Pearson Group Real Estate


Michigan Monthly Market Update – July 2012

The market is showing the same good news we have been seeing all year. The current housing recovery is riding on three core factors: low home prices, historic low interest rates and increased consumer confidence (i.e. a stabilizing Michigan economy). There has been a slight slowing in the pace of growth, which can be attributed to a combination of the time of year and decreasing consumer confidence. Of the three core factors, the economy/consumer confidence is the fuel for growth. We have had low prices and rates for over three years but it wasn’t until consumers became more confident of their economic stability last fall that the market took off. The ideal recovery follows stable economic growth, interest rates below 6.0% and quickly rising home values. The odds are that’s where we’re headed. Quickly rising values are necessary to generate the home inventories needed to meet buyer demand. If the economy falters and/or rates rise too far, that will take the excess buying power away, which will delay the housing recovery.
In all markets and price ranges, June showed the strongest indicators over the past two years; a low in the Months Supply of Inventory (4.1 months), a low point in the number of homes available for sale, a peak in sales for properties on the market less than 90 days, and a high point in median home values. It was, for SE Michigan, also a high point for the percentage of homes for sale that have been on the market for over 90 days, which shows the continued growing gap between homes priced right for the market and those that are not (85% of all buyers continue to chase 33% of the available homes).

Moving more overpriced homes to market pricing is the quickest way to satisfy buyer demand. On average, homes on the market in excess of 90 days are overpriced by 15%. The percentage varies a bit between markets and price ranges (NW Michigan 13%) so most homes that have not had an offer in 90 days in most any market (including NW Michigan) will require a significant price reduction to attract buyer interest. For example, if the true market value is $95,000, it will attract attention if priced between $95,000 and $100,000, above that, crickets start to chirp. The average over 90-day listing would be at $115,000, so they would need to drop to $100,000 to begin to see the activity they need.

The best advice we can give sellers is to give the market a try. Home values are rising and homeowners may be surprised by what the market has to offer as it continues to improve.  With inventory low, now is the time to make well-priced properties stand out from the crowd.

Lastly, our First to Know products continue to get great feedback for keeping abreast of the market (via e-mail, mobile, text or voice), so if you are not signed up, give it a try!

If you’d like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

The Pearson Group
Kay Pearson and Robin Cutler

Serving Oakland County and Northeastern Michigan

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Hubbard Lake Michigan

Hubbard Lake is a lake in Alcona County in Northern Michigan. The lake covers 8,850 acres and is seven miles long and two miles wide. It has a maximum depth of 85 feet with an average depth of 32.6 feet. Wikipedia

Hubbard Lake Fish Map
Things to Do in Hubbard Lake, Michigan
Lost Lake Woods Private Golf Course
White Pine National Golf Club
Hubbard Lake Restaurants
Photos of the area are compliments of Joey Randall who has been enjoying the Hubbard Lake area and Lost Lake Woods Club since she was 4 years old.   Visit Joey Randall’s Photo blog site at:  The Village Voice


Real Estate Market Update for May
May 21, 2012, 11:39 pm
Filed under: Uncategorized

May, 2012

Dan Elsea,
President of Brokerage Services
Real Estate One – Max Broock


After watching the market numbers over the past 12 months, a solid (positive) pattern has been set that appears to be spreading across the nation. The housing market, for all practical purposes, has shifted from a Buyers Market to a Sellers Market. In the five-county
Southeast Michigan market, 84% of all sales are homes that have been on the market less than 90 days. These homes are well priced and in the best condition, but also only represent 30% of the homes for sale, which means 84% of all buyers are bunched together chasing 30% of the available listings. With a limited supply of desirable homes and increasing buyer demand, good things are starting to happen for sellers, the most important of which is appreciation. (The Northwest Michigan market is about 6-8 months behind SE Michigan so the inventory numbers are not as dramatic, but the same improving patterns are still evident.)

The “average” market statistics hide the true strength of the current market. Overall, the average Months Supply of Inventory (MSI) is 4.1 months (for SE Michigan), but in reality, 84% of the market is operating with a MSI of 1.5 months while the rest of the market (70% of the homes for sale) is operating with a MSI of 18.5 months. The result is a strange world where 70% of all sellers complain about a slow market with few offers while 84% of all buyers complain about a wild market with no saleable homes to purchase. Both are correct! The reality is those 70% of the homes that are in the 18-month MSI “slow zone” are not really relevant to the market since they are not attracting much market attention.

The chart below outlines the “true” MSI for the majority of the market as well as the hidden MSI for those homes that are not priced in a saleable range.
What does that mean for a buyer? It means over bidding on list prices, sight unseen offers, waiving appraisal contingencies and pricing wars above the asking price. Most importantly, it means make your best, strongest offer the first time since we are approaching 50% of all transactions with multiple offers.

So buyers have two choices: jump in and play by the new rules of a Sellers Market – move fast, be aggressive and patient since you will most likely lose out on a few before you get one, or go after the other 70% of the listings that are sitting quietly and find that diamond in the rough.

For sellers, throw your line in the water. Don’t be crazy about the price. You might be surprised what the market will give you, but be prepared to be honest about the condition and features of your house. Buyers are willing to pay a larger premium for a home that is updated, without deferred maintenance, and with a design consistent with the neighborhood (i.e. points off for a contemporary in a Colonial neighborhood, etc.). It may be worth the time and money for some basic updates before putting your home on the market.

April of 2011 was really the start of our heated up market, but even so we still showed growth over our previous year, which was strong, and buyer demand continues to grow.



3.8% home sales tax in health-care law clause without merit for 99%
May 16, 2012, 12:00 am
Filed under: Uncategorized

By LONA O’CONNOR
Palm Beach Post Staff Writer
Posted: 11:34 p.m. Monday, May 14, 201

An email circulating on the Internet claims anyone who sells a house after 2012 will be hit with a new 3.8 percent sales tax, thanks to an obscure clause in the Patient Protection and Affordable Care Act.

A cause for concern?

The 3.8 percent tax is real, but it affects only people with high incomes who make large profits on the sales of their homes.

“It’s not a sales tax; it’s a tax on all income, which would include capital gains, and its purpose is to make Medicare solvent,” said Palm Beach accountant Richard Rampell. “It’s a tax on profit.”

The new Medicare tax greatly interests Rampell’s peers, who are devising strategies to soften the tax’s effect on their clients if the provision takes effect next year.

A decision is expected soon from the U.S. Supreme Court. The key point is whether it is constitutional for the act to require all Americans to buy health insurance.

In April 2010, when the Affordable Care Act was passed and the email started circulating, Snopes.com and FactCheck.org declared it false. PolitiFact.com gave it a “pants on fire” rating.

Yet it continues to ping-pong around the Internet.

The Affordable Care Act “is set to screw the retiring generation who often downsize their homes,” it claims.

For citizens with the determination to read the 974-page act, the tax is introduced on Page 965 in Chapter 2A, Section 1411: “Unearned Income Medicare Contribution.”

The provision, which is meant to help support Medicare, does impose a 3.8 percent tax, but only on individuals with incomes greater than $250,000, and only on those who make a profit of more than $250,000. And only the portion greater than $250,000 would be taxed.

West Palm Beach real estate broker Sherry Lee, who received the email, said some of her clients might have made that kind of profit on a house sale in the years before the real estate bubble burst, but very rarely now.

Still, Lee thinks it would be unfortunate if even a few couples nearing retirement had to pay the sales tax, just because they invested well or because they bought their house so long ago that their profit might exceed the $500,000 limit for a couple.

“Even if they made $600,000 and only got taxed on the $100,000, that’s $3,800 taken out of the economy,” Lee said. “My mother is near retirement. If that $3,800 was in her pocket, I think about what she could do with it.”

The email’s original source appears to be an April 2010 blog post on www.gop.gov, which describes itself as “the website of the Republican majority in Congress.”

The email also says, “The National Association of Realtors is working to get it repealed.”

The Realtors association did send a letter to then-House Speaker Nancy Pelosi and Democratic Rep. Sander Levin, then-chairman of the House Ways and Means Committee, saying that it opposes the 3.8 percent tax “in the strongest possible terms” and that the tax would “impair and delay” economic recovery.

But Stephanie Singer, the group’s director of communications, is not happy to see her organization mentioned in a chain email. To keep people informed, the Realtors have produced a video and an 11-page brochure explaining tax consequences.

To Jeanette Castillo, who studies social media, the email reflects the state of modern political discourse.

The accuracy of a politically motivated email is rarely the point, said Castillo, assistant professor in the College of Communication and Information at Florida State University.

“I found it on a conservative discussion forum and message number 3 said, ‘This has been debunked, it’s essentially a capital gains tax,’ ” Castillo said. “But there were still people coming in afterward, reacting as though it was true. There is a core of people that are going to embrace something like this because it reinforces their political narrative.”

In other words, people on all sides of a political debate read online information that reinforces, not challenges, their beliefs.

Maybe the Obama administration should generate a few viral emails of its own, Rampell said.

“They could have done a lot better job highlighting the benefits, like no exclusions for pre-existing conditions and coverage of children to (age 26),” Rampell said. “They could have sold it as ‘Medicare for all.’ ”

Castillo agrees that the administration ceded the political debate to its most passionate opponents.

“The ultimate narrative that came out of this bill was the tea party saying, ‘Government, keep your hands off our Medicare.’ I’ve been a diabetic since I was 14, so when I hear Republicans talk about health care savings accounts, I think, ‘Was I supposed to start saving for my lifelong chronic disease before I was 14?’ I talked to a woman, a poorly paid clerical worker, who told me that the free wellness visits for her three children have saved her life. They have done so little to promote things like that.”

Castillo, however, is an optimist.

“Social media is proving that people really can demand that something get on the agenda. They can force topics into the media,” Castillo said. “What fascinates me is that average people on the left and right care about their country. They want to live in a democracy.”

Castillo’s secret weapon is her mother, a librarian in Indiana.

“She gets a lot of those emails, very conservative, some of them racist. She told me the other day, ‘I’m not going to take this anymore.’ So now she hits ‘reply all’ and corrects their errors.”



New Legislation in Michigan now allows for 2 Principle Residence Filing Dates
May 4, 2012, 9:56 pm
Filed under: Uncategorized
Wednesday, March 28, 2012 at 4:06PM

Principal Residence Exemption Legislation Unanimously Passes Senate

Today, the Michigan Senate voted 38-0 in support of legislation providing a fair process when it comes to their property taxes.

Senate Bill 349, sponsored by Senator Dave Hildenbrand (R-Lowell) creates two Principal Residence Exemption (PRE) filing dates; one on June 1st, and the other on November 1st. Additionally, this legislation allows bank-owned properties to retain their PRE so that buyers can qualify at the lower rate of taxation. This is particularly important since foreclosures have flooded the market in recent years.

Senate Bill 349 now heads over to the House for consideration.

Copyright Michigan Association of REALTORS®. Reprinted with permission.

IF THIS BECOMES LAW WHAT DOES IT MEAN?

Currently, Michigan property owners have to file a principal residence exemption form by May 1 to get lower primary home taxes for the full year. If you miss the May 1 deadline or you purchase a house that wasn’t a primary home after May 1 you will pay the higher non homestead taxes until the following year. If this bill becomes law the new deadline for your summer tax bill (the much higher bill) will be June 1 and November 1 for the winter tax bill. In short, it will save the home purchaser money if you buy a non-homestead (vacant or non primary residence) home after May 1 and intend to occupy the home as your primary residence.

Exemptions for bank owned properties.

This also appears to be a major tax break for lending institutions and banks that can file an exemption to receive the homestead property tax rate (primary home rate) for vacant assets that are currently for sale. This also could allow for purchasers to qualify for their mortgage based on the lower tax rate and qualify for a slightly more expensive home.

Here is the most relavent portion of the bill:

An owner of property may claim 1 exemption under this section by filing an affidavit on or before May 1 FOR TAXES LEVIED BEFORE JANUARY 1,2012 OR, FOR TAXES LEVIED AFTER DECEMBER 31, 2011, ON OR BEFORE JUNE 1 FOR THE IMMEDIATELY SUCCEEDING SUMMER TAX LEVY AND ALL SUBSEQUENT TAX LEVIES OR ON OR BEFORE NOVEMBER 1 FOR THE IMMEDIATELY SUCCEEDING WINTER TAX LEVY AND ALL SUBSEQUENT TAX LEVIES

You can read and/or download the full 27 page Senate Bill 349 by clicking here:
http://www.legislature.mi.gov/documents/2011-2012/billengrossed/Senate/pdf/2011-SEBS-0349.pdf

UPDATE: APRIL 26, 2012: Yesterday, the Michigan House of Representatives voted 109-1 in support of legislation providing a fair process when it comes to their property taxes. The bill now heads to the Governor, where we expect his signature before May 1st.

UPDATE #2: MAY 1, 2012: PRE Enhancement Legislation Signed by the Governor 5/1/2012 Today, Governor Snyder signed legislation providing homebuyers a fair process when it comes to their property taxes. Senate Bill 349, sponsored by Senator Dave Hildenbrand (R-Lowell) creates two Principal Residence Exemption (PRE) filing dates; one on June 1st, and the other on November 1st. Additionally, this legislation allows bank-owned properties to retain their PRE so that buyers can qualify at the lower rate of taxation. This is particularly important since foreclosures have flooded the market in recent years. 

Below are a few FAQ’s regarding the new law:

1. Does the legislation take effect this year?
A. Yes. The new law moves current May 1st PRE filing deadline to June 1st of this year.

2. How does it work?
A. If a homebuyer purchases a Principal Residence and closes on or before June 1st, they can take advantage of a significant tax break by filing for a Principal Residence Exemption.

3. When is the additional filing date?
A. November 1st. This allows for tax relief in those communities that still collect a portion, if not all of their non-homestead mills, on the December tax bill.

4. If my client buys after June 1st this year, what can they expect?
A. If a homebuyer purchases a home after the June 1st filing deadline, and their local tax authority collects all non-homestead mills on the spring tax bill, their property taxes may not reflect the exemption until the next tax bill. If however that local tax authority collects a portion of the non-homestead mills on the winter tax billing cycle, the homebuyer can file for a PRE before the November 1st and exempt themselves from any non-homestead mills collected on the December bill.

5. What about the foreclosure provisions?
A. Banks have the option of maintaining the home’s Principal Residence status by filing a Conditional Rescission. By maintaining this exemption status, it’s the expectation that borrowers will be able to qualify for financing on these foreclosed properties at the PRE rate and begin paying the lower rate of taxation as soon as they move into the home. To make up for the lost school revenue, banks will be assessed a newly defined tax that will keep the 18 mills (which they presently pay on any foreclosed property) when a property can no longer qualify as a principle residence. It is important for those REALTORS® working with bank clients to let lenders know about the change and communicate the benefit of filing a Conditional Rescission.

Copyright Michigan Association of REALTORS®. Reprinted with permission.



Michigan Monthly Market Update – April 2012
April 29, 2012, 7:18 pm
Filed under: Clarkston Real Estate, Uncategorized

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As the market recovers, there will be fewer months where we beat the prior year. Such is the case with March 2012. In terms of new contracts written, numbers continued to show improvement over March of last year. Across all of our markets Closed Sales were down just a bit from last year. This is not a cause for concern (it would be if there were three months of decline). March 2011 was an unusually strong month, so it is not surprising that we did not top it this year. As the percentage of short sales grows, pending sales will outpace actual closings since there is a higher fall-through rate for short sales. The more significant number from this point forward is the average/median sale price, since much of the market gain will be in rising values. If available home inventories remain tight, in ensuing months we may even see a slight decline in the number of homes sold as we simply run out of homes to sell. That trend, however, should not last long because it will cause values to rise thus more homes will be released to the market.

Southeast Michigan as well as both Southwest (Grand Rapids area) and Northwest (Grand Traverse) Michigan, the Months Supply of Inventory (MSI) hit another two-year low. (Southeast Michigan had the largest positive movement.) This is a very good thing because each month with a falling MSI moves us closer to a sustainable appreciation rate. For bank-owned, the MSI fell below 3 months, with non-bank owned at 4.8 months.  Most of that fall was a result of an increase in contracts written in March. Available bank-owned inventories fell, but non-bank owned remained about the same.

The rest of the nation appears to be joining us in the market upturn. Brokers across the country are reporting strong buyer demand and a lack of home inventories, similar to where we where in mid 2011. With the rest of the country joining our party, housing is beginning to move from an economic anchor to one of the key pieces fueling the recovery.

For those looking to move, a common question is… should I buy/sell now or wait for the market to improve a bit? The chart below shows the cost of waiting to buy versus buying this year in terms of total cost of ownership. The chart used the anticipated mortgage and appreciation rates over the next few years to project the cost of waiting to buy versus buying this year (2012).

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By waiting, buyers face both a higher interest rate as well as a higher purchase price on the home they buy. Each year a buyer waits it will costs them more (blue line), yet reduce their future appreciation gain (green line). For many homeowners, their mortgage gap is too wide to sell; however, that gap is closing every month, so it is more important than ever for sellers to ask their Realtors to track values.

If you’d like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Robin Cutler and Kay Pearson
PearsonGroup@MaxBroock.com
248-860-0366



Housing Market Reports are Rather Confusing
April 29, 2012, 4:42 pm
Filed under: Uncategorized
Several articles related to the “Housing Market” are included below.    One of the articles talks about how confusing it is to know….Have we hit bottom, are
prices rising?  As a Realtor in both Florida and Michigan, I agree with the article included below….”There is NO National Housing Market”  Real Estate only matters in the locale that you are buying and/or selling in.  Your Realtor should be able to help you sort through the market information.  Buyers and Sellers need a competent Realtor who can help them make informed decisions based on market conditions of  the local market.
TIMETIME.com - Business
Has the Housing Market Finally Hit Bottom?
By CHRISTOPHER MATTHEWS |  April 27, 2012
Read the Article
Real estate news and analysis from The Wall Street Journal
April 25, 2012, 10:14 AMOne reason for the confusion is that there’s no such thing as a national housing market. That may have been true in 2004, when all housing markets rose together, or in 2008, when they all fell together. But one difficulty in writing about “the housing market” is that there isn’t “one” market—and increasingly, the nation’s many housing markets are moving in different directions.  Read more:  Some Housing Markets are Rising; Others, Not So Much

DSNews.com
SUN APR 29, 2012
Some Markets to Hit Bottom and Rise

HOUSINGWIRE
By Justin T. Hilley
• April 26, 2012 • 9:53am
NAR Pending House Sales Rise to the Highest Level in 2 Years