Real Estate Market Hot in Madison

Market Update for Dane County and First Weber

The past few years in almost every market in the United States has been anything from slow to depressing for all real estate sales.  With the market improving and the local area seeing a lot of job growth, higher rents and an unprecedented start to the first 5 months of real estate sales, the market is starting to gain momentum.

Here are statistics( stats from SCWMLS service) that show the true picture of the market.

South Central Five months Year to Date:

• Units closed are up 17.5% over last year for single family and condo.
• Average sale price is almost even at $168,207 this year vs. $169,386 last year.
• List to sale ratio is 94.66% up from 93.84% last year in the same period.

First Weber South Central Five months Year to Date:

• We are up 25% in closings.
• Our average sale price is up by 1%.
• Our market share has gone up from 16.64% to 18.03%

Dane County Five months Year to Date:

• Sales are up 16.6%.
• Average sale price is down 3.6%.
• List to sale ratio is 96.07% up from 95.71%  

First Weber Dane County Five months Year to Date:

• We are up 24% in closings.
• Our market share has jumped from 18.82% to nearly 20%.

We have experienced month over month sales increases for 11 months in a row in Wisconsin.  Sellers are more realistic and better at getting their homes priced right and having their homes decluttered and staged. 

Buyers have more confidence and are acting with less resistance than we have observed in the last few years.  This is evidenced by the fact that they are looking less and buying more and that the offers are much more likely to stay together once accepted.  

With interest rates where they currently sit, 3.875% for a 30 year mortgage, it is one of the best opportunities for buyers to buyer and sellers to sell their home.

Is 20% down payment right for you??

Is it worth putting down 20%??

When I was reading the KMC Blog this morning, I really liked the topic of weighing your options as a consumer in the process of getting a home loan.  This is a difficult question to ask yourself if you are purchasing a home.  Right now with the current rates, every $10,000 costs roughly $50 per month.  Most of us can make $50 more a month work but might have a hard time making an additional $10,000 down payment on a new home.

These are perfect questions to ask not only your Realtor, but your lender.  Working with a trusted lender will help you understand these options to the fullest.  Depending on the type of loan you get you also may have a PMI (Private Mortgage Insurance).  For more information on PMI and the rules, please check out the FTC's Site: Click Here

Also, speak with your tax consultant about the amount of deduction you will be able to have with a mortgage and PMI.  

This past week I was at the National Association of Realtors in Anaheim, CA I went to hear Chief Economist Dr. Lawrence Yun speak.  The big take away from that report was that rates will go up as inflation increase.  Every economist and money manager will tell all of us the same message....inflation increases are inevitable over the next few years.  They won't be extraordinary, but they don't have to be to affect the mortgage rates.  His prediction is that rates will increase .5% to 1% each year for the next 3-4 years.  That means that rates will most likely be around 4.5%-5% next year, 5% -5.5% in 2013, 5.5%-6% in 2014.

Here is what that means in real dollars.  If you have a $200,000 mortgage that you are looking to have when purchasing a home, a mortgage with 20% down and 4% interest rate will cost you $764 a month with P&I( taxes not included in any of these calculations).  At 5% this is $859 a month.  This is $95 more per month, $1140 more a year and $34,200 more over 30 years!!!  The difference between 4% and 6% is even greater.  A month it is $195 more a month, $2340 a year and $70,200 in 30 years!!

Showing you these numbers is not to scare anyone...I hope that you are not after seeing this information.  I want to make sure that everyone that is looking to purchase a home is well informed and does what is best for their personal economy.

With Thanksgiving around the corner, it is important to remember what we are thankful for and all that we have and all of those people that are in our lives.  Happy Thanksgiving!

VA Loans and Tax Credit Extension

Recently the office of Veteran's Affairs announced a few updates to the VA loan program and now an extension of the tax credit is still available for active members of the armed service. This is very difficult information to find and I wanted to post this out there for all of the men and women that serve our country. They deserve our thanks and help in manners like this that can benefit them to own a home.

Here are some of the details that I was able to find:

• Tax credit is good until April 30, 2011. This means an accepted offer has to close by this time.
• $8,000
• No repayment penalty of the tax credit
• You don't have to live in the home for 3 years. This can be due to a variety of different reasons( reassignment, etc)

VA Loans are still available and are the only loans that are offering 100% financing. !00% financing still means that the veteran can have closing costs, escrow of taxes, and many other costs that will need to be brought to the closing table. A great way for these to be covered entirely or partially is asking the seller to pay up to 3% of the purchase price in closing costs and prepaid. A great resource is http://www.benefits.va.gov/homeloans/docs/2010_county_loan_limits.pdf for loan limits. Here are some other guidelines with a VA Loan:

• Loan limit of $417,000 unless you live in any of the other high cost counties see the pdf above.
• No private mortgage insurance
• 100% Financing
• No Mortgage Insurance
• No Minimum Investment or Down Payment needed from the buyer
• Lenders are limited to only charging 1% Origination Fees
• Seller must pay the entire escrow fee (Lender pays this if it’s a refinance)
• If the property does not appraiser for the sales price, the Veteran’s earnest money is protected
• No Credit Report or Appraisal needed for VA Interest Rate Reduction Refinance Loan (A VA-to-VA refinance with no cash-out. Often called VA Streamline refinances).
• Low rates
• No limit in seller’s concessions used to pay Veteran’s closing costs
• 4% Seller’s concessions for non-VA costs as well as Veteran’s debt (That’s right, the seller can pay off some of the veteran’s debt in the transaction).
• Can be used for a Stick Built House, Manufactured home (must be on land), Condo, Townhouse, and multi-family from 2-4 units
• No Funding Fee for disabled Veterans (It doesn’t matter if the veteran is 10% disbaled or 100% disabled, they won’t be charged a Funding Fee).

Here are some basic guidelines for a VA loan( check with a VA lender to get all of them):

• Most lenders will want the Veteran to have at least a 620 credit score
• You must be 3 years separated from a foreclosure
• You must be 2 years separated from a Bankruptcy
• The Veteran should have at least 3 tradelines on credit to review.
• Nobody can be on the VA Loan with the Veteran other than a Spouse
• Surviving Spouses of deceased Veterans with VA Benefits can also use a VA Loan
• VA Loans are assumable, which means you can sell the house and pass the loan to another Veteran as long as they can cover the difference between the sales price and the existing loan.
• VA Funding Fees, which is a fee that goes directly to the Department of Veterans Affairs, varies depending on whether the Veteran was full-active duty or reserve, how much the Veteran puts down, the type of transaction (Purchase, Streamline refinance or Cash-out Refinance) or if the Veteran is disabled.

Whether you are looking for a home, condo or income property, finding a local lender and local Realtor will help you in the process. Please feel free to pass this along. It is really important that veterans understand all of the benefits available to them.