So, What's effecting home values and the market in general??

FIVE HOUSING TRENDS WE'RE SEEING SO FAR IN 2011

Depending on whom you speak with, Home Values are still declining.... Home Values have "stabilized".... Home Values are on the rise.... The truth is, it depends!!

If your looking at housing markets in West Oakland County, or East Livingston County, in general, things are looking up. In most "Micro Markets" (a certain segment based on home size, amenities, etc) we can extract trends that might be considered showing an increase in values. In other Micro Markets, I'm still seeing annual double digit declines. So, the truth is, when it comes to real estate value trends, It Depends. (wait a minute, I already said that)

So what do I see effecting sales and values in the coming year? let's start with..

1. Home owners are holding off on refinancing.

Mortgage refinancing in 2011 is expected to experience a big drop compared with 2010. We're already seeing a marked slowing in refi applications. The prospect of higher interest rates on home loans is one reason for the outlook, but not the only reason. Most Homeowners who have measurable equity, A-1 credit and solid employment have refinanced at least once during 2009 or 2010, locking in low fixed rates and consequently, have little or no incentive to refinance again in 2011.

Those folks who didn't refinance in the last two years due to their loss of equity, unstable employment or damaged credit, probably won't do so this year either because, while still-low rates may create an incentive, those challenges will become even harder to overcome.

2. Home loans are getting harder to get.

There's no secret out there, it's become more difficult to qualify for a home loan today than it was in the past, and it looks like the only changes coming down the road are only going to make it harder.

The tight lending guidelines are the result of lenders' new Conservative attitude toward the risk of bad loans and the real possibility that while they continue to exist, Fannie Mae and Freddie Mac will force the lenders to buy back older, faulty loans, causing them to have less available cash to make new loans.

Lenders are being "Extremely Cautious" and asking for volumes of documentation from borrowers, meaning multiple credit checks, income verifications and appraisals, increasing the cost of acquiring a mortgage from the start.

Borrowers seeking a low down payment loan insured by the Federal Housing Administration (FHA) will also be subject to higher standards in 2011, due in part to lenders addition requirements, commonly called "Overlays".

3. Home buyers will remain on the fence

Now is supposed to be a great time to buy a home. Mortgage rates, for the time being, remain low and prices are the lowest in 10 years. This combination makes real estate relatively more affordable to purchase. Some folks contend that home ownership has never been more affordable.

Plenty of properties are on the market, and inflation, waiting off the horizon to take a big bounce, could boost home values over the long term. Yet many might-be buyers remain on the sidelines due to near-term doubts about the wisdom of buying a home. Indeed, a Fannie Mae survey from the third quarter of 2010 found that one third of those asked said they were more likely to rent rather than buy their next residence. So much for our Government's thought that EVERYONE deserves to own a home.

The recent destabilization in mortgage interest rates, despite the Federal Reserve's efforts keep rates low, should be an alarming event for anyone who wants to buy in the next few years. That alone, should have buyers thinking about buying sooner than later. If rate do jump up, prices may drop even more and make it all a wash, but it's still tough to consider that you may end up taking a mortgage at 7 or 8% while your neighbor is only paying 4%.

4. Home Sellers continue to face "sagging" prices.

Selling a home continues to be a challenge due in part to the loss of qualified buyers and the huge "Shadow Inventory" of homes that are stuck in the foreclosure process, but not yet on the market. As long as these dynamics and high rates of unemployment persist, so will the downward pressure on home prices.

Lower prices may attract more buyers, but many of them won't be able to quality for a home loan. Lower prices could also increase the supply of homes as more owners just walk away from their under water mortgages.

5. Struggling homeowners aren't getting much relief.

Government programs so far have a dismal track record of delivering aid to homeowners who are unable to make their mortgage payment. Our Government has thrown so much of OUR money at this problem, they could have paid off the mortgages of a large percentage of those who applied hoping to get just a little help. Predictions are that this situation won't change much in 2011, due to the intractable nature of the problem.

Homeowners who are under water on their mortgage should contact their loan servicer and ask about a loan modification. Just remember, YOU CAN'T STOP TRYING!

Some borrowers have received relief, but those golden tickets are the exception. More often, the process results in frustration, disappointment and perhaps only a temporary fix at best for the homeowner's situation. There's no guarantee that you'll get a reasonable loan modification, but you might, so it's always worth trying.

Bottom line?

If you can refinance, now is the time.

If you can purchase, now is the time.

If you can sell now is the time.

Have you visited my new web site? http://www.1stinmichigan.com/

Looking for real estate? http://www.hglenbetts.com/

HELPING THE HARDEST HIT??

This past week, Jeniffer Granholm, our lame duck Governor of Michigan, announced that the Michigan State Housing Development Authority (MSHDA) with the help of banks, Credit Unions and non-profit counseling agencies, will launch a statewide program to help eligible Michigan homeowners avoid foreclosure by participating in the State's new Helping Hardest-hit Homeowners Fund.

The dollars for this, is part of the new $2.1 BILLION of federal money that the President has pulled out of the air to help homeowners in 10 states keep their homes. The fund aims to assist those in states that have seen average housing prices decline by 20% or more.

President Obama unveiled the Hardest Hit Fund in February to help folks struggling with home value decline, and a tight labor market and a near double-digit unemployment rate. The program is just one of several that the administration launched to combat the nation's housing crisis, but like their other initiatives, this has been met with criticism.

So finely last month, (only FIVE months after announcing the program) the treasury provided Michigan, along with California, Arizona, Nevada and Florida, a combined $1.5 Billion from the fund. The states expect to help thousands of homeowners by offering subsidies to the unemployed, reducing loan principal and offering incentives for short sales.

The State expects the $154.5 million program could "help" more than 17,000 households, including thousands who are currently drawing unemployment benefits. The program would also help owners who are behind on their mortgage payments because of a temporary layoff or medical condition, and those who have jobs, but have lost income. (GEES, THAT'S MOST OF THE POPULATION OF MICHIGAN)

The program began this past week and was met with frustration, as the State offices received 30,000 calls by 10:00 a.m. the first first day, causing it's phone system to crash. Officials say because it's not mandatory for lenders to participate, the state was still waiting to hear from large mortgage servicers. They said homeowners must apply for the program through their lenders, not the State.

Eligible homeowners can obtain more information by calling 866-946-7432 or visiting www.Michigan.Gov/Hardesthit .

Is this government handout going to save the housing industry in our state? NO!! Not if there aren't any JOBS for those 17,000 unemployed/underemployed homeowners to return to.

Is this going to stop the five year slide in home values?? Not as long as the banks, Fannie Mae and Freddie Mac are holding thousands of foreclosed homes in their "shadow inventory".

In Milford, Highland and throughout the Huron Valley area, along with most communities in Oakland County, Real Estate values have actually increased during the first quarter of 2010, but considering our government was paying people (through tax credits) to buy a home, we can assume that growth is going to disappear by the end of quarter three of this year.

Bottom line is, until the government stops manipulating the housing market and the interest rates, and allows business and industry to function freely, resulting in REAL job growth, there will be no true sustainable recovery of home values.

But hey, what do I know.....

WHO SETS THE VALUES??

So who really sets the value of a piece of real estate?

Is it the buyer with a mortgage pre-approval letter, negotiating with an informed seller?

Is it the Realtor who performs the CMA for a seller?

Is it the Buyer Agent, guiding their buyer?

Is it the appraiser, who gives an opinion of value, regardless of the purchase agreement?

Is it the Bank's underwriters, who review the PA, the Appraisal, the buyer's financials?

I'd contend that any one of these people may have a hand in determining what the value of a certain parcel in a transaction is.

But, looking at value from another angle, let's consider the cash rich investor who has no pressure to buy for shelter. One who is investing his own money. One who doesn't need the permission of a bank to leverage his 5 -10% against the lender's money. This guy weighs the pros and cons of each property, calculating the return on investment. This is where the true value of real estate comes from.

An appraiser shows the bank an opinion of value based on history. Buyers and sellers get upset because values are growing again, and their deal is being "killed" by a review of deals in a crummy market.

Give me an informed cash buyer any day. They are the one's that truly set the values.

Throughout Milford, Highland and the rest of the Huron Valley, the market values have stabilized for now, and in some neighborhoods, values have even started to show slow growth. That growth will continue to be slow and methodical, not like the big spikes of the '90s, because this time, we're coming off the biggest crash of our life times. The banks aren't going to let you leverage "their" money to speculate in the new growth market like they did before, so if you're thinking of bidding up an offer on what seems like a great deal, be ready to bring cash, not a pre-approval letter with you.