Detroit Area Real Estate - Canton | Plymouth | Northville | Livonia - Community News » canton michigan house sales

Positive home sale factors the media ignore.

alsted — Mon, 05 May 2008 14:59:37 +0000

Thumbs up for all the positive things about home sales in Detroit, Michigan suburbs that are not getting reported by the media!

It is true that home sales are at an all time low here in Canton, Plymouth, Northville, Livonia and pretty much all of southeastern Michigan. The media remind us of foreclosures, short sales, and the slowdown in home sales in general almost daily. The mantra is mind numbing, especially if you are a home buyer, seller, or in the real estate sales profession like Noel and I are.

I have always been taught to look on the positive side though and thought I would outline some of the reasons for optimism concerning the present state of affairs in the real estate market. I gathered these statistics concerning home sales in America. Remember these are for the country as a whole but we can expect to see similar results in our market. Also remember our home sale slowdown occurred a year or two prior to the rest of the country. This was due to the slowdown of the Michigan economy that the country did not experience. In fact the slowdown of home sales in the rest of the country is due mainly to the price bubble that occurred due to speculation and easy money as opposed to job losses for example.

The Reasons for Optimism:

During the 2005-2007 correction:

Median household income grew by 5%

> 4 Million jobs were created

> 2 Million Legal Immigrations (4 Million IRS I-10 status)

> U.S. Population grew by 5 Million people

> House prices fell, so affordability is up

> 3 Million Family formations

> Retiring boomers abated sales or purchases

AND — Why an up-turn in late 2008 and early 2009 is likely and by 2010 solid:

> Pent up demand from the correction will work off the inventory

> U.S. population growth by another 5-7 Million people to a total of 315 Million by 2010

> 1 Million + Legal immigrants/year

> X Generation 30 Million

> Y Generation 70 Million

Estimates are that about 100 Million people are growing into home buying age; youngest 20+, oldest early 30′s. It’s estimated that only 5% own a home now.

By 2010, we will likely be in a balanced market. Enough inventory to meet demand; but not at the point where there are not enough listings.

Builders will start to replenish new home supplies as there will be a demand for 129 Million housing units vs. 127 Million now built.

AND — Why is now a good time for buyers to buy?

> 30-year fixed-rate mortgages at 6% on average, they are down from 6.3% a year ago — lower rates mean buyers can afford more

> As a forward-looking factor, mortgage interest rates continue to hover just above the 40-year lows — there is mortgage money available at some of the lowest rates in history

> Excellent homes-for-sale selection, both new and resale

> Great value – homes priced to sell

> More affordable housing and lower monthly payments

> Owning a home offers good tax benefits

> Homes are still a great investment and are increasing in value in most markets

> Build incentives and promotions available

Yes there are reasons to celebrate in what seems to be a down market. Keep in mind these statistics are for the country as a whole but here in the Detroit market we are experiencing a significant increase in sales activity right now. Could it be that we may recover faster than the country as a whole? As I mentioned, we went into a slump at least a year or two ahead of the country. Maybe it’s our turn to lead the country out of this home sale slowdown.

Here’s more evidence of this. Our partner website for searching homes, www.bestmichiganhouses.com , has been registering record traffic. What’s more interesting is the people that have been coming to this site are coming back in record numbers on a daily basis. The return is probably because the site is so user friendly, but it also seems there is so much more interest in finding a home. People are requesting more from the site than they have in the past few months.

Now you may be asking yourself how to take advantage of the surge in home buying interest that is occurring. Our website www.thebittingerteam.com is designed to be a resource site for people interested in buying, selling, and investing in real estate. Although we do have information on our team and how we work, the main function of the site is to provide resources to you the consumer to help you understand all aspects of the real estate market.

Here is an example of how the site can help you. The two buzzwords you hear in the real estate market today are "Foreclosures" and "Short Sales".

The tab labeled "Foreclosure Help" takes you to pages that explain in detail how foreclosures work, how they are different in Michigan as opposed to the other states, online resources for further information, and a wealth of other pages that are being added to further your knowledge of the Foreclosure market.

Similarly the "Short Sale Help" tab takes you to pages concerning Short Sale FAQ’s, the effect short sales have on appraisals, helpful hints to see if you qualify for a short sale, and a host of additional information on the process and what it may mean to you as a buyer or seller.

There are lots of reasons to buy a house right now. With interest rates and house prices so low there is no reason to wait. If you currently own a home and it fulfills all your needs then the best advice is to stay where you are. If however you have been contemplating moving because the home no longer fits your needs, an upgrade to a house that does may make a lot of sense. While you may take a financial hit on your current house you could stand to make a windfall on a bargain you will buy to replace it.

If you would like advice on your situation don’t hesitate to call us at 734-459-2600. We can help you over the phone to decide which way is best for you and your family.

Home Sellers Save Transfer Taxes Using Little Known Exemption.

alsted — Mon, 07 Apr 2008 23:01:06 +0000

Our Canton and Plymouth home sellers are saving money big time by getting refunds on their Michigan Transfer Taxes incurred upon the sale of their primary residence.

Proposal A, which passed in 1994, drastically reduced property taxes and capped the yearly increases. This represented a huge savings to Michigan homeowners.

To alleviate the loss in tax revenue the Michigan Transfer Tax Act was amended to increase substantially the tax levied when a homeowner sells their property.

I know many sellers complain about the high transfer tax on sale but I have found myself reminding them that they have been saving thousands over the years of ownership due to the reduced property taxes.

However, now that home values have been decreasing, home sellers are getting hit with a double whammy…the drop in proceeds on the sale and the requirement to pay the high transfer tax on a sale where they are losing money.

There is a little known exemption in the Tax Act that has rarely been applicable until now. This exemption has been getting more attention as of late due to the lowering SEV (State Equalized Value) on homes.

Attorney General Mike Cox issued an opinion last week clarifying the proper application of this exemption. The opinion should afford certain home sellers immediate financial relief as Michigan’s real estate market continues its road to recovery.

Exemption “t”, as designated in the Michigan Transfer Tax Act, sets forth that a seller may seek an exemption from paying the state transfer tax if the following criteria are met:

1) The property must have been occupied as a principle residence and classified as a homestead property during the year of sale.

2) The property’s SEV for the calendar year of the sale must be less than or equal to the SEV for the calendar year in which the seller acquired the property.

3) The property cannot be transferred for consideration exceeding its true cash value for the year of the transfer.

With property values and corresponding SEV declining due to the struggling economy, many home owners and real estate agents took notice of the exemption’s possible applicability under the state transfer tax. However, absent an official interpretation, there was little awareness of its proper application.

As an example of how the exemption works let’s say you bought a house in 2007 for $220,000. You have lived in it as your primary residence and you registered the home with your city as a homestead property. You sold the property in 2008 for $180,000. Unfortunately, a typical situation in today’s market.

The SEV when you bought was $110,000 (half of purchase price) and let’s say your current SEV is $95,000. This scenario would satisfy the first two criteria above.

The true cash value in 2008 is 2 times the SEV or $190,000. Since the sale price is less than the true cash value the third criteria above has been met and you would be eligible for the tax exemption.

The Attorney General’s opinion provides immediate relief to home sellers already faced with the reality of declining value on their single greatest asset. The opinion also provides a uniform reading of the exemption that is necessary to provide consistent application among the various Registers of Deeds across the state as they are already receiving filings for the exemption.

Sellers should be cautioned that a request for the exemption that fails to meet all three criteria could bring a penalty equal to 20% of the tax assessed in addition to the tax due. Additionally, no similar exemption exists in the County Real Estate Transfer Tax Act.

email us at team@bittinger.com for more information. To apply for the exemption you must submit Michigan Department of Treasury form 2796.

Did you sell recently? Is your house up for sale now or are you about to put it on the market. This knowledge will help you save a bundle as our sellers are experiencing. Leave a comment below for more ways to save money in your next real estate transaction.

Fed Rate Cuts Help Canton Homes Sell

alsted — Sat, 22 Mar 2008 01:25:58 +0000

Fed rate cuts should boost house sales in Canton, Plymouth, Northville, Novi and the rest of the Detroit Suburbs.

This has been another volatile week in the mortgage markets. The favorable rate cuts should result in increased house sales activities in the Canton and Plymouth market.

There was major news news out on each of the first three days of the week. The net effect of the ups and downs was a significant reduction in mortgage rates.

Two stories surprised investors Monday morning:

In an uncommon emergency meeting over the weekend, the Fed decided to lower its discount rate to 3.25% from 3.5%

The other major announcement was the sale of Bear Stearns, a large investment bank, to avoid bankruptcy. Bear’s stock, which had been trading around $80 per share in January, would be sold for just $2 per share. Investors took the news to mean that the risks to the credit markets were even greater than they thought, and they embarked on a flight to relatively safe investments, which lowered mortgage rates.

Big news on Tuesday:

Fed cut the Fed Funds rate by three quarters of a point to 2.25%, as expected by many investors, although two of the ten voting Fed members were in favor of a smaller rate cut.

Stocks rallied on the news, and the Dow closed higher by a whopping 420 points, but the Fed’s emphasis on the risk of higher inflation hurt mortgage markets. Overall, the Fed’s statement described reduced economic growth and higher inflation expectations. The Fed believes that inflation should moderate over coming quarters, but that the uncertainty over the inflation outlook has increased. Mortgage investors require higher yields to offset future inflation, and mortgage rates rose, offsetting some of Monday’s reduction.

Another big news story hit the wires on Wednesday:

OFHEO, the regulator for Fannie Mae and Freddie Mac, relaxed the capital requirements for the two firms. Early estimates are that the changes will enable Fannie and Freddie to make an additional $200 billion in loans. The additional capacity for mortgage investments boosted mortgage markets, and mortgage rates fell again.

The home sales market in the Detroit suburbs has been dismal as of late but this news of mortgage rate cuts is bound to inject activity into the sales process. It appears there are lots of buyers in the wings waiting for the right moment to make their move. We have witnessed more activity in the last few months and believe this bodes well for the near future.

Bargain Hunters … Buying a house now may be your best investment!

alsted — Tue, 26 Feb 2008 00:33:18 +0000

The distressed Michigan housing market should get a lift this spring as bargain prices and favorable interest rates lure prospective buyers out of hibernation. Tighter lending practices however, means no one should expect the boom days to return any time soon.

SPRING HOUSING MARKET ALMOST HERE

Spring is a pivotal season in the housing market in the Canton, Michigan area and in the Detroit metropolitan suburbs in general. Potential buyers typically emerge from a winter hiatus and shop in earnest for a new home or an investment. The strength of the market in March, April and May usually sets the tone for the entire year.

This year, spring has assumed even greater importance as our ongoing Michigan economic slump couples with a sharp U.S. economic slowdown. The U.S. slump by many standards has been triggered also by a slow country wide real-estate market.

After sales of existing homes in Canton, Plymouth, Northville, Novi and surrounding cities sank almost 11 percent last year, a housing revival could help our local economy get back into revival mode.

When the housing sector is thriving, so does the economy as buyers spend heavily on new appliances and furniture while owners pump cash into remodeling or additions.

In many areas, the choice of homes on the market has increased considerably, with unsold inventory double the typical supply as foreclosures mount and sellers hold out for higher bids

Indeed, possible buyers are already coming out the woodwork seeking deep discounts.

Signed contracts that have yet to close were higher in January than any month in the prior six. While we’ve seen quite a bit of increase in traffic, a lot of people are shopping for deals right now.

HIGH HURDLES

But the roadblock to closing the contracts is ominous.

Many lenders are shutting down the money pipeline to all but the most credit-worthy borrowers, looking to avoid repeating mistakes that led to the current wave of bad mortgages.

While a flurry of sales this spring may highlight the pent-up demand in the market, it probably would not signal a sustainable housing upturn this year.

Still, demand is stirring as sellers grow desperate to off-load properties. Fixed mortgage rates are low, and some home prices are looking too attractive to pass up.

Bidders are emerging for foreclosed homes and for so-called "short sales" at sharply reduced prices. In a short sale, the lender agrees to take a loss and avoid foreclosure costs if the borrower is unable to command a sale price that will pay the remaining mortgage balance.

Meanwhile, the average 30-year mortgage rate is around 6 percent. That’s up a half percentage point from four-year lows set last month, but it’s roughly a quarter point less than a year ago, based on data from Freddie Mac, the second-largest U.S. home funding company.

NEW GOVERNMENT STIMULUS SHOULD HELP

A new government stimulus package will likely also open the doors for more buyers. It temporarily raises the size of mortgages that can be purchased by Freddie Mac and Fannie Mae, the No. 1 federally chartered home funding company, making some lenders more inclined to approve home loans.

Additionally an expected new rate hike by the Fed that is rumored to take place in March will undoubtedly create more downside pressure on rates.

If people have a good track record of paying their bills, the loans are there. But those kinds of buyers seem to be scarcer today than ever before. Even a few late paid loans are enough to lower a credit score to a level that turns away many mortgage companies.

Even if you talk to people who refinanced recently, a lot of them are finding that the banks are asking a lot more personal and critical questions. There is no doubt It’s more troublesome to get a loan these days.

BUYERS MARKET

In spite of all the above I think this is the best buyer’s market that has existed in a long time. There are tons of inventory, great interest rates and the prices are back in line to where houses are decently priced again. In fact I would consider many houses on the market to be at rock bottom prices now.

If you are currently renting this could be the best time to buy than has existed in a long time. Even if you own a house and wish to move up, this might still be a great opportunity. While taking a loss on your current house may not be savory, the gain you’ll get on the move up house may be much more than the loss on the old one.

Lee Bittinger