, and you have a terrible market.
As terrible as that market seemed, it was a great time to enter the real estate market. Agents learned the correct way to market properties. Clients did not think the agent was overpaid; they earned every cent of their commissions. An additional benefit to buyers and sellers was how creative agents developed creative strategies to market every property on the market. Additionally, lenders participated in creative lending situations that help clients through these tough times.
In retrospect, “tough” seems like an understatement when describing my first three years in the business (1980-1983). Yet, through these three years, Southern Indiana still saw price appreciation. Southern Indiana still saw the number of transactions increase. Southern Indiana faired better than the rest of the nation, better than Indiana, and better than Louisville.
I also remember the market of 1991-1992. During these years, we endured a national recession that flattened price appreciation and lengthened the number of days needed to market a property. During that time, new construction glutted the market, and it took a few years to absorb that glut, but no great catastrophe occurred.
In hindsight, today’s market doesn’t even close to times that “try men’s souls.” Unemployment levels are historically very low. Some might argue that we are at or near full employment. UPS and other industries continue to expand employment opportunities, and as an area, we are continuing to get better at attracting new employers. Although mortgages are a little harder to qualify for, the rates are extremely reasonable. Consumer confidence isn’t as high as last year, but it’s not bad, and traffic at open houses is brisk.
We do find ourselves at a time where new construction is glutted, but that’s a buyer’s opportunity. All in all, this is a great “move-up market time.” How could that be, you ask?
Let’s say the market is off 2% in value from its high of last year. I own a home that was worth $100,000 last year, so this year I am able to sell it for $98,000. I lost $2,000. I qualify to purchase a home for $200,000, if that home is also de-valued 2%,that means I bought a home that was valued at $204,000, I saved $4000. To recap, I lost $2,000 on the sales of my present home, but saved $4,000 on the purchase of my new home. At the end of the day, I saved $2000 and am living in the home of my dreams, not a bad deal.
This market is full of these opportunities. You need a Realtor who understands investment, and when real opportunities present themselves. You need an agent who is capable of thinking creatively and positively about your opportunities. I think you have come to the right place and I hope you will return to our website when your real need arises.
CFO, Schuler Bauer Real Estate Services...