Well, not that you didn't know this already, but if we aren't in a housing recession right now, then my name isn't Paul Chapman. I've had two of my listings either sell or go pending in the past month and in both cases, the home sold or will sell, for far less than the owner paid for it!!
House number 1, was purchased in May, 2006 for $385,000. It closed in late September for $315,000 after 10 months on the market. If my math is correct, that's a loss of about 18% in the homes value in a little over 2 years. House number 2, as I write this, is pending and will close within the next couple of weeks after 6 months on the market. It was purchased for $161,000 in April, 2000 and will close for $118,500! That's a loss of about 26% in value over a period of over 8 years.
The National Association of Realtors (NAR) has a campaign out this year which says that over time, a home will double in value every 10 years. Now this may be true, but it's hard telling that to folks who right now, are "upside down" on their mortgages. This is something none of us in the real estate business have ever been through, so it's hard to judge what's going in. This is new territory for all of us. But over time, a home, if you hang on to it, will be a good investment.
Home buying is like the stock market. You have to be in it for the long haul. Buy a home now and turn around and sell it within a couple of years and you could find yourself "upside down." But take the case of house number 2. They had the home for over 8 years and look at the loss they took. Luckily, they are not "upside down" on their mortgage. It's just that they purchased another home and were getting tired of making two mortgage payments, so they are selling the house I have listed at a sacrifice price!
Again, people keep asking me "when will the housing market snap out of it." All along I've been telling them, by the summer of 2010, even though many, who know far more about the economy than I, were saying we'd snap out of it during the second quarter of 2009. With the current financial crisis, even those who know far more than I about economics, have adjusted their thinking to right about where mine was all along, the second quarter of 2010.
Wednesday, October 22, 2008
Wednesday, July 23, 2008
Has It Been This Long?
Has it really been almost 3 months since I've posted anything here? I can't believe it. Well, since I last posted I've taken a 2 1/2 week vacation to New Hampshire in late May and early June and I discovered one thing while there. Their economy may be better than it is here in the State of Michigan, but they're having the same problems real estate wise that we are here! They just started a little later than we did. Our real estate "free fall" began in the summer of 2005. Theirs began about a year later. I also sense that Michigan will be the last out of our real estate problems, when compared to the rest of the country.
I keep reading and watching and listening to reports which say the country will pull out of it's economic problems in 2009. Even economists here in Michigan are saying the same thing about the State economy. I doubt that however, so I'm telling folks plan on the rebound coming in 2010! I realize that's a long wait, but it's going to take that long to clear out all of the housing inventory that's currently for sale in our area. It won't be an easy stretch, but we have bottomed out in my opinion. But right now, we're just sort of meandering around on level ground, not going up, home values wise and not dropping fast, either.
As for when your house will be worth what it was say, in 2004, you've got a long wait. Once this housing crisis turns around, don't expect your home to instantly jump in value to where it was 4 years ago! No, it will take 5 to 7 years to recover the value that your home lost. So if Michigan starts to come out of this slump in 2010 and your home was worth $200,000 in 2004, expect it to be worth $200,000 again in 2015! After that, don't expect the 4% to 6% rise in home values per year that we had in the late 1990's and early 2000's. Growth will be at a more modest 2% or so per year. Them's the cold, hard facts as they say. That's MY opinion and I'm sticking to it!!!
Happy rest of the summer!
I keep reading and watching and listening to reports which say the country will pull out of it's economic problems in 2009. Even economists here in Michigan are saying the same thing about the State economy. I doubt that however, so I'm telling folks plan on the rebound coming in 2010! I realize that's a long wait, but it's going to take that long to clear out all of the housing inventory that's currently for sale in our area. It won't be an easy stretch, but we have bottomed out in my opinion. But right now, we're just sort of meandering around on level ground, not going up, home values wise and not dropping fast, either.
As for when your house will be worth what it was say, in 2004, you've got a long wait. Once this housing crisis turns around, don't expect your home to instantly jump in value to where it was 4 years ago! No, it will take 5 to 7 years to recover the value that your home lost. So if Michigan starts to come out of this slump in 2010 and your home was worth $200,000 in 2004, expect it to be worth $200,000 again in 2015! After that, don't expect the 4% to 6% rise in home values per year that we had in the late 1990's and early 2000's. Growth will be at a more modest 2% or so per year. Them's the cold, hard facts as they say. That's MY opinion and I'm sticking to it!!!
Happy rest of the summer!
Monday, April 28, 2008
Losses and Gains
When someone passes on to their great reward, they leave a void which can last forever. I still haven't gotten over the passing of my baby sister Linda in March, 2000. I've lost 3 good friends who were agents in my office, over the ten years I've been there, Grace Wu, John Fry and Paul Fiore. Recently, we've lost 3 outstanding Detroit area sports personalities. I have to admit, I did not know Sonny Grandelius, the former star MSU athlete and coach and for that, I am a lesser man. But I did know George Puscas and I'm saddened this afternoon to hear of the passing of Will Robinson.
I met George many times covering all kinds of events, because he was a columnist and covered many events. His 65 years at his beloved Detroit Free Press will probably go down as the longest tenure of anyone at that newspaper. I would not miss his weekly "Love Letters" column and had missed it greatly since he finally hung up his typewriter in 2006. Whether it was at a Lions game, a Tiger contest, at Joe Louis Arena for the Wings, a U of D hoops game or even the Unlimited Hydroplane races, George was always helpful to this onetime young reporter. He will be terribly missed and we may not see his like again.
Will Robinson was a ground breaker. He was the first black head coach in the Detroit Public School League, coaching both football and basketball. In 1970, after leading the Pershing Doughboys to their second state basketball title in 4 years, he left the PSL to become the first black head coach at a Division One university, Illinois State where he coached all American and future Piston head coach Doug Collins. In 1976 at age 64, he took on a new role at an age when most men are ready for the rocking chair. He became Piston's scout. He already had been a scout for the Lions for whom he had discovered Lem Barney. With the Pistons, he discovered Joe Dumars and Dennis Rodman and was a confidant to many Piston players including Isiah Thomas. Will was a fun man to be around, always upbeat. He never looked his age. He finally did retire as an assistant to Dumars in 2003. He died this morning at age 96.
They always go in threes. My sympathies to their families.
By the way, what a day Sunday, April 27 was. Nationally and locally it was called 'The Big Open House." From talking with several agents in my office and from my own experience at my open house, I know there was a terrific turnout of people, looking at homes. Some 2000 were on display in Southeast Michigan alone. Congrats to the organizers and hopefully, it will turn out to be one of the steps that brings our local housing economy back to life!
I met George many times covering all kinds of events, because he was a columnist and covered many events. His 65 years at his beloved Detroit Free Press will probably go down as the longest tenure of anyone at that newspaper. I would not miss his weekly "Love Letters" column and had missed it greatly since he finally hung up his typewriter in 2006. Whether it was at a Lions game, a Tiger contest, at Joe Louis Arena for the Wings, a U of D hoops game or even the Unlimited Hydroplane races, George was always helpful to this onetime young reporter. He will be terribly missed and we may not see his like again.
Will Robinson was a ground breaker. He was the first black head coach in the Detroit Public School League, coaching both football and basketball. In 1970, after leading the Pershing Doughboys to their second state basketball title in 4 years, he left the PSL to become the first black head coach at a Division One university, Illinois State where he coached all American and future Piston head coach Doug Collins. In 1976 at age 64, he took on a new role at an age when most men are ready for the rocking chair. He became Piston's scout. He already had been a scout for the Lions for whom he had discovered Lem Barney. With the Pistons, he discovered Joe Dumars and Dennis Rodman and was a confidant to many Piston players including Isiah Thomas. Will was a fun man to be around, always upbeat. He never looked his age. He finally did retire as an assistant to Dumars in 2003. He died this morning at age 96.
They always go in threes. My sympathies to their families.
By the way, what a day Sunday, April 27 was. Nationally and locally it was called 'The Big Open House." From talking with several agents in my office and from my own experience at my open house, I know there was a terrific turnout of people, looking at homes. Some 2000 were on display in Southeast Michigan alone. Congrats to the organizers and hopefully, it will turn out to be one of the steps that brings our local housing economy back to life!
Friday, February 29, 2008
A Leap of Faith
Well, as I write this it's a rare day, a once every 4 years day. Leap year day, February 29! So, since it's so rare and since I'm in a rare mood, lets do something I never do, lets talk politics shall we?
I see Wayne County Executive Robert Ficano has gone on record today as saying Detroit Mayor Kwame Kilpatrick should not be pressured into resigning. He further stated that his thoughts on this could all change if Wayne County Prosecutor Kim Worthy charges the mayor with purjury in the text messaging scandal. I feel Ficano is right. No matter what you may think about his private life, Kilpatrick has done more for the City of Detroit as mayor, than any of his predecessors over the last 40 years combined, dating back to the 1967 Detroit riots. He's bringing business back into the city and he's striving to improve neighborhoods which, in my opinion, is the real key to making Detroit a world class city again. For years, city leaders felt improving the downtown riverfront area was the key and they neglected the neighborhoods.
Many of the "letters to the editors" I see in the 2 Detroit dailies and the public voices I hear on Detroit talk radio stations, are not the "voices" of Detroit. They are outsiders, like me, living here in the suburbs. Maybe they feel they can tell Detroit and the mayor what to do, because they work in Detroit as I did for 15 years and thus, pay a city income tax, as I did. But they don't live there, they live in the suburbs. Many don't even work in Detroit. If you don't live there, what right do you have to tell the city what to do? Reporters can be very selective sometimes as to who they talk to on the streets, when they talk to residents. My sources tell me, many Detroit residents don't even want to talk to reporters. So how can you get a true feeling about what's going on in the heads of the Detroit electorate if they won't talk with you?
Yes, I'm in a rare mood. But not rare enough to want to stunt Detroit's recent growth. Detroit's "hip hop" mayor may have done some illegal things, but that's for the courts to decide. His youth and his surrounding "posse" have made him feel like king of the mountain. Yet he is a smart, sharp guy and a great public face for the city. However, if it becomes clear that his public face is being hampered by his private face, then yes, there should be hell to pay. As Ficano said, if Kim Worthy charges the mayor with purjury and he's found guilty, then he must go! But for now, let him stay on the job and do his thing, which is reviving this once great middle American city. As one Detroiter, not suburbanite, said on the local TV news the other day, "why don't they just let the mayor alone and let him do his job for the rest of the term for which he was elected?"
I see Wayne County Executive Robert Ficano has gone on record today as saying Detroit Mayor Kwame Kilpatrick should not be pressured into resigning. He further stated that his thoughts on this could all change if Wayne County Prosecutor Kim Worthy charges the mayor with purjury in the text messaging scandal. I feel Ficano is right. No matter what you may think about his private life, Kilpatrick has done more for the City of Detroit as mayor, than any of his predecessors over the last 40 years combined, dating back to the 1967 Detroit riots. He's bringing business back into the city and he's striving to improve neighborhoods which, in my opinion, is the real key to making Detroit a world class city again. For years, city leaders felt improving the downtown riverfront area was the key and they neglected the neighborhoods.
Many of the "letters to the editors" I see in the 2 Detroit dailies and the public voices I hear on Detroit talk radio stations, are not the "voices" of Detroit. They are outsiders, like me, living here in the suburbs. Maybe they feel they can tell Detroit and the mayor what to do, because they work in Detroit as I did for 15 years and thus, pay a city income tax, as I did. But they don't live there, they live in the suburbs. Many don't even work in Detroit. If you don't live there, what right do you have to tell the city what to do? Reporters can be very selective sometimes as to who they talk to on the streets, when they talk to residents. My sources tell me, many Detroit residents don't even want to talk to reporters. So how can you get a true feeling about what's going on in the heads of the Detroit electorate if they won't talk with you?
Yes, I'm in a rare mood. But not rare enough to want to stunt Detroit's recent growth. Detroit's "hip hop" mayor may have done some illegal things, but that's for the courts to decide. His youth and his surrounding "posse" have made him feel like king of the mountain. Yet he is a smart, sharp guy and a great public face for the city. However, if it becomes clear that his public face is being hampered by his private face, then yes, there should be hell to pay. As Ficano said, if Kim Worthy charges the mayor with purjury and he's found guilty, then he must go! But for now, let him stay on the job and do his thing, which is reviving this once great middle American city. As one Detroiter, not suburbanite, said on the local TV news the other day, "why don't they just let the mayor alone and let him do his job for the rest of the term for which he was elected?"
Wednesday, February 13, 2008
Strictly Baseball On This One!!
I watched much of Roger Clemens and Brian McNamee's testimony before Congress today and came away thinking what a dog and pony show. With a war going on in Iraq and Afghanistan, with Michigan and soon, much of the rest of the country in recession due to an economy that's in shambles, mostly due to homes sales and mortgages and with possibly the most important Presidential election in this country in years on the horizon and Congress is worried about the use of steroids or HGH in baseball? One Congressman even asked Clemens today what uniform Clemens would wear when he enters the Hall of Fame. Come on Congress, get a life!!
And then there's the media. I turned on one of the local sports talk stations and low and behold, they're telling me how Clemens is being "crusified" by Congress. Well, from where I was sitting, both here at home and then later on my real estate office computer, I saw McNamee getting his share of verbal abuse from the Congressmen and Congresswomen who were on hand. But then again, that's the media, ready to dub someone guilty until they're proven innocent. Think O.J., Robert Blake and others.
Hey, I don't know anything about this steroid usage issue, whether Roger did or didn't. Yes, I do care, because if he did, it's just another black eye for baseball. The game will continue getting black eyes, until they hire an independant commissioner, similar to what we had before Bud Selig took the job. Big Bud at the time, was a baseball owner and he continued in that capacity for quite some time after taking on the commissioners post. The leaders of the game, must clean up their own act before they can even think about cleaning up the sport itself. Lets bring in another Kenesaw Mountain Landis or Bart Giamatti to bring baseball back where it needs to be, untainted and unquestionably the "national pastime."
And then there's the media. I turned on one of the local sports talk stations and low and behold, they're telling me how Clemens is being "crusified" by Congress. Well, from where I was sitting, both here at home and then later on my real estate office computer, I saw McNamee getting his share of verbal abuse from the Congressmen and Congresswomen who were on hand. But then again, that's the media, ready to dub someone guilty until they're proven innocent. Think O.J., Robert Blake and others.
Hey, I don't know anything about this steroid usage issue, whether Roger did or didn't. Yes, I do care, because if he did, it's just another black eye for baseball. The game will continue getting black eyes, until they hire an independant commissioner, similar to what we had before Bud Selig took the job. Big Bud at the time, was a baseball owner and he continued in that capacity for quite some time after taking on the commissioners post. The leaders of the game, must clean up their own act before they can even think about cleaning up the sport itself. Lets bring in another Kenesaw Mountain Landis or Bart Giamatti to bring baseball back where it needs to be, untainted and unquestionably the "national pastime."
Wednesday, January 23, 2008
The Current Real Estate Trend
I don't know if you saw the article in Monday's Detroit News entitled "2008 may be brutal again for Michigan real estate," but there were some interesting points made in the article, which was written by Nathan Hurst.
According to Realcomp, which is the multiple listing service most used by Southeast Michigan agents, home sales in our area have fallen 14.4 percent since 2004. But the even bigger news is the average sales price of a home in Southeast Michigan fell 17.3 percent over that same time span, 2004 to 2007. So if your home was worth 200,000 in 2004, today it would be worth 165,400. Yet, as an agent, I'm seeing homeowners and their agents, still trying to list that home for 200,000! The problem with that, is the eventual appraisal. If someone puts an offer in on that home for say 190,000 for the sake of argument and the seller accepts, within a couple of weeks, the appraiser for the buyers mortgage company is going to visit the home. That appraiser will go back 6 months to check recent sales prices in the neighborhood and they'll see that similar homes in that sub have been selling for 165 to 170,000 and they won't be able to appraise that 200,000 listing for it's 190,000 sales price. Thus, the mortgage company won't give the buyer a mortgage and THE DEAL IS OFF!!!! Sellers seem to forget the appraisal process when they price their homes and this was a good example of what COULD happen.
The Detroit News article goes on to say that new home construction in our area is at it's lowest level in 40 years. The article also says 2007 foreclosures were up 65% over 2006 figures.
But there are great bargains out there and of course, if you're a buyer, I'd love to show them to you. They are everywhere and with the Fed cutting interest rates 3/4's of a point on Monday, expect the interest rates on 30 year fixed rate mortgages to fall even further, to record lows, closer to 5% interest than to 6%.
If you'd like to learn more, give me a call at my office number, 248-526-2193 and I'd love to chat with you about the opportunities in today's real estate market.
According to Realcomp, which is the multiple listing service most used by Southeast Michigan agents, home sales in our area have fallen 14.4 percent since 2004. But the even bigger news is the average sales price of a home in Southeast Michigan fell 17.3 percent over that same time span, 2004 to 2007. So if your home was worth 200,000 in 2004, today it would be worth 165,400. Yet, as an agent, I'm seeing homeowners and their agents, still trying to list that home for 200,000! The problem with that, is the eventual appraisal. If someone puts an offer in on that home for say 190,000 for the sake of argument and the seller accepts, within a couple of weeks, the appraiser for the buyers mortgage company is going to visit the home. That appraiser will go back 6 months to check recent sales prices in the neighborhood and they'll see that similar homes in that sub have been selling for 165 to 170,000 and they won't be able to appraise that 200,000 listing for it's 190,000 sales price. Thus, the mortgage company won't give the buyer a mortgage and THE DEAL IS OFF!!!! Sellers seem to forget the appraisal process when they price their homes and this was a good example of what COULD happen.
The Detroit News article goes on to say that new home construction in our area is at it's lowest level in 40 years. The article also says 2007 foreclosures were up 65% over 2006 figures.
But there are great bargains out there and of course, if you're a buyer, I'd love to show them to you. They are everywhere and with the Fed cutting interest rates 3/4's of a point on Monday, expect the interest rates on 30 year fixed rate mortgages to fall even further, to record lows, closer to 5% interest than to 6%.
If you'd like to learn more, give me a call at my office number, 248-526-2193 and I'd love to chat with you about the opportunities in today's real estate market.
Thursday, January 10, 2008
It's That Time Again
I haven't blogged anything for just over two months, so I guess it's time to crawl out of my hole, end the holiday break and vacation and put my nose to the grindstone once again!
Good news for buyers! Did you know that mortgage interest rates are back down below 6% on a 30 year fixed? I just spoke with my regular mortgage guy, Dave Tumey of Cambridge Mortgage and he tells me the rate yesterday, was 5.875% on a 30 year fixed, while today it bumped back up to 6% on the nose. So it does vary from day to day. Many in the real estate industry feel there's a lot of pent up demand out there for home buyers so with mortgage rates dropping from the 6.25 to 6.375 they were at a few months ago down to 6% and lower, maybe these buyers will start crawling out of the woodwork, just like I've crawled out of my hole to write this blog! If this is true, it means the poor real estate market we were in since mid 2005 may have finally bottomed out and there's nowhere to go but up. Just don't look for any of those special mortgage rates and "low cost" loans that were out there a few years ago. Such deals almost ran the mortgage industry and the nations economy into the ground!
I guess I'm also obligated to write something about sports so here goes, in no special order. While I've been away from blogging:
Roger the Dodger (of questions that is) has said he didn't do steroids. Do you believe him? I Don't. In his Sunday interview with Mike Wallace, he looked awful clammy to me, like he was ready to sweat bullets at any time. Good thing he wasn't attached to a lie detector then. I can't believe that Andy Pettitte, Roger's good friend and Roger were outed by the same trainer. Then Pettitte admitted to it, but Roger is still in denial.
Lloyd Carr retired as Michigan football coach and Michigan, after a 4 week search, landed Rich Rodriguez as their new head coach. Hey Rich, wanna buy a house? Congrats to Lloyd on a career well done and for that sweet win over Florida on January 1. Now if Rich can find himself a quarterback and replacements for the likes of Manningham, Hart, Arrington and Long, UM might win another 8 regular season games next year! Difficult system adjustments are ahead.
The Lions finished their season, losing 6 of their last 7, thwarting their media critics. I got sick of hearing from the media after the Lions were 3-2, that they'd lose their last 11, to finish 3-13. Then after they were 4-2, they'd lose their last 10 to go 4-12. Finally when they were 6-2, they'd lose their last 8 to finish 6-10. I saw the 2007 Lions season as a 4 win improvement over 2006 and if they win 4 more next year over this years 7 victories, watch out!!!!!
The Wings are the best team in hockey, by far, but Hockeytown has turned into a ghost town as far as attendance goes. Well gee, what did you expect, to win the Stanley Cup in January? Just shows to go 'ya how little the regular season means. It's the playoffs that count and local Wings fans have heard that song before about the Wings being hockey's best, October thru April, only to fall flat in May. And Darren McCarty isn't the answer. It goes far deeper!
Finally, that whopper of a Tiger trade with the Marlins. The Tigers get a 24 year old superstar in the making in Miguel Cabrera and a young 25 year old former Cy Young Award runner up for a handful of unproven prospects. WOW! Print your World Series tickets now Mike Ilitch! Boy the pressure on Jim Leyland in 2008 will be enough to make him smoke. Oh, wait a minute, he already does. The Tigers will be beasts in the Central, but the BoSox lie in ambush.
So that's it for blogging for now. Hopefully it won't take another 2+ months before I have something else to say. But then again, I always have something to say, it's just finding the time to do it in that's hard!
Good news for buyers! Did you know that mortgage interest rates are back down below 6% on a 30 year fixed? I just spoke with my regular mortgage guy, Dave Tumey of Cambridge Mortgage and he tells me the rate yesterday, was 5.875% on a 30 year fixed, while today it bumped back up to 6% on the nose. So it does vary from day to day. Many in the real estate industry feel there's a lot of pent up demand out there for home buyers so with mortgage rates dropping from the 6.25 to 6.375 they were at a few months ago down to 6% and lower, maybe these buyers will start crawling out of the woodwork, just like I've crawled out of my hole to write this blog! If this is true, it means the poor real estate market we were in since mid 2005 may have finally bottomed out and there's nowhere to go but up. Just don't look for any of those special mortgage rates and "low cost" loans that were out there a few years ago. Such deals almost ran the mortgage industry and the nations economy into the ground!
I guess I'm also obligated to write something about sports so here goes, in no special order. While I've been away from blogging:
Roger the Dodger (of questions that is) has said he didn't do steroids. Do you believe him? I Don't. In his Sunday interview with Mike Wallace, he looked awful clammy to me, like he was ready to sweat bullets at any time. Good thing he wasn't attached to a lie detector then. I can't believe that Andy Pettitte, Roger's good friend and Roger were outed by the same trainer. Then Pettitte admitted to it, but Roger is still in denial.
Lloyd Carr retired as Michigan football coach and Michigan, after a 4 week search, landed Rich Rodriguez as their new head coach. Hey Rich, wanna buy a house? Congrats to Lloyd on a career well done and for that sweet win over Florida on January 1. Now if Rich can find himself a quarterback and replacements for the likes of Manningham, Hart, Arrington and Long, UM might win another 8 regular season games next year! Difficult system adjustments are ahead.
The Lions finished their season, losing 6 of their last 7, thwarting their media critics. I got sick of hearing from the media after the Lions were 3-2, that they'd lose their last 11, to finish 3-13. Then after they were 4-2, they'd lose their last 10 to go 4-12. Finally when they were 6-2, they'd lose their last 8 to finish 6-10. I saw the 2007 Lions season as a 4 win improvement over 2006 and if they win 4 more next year over this years 7 victories, watch out!!!!!
The Wings are the best team in hockey, by far, but Hockeytown has turned into a ghost town as far as attendance goes. Well gee, what did you expect, to win the Stanley Cup in January? Just shows to go 'ya how little the regular season means. It's the playoffs that count and local Wings fans have heard that song before about the Wings being hockey's best, October thru April, only to fall flat in May. And Darren McCarty isn't the answer. It goes far deeper!
Finally, that whopper of a Tiger trade with the Marlins. The Tigers get a 24 year old superstar in the making in Miguel Cabrera and a young 25 year old former Cy Young Award runner up for a handful of unproven prospects. WOW! Print your World Series tickets now Mike Ilitch! Boy the pressure on Jim Leyland in 2008 will be enough to make him smoke. Oh, wait a minute, he already does. The Tigers will be beasts in the Central, but the BoSox lie in ambush.
So that's it for blogging for now. Hopefully it won't take another 2+ months before I have something else to say. But then again, I always have something to say, it's just finding the time to do it in that's hard!
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