Jim Mulleady

In speaking with a neighbor who experienced some heart difficulty last month:

"Its better to be seen than viewed".

One problem that we now have in the post meltdown world is the banks desire to "cherrypick" loans. The banking industry was giving away money to anyone and apparently everyone 12 months ago. Now the pendulum has swung over to the other side and they are unwilling to lend to even qualified candidates. They are choosing not to fund in many creative ways. Sometimes it is the borrower. Sometimes it is the property. Sometimes it is the amount. If everything does not pass the smell test, the loan originator is off to the next "sure thing" and you are left with a dead deal.

Successful REALTORS now must pay close attention to financing. We had to before but now you really have to. Even if the borrower is not your side.

Case in point. Buyer buys a lakeside cabin that is part of a condo. It is a 3 season cabin in the Northwoods. Seller is happy to get the offer. Buyer is looking forward to spending summers up north. Selling agent is not blessed with experience or a good manager. She does not realize that the mortgage for this cabin cannot be sold on the secondary market, Fannie or Freddie because of its seasonal status. Listing agent is a grizzled veteran and inquires about what is happening with the loan. Listing agent calls the selling agent and advises that she best be telling the lender that the cabin is seasonal now rather than find out at the last minute that the deal died at underwriting (d.a.u.).

Somewhere in the process, the truth will come out. Its better to face the music.

In this case, the listing agent called several banks. He found out that there were HUGE differences in what lenders were offering. Most were offering ARMS. Two offered fixed in-house programs with strong comparables. One would not even look at it.

It pays to shop and talk to many lenders. Surprisingly, the small banks appear to be more flexible and willing to look at competitive packages for loans outside of the secondary market.

Not a lot of "news" with this Northwoods News. December results were on the lackluster side. Our best month was January with sales of 158 units followed by May with sales of 128 units. The slowest month was February with sales of 53 units.

2008 was a slow year in terms of sales volume. The normal "blip" we get in the late summer/early fall months was decidedly clipped this year.

Many Sellers have not relisted in light of present market conditions. Overall sales were down approximately 40% in Vilas and Oneida Counties.

There is cause for optimism. The cost of money is down from 2008. New conforming (under $417,000) purchases have been quoted rates as low as 4.5%. Fuel prices are at least $1 below where they were one-year ago. The new administration is committed to getting the housing market kick started. Volume in California, Nevada and Arizona is up from where it was in 2007 and those markets usually begin trends.

There never has been a better time to be a Buyer!

Like we need more hurdles?

Secondary home sales are a different breed to begin with. It is a very emotional experience. After all, who really "needs" a lake home. With the highs of great economic environments you also get lows like 40% drop offs in volume like we are presently seeing here in the Northwoods.

In the post bank-bust world, getting loans has become more difficult. Most lenders are now requiring 20% down. In the days before the banks started paying attention, you could buy a lake home with little or no down. This requirement will cost us more sales. Buyers are able to handle the payments but are not looking to reduce their own liquidity by $80,000 (20% of average lake home value of $400,000)

Some good news here is that there are creative solutions for those willing to work them. Anxious sellers may pay points to buy down mortgages/payments/pmi.

Values are hanging tough as there are not a lot of bank owned properties here in the Northwoods. Without that anchor, home values are flat to down 3% overall.

Not a significant change from last month's numbers. What we look at is the average home sale price year to date versus previous years' average home sale price. It is a running average and changes monthly.

Thus far, prices are holding reasonably steady. Volume is significantly off; particularly in on-water homes where unit sales are down by as much as 50%. The lack of sales is easily attributable to the national economy. Northern Wisconsin is a resort market and other resort markets are experiencing similar drop-offs in volume.

So, the laws of supply and demand should dictate that prices should fall when the volume falls off. The issue in my mind is timing. Sellers are still in control even though Buyers have all the leverage. Thus far, Sellers have chosen not to lower prices and that has resulted in the low volume. Sellers who have lowered their price expectations have seen sales. I suspect that we will see more price reductions and more sales in the New Year.

Have we seen the bottom yet? Looking at sales in California, Nevada and Arizona where sales volume is going up, the bottom may be here.