First, this is a tax credit, not a cash payment. It’s unlike a bailout to a bank, or even Cash for Clunkers where we as citizens wrote checks to take serviceable vehicles off the road. By taking part, buyers are keeping tax dollars out of Treasury hands, and I like that. A small distinction, I know, as the money will be made up somewhere.

Second, it’s estimated the median home sale generates about $63,000 of economic impact via ancillary services, purchases by buyer and seller, etc. That’s a powerful engine to drive this recovery.
Third, first time buyers have been given the opportunity to participate, and it’s made a difference in clearing inventory (which in turn can hasten the return to work for contractors, etc.) Broadening this with reasonable limits can allow others to take part in the recovery.

Fourth, lending requirements are so tight that we’re not putting bad loans in the system. In fact we’re keeping some very good buyers out, and keeping people who would be purchasing from doing so. This legislation can help to create a bit more balance in the market.

BUT WE DO NEED TO WEAN OURSELVES FROM THE GOVERNMENT TEAT!

September proved to show a long anticipated increase in real estate activity in Northwest Michigan. Buyer activity has been trending upward after a lackluster summer season, and we’re driving into the fall with a lot of offers being written and properties being put under contract.

The number of residential sales for September we up 31% over 2008- actually they were the best they’ve been in the past 4 years. This has been driven by the downward adjustment in sale prices. Buyers flocked to those listings where the prices had dropped in concert with the regional market trend. Median price as compared to the prior year was down about 11%, which is on par with year to date figures as well.

Overall, we’ve seen home prices decline just under 21% since their peak in 2005/2006.

Home Sales Rebound in Northwest Michigan, September 2009

Home Sales Rebound in Northwest Michigan, September 2009

Value leaders have been in the low and middle ranges- you’ll see in the chart below a sharp increase in the number of sales under $40,000 (WHAT! A house in NW Michigan for under $40,000? Yep.) That trend is reflected up into the midrange, with gains up through the $180,000 range.

Home Market Price Analysis for Northwest Michigan, September 2009

Home Market Price Analysis for Northwest Michigan, September 2009

Where we’ve fallen off is at the higher end, made up primarily of waterfront/vacation homes. Many of these sellers are either insulated from the economic pressures of our current economy, or have just not come to terms with the effect that the overall market has had on their values. While waterfront properties have suffered much less exposure to price erosion, the lack of transactions indicate that the buyer population is waiting for adjustment to take action. There are some exclusive enclaves (such as Crystal Downs on Lake Michigan) where little if any depreciation is occurring, but what we’ve seen on other lakes is that only those properties that have made adjustment are selling.

We continue to have some very good values, but the best deals get picked off very quickly, and as inventory continues to tighten, we’ll see increased competition for these listings. Multiple offers are already common, and by all indication this trend will continue.

Fall brings fish into the rivers of Northwest Michigan, first Coho and Chinook Salmon, and later Steelhead. Enthusiasts travel long distances to enjoy the action and the beauty of the region. One of my clients is a river guide, and had a group coming in from North Carolina last weekend.

One of the best know locations among fisherman and tourists alike is the old Homestead Dam site on the Betsie River, just East of Benzonia. Here the fish stack up before making their way through a fish ladder at the dam. It’s entertaining to watch these big fish jumping up river from one level to another.

Just upstream from the dam is The Homestead Resort on the Betsie, which features 11 units, a home with office, about 330 feet of river frontage and about 18.5 acres of land. This resort is being offered for sale by a local bank, and they’ve just reduced the price to $395,000. It is a cool opportunity for someone who wants to do their own thing, has a love of the outdoors and a friendly personality. Additionally, the resort was previously approved for condominiumization, or division into 12 separate units for individual sale. Often these types of projects are sold out, with the individual owners continuing to offer their units for rental through a manager.

The fishing has by most accounts been very good the past two years. This year had ebbs and flows, as a long period of warm dry weather in September slowed the fishing for a while, however it has taken off again with recent cooler weather and rain. Some great fish have been taken, and just south of us a world record brown trout was pulled from the Manistee River.

I somewhat regularly post the best deals I come across in my Unreal Deals Blog.  My latest find looked great on paper and I was excited to feature it:

“My newest UnReal Deal is all about the acreage.

2 Bedrooms, 1 bath, 1232 square feet, plus a 58x 60 horse barn and 66.9 acres. That’s right SIXTY SIX acres. How much would you pay for all this? For a limited time, it’s yours for only $145,000.

Average price per acre for parcels 5 acres or larger is $3261, indicating a land value alone well in excess of $200,000. This proprety was just listed, by Tim Reid, RE/Max Bayshore properties, and while I haven’t toured it yet, it hit my radar and caught my attention.

Turns out on paper isn’t real life.  Yep, it’s got all those acres, and the house, and the barn, but the house is as bad as the agent let on in his comments, or worse.  The deck has…let’s call it debris… an inch thick on it.  The former owner sold all the top soil off of the land, and allowed contractors to dump old concrete and road construction debris out back.

Don’t take this to mean the agent was dishonest in describing the property.  By no means did he sugar coat it, but by getting caught up in the specifications of the property, I rushed to judgement.  This might still be an OK deal for the right buyer, but it’s not as UnReal as I had thought.

This is similar to the realization that many buyers face when looking at foreclosed properties- they compete on price alone.  Condition and history are unknown.  Nobody is loving them, keeping them feeling like a home.   The good news for buyers is that more and more sellers are taking competitive stances on pricing, bringing well cared for homes into the mix with foreclosures.

If you’re in the market, don’t limit yourself by telling your agent you’re only interested in foreclosures.  Just because the bank owns it, doesn’t mean it’s the best deal.

That’s Lake Ann for those of you who don’t know Northwest Michigan lingo.

Who: Motivated sellers who just improved their price to $118,000

What: World’s neatest 3 BR bi-level, with fully finished basement and detached garage.

Where: 6226 Reynolds Road (just South of 610/Almira Road), close to state land and lake access.

When: New price NOW

Why: Because you’re tired of seeing worn out, beat up bank owned homes.

How: Click here to check out the listing, then call me office to schedule a showing, or if you’d prefer email/text/tweet/facebook/smoke signals/mental telepathy- I’ll try to make it easy on you!

The passing of the $4500 “Cash for Clunkers” tax credit out of the House got me thinking. First, let’s not fool ourselves into thinking that this is serious efficiency legislation- yes, it puts an incentive on deciding upon a fuel efficient vehicle, and that’s certainly more palatable than forcing higher efficiencies and limiting consumer choice. But this is about getting auto sales moving more than anything. And as an old car guy (I grew up around my father’s Chrysler dealership) I cringe when I hear that the “clunkers” traded in would be “recycled”- it’s a certainty that some very serviceable vehicles are going to be taken out of circulation. That means they won’t be available for resale to those who can’t afford a new car.

Let’s compare this incentive to the $8000 first time buyer tax credit, shall we?

Average new-car transaction price has dropped to $27,941, according to The Wall Street Journal. This means that the credit given is 16% of the average price- a pretty healthy incentive, and no restriction on who can buy, other than you have to move up in efficiency.

Compare this with the 2008 US Median Sale Price of $198,100 (per this NAR report) and the $8000 First Time Buyer Tax Credit, and we’re looking at an incentive of 4%. Still very nice, thank you, but think what a bump in the tax credit, to say $15,000 could do. Especially if it were paired with revisions making the credit applicable to all buyers of primary residences!

Danielle Hale, a research economist with the National Association of REALTORS(R) put together this analysis that shows each home sale at the median generating $63,101 in economic impact. That’s an enormous number, and one that drives activity in all sectors of the economy.

My opinion: The current home buyer tax credit is a good thing, but it would be a much more significant force in helping clear inventory and stabilize values with the changes noted above.

Governor Signs Important REALTOR® Legislation:
Public Act 96 Provides Significant Tax Relief for Sellers;

Governor Granholm signed 3 significant pieces of REALTOR® supported legislation. First, legislation enabling home sellers to retain 2 principal resident exemptions for property still on the market after the seller has moved elsewhere in the state. The signing of this legislation is a huge step in aiding struggling sellers who have had homes on the market for over a year and have lost their principal residence status on that property.

House Bill 4215, now Public Act 96 of 2008 sponsored by Representative Ed Gaffney (R-Grosse Pointe Farms) enacts that the seller can retain an additional exemption for up to three years on property previously exempt as the owner’s principal residence if the following circumstances are met:

  • the property is not occupied,
  • the property is for sale
  • the property is not leased or available for lease
  • the property is not used for any business or commercial purpose

The Michigan Association of REALTORS® (MAR) was active in pointing out to lawmakers that the struggling economy in Michigan has forced several home sellers to relocate to other areas of the state, in some instances continuing to market a home that they have not lived in for over a year. As a result, the home was no longer treated as a principle residence and the homeowner lost the principal residence exemption. Retention of an existing homestead credit for an unoccupied home that is currently for sale would offer relief to sellers who have had to relocate for whatever reason. The MAR is grateful to Representative Gaffney for being receptive and following through on this very important piece of property tax relief.

Source:  Michigan Association of REALTORS(R)