As pointed out by this blog back in April, the subprime mortgage market implosion has been a direct result of collateralized debt obligations (CDO’s).  While at the time it was simply a point of pride that Team366 had figured out what was happening to many upside down home owners in SouthEast Michigan, our gut instincts were backed up by former Fed Chairman, Alan Greenspan.

On October 2nd, at a Bloomberg hosted event in London, Greenspan pointed to the CDO’s as a reason for subprime market implosion.  From the Bloomberg article:

“People always say it’s the subprime market that created this crisis,” Greenspan told investors at an event hosted by Bloomberg LP in London. “It’s the subprime asset-backed market” which did, he said. “As a consequence of that, there’s going to be some rethinking about collateralized debt obligations.”

“The Wall Street firms were under real pressure to supply asset-backed securities, and the Wall Street firms were pressing the lenders to give them more raw material,” Greenspan said today. “Credit standards just went straight down, and applications for subprime mortgages soared. The consequences of that are evident.”

So what are consequences for the Ann Arbor housing market?

 Credit standards are tighter than we have seen in the past 4-6 years.  To qualify for a near zero down loan, your credit score will need to be stellar.  Consequently, we are also seeing the return of higher down payments to purchase a home.  The days of $5,000 down on a house may not be entirely behind us, but they sure are becoming a less frequent occurrence.

Even in this market of high levels of inventory and a near historic low cost of money, homes are still selling!  People still need to buy a first home, upsize because the family is expanding, or even down-size as the family moves out.  As the charts from Big House Data continue to show, there is nearly 85% of the same level of sales happening this year, compared to last…that’s means that less than one out of five buyers have disappeared from the market.

Call Team366 today to learn how you can benefit from today’s real estate market.  As challenging as it appears, it is a great time to be in the market!

Thanks to Gary Varvel of the Indianapolis Star.

 Rubbing the sleep from my eyes this morning and slurping on the first cup of java before the boyos awoke, I began to read my email off my phone.  There was one email that stood out.  In fact, it gave me so much of a jolt that I nearly didn’t need any more coffee today…..almost.

The President of Operations at Real Estate One is Dan Elsea.  His email to the company was frank but optimistic about where we are as a company and as sales professionals in a rapidly changing market.  Specifically the following quote:

Overall, we will appear to “bounce” off the market bottom over the next six to eight months as we work through the mortgage market stabilization and our local economy settles down. Predicting the true market bottom is difficult; we won’t really know it until after a recovery is well on its way.

Also, year to date, the number of leases has risen from nearly 6% of total units to 12%, reaching close to 20% for the month of August. The percentage of leases, like the percentage of vacant homes, are indicators of the direction of the market. For vacant homes, the percentage is running in excess of 40%, with a stable market in the 20-25% range. When both percentages begin to fall, our market will be on the rise.

So the light at the end of the tunnel may not be a train after all, but then, this blog has never advocated a doom and gloom attitude on the housing market.  In fact, we continue to recommend to anyone considering buying, that they buy and buy frequently!  This is the market within which to make your money!  Never before have we seen the combination of the high level of inventory and the low cost of money.  If you want to make sure that your purchase now will pay you dividends down the road, now is the time to buy.

If you are a seller, things are not as bad as everyone wants you to believe.  Yes, prices are down, inventory is up and competition for the buyers in the market is fierce.  But Team366 has a proven marketing strategy that ensures your home is seen by all who might be looking for it.

In addition to our own marketing strategy, Real Estate One has its own proven track record.  In fact, here are the stats for our company for August 2007:

Sales Volume for August: $221 million dollars                 

Number of Homes Sold/Leased: 1,392

Number of Mortgages, Title and Home Insurance policies provided to our clients: 524

We had our listings shown more than 16,000 times

We had over 5,000 buyers visit our open houses last month

We had another record month of visitors to our web sites, over 110,000

Combining Real Estate One’s winning track record and Team366′s professional marketing strategy is a powerful way to ensure your home is seen and sold!

If you are a buyer or are considering selling your home in this market, give us a call at 734.330.2392.

Big House Data, LLC has gone into Beta for their new delivery of stats packages…and boy does Team366 like the look and the new data set.  From BHD’s intro to Beta email:

Aside from the announcement that there is now one location to get your housing statistics, BigHouseData.com|BETA is pleased to announce that our stats focus solely on properties within Washtenaw County.  No more out of county sales included in your housing stats!  Any property listed and/or sold in Washtenaw County by a licensed agent is now a part of our  data set and, therefore, your housing statistics.  Big House Data, LLC is  providing you with the truest picture of the area housing market!

Thank you Big House Data! Now for the charts and analysis!

From the Big House Data Executive Summary:

On average, single family residences and condominiums sell within 2.12% of their list price. This is a good indicator for the overall market. This means that buyers and sellers are beginning to agree, rapidly, on what price constitutes market value. Due to Pfizer’s withdrawal from Washtenaw County, it is BHD’s opinion that the area housing market learned what it takes to sell a home in this market a lot quicker than the rest of SE Michigan. It was a very short, steep learning curve, but Washtenaw County sellers now know that price sells.

Average List Price – Washtenaw County

The average list price on both condos and homes in Washtenaw county has fallen nearly 6.5%, compared to the same eight months of 2006.

The Pfizer withdrawal is in effect!

Average Sales Price – Washtenaw County

The Average sales price of property in Washtenaw county has fallen as well.  Given all the bad news and media hype, one would think the bottom had fallen out.  Fortunately, this is not the case.  Compared to the first eight months of 2006, the average sales price for the same time period in 2007 is down only over 4.5% to $228,270.

August 2007′s average sales price was $223,637, down 4%, compared to August 2006′s average of $233,148.

Number of closings v number of sales

As you can see, the sales trend continues gradually down as the listings continue to pile onto the market.

Compared to the first eight months of 2006 where 30.1% of listed properties sold, the same time frame in 2007 has seen only 19.9% of listed properties selling!  That’s a 10.2% drop in one year.

Compared to the county average of 19.9% of the listings selling, Team366 is proud to announce that we sell 73% of those properties we list….and that’s just this year!

As ever, contact us if you would like information on the Team366 professional marketing system, our housing stats or any further information regarding real estate in Washtenaw county.

It’s the weekend, so that must mean it is time for some Team366 Real Estate Chats!  Not to be disappointing, we are holding four chats this weekend! 

Also on tap this weekend, we are pleased to announce that Mr. Harry Kroth has joined Team366!  So, without further ado, let’s introduce Mr. Kroth and his first Real Estate Chat.

20300 North Territorial, Chelsea, MI – Sunday, 2 to 4 pm

This four bedroom, three bath ranch in Chelsea simply must be seen to be believed!  The finished walkout lower level adds an additional 1300 square feet of livable space.  Surrounded by towering trees, you’ll feel as though you are in the middle of the country. 

Stop by on Sunday and say Hi! to Harry.

1216 Grant, Ypsilanti, MI – Sunday, 2 – 4 pm

Featured last week as new to the market, this weekend is the first open house for 1216 Grant Street.

This gorgeous Normal Park center-entry colonial just waiting for you to call it home!  Stop by this Sunday and say Hi! to Jim Tillman.  This is a must experience home for any Sunday Open House regular.  In fact, check out the video walk-through by clicking on the picture.

2827 Bellwood, Ann Arbor, MI – Sunday, 2 – 4 Pm

Todd Waller will be holding his real estate chat at 2827 Bellwood, Ann Arbor.  This real estate chat will be live-blogged, so if you stop by as a result of reading this post, let Todd know so he can post a photo of your visit!

1560 Kuehnle, Ann Arbor, MI – Sunday, 2 – 4 pm

Eric Pointer will be holding his real estate chat at the “Best of the West(side) Colonials”.”  1560 Kuehnle has got location for anyone needing to be close to bus lines and within the city of Ann Arbor, without the hustle and bustle.

The monthly report on the Ann Arbor Housing Market

It’s the second week of August so that means it’s housing stats time!

From the Big House Data Executive Summary:

Overall, the thin silver lining is that the pace of listings coming onto the market has slowed down. Sales prices, number of closings and monthly volumes continue to decline, giving the impression that no properties are selling at all. There is brisk movement among properties that appear to be priced at their 2001 price points.

Average List Price

List price continues its downward trend.  This is a direct correlation to the amount of properties currently on the market.  Econ 101 taught us about the law of supply and demand.  Falling list prices mean that sellers have taken the second class of Econ 101 and learned that the market drives toward equilibrium by forcing price downward as inventory increases.

Average Sales price

Average sales price, however, shows that its rate of decline has slowed, and even crossed the average list price threshold!  This could be an indication that the market is beginning to stabilize itself.  When properties sell for more than the average list price, it indicates a level of activity we’ve not seen in this market for quite some time!

Number of closings v number of listings

This chart shows the continued gap between the number of listings and the number of closings per month for the last 36 months.  It is dramatic to see the gap widen recently.  While listings per month have increased, sales per month have remained relatively stable, to declining slightly.

As ever, should you like a copy of the full report, Team366 will be happy to add you to our monthly stats email list.  Drop us a note at info-at-team366[dot]com.

Controversial financial advisor, Jim Cramer, suggests that if your home has depreciated to the point you no longer have an equity position, that you should walk away from the home and its payments.  Don’t believe me, here’s the clip!

[youtube=http://www.youtube.com/watch?v=FJYcxqjXlkc]

While this may make sense from a purely “see a home as a commodity” point of view, I feel this fails to take into account the utility and lifestyle. that a home provides to the owners.  But hey, I’ve a vested interest buying and selling homes.

What are you thoughts on today’s real estate market and what Cramer is advocating?

[Hat tip to Al Acitelli for ferreting out this video]

Technorati tags: Michigan, Ann Arbor, Real Estate, Buyer Insights, Seller Insights, Homes, Condos, Foreclosure, Team366

Let June be no different then the months before!  It is time for monthly housing statistics from Big House Data!

From the Big House Data Executive Summary:

The effect of the Pfizer relocations will be felt for a time in Washtenaw County. Anecdotally, the post-buyout list prices are particularly aggressive. With this aggressive pricing, Pfizer is
selling their properties, but the non-Pfizer owners in those neighborhoods will be dealing with lower property values as a result if they decide to put their property on the market. This
anecdote goes a long way to emphasize the power of the convergence of price and quality. Obviously, the prices on these Pfizer relocation properties is such that the market is responding favorably and snapping them up before competing homes that, comparatively, are over priced.

List Price

The average List Price for housing in the Ann Arbor Area Board of Realtors was $227,645.  This is a roughly $20,000 increase from May.  It may be that the initial Pfizer relocation sell-off hangover is nearly over.  A few more months will show us for sure if this is the case

Sales Price

The average Sales Price for housing jumped to $221,784 in the Ann Arbor Area Board of Realtors.  This means that an average home in Washtenaw County cost an average of $221,784.  Interesting when compared with June 2006 and June 2005 with average Sales Prices of $247,086 and $249,129, respectively.

Number of Closing v Number of Listings

Here’s a new chart for regular readers of the Team366 Blog.  This is a three year trend of the listings (red) to closings (blue) per month.  The associated twelve month moving average trend line simply shows the momentum that the market currently has.

What appears to be a regular feature on this blog, is the monthly rolling out of Big House Data’s housing stats.  Well, let June be no exception!

From the BHD Executive Summary:

The mantra in this market is: price moves homes.  Location, price and condition are the traditional three keys to selling real estate.  Sellers have ultimate control over two of the three.  When condition and price converge in the mind of the buyer, the property sells.  And the stats show that compared to last year’s market, 84% of the buyers are still there. [emphasis added by editor]

84%?  That means that the number of closings this year, compared to last, are down 16%!  Phew.  And that’s just from the first five months of 2006 compared to the first five months of 2007.

For the folks looking for some graphs:

Average List Price

The average list price for a home in Washtenaw County in May 2007 was $207,559.  For the year-to-date, the average list price is down nearly 5% to $223,657, compared to the same five months in 2006.

Average Sale Price

With an average sales price of $212,623, May 2007 saw the year-to-date average sales price drop to $210,730.  That represents a 7.19% drop in the sales price, compared to the same five months last year.

Average List Price v Average Sales Price

This chart is done purely to show how the list price and sales prices are moving from month to month.  What is interesting about this chart is the ‘inversion’ of the list price and the sale price for the month of May.  Watch for sales prices to continue to drop.

Sunday’s Ann Arbor news spotlights the coming boom in foreclosures to Washtenaw County.  It was thought that Ann Arbor and the surrounding environs was a relative island amongst the pain in the housing market in SE Michigan.  However, every island, no matter how beautiful and idyllic will see some storms and this appears to be ours.

The first article in Sunday’s paper is about prospective speculators/investors snapping up properties at the courthouse steps.  If you are considering going after foreclosed properties as an investment, the article does not do enough to stress enough the need for detailed due diligence on any property that you are considering.  Truly, the purchases at the courthouse are “Buyer Beware.” 

The flip side to “Buyer Beware” on courthouse steps purchases is that those purchases are the ones that will maximize your return on investment.  When and if you find the property, and your due diligence has produced a solid return and number for purchase, when you dispose (sell) the property your returns will have been maximized much more greatly than if you had waited for the property to be listed by an agent as a foreclosure.

The other interesting anecdote popping up more frequently is hearing that the banks are purposefully under-bidding some of their defaulted properties so that they don’t buy the property back!  From the bank’s perspective, this is a great ploy.  As much as they want the balance of the loan back, they know this RE market is soggy for sellers and that if they pick up the property, they might be holding on to it for 9-18 months.  Sneaky buggers……

In the second article of the Ann Arbor New’s coverage of foreclosures in Washtenaw County, they give an account of a fix and flip gone bad.  Having successfully completed a couple of fix and flips in stronger markets, a retiree takes another swing at completing a flip.  He purchases the home in foreclosure at $60,000, leverages himself into some money to finish the property off “right,” puts the house on the market and is now stuck with the home and facing foreclosure on it.  Judge for yourself, here are the profile sheets of the property in foreclosure that he purchased and the property as it currently is on the market.

With investors leveraging themselves to finish properties and flip, many of those leverage tools were likely high-interest, no to low money down mortgages.  Well, I explained earlier this month how I had an “Aha!” moment with regards to subprime mortgages and Wall Street.

Certainly not a “good news” story to read on a Sunday morning over your coffee.  However, this is a good reminder to be wise about any RE investing that you might endeavor upon.  The first step in a solid real estate investment plan are easily definable goals or returns on your investments.  Second, make sure you can afford the monthly debt service and assorted costs for the current market for those defined goals. 

For inventory levels throughout Washtenaw County, please check out my quarterly inventory reports.  For a longer discussion on real estate investing, call Todd at 734.302.8852 or email me at todd-at-toddwaller[dot]com.