Existing Home Sales

Existing Home Sales Approach Bull Market Territory

The housing market finished 2011 with strength, and is carrying measurable momentum into 2012. 

According to data from the National Association of REALTORS®, on a seasonally-adjusted, annualized basis, December’s Existing Home Sales climbed by 220,000 units overall from the month prior on its way to an 11-month high.

An “existing home” is a home that’s been previously occupied; that cannot be considered new construction.

After 4.61 million existing homes were sold in December, there are now just 2.38 million homes for sale nationwide. The last time the national home supply was this sparse was March 2005.

At today’s sales pace, the complete, national home inventory would be exhausted in 6.2 months — the fastest pace since before the recession. A 6.0-month supply is believed to represent a market in balance. 

The December Existing Home Sales report contained noteworthy foreclosure and short sale statistics, too :

• Foreclosures sold at an average discount of 22% to market value
• Short sales sold at an average discount of 13% to market value
• Together, foreclosures and short sales accounted for 32% of all home sales

Clearly, “distressed homes” remain a large part of the U.S. housing market.

Furthermore, in its report, the real estate trade group also noted that one-third of homes under contract to sell nationwide succumbed to contract failure last month. That’s up from 9% one year ago.

Contract failure occurs for a multitude of reasons, most notably homes appraising for less than the purchase price; the buyer’s failure to achieve a mortgage approval; and, insurmountable home inspection issues. December’s high failure rate underscores the importance of getting pre-approved as a buyer, and of buying homes in “good condition”.

For today’s home buyer in Valparaiso Indiana, December’s Existing Home Sales figures may be construed as a “buy signal”. Home supplies are dropping and buyer demand is rising. This is the basic recipe for higher home prices ahead.

If your 2012 plans call for buying a home, consider that home values throughout Indiana are expected to rise as the year progresses. The best values of the year may be the ones secured this winter.

Highland Indiana Real Estate Market Year In Review

It was another rough year for Highland Indiana homeowners who needed to sell. The roller-coaster ride that has been rumbling since 2007 continues to swing both ways. Unfortunately for 2011, that swing has been down. The average home price peaked in the summer of 2010 and has been slowly declining ever since, with a dip in the median price from this time one year ago of $160,000 to the current median of $147,000, a loss in value of about $13,000 on average.

Over that same time, the important price-per-square-foot trend that is used by appraisers and lenders to benchmark homes of different size proportions, also declined by about 20%, from $110/ft last January to only $88/ft currently.

With a lack of buyers in the market due to the economy, the Days-On-Market statistic that Realtors use to gauge the market turnover has jumped from a reasonable 132 days to a lethargic rate of 192 days currently (see blue graph). Condo’s were less affected than single-family homes; their values held and their days t0 sell remained fairly flat throughout the year.

One bit of good news: recent trends point to a decline in overall inventory. There are currently 73 homes for sale in Highland but existing homes are selling slightly faster than new homes are coming on the market (orange graph shows units). That gradual decline in the number of homes for sale should eventually help to stabilize the slide in prices as the supply and demand become equalized.

If you are considering purchase of a home in Highland Indiana, this is an outstanding time to be in the market. Next door in Munster, Indiana, prices are climbing. Consequently there are opportunities for the savvy shopper who can appreciate the wonderful parks, schools, highway access and convenient commercial districts available to Highland residents. The down cycle will not last indefinitely. Highland prices will eventually turn positive to match the trend of it’s community neighbors . Contact me if you need more specific information about a particular home or neighborhood. A new home for the new year has a nice sound.

CATAWAMPUS! What’s Gone Wrong With The Our Lakefront Homes?

Party Like It’s 2005!

That’s to say, party on, if you live on the beach. And you have deep enough pockets to hold on through thick and thin.

A few isolated pockets of  Lake County Indiana, and Porter County Indiana must not have gotten the memo that we are in a real estate recession. With all our sophisticated communications devices and 24 hour news, we should all be on the same page on these things. Still, some people stubbornly refuse to face the reality that their homes are not as valuable as they used to be. The Lake Michigan waterfront seems to be one of the places where “the bubble” still lives, at least in people’s minds.

Economists like to discuss “orderly” markets where buyers and sellers can negotiate win/win deals by making small trimming adjustments until both sides have reached agreement. But some lakefront sellers are dug-in. And since lenders and buyers must adhere to more stringent rules now, than in the past, deals are simply not happening. The market has hit the wall.  When sellers dig in; buyers can only borrow so much. If buyers don’t have their own cash to waste on an overpriced home, the mortgage lending system will not allow them to overpay using other people’s money.

But those who MUST sell learn a hard dose of reality when they finally must cross the line back into the real world. Because when their appraisal reveals an inflated price, they discover that banks are not rolling out the red carpets for Jumbo loans like they used to.

I ran an analysis of the various lakefront communities to see where the disconnects have been most severe. Some of these results are fairly predictable from talking with local REALTOR’s. Others are surprising, because some Lakefront communities do have quite orderly markets.

Remember our discussion about Price-Per-Square Foot? If you are not familiar with this measurement, this is a common denominator which allows us to compare a large home versus a small one. Regardless of the size, a higher number means a “better” home (better location, higher quality of construction, larger lot, nicer architecture, fixtures and amenities) while a lower number means a less desirable property. How close you are to the water; on the beach versus across the street, or a block away, are big factors which will spike up or down the PPSF of one house versus another when comparing two similar homes.

In most NWI communities, average homes range from about $80 to $140 per square foot. And a home that is priced accurately for the local market can be expected to sell in 6 to 9 months. But in the rarefied air of the beach, it’s a wide open scenario.  Here is the list of of what you can expect to see in each of these markets, and how stagnated things become when sellers dig-in.

BEVERLY SHORES, INDIANA:

We will start here, the most egregious disconnect between buyers and sellers, Beverly Shores. This sparsely populated community has some magnificent unspoiled views of the lake from Lakefront Road. But the disparity between the prices folks want for their properties and what buyers are willing to pay is the most extremely out-of-sync.

Active Listings Average PPSF:  $267   Homes SOLD PPSF:  $188   Difference:  -30%

Time needed to sell existing inventory at current Absorption Rate:  3 years, 7 months.

SHOREWOOD FOREST, VALPARAISO, INDIANA:

There are some fantastic buys here for a savvy negotiator who has good credit and  is willing to make make low-ball offers. Prices have already dropped some, but as the statistics show, there is still more room to come down before the market comes into harmony.

Active Listings Average PPSF:  $139  Homes SOLD PPSF:  $109  Difference:  -22%

Time needed to sell existing inventory at current Absorption Rate:  4 years, 5 months.

MILLER BEACH, GARY, INDIANA  (From Maple Ave to the beach):

Active Listings Average PPSF:  $144  Homes SOLD PPSF:  $115   Difference:  -20%

Time needed to sell existing inventory at current Absorption Rate:  3 years.

OGDEN DUNES, PORTAGE, INDIANA:

There are many homes here from the 1950′s and ’60′s which need major rehabs, yet many sellers with pink fixtures still regard them as made from gold. Regardless of where the location is, when rehab needs $100,000 in work, it should be priced accordingly. Some of the sellers in OD need more than just the “tough love” conversation about their asking price, but a swift kick for being so blatantly greedy, (IMHO, of course).

Active Listings Average PPSF:  $190  Homes SOLD PPSF:  $152    Difference:  -20%

Time needed to sell existing inventory at current Absorption Rate:  3 years, 7 months.

DUNE ACRES, PORTER,  INDIANA:

This is a special case since many of the homes are opulent and have legitimately high price tags. And there is simply not much turnover. So although the prices are close, there are simply few transactions. But with 10 homes for sale and only one sold within the past year, a seller will need to be very patient waiting for his number to come up.

Active Listings Average PPSF:  $242   Homes SOLD PPSF:  $230   Difference:  -5%

Time needed to sell existing inventory at current Absorption rate:  10 years

BRIGHT SPOTS OF SENSIBILITY:

It is not all doom and gloom in this market study. Several lakefront communities have found buyers and seller expectations matching up well to make an orderly and “normal” real estate market.

LONG BEACH, MICHIGAN CITY, INDIANA:

Recent sales in this posh community have actually been HIGHER per square foot than the current crop of homes for sale.

Active Listings Average PPSF:  $228   Homes SOLD PPSF:  $252   Difference:  +11%

Time needed to sell existing inventory at current Absorption Rate:  1 years, 9 months

LAKE OF THE FOUR SEASONS, WINFIELD, INDIANA:

Winfield gets the prize for the being most affordable lakefront community as well as having the most “normal” juxtaposition between buyers and sellers. Sure, it’s not Lake Michigan; but it’s still the beach.  Here again, SOLD homes went for higher prices (on per square foot basis) than the current Active inventory.  Sweet!

Active Listings Average PPSF:  $83   Homes SOLD PPSF:  $89  Difference:  +7%

Time needed to sell existing inventory at current Absorption rate:  10 months

CONSULT YOUR LAKEFRONT AUTHORITY:

For anyone needing a reality check in today’s shifted market, contact me for the market facts. If someone you know needs the “tough love” conversation about their dormant property, I am here as your consultant as well as your negotiator.  Let’s kick into gear! For both Buyers and Sellers alike, I make house calls with the ice water ready for those sleepy listings. 2005 is over; it is time to wake-up and drink the espresso  if you want to make a deal. Volunteer yourself, or turn in a friend you care about! My two-step program is available now.

Nationwide Open House Weekend Kicks Off Today

Nearly half of all home buyers visit open houses during their home search. This weekend, those numbers may swell as buyers across the country take advantage of the Realtor® Nationwide Open House, June 4-5.

“Realtors® bring value to home buyers and sellers, and this weekend, Realtors® are bringing them together through the Realtor® Nationwide Open House,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The event will give consumers the chance to find out more about home ownership, allow buyers to pursue their dream of owning a home, and give Realtors® an opportunity to connect with consumers about the housing issues that matter most in their area.”

During the weekend of June 4-5, Realtors® will hold open houses in local neighborhoods throughout the country, as well as across the globe. Over 300 Realtor® associations are participating in the event, along with NAR global partners in Canada, Denmark, France, Israel, Mexico, Norway, Peru, Philippines, Romania, Sweden, and the United Kingdom. During the weekend Realtors® will be on hand to provide guidance and insights into the social and financial benefits of home ownership.

According to a recent nationwide Pew Research Center survey, eight in 10 adults agree that buying a home is the best long-term investment a person can make. In addition, a strong majority of renters – 81 percent – said they would prefer to one day buy a home, demonstrating the value Americans continue to place on home ownership.

“There’s a reason owning a home is called the American Dream,” said Phipps. “Home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy. We hope that everyone who aspires to become a home owner will come out this weekend, not only to learn about the homes for sale in their local market, but also to find out more about how current and future public policies may affect their ability to achieve and sustain home ownership, now and in the future.”

To find open houses in your area, visit www.realtor.com and search for open houses in the Realtor® Nationwide Open House Weekend box on the home page. The special search function will be available beginning June 3.

Reprinted with permission of the NATIONAL ASSOCIATION OF REALTORS®. Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section.

Munster Indiana Real Estate Market Summary February 2011

There has been little relief for Munster Indiana single family residential homeowners (Chart 1) during February. What seemed like a fledgling plateau in January prices,  never materialized into a floor, but kept on falling. With good jobs and qualified buyers so scarce, prices continue to slide. The average home in Munster Indiana lost nearly $6,000 in value since the beginning of the year, according to this chart.

Condo’s did better with a flattening of the 4 month long fall/winter slide (Chart 2). With prices holding fairly firm for the past four months, let’s keep an eye on this plateau to see if this turns into a legitimate market bottom and indication of a more stable condominium and townhouse market.

Obviously if you are a BUYER looking for a home in Munster Indiana, this is an unprecedented opportunity to buy property at the lowest prices in several years. Interest rates have already started to climb, so many experts are predicting that this is as good as it will get. Serious sellers will need to stay ahead of the curve by setting their prices low enough to generate offers for their home, or else watch the competitors get all the attention.

Single Family Benchmarks:

• New Listings, 18
• Sold Listings,  9
• Inventory, 121
• Average Days-On-Market, 209
• Asking Price Per Square Foot, $125

Condominium & Townhouse Benchmarks:

• New Listings,  9
• Sold Listings, 2
• Inventory, 58
• Average Days-On-Market, 205
• Price Per Square Foot, $100

New & Noteworthy

Architectural details and innovative design distinguish this unique home in Munster’s  Hill & Vale subdivision. Located with natural water feature of Hart Ditch, this contemporary ranch home is loaded with style, featuring: an enclosed courtyard entrance with fountain, vaulted ceilings, large stone fireplace, lots of built-ins; even a private library inside the master suite. This 4 bedroom, 3.5 bath ranch was built in 1969, has 3,458 sq ft main floor and large finished basement. The asking price is set at $439,900, which breaks down to a reasonable $127/ sq ft.

Searching for a unique home for your next move?  If you are scouting the market for something special, let me help you discover what sparks your imagination. Take advantage of my experience and the information at my disposal.  And likewise,  if you’ve been thinking about selling your Munster Indiana gem please avail yourself of my innovative real estate practice. You can be assured that you will receive the utmost care, foremost marketing skills, and diligent service.

Chesterton Indiana Real Estate Recap January 2011

The Blizzard of 2011 did not stop buyers and sellers in the Chesterton Indiana real estate market from taking the next steps in their lives!

The median price for a home listed in the Chesterton Indiana real estate market has fluctuated quite a bit throughout the month of January with a low of $199,900 and a high of $209,900. This leaves us with a median price of $205,000 for the month.

Even with the price fluctuating the days on market for a home to sell in Chesterton Indiana increased 19 days from the beginning of the month to the end. This has not stopped the inventory of listed homes from going down to 187 from a starting inventory of 199.

As we see the inventory levels drop with sales increasing, we will see the market change from a buyer’s market to a seller’s market.

With this month’s median price of $205,000 in Chesterton Indiana you can expect:

• 3 Bedrooms
• 2 Bathrooms
• .25 – .50 acres
• 1,940 square footage

Chesterton Indiana Real Estate Month At A Glance:

• 32 New Listings
• 47 Sold Listings 
• 187 Homes Listed
• 248 Average Days on Market

Thinking about buying or selling or know someone who is?

Call, text or email me to help you get started!

Portage Indiana Real Estate Recap February 7, 2011

Throughout last week in Portage Indiana, even through the aftermath of the snow storm, people were getting ready for their Super Bowl parties. Now that the Super Bowl is over, it is time to start planning for next year’s festivities.

Where better to have a Super Bowl 2012 party than your new home in Portage Indiana?

The Portage Indiana real estate market has a wide variety of homes listed for sale. There are many price levels to choose from. In the previous week, prices have remained steady with an average asking price of $90.00 per square foot.

The market can be segmented into 4 quartiles to determine what to expect within your different price range.

For example, if you know you can afford and are pre-approved for a home loan for $150,000, we can determine that you can find your home with 3 bedrooms, 2 bathrooms with square feet between 1,500 and 2,000.  

Within these quartiles, you will find 111 homes listed for sale in the Portage Indiana real estate market. The prices for these homes vary from $130,000 to $180,000.   

At this week’s median price of $154,228 you can expect:

• 3 Bedrooms
• 2 Bathrooms
• .25 – .50 acres
• 1,796 square footage

Portage Indiana Real Estate Week At A Glance:

• 8 New Listings
• 6 Sold Listings 
• 222 Homes Listed
• 234 Average Days on Market

Thinking about buying or selling or know someone who is?

Call, text or email me to help you get started!

Highland Indiana Real Estate Market Summary January 2011

Recent movement in the Highland  Indiana real estate market shows that the prices of single family homes continued trending downward during January.  Home prices made an impressive peak last summer but fell back and stayed flat at the end of 2010.

Compared to other nearby communities which are still experiencing declines, Highland Indiana home values are holding up very well. The condo market experienced an up-tick in January, with the median price of a Highland Indiana townhouse or condo unit increasing $4,500 from $129,900 in December to $134,400 at the beginning of February. Single family homes slipped $1,900, with the median home price currently $158,000.

Single Family Benchmarks:

• New Listings, 17
• Sold Listings, 14
• Inventory, 90
• Average Days-On-Market, 132
• Price Per Square Foot, $112

Condominium & Townhouse Benchmarks:

• New Listings, 6
• Sold Listings, 9
• Inventory, 52
• Average Days-On-Market, 229
• Price Per Square Foot, $101

New & Noteworthy

This bank owned tri-level townhome on Price Circle had been listed on the market last March for $140,000. The MLS is now showing it as a PENDING listing with a price of $89,900. Congratulations to the savvy bargain-hunter who got this diamond-in-the-rough for only less than $64 per square foot.

Trust your local market expert. If you have you are scouting the market for a bargain of your own, or simply need more information about a particular home,  it is my mission to share the information at my disposal to help you.  And likewise,  if you know anyone who is seeking a property to buy, or thinking about selling a property in any of Highland Indiana’s neighborhoods or developments, please let them know about my innovative real estate practice. You can be assured that they will receive the utmost care, foremost marketing skills, and diligent service.

Bargain Hunting Real Estate In Porter County Indiana

Do you know the difference between Foreclosure, REO and Short Sale? Bargain hunting prospectors seeking the diamonds-in-the-rough sometimes use these words interchangeably, so let’s review the basic terminology so we can be more precise when discussing any plans to invest in a Porter County Indiana distressed property. Pictured here are two Portage Indiana distressed homes which are priced below market value. Both are located in top quality neighborhoods. They seem like bargains on the surface. But without lengthy research on the property, and negotiation with the lender, will a buyer find out how much of a “bargain” she will actually be purchasing.

Foreclosure

Foreclosure is the process that occurs when a homeowner stops paying the mortgage and eventually surrenders the home to their lender. This process has several steps. It starts with overdue notices, kindly asking the borrower to catch up. There will be a series of workout people who will try to help get things back on track. Under the Federal HUD Home Affordable Foreclosure Alternative program they may reduce the interest rate or modify the mortgage.

If it all fails the lender will issue a default notice, and eventually a legal suit through county court and eventually an eviction from the property if the borrower has not already vacated. This is a lengthy process and you can imagine that the property is likely to be poorly maintained during this time period of “distress”. Sometimes owners or renters will strip the home of appliances and cause damage, as things turn from bad to worse.

Finally, the lender will salvage whatever residual value, by listing the home on the real estate market. In most cases these homes are sold in as-is condition without the disclosures and clean chain-of-title that a conventional seller will offer the buyer. The entire time period can often a run a year or more while the various steps in the process run their course.

Bank Owned or REO

Real Estate Owned is what happens at the end of the foreclosure process, and it is the worst outcome. The property ends up being vacant, neglected, often vandalized. Banks and lenders don’t really want to own and maintain empty dilapidated homes, but due to the recession they have many on their list of “assets”. The word asset being somewhat euphemistic since the house is probably worth only a fraction of what it once was,  by this point.

So now that lender, often being out of state, and having a list of many of these so-called assets, now goes through another process of selling these homes to bargain-hunters, rehab contractors, and handy homeowners who are willing to buy them and invest in turning them around. After trying to determine it’s salvage value, they will list it with a broker and hope for the best.

In short, REO properties are bank-owned.  And they likely are in need of some restoration and maintenance work, may to need fixtures or appliances.

Short Sale

The short sale is another type of work-out that can take place during the early phase of the foreclosure process, if the homeowner and the lender can’t work out a modification. This is about the only scenario where a Realtor can help out a trapped and struggling owner. Once the homeowner realizes they are in pre-foreclosure trouble they ask their lender permission to conduct a short sale. They write a letter explaining their hardship, such as loss of job, medical issue, or other reason. And th lender will provide a list of supporting documents and questions they will want answered. An experienced agent can assist through this process.

When accepted, the homeowner can then hire the Realtor to market and sell the home at a discounted price to a new buyer. The home, sold in good condition, maintains much of of it’s value. The bank recovers a decent portion of it’s equity. And most important, the home seller walks away from the deal with his credit intact.

There are several advantages for doing the short sale versus the full foreclosure.  Compared to a court ordered foreclosure, where all a defendant’s asset are liquidated to pay the mortgage debt, in the short sale . If the assets don’t completely pay off the debts & fees, the court will issue a “deficiency judgment” for the balance. This will leave the convicted debtor responsible for the remaining debt which will cloud their credit rating for for years thereafter.

By settling with the lender and selling the house to a new and more solvent buyer, the deficiency judgments are usually released making it a win-win for both lender and debtor. And since the homes are often still occupied until the end of the process, the buyer gets a better maintained property.

Buyer Beware

Bargain hunters must always be extra careful with their diligence when choosing a distressed home. Such factors as

• the home’s condition
• whether the home can be financed at all or will requires cash
• the selling bank’s  deal
• the chain of title

are some of the main considerations to closely examine. Like anything that seems too good to be true, buying a “scratched and dented” home is like anything else–you need to do your homework. It takes extra diligence on the part of the agent and the buyer to make sure that one of the many possible “gotcha’s” doesn’t sneak up on the unaware. If you need help navigating the short sale or foreclosure real estate market in Portage Indiana, or the other Porter County communities, allow me help you select that diamond-in-the-rough. Send me a text message with your question.

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