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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.

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 recent near blizzard conditions here in Northern Michigan brought to mind the topic of Weathering the Storm.  Like many areas in the country, Michigan’s real estate market has taken a beating.  Honestly, our entire state economy has been struggling.

 The thing about real estate markets, though, is that they’re local.  In our area, we’ve got one county showing a 15% drop in average sales price, while the neighboring county is down only minimally.  SE Michigan continues to struggle mightily, but when that market turns (and it eventually will) we’re going to benifit in the vacation/retirement mecca here in the north.

 So what to do in the meantime?  Work hard, get good listings, make sure they’re priced well, and tell the world about the deals available.  And there are deals!  I’ve got a list sitting in front of me that includes 286 bank owned properties in a 5 county area.  These banks don’t want to sit on these properties- they want them gone, and among these 286 listings are some great deals.  Aside from bank owned properties, there are private sellers who are ready to make someone a very happy owner. 

I’ve literally got one owner right now who is all but begging me to buy his property.  And I might just give in and do it, because it’s a GREAT deal.  But I can’t buy all the great deals, as much as I’d like to.  I need to keep finding buyers who are ready to move when these deals become available.  So that’s what I’ll be working on this week.  Calling contacts and pitching them a deal, one that I should probably take, but so far haven’t.

 I’m really optimistic about the upcoming year.  It’s the buyers turn in the drivers seat, and as prices adjust, buyers can afford more home.  That means more happy buyers, more dreams fulfilled, and more excitement.  And for me, those are the rewards that last, that fill you with hope when deals go bad, that make you smile when you head to the office, that make you feel like you make a real difference.  I’ve said often to friends and family that “I still want to save the world, to make it a better place.”  When dreams get fullfilled, I can see that I’m doing that, bit by bit.

If you want a copy of the list I referenced, or want to be on my “hit list,” send me an email, or post a response.  It’s a great time to be a buyer!

Great video, giving some pretty realistic and good advice to anxious home sellers.

http://www.msnbc.msn.com/id/21134540/vp/22646065#22646065

You can also go to my website at www.2cases.com and click through to the video there.

I know, it seems to run counter to all we’re hearing about the real estate market, but some people still do realize a gain when they sell.  Today I had a client whose property I have listed ask me about how he’ll be taxed on his gain.  Seems he inherited the property some time ago.  The basics, I told him, are as follows:

Your gain is calculated by taking your net proceeds from the sale and subtracting your adjusted basis.  What’s your adjusted basis?  Well, it’s your basis when you acquired the property, plus any improvements, less any depreciation or partial sales taken.  In other words, its what you bought the property for, plus improvements (that you can prove) minus anything you’ve taken away from the property.

Once you arrive at this figure you can calculate your taxable gain- if you’ve owned it for more than a year, you’ll be at the current long term capitol gain rate.  Otherwise it’s taxed as ordinary income.

 So smart sellers want to know how to avoid this tax… For your home, there’s an exemption that may apply.  For investment properties, you can’t avoid it, but you can defer it by way of a 1031 Tax Deferred Exchange.  In a 1031 you’re rolling your gain over into a new property, as opposed to putting it in your wallet.  This isn’t a casual transaction, and requires an intermediary and some planning.

Now for the disclaimer.  The US Government has a habit of changing the rules for this sort of stuff, so make sure you talk with your CPA or financial professional to make sure you’re using what’s available to your best advantage.

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