the realities of real estate during the great recession n.
Skip this Video
Loading SlideShow in 5 Seconds..
The Realities Of Real Estate During the Great Recession PowerPoint Presentation
Download Presentation
The Realities Of Real Estate During the Great Recession

Loading in 2 Seconds...

play fullscreen
1 / 36

The Realities Of Real Estate During the Great Recession - PowerPoint PPT Presentation

  • Uploaded on

The Realities Of Real Estate During the Great Recession. Julie Lang ABR, CRS The Julie Lang Team First Weber Group Realtors Racine, WI.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'The Realities Of Real Estate During the Great Recession' - galen

Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the realities of real estate during the great recession

The Realities Of Real Estate During theGreat Recession

Julie Lang ABR, CRS

The Julie Lang Team

First Weber Group Realtors

Racine, WI


“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”-Franklin D. Roosevelt

“Owning a home is a keystone of wealth.. both financial affluence and emotional security”. –Suze Orman

“It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.” – Donald Trump

“The best investment on Earth is earth.”-Louis Glickman, American business executive

perceptions of real estate homeownership
Perceptions of Real Estate & Homeownership
  • It’s the American Dream
  • It’s a good investment
  • It’s safe
  • It is a status symbol
  • It is an entitlement
  • It’s scary
  • It’s a risk
  • A Responsibility
  • It’s now OK to walk away
  • It’s a terrible investment
  • Too much work
  • What are your perceptions?
why do people want to own a home
Why Do People Want To Own A Home
  • Not throw money away
  • Build a nest egg
  • Decorate the way they want
  • Have a good place to raise a family
  • Fulfill a dream
  • Stability
  • Budget
  • Feel Grounded…Emotionally Satisfying
some quick definitions
Some Quick Definitions
  • DOM – (Days on Market) the period of time a property is listed for sale prior to being sold or removed from market.
  • LP/SP – (list price to sale price ratio)
  • Assessed Value – the value placed on a home by a government tax assessor in order to calculate a tax base.
some quick definitions1
Some Quick Definitions
  • REO – (Real Estate Owned) property acquired by a lender, through foreclosure, which is held as inventory.
  • Short Sale - a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan.
some quick definitions2
Some Quick Definitions
  • Sellers market – a very strong real estate market where sellers have the advantage because there are more buyers than properties for sale. Generally when there is less than a 5 month supply of inventory.
  • Balanced market - occurs when the relative supply of homes reach a 5 or 6 month level.
  • Buyer’s market – a real estate market in which the buyers have the advantage over the seller due to slow sales. Generally this is when there is more than a 7 month supply of inventory.
some quick definitions3
Some Quick Definitions
  • Sales Concession – an instance where the seller will pay a cost that is normally paid by the buyer. Usually done to ensure the sale will go through.
  • Price appreciation – an increase in the value of real estate. The price may increase because of a number of factors, such as shortage of supply, improved economy, favorable political environment, tax incentives, or increased profitability.
  • Expired listings – when the time frame of a contract to list a property for sale passes and the home is no longer for sale. No purchase was made.
some quick definitions4
Some Quick Definitions
  • Sale Price – the amount of money that is paid by a purchaser to a seller for property that is bought.
  • Absorption Rate - this is the measurement of current housing supply divided by the current rate of sales, expressed in months of supply.
  • Multiple offers - more than one offer to purchase a property, which usually occurs in a seller’s market. This is most likely a competitive bidding situation.
what was it like in 2005 2007
What was it Like in 2005-2007
  • People looked at few homes…they might lose out on the one they want
  • Confidence was up ~ Positive feelings were up
  • Lending was easy…… easy underwriting, minimal qualifications
  • No down payments , interest only loans, etc…
what was it like in 2005 20071
What was it Like in 2005-2007
  • List/sale ratios…… very high 97-98%
  • Average days on market…..

52 in 2005

72 in 2006

86 in 2007

  • Average sale price in eastern Racine County 2007=$174,132
  • Average appreciation over 5 years in city of Racine 30%
what was it like in 2005 20072
What was it Like in 2005-2007
  • Multiple offers – common
  • Inspections – repairs often not negotiated
  • Flippers present in the market
  • Homes ALWAYS appraised
  • Sense of Urgency….to list, to write an offer, to see a house…everything was urgent!!!!
the numbers during the boom
The numbers during the boom
  • Homes sold in eastern Racine County:

2005 - 1721

2006 - 1524

2007 – 1364

  • How many houses expired ….. 815 in 2005
  • DOM - 52 in 2005
other facts during the boom
Other Facts During the Boom……
  • Mortgage rates …approx. 6%
  • People financing 100% plus
  • Most homes are selling well above the assessed value
  • Many Realtors flooded the industry
a house for sale during the boom
A house for sale during the boom

1330 Erie St. ~ Racine

4BR, 1.5BA ~ 2017 sq. ft.

Sold March 2007 for $140,900


National Statistics Show

The height of the market….

The absolute peak

Q1 2007

the bubble is bursting
The Bubble is Bursting
  • What was it like locally vs. nationally
  • It took longer here to feel the effects
  • Offering incentives …bonuses, closing costs, etc
  • Homes are not appraising at purchase price
  • The pool of buyers is decreasing
  • Mortgages are harder to get
what was it like in 2008 2011
What was it Like in 2008-2011
  • Buyers are sitting on the sidelines
  • Buyers are picky….sometimes looking at 50-100 homes
  • More difficult to get loans…. Require a down payment
  • Consumer confidence had dropped
  • Sellers owe more than their house is worth …”upside down”
  • Sellers still believe their house is worth more
2008 2011 the hard times
2008-2011 The hard times
  • LP/SP…… 96% in 2008 down to 92% in 2011
  • Average DOM

109 in 2008

112 in 2009

107 in 2010

121 in 2011

  • Average sale price in eastern Racine County in 2011= $120,703
  • Number of foreclosures in the market = 40% of total sales
  • Homes are selling well below assessed value….approx 60%
the numbers during the bust
The numbers during the bust
  • Homes sold in Eastern Racine County:

2008 - 1111

2009 - 1120

2010 - 1013

2011 - 1134

  • How many homes expired in 2011 - 1260
  • DOM – 121 in 2011
other facts during the bust
Other Facts During the Bust….
  • Multiple price reductions are common
  • Short sales are common
  • Foreclosures are every price bracket
  • The shiny penny story… you only sell if you are the shiny penny… or really CHEAP!
  • Rentals are busy
  • Mortgage rates – under 4%
  • Good comparable properties are sometimes hard to find
  • Realtors are leaving the industry for other jobs
the same house now for sale
The same house now for sale

1330 Erie St. ~ Racine

4BR, 1.5BA ~ 2017 sq. ft.

Sold October 2011 for $32,000

a snapshot of where we are today
A Snapshot of Where we Are today
  • Many areas of the country felt the hard hit from 2008-2010
  • IN Q4 of 2011, The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas1 (MSAs) in the fourth quarter from a year earlier
  • Some areas of the country are starting to stabilize


SE Wisconsin was slow to feel the bubble inflate…..

the median sales price is still declining according to statistics from january 2012
The Median Sales Price is Still Declining According to Statistics from January 2012

This is by far the BIGGEST hurdle for us to cross!!

  • Homes are now more affordable than ever!

The national affordability index

Nov. 2011 – WRA 242

Nov. 2011 – Nationally just under 200

Definition: that the family with median income can afford to buy 242 percent of the median priced home in the state, given 30 yr. fixed rate mortgages and a 20% down payment.

In some cases, homes might be starting to become undervalued

the tough conversations sellers
The Tough Conversations ..Sellers
  • How to sell now
  • What are your options…is selling the best option
  • Perception vs. Reality
  • No Equity
  • Many Sellers have Multiple loans
  • Perception of value…some sellers still wearing rose colored glasses
  • Difficult to find comps
what does it take now to sell
What does it take now to Sell
  • Competitive prices
  • Updated & show well
  • Negotiating mortgages in short sales
  • Pulling other resources to move on if you don’t have enough equity
  • Know the numbers…….. How do you stay ahead of the curve when selling – get the numbers right the first time!
  • No Defects….pre-home inspections, make necessary repairs, and upgrades
  • Each transaction presents unique and new challenges….. Enlist professionals for help!
the tough conversations buyers
The Tough Conversations … Buyers
  • Hard to get financing…good credit is a must
  • Condition of foreclosures..can you afford repairs
  • What loans are available
  • Loan limits
  • How long do you plan to stay in this house
  • What is your lifestyle…buying within your means
the tricky part
The Tricky Part

Finding a home…or finding a buyer - NO

Marketing a home – NO

Looking at properties – NO

Negotiating initial terms of offer - NO

Dealing with contingencies & getting to the closing


what s it like today
What’s It Like Today

For Buyers

  • Money is available ….. Good news!
  • Prices are at an all time low…… Good news!
  • Interest Rates are at an all time low….. Good News!
  • Affordability is better than ever….. Good News!
  • There is a lot of inventory …. Good News!
what s it like today1
What’s It Like Today

For Sellers

  • Houses are selling, # of SOLD homes is up…Good News!
  • Buyers are ready to buy…. Good News!
  • Interest Rates are low….. Good News!
  • If homes are priced well and show well….they sell fast!
looking forward
Looking Forward

Fannie Mae:

“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.

USA Today:

“Housing Outlook is More Upbeat”

The Wall Street Journal:

“From Bottom Up, Signs of Housing Recovery”

looking forward1
Looking Forward

RIS Media – Feb. 22, 2012