Vance Shutes, your Saline, Michigan blog

I've been Meme'd again

2008-06-02T12:22:33Z

OK, I've been meme'd once again by Missy Caulk, my nearby neighbor in Ann Arbor, MI, over the weekend.

If you don't know what a meme is, think of "tag, you're it". Meme rhymes with dream.

The rules are that I am to share 8 things you might not know about me:

1.. Who is my favorite musical artist?

Of all time: Pink Floyd. Very influential in the development of my musical tastes, which run the gamut. "The Wall" is my top album of all time. I think I've worn the digital info off a couple of CDs of "The Wall". An incredible tribute to one of the band's founders - Syd Barrett.

Recent: Sum 41. Their lyrics have always caught me, and coupled with the creativity of the musical accompaniment, I'm hooked. Here's my choice from YouTube.

2. Who is my favorite artist?

As a kid, MC Escher captivated me. Here's one of my MANY favorite Escher works:

(Escher)

3. Who is my favorite blogger?

With over 50 daily RSS feeds on my reader, how can I choose? What I look for in an RSS feed is that the blogger resonates at my harmonic frequency on a regular basis. There are at least a dozen who qualify by that definition. The best way to choose? Watch where I comment the most frequently.

4. Who would I like to meet?

I know that I'll be meeting Jesus one day (let's not rush things there, my friend), as he has already gone ahead to prepare a room in his mansion for me. Just think - real estate for eternity!

George Washington is such an enigmatic figure in our history. I'd ask him about his surveying work across the Appalachians during the formation of the revolutionary ideas of the era. When you think about it, this nation was blessed to have many, many brilliant and passionate people come together at one time, with one mind - independence. We're coming up on the celebration of that independent spirit in about a month. Be sure to say thanks to our founding fathers on July 4.

5. What did I want to be when I grew up?

A race car driver. It's still in my blood. My driving motto: I go fast when I can, and slow when I have to.

6. What is the most important trivia that I know?

There are 272 words in Lincoln's Gettysburg address. Having just read one (of many) biographies of Lincoln, I've learned how much influence he had on our nation, even today. Being an attorney, he valued the importance of words, and chose them for maximum impact.

Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

7. If I could live in any point of history, when would I want to live, and why?

The post-depression era in Europe. I'd like to find out how the evil of Hitler was perceived by those who let such evil continue unabated until WW II. Then I'd bring that info forward into the present era to ask our political leaders "What is there about pure evil in this world that you either don't recognize, or won't do anything about?"

8. My most interesting job?

As a teenager, I worked in the golf shop of a local country club. I learned a lot about people - how they held themselves, how they interact with others, how they value money. From that experience, I developed the love of "people watching". I can go anywhere and be fascinated by watching people. It's also where I honed my golf skills, which I still practice today. Note, I said "practice".

As I value both my own time, and the time of others, I'm going to refrain from saying "tag, you're it!" to 8 other bloggers. So, for now, this meme path ends with me.

Saline Market conditions for May 2008

2008-05-16T08:18:58Z

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As you all know, I review our market statistics around the middle of each month. What I'd like to focus on this month is the overall strength of the market in, and around, Saline.

The first chart I'd like to review is shown below. I've tracked real estate activity for the Saline real estate market since 1996. There is a definite seasonality to the market - strength in the summer, weakness in the winter. A reading above 25% is a "seller's" market, while a reading below 20% is a "buyer's" market.

It's no surprise to learn that we have been in a "buyer's" market in Saline since the end of 2004 - more than three years, now.

What we see here in the middle of May, 2008, is a continued strengthening in the overall real estate market, going back to last October. The jump in strength from April to May is very encouraging, as we have reached a level unseen since the summer of 2005. So, the question to ask is "What could be the cause of this?"

This second chart (above) shows 2 lines. The top line shows the number of homes available for sale (listings) in the Saline area. The lower line shows the number of homes sold each month.

In answer to my question posed above (What could be the cause of this?), the strengthening of the Saline market since October is a direct result of fewer homes listed for sale. Each month, there are fewer and fewer homes for sale in the Saline market. How could this make the market stronger? Well, with fewer homes competing for the available buyers, it's more likely that any of the homes listed for sale will actually sell during the month. That's what we mean by a strengthening of the market!

Another interesting observation from the chart is that the number of sales in the Saline area has been rather consistent since 2005! In a previous post, we learned about the three "P's" that you control when you sell. The homes that are selling now, have been selling since 2005, are those that have consistency between the three "P's". Go back and check that post for a reminder.

The final piece of the analysis of the strength of the Saline real estate market is the months of supply of homes presently on the market.

This table shows the "raw data" that makes up the charts shown above. On the far right hand side of this table shows the "Months Supply" in each price range. Rather than focus on any particular price range, it's more helpful to understand the overall level of inventory of homes for sale.

As of mid-May, at the present pace of sales of homes in Saline, there are enough homes on the market to supply about 10 months of demand. This is down significantly since February, when there was nearly a 20 months' supply of homes for sale. In the past few years, it's been typical to have about 6 months' supply of homes for sale, so our market continues to improve toward our average.

If you're looking to sell in this market, take heart! Call me!

Auction your Saline real estate

2008-05-14T10:12:48Z

The traditional method for selling your Saline real estate is to list it with a Broker. By "traditional", I mean only that most sellers choose this method. You ask your friends and relatives for the name(s) of reputable Realtors®. You contact each of them, making note of the ease of reaching them, and your comfort level in speaking with them (after all, you'll be speaking with them a lot during the selling process). You choose one and begin the listing process.

In today's market for Saline real estate, we have an 11-month supply of homes available for sale. What that means is that it could take many months to get your home sold. (Let me emphasize that it could take that long, depending upon your asking price).

But what if you can't wait that long to get your property sold?

There's always (gasp!) an AUCTION (HUGE GASP!)

Why would you choose an auction?

With a real estate auction, you have the likelihood of a certain date for the sale of your property. I must emphasize that it's only a likelihood - which you'll understand more below.

There are two primary forms of auction.

•1. An ABSOLUTE auction. This is where the property sells, no matter the hammered price. It is via an absolute auction that you get the most interest from the buying public, as they know that THEY could be the one to scoop up your property at THEIR price.

At an absolute auction, you also know the exact date that your property will likely sell. (I say "likely", because until the buyer actually hands over the certified check to the auction house, it still isn't sold).

•2. A RESERVE auction. This is where the property sells, but only if the hammered price is above your minimum price. At a reserve auction, you'll generally see fewer buyers than you will at an absolute auction. Bidders at a reserve auction will not know your minimum price. My guess is that a bidder's thought process will be something like this - "I'll bet they set a reserve because they ‘have' to get a certain price, so I won't bid as high, and hope only that I'm above the minimum." Contrast this attitude with one from an absolute auction, where the bidders will continue to bid until they either win, or reach their maximum bid level.

At a reserve auction, if the reserve price isn't met, you still won't have a certain date that your property will sell. You may have to list it for sale again with a Realtor®, or try another auction. But understand, once an auction fails, the likelihood of a bidder increasing a bid amount is totally diminished. This ties into one of my fundamental truisms of real estate - the first offer is USUALLY the best offer.

I have been the listing agent for sellers at auction in the past. It is a gut-wrenching process to go through - not for those with a weak stomach. It's not like eBay where you don't see the seller or the other participants. Think about this. You have to know with absolute certainty what price you will accept, and stick to it. No wavering.

In one particular case, I recall watching a seller writhe in agony as the hammered bid amount was just slightly below the reserve price. I advised the seller to accept the bid, even though it was below the reserve level. While the seller deliberated, the buyer tapped his foot, waiting, and about two minutes later, walked away. The seller lost the sale, and eventually lost their house to foreclosure. Rather than accept a little less than they "wanted", they lost their entire equity and their ability to borrow for years to come. All for a couple thousand dollars. Ouch.

If you're wondering about an auction of your Saline real estate, ask an experienced Realtor® first.

Beanstalks Play Cafe of Saline

2008-05-12T09:34:24Z

I'm not much of a coffee drinker (Pepsi is my choice for COLD caffeine). That said, many of my friends and clients (especially those with younger children) have lately spoken of a new spot for coffee (and more) in Saline.

Beanstalks Play Café is located in the old Calico Cat building (which is a former church built in 1899) at 117 S. Ann Arbor St. The building is located within the central business district in downtown Saline. Beanstalks Play Café joins the growing trend of businesses geared toward family-oriented play and recreation.

The space has a giant play structure, toddler area, small gift shop, coffee bar and snack area on the main floor. The lower floor has a video game room and space for birthday parties, and the top floor has an office.

Admission to the play cafe for a day is $6 for children ages 1 to 15. A three-month pass is available for $55 for one child, $90 for two children and $125 for a family of three or more children. Adults and children under 1 are free.

The proprietor, April Scarlett, considered a franchise (like Jungle Java), but wanted the freedom to bring her own expertise to the center without corporate interference. She previously owned a children's party-planning business for five years.

So when you're considering Saline Real Estate, (especially for the schools!), you'll know that there is a local place for your kids to work out some of their energy. This is especially important in the era of $4 per gallon gas!

For more information on Beanstalks, call (734) 944-7979 or visit www.beanstalksofsaline.com.

The Importance of Pricing

2008-05-09T10:23:08Z

In good times and bad, in buyer's markets or seller's markets, the number one influence on the sale of your Saline real estate is Price, Price, Price. Oh, sure, the three most important issues to most buyers (and sellers) are Location, Location, and Location. But unless you have a mobile home, there's not much you can do to move the location of your home.

Having lived in Saline since 1985, I've seen the changes in price of most Saline real estate over the years. In fact, since 1996, I've kept records of the pace of sales activity in the Saline area. It's what I call my Total Market Overview, or TMO for short.

Using the TMO, I can show you how, since 1996, we have moved from a moderate seller's market, to a strong seller's market, to a neutral market, to now - a strong buyer's market. If you'd like to see the graphical TMO, I usually post it around the middle of each month.

Today's market conditions - a strong buyer's market - means the following:

There are many more homes for sale than there are buyers looking for a home. In economic terms, we have too much supply chasing too few buyers. Price has to come down until the extra supply is finally sold off.

So, getting the price of the house right is the number one influence on getting your Saline Real Estate sold today, and getting on with your life.

I'm Tired of Stairs!

2008-05-07T08:52:45Z

Just another quick article to let you know how I recently helped a client with their real estate needs.

Bob and Zoe had grown tired of climbing stairs in their 2-story home. It was time for them to move to a home on a single level.

Geographic proximity to their children and grand-children defined the limits of our search for a ranch-style home or condo. We screened dozens of choices to find a few developments which offered the various amenities important to Bob and Zoe, which meant that we had only to visit a few properties to find the right one.

And now, Bob and Zoe are enjoying their new home, all on one floor!

Meanwhile, they are able to lease out their former home, earning income for their future needs.

So, who do you know that is tired of climbing stairs? Please pass this article along to them.

What are you waiting for?

What $4 gas means to Saline real estate

2008-05-05T08:58:04Z

When the gas pump turns off automatically at $50 while filling your tank, you know that gas prices are REALLY high. But, what does that mean for Saline Real Estate?

Most of the articles about the price of gas are based upon an implicit assumption: that the price of gas is only temporarily as high as it is. This is not the case. Gas isn't going to get significantly cheaper than today. As a matter of fact, it's a better bet that the price ten years from now will be much higher. It's a matter of supply and demand. Two billion people in China and India are joining the consumer society, and they want our standard of living. There was a recent article in the AP headlined Gas guzzlers a hit in China, where car sales are booming.

But while sport utility vehicle sales in the U.S. are tumbling, automakers are finding that for China's newly prosperous car buyers, bigger is still better. So General Motors Corp. has made the Escalade a star of its Chinese auto-show display, and is eager to get it on the market there. "If you look at the fastest-growing market segments in China, there are two - SUVs and luxury cars," said Joseph Y.H. Liu, GM China's vice president for sales and marketing.

It isn't a matter of price gouging by the oil companies, or even by OPEC. The real bottleneck is in refining capacity. Oh, there's only a finite supply of oil and eventually it will all be gone. But right now, the things limiting supply are how fast we can get it out of the ground, and how fast it can be refined to a usable form. It doesn't matter how much water is in the lake if you need more supply faster than the pipes can carry it.

Suburban and rural real estate (like around Saline) grew on cheap gas. Five years ago, gas was $1.40 per gallon. A car that gets 20 mph can go 70 miles on $5 worth of $1.40 gas. With gas in Saline now over $3.60 per gallon, things aren't nearly so rosy. Instead of 70 miles, that $5 will only barely take you marathon distance (26.3 miles), and it's going to get worse. At $5 per gallon, the consumer with a job in downtown Detroit who lives in Saline (40 miles) has gone from spending roughly $1400 per year on gas for their commute (five years ago) to $3600 per year on gas now, to possibly $5000 per year (when gas hits $5 per gallon). That difference of $3600 is $300 per month right out of the family budget. In most cases, two spouses are driving separately, which means that difference goes to $600 per month, or more than $7200 per year right out of their after tax income. It's only a matter of time before already-stingy mortgage lenders figure out a way to account for a borrower's reduced ability to re-pay a mortgage. When mortage-ability is an issue, you know that home prices will be negatively affected.

Saline isn't the furthest of Detroit's bedroom communities, by any means. I know people who commute from Tecumseh to Southfield each day. Many commutes are over 100 miles, plus all the people from even further afield (for instance, Saline to Lansing). Despite greatly augmented gas mileage, hybrids aren't going to offset this increase and even if they were, people would be adding the cost of at least one new car in order to do so. I don't know if you've looked recently, but hybrids aren't economy-car priced.

With this effectively raising the cost of living further from the job, one of two things will need to happen: Either the places where the jobs are will have to relocate to the suburbs (where their workers can afford to live), or people will have to start finding places to live closer to their jobs. The older communities closer in have long been less attractive than new developments further out (like, in Saline), but raise the price of making that trip enough, and the macroeconomic reality will force people to start thinking more in terms of shortening the commute, even if it means they have to settle for a 1200 square foot house built in 1950 instead of a new 2600 square foot one way out in Saline. People are willing to make sacrifices when it's mostly time out of their day, but when it's a continuing drain on the wallet that means little Billy can have an 8x8 bedroom and food, clothes, and a college fund, or a 15x12 bedroom and none of the others, you can expect more people to start choosing the former.

What this means is that suburban bedroom communities (like Saline) become less valuable, while older communities closer in to the job centers become more valuable. For those who may not realize what I'm saying, the closer it is to places where people work, the more valuable it will become. This factor has always been present, and the cost to commute has always been part of the cost of the property, no matter how many people pretended it wasn't. It will become a more important component as time goes by and gas prices rise further. The further people have to drive to work every day, the less a given area will be worth. The people who work there won't have these costs, of course, but most of the skilled trades that get substantial paychecks have to work in the main job centers, and there aren't as many of those in Saline or Manchester as there are in the central areas of Detroit and Ann Arbor. Corporate facilities are where they are, and if you can't afford to commute, you're either not going to work there or not going to live here.

Buy or Rent that home?

2008-05-02T09:07:20Z

Not everyone wants to be a real estate investor. For that matter, not everyone wants to own a home of any kind. And that is okay. Some people just don't want to be "tied down" or have to deal with a leaking water heater or have to take the chance on replacing a roof.

But for those of you who are still wavering between buying and renting and are wondering how the current Saline Real Estate market plays into that decision and whether or not it is worth it and...

Let's just lay it all out there for you so you can make up your own mind.

Here is our scenario: A house in Saline that costs about $150,000 will rent for about $1200 in most of the Saline area. The house is a 3 bedroom, 1 and ½ bath brick ranch, in good condition, with (maybe) a 1 car garage. Let's project that you will either rent there for 8 years or own there for 8 years. That's about the average length of time a home owner stays put. Renters will move more often, but will usually move into another rental house before finally buying a home. So those are the rules.

RENT

We'll start with the renter because the numbers are more simple. Starting rent will be $1200/mo. We'll raise the rents approximately 5% every other year. Years 3-4 will be $1250/mo. Years 5-6 will be $1310/mo and years 6-8 will be $1375/mo. Sound reasonable?

At the end of the 8 years you will have paid to your landlord $123,240. And the good news is you didn't have to shell out any other expenses for repair type items.

OWN

Taking the $150,000 house, we are going to say that you are going to get a 100% loan. Don't think your'e alone! If you have little or no money to put down, you can still purchase a home in Saline. In fact, now is the perfect time to purchase a home. Historically low purchase prices, coupled with low 30 year fixed rates, are just two reasons to purchase Saline Real Estate now.

FHA IS THE WAY. There are many benefits that an FHA mortgage can provide to buyers. The most significant benefit is enabling the seller to cover a 3.0% down payment and pay all closing costs. There are no income restrictions. Whether you are a first time buyer, or a seasoned buyer, this is the most flexible program available in the mortgage industry today.

Based on a purchase price of $150,000 with the seller paying costs and down payment with a loan amount of $147,268, Principal and Interest (P&I) is $882.95 based on a 30 year fixed rate of 6.0% + PMI (Private Mortgage Insurance, required on FHA loans) of $60.63 + $275.00 estimated taxes and insurance. Your total monthly payment will be $1,218.58.

THE RESULTS

Over that same 8 year period you will pay PITI (Principal, Interest, Taxes and Insurance) of $116,984.

That is $6256 less than if you rented.

Now we have additional factors we have to take into account. Over that 8 year period you will have paid in interest alone $66,755. Home mortgage interest is deductible on Schedule A of your Income Tax return. If you are at the 28% tax bracket, you will have seen a tax savings of $18691 over those 8 years.

Now the difference is even more in OWN's favor, by $24,947 over the 8 years.

Another thing to think about is the reduction in the principal balance of your mortgage. Over those 8 years, each month you paid your mortgage, some of that money (at first a very small amount) went towards reducing the amount of money you owe. Over the 8 years, that amounts to $18,008.

The difference is now in OWN's favor by $42,955 over the 8 years. Do I have your attention now?

Still one more factor to take into account: Appreciation. It seems that we always talk about appreciation of home values. Lately, though, the talk is about lack of appreciation. Here in Saline, we have seen a loss in value of about 25% in the past three years.

Historically, the Saline housing market has appreciated at 5% a year. But for our purposes, we are going to use a yearly average appreciation of 3%. 8 years at 3% per year appreciation (on average) will make that $150,000 home sell for about $190,000. That is a $40,000 gain.

Now OWN's favor is by $82,955.

It is fair to say that after 8 years there will be deferred maintenance that will have to be caught up. So subtract from OWN $5000 for carpeting, $2,000 for appliances, $5,000 for painting and $5,000 for miscellaneous.

You are still left with an advantage to OWN by about $65,955.

There are, obviously, multiple variable and unknowns. The market could continue to go south like some gloom-and-doomers would have you believe. It wouldn't surprise me at all if we stay flat in 2008 and 2009.

There are those who would have us believe the stock market run-up of the '90's, and the real estate boom of the 2000's wouldn't end. They did. Now we are led to believe that the Saline Real Estate market will never rebound. It will. People will still need a home to live in. Banks will still exist, with a business model to make money by loaning money (for home purchases). You can count on that.

Another factor is lifestyle. Perhaps you just don't want to own. I understand that. I've sold duplexes where the tenants have been there more than 10 years. They liked where they lived, and didn't see any reason to do anything different.

The bottom line? Talk with an experienced Realtor®. They can guide you through the numbers of your specific situation, so you can make an informed decision.

Duplex? Do what?

2008-04-30T08:08:01Z

One of the biggest decisions most people will ever make with their finances and their lifestyle is to buy (or sell) a home. Getting the best bargain in the purchase, or making the most profit on the sale, give buyers and sellers so much to think about that many may never stop to consider keeping that old house - or buying another - as an income-generating property. But the rewards, in savings, profits and problem-solving, can be high.

One option for buyers who otherwise might consider home prices beyond their reach is the property that pays for itself: a house you live in part of and rent out the rest (the simplest form is a duplex). This offers not only an obvious balance of cost and income, but perhaps lesser-known benefits in taxes and mortgage.

The rental unit(s) can be depreciated over time; considered to offset the rental income, this can lower your taxes on that income. At the same time, the addition of the rent to your finances helps you qualify for a larger mortgage, and investors who occupy their rental properties can, under certain conditions, get interest rates lower than those who do not. Of course you'll want to decide if the demands of being a live-in landlord are for you.

One of my early clients as a Realtor® is a prime example of what you can accomplish with an income-generating property.

Rob was in his late 20s, had a great job in the area, and earned a nice income. He could qualify for a mortgage for a "trophy" home, if he chose. Instead, Rob followed a game plan which I would have loved to have followed at his age.

Rob bought his first duplex with me in my first year of business. It needed some minor work (sweat equity) on the owner-occupied side, while the rental unit was nicely updated. Rob fixed up his side in the two years he lived there. On the two-year anniversary of the purchase of his duplex, Rob called to ask about the available duplexes on the market. He bought his second duplex a month later. He moved into the new duplex, taking the "worst" side for himself, and renting out both sides of his first duplex.

Over the next two years, Rob fixed up the unit he lived in, building more sweat equity. As Rob and I were regularly in contact, I knew to send him the list of available duplexes at his purchase anniversary date. Rob bought his third duplex almost four years after his first duplex.

Why always two years between purchases? Tax purposes only. Not being a tax-law expert, I'm not qualified to explain exactly why Rob always waited two years between purchases, except to say that he always explained it as being for "tax purposes". Ok.

To make a long story short, Rob now owns five duplexes. The first three are fully paid for. The income from those three are used to pay down the fourth duplex. By the time that Rob is in his mid-40's, he will have all five duplexes fully paid for. He can retire, if he wishes, and live off the passive income for the rest of his life. But knowing Rob, he'll keep building his empire.

Owning an income-generating property is not for everyone, but - from younger buyers offsetting their purchase costs, to seniors easing the expenses of their retirement years - it can be for all kinds of people.

Who know? You could be the next "Rob" that I'll be writing about?

Junk Mail

2008-04-28T08:14:03Z

With no fear of heights, I'm not worried about climbing up on a soapbox for a good rant. Here goes:

I've written previously about the struggles of my aging parents. If we're fortunate to have our parents around for much of our adult lives, it's something that we all have to go through. Think of it as an educational opportunity to prepare for our own aging - should that actually occur.

One of the tasks which my parents have asked that I assist with is to go through their mail, which I've been doing for a couple of months now. And what I have to rant about today stems from that mail-opening experience.

It is absolutely abominable what some so-called "marketers" will do to trick the gullible (in my parents' case, elderly)! Using envelopes with borders similar to the IRS' official mail. Using business names (in the return address area) which closely imitate an official government entity. Using stationery which closely approximates what you would expect from a government entity. These are all very common, and frequent, occurrences I've experienced in going through my parents' mail. Much to the chagrin of the mail marketers (they didn't expect that some educated 40-something would actually read their material), I just chuck it all in the trash, cursing their businesses all the while. So far, I haven't resorted to a common mail-marketer revenge tactic - to mail all their junk back to them in their postage-paid envelopes - but that's coming!

No, I didn't take photos of examples of these offending mail pieces - I didn't want to run afoul of the law. No doubt, though, that those b*****ds know full well who they are! And if you're in the "appropriate" demographic for their marketing efforts, you've seen their proffering already. Again, I say, B*****DS!!!

No Realtor® worth their MLS would ever disdain the use of mail in their own marketing efforts. It's one of the many effective marketing efforts that we use in our daily business. But stoop to the level of those mail marketers who prey on the elderly and gullible with their shameless approach? Never!

Let this be a lesson to all Realtors®. Use the mails, but use them with respect for yourcustomer, your profession, and yourself.

OK, I'll step off the soapbox now.

What do you want - Part I

2008-04-25T09:06:28Z

When it's time for you to begin looking at Saline real estate, the first question I'll ask you is "What do you want?"

Let me paint a word picture: Why does a 60-watt bulb light a room, but give little warmth, while a laser beam will burn a hole through the wall? The answer: Focus.

The more focused you can become about what you really want in your Saline real estate, the more powerful a force you become in the marketplace.

But, how do you really know what you want?

Your first inclination may be to go out and look at lots of houses. You want to experience first-hand what your "wants" both look and feel like.

Many people start off with a list of requirements that look like:

"Must Have": What you absolutely know you want
"Should Have": What you think you want
"Could Have": What you're not sure you want
"Won't Have: What you absolutely know you don't want

For any number of reasons, what people say they want doesn't always line up with what they really want in their minds and hearts. A lot of times that's because of the difference between theory and application: being able to actually drive the commute or experience how many flights of stairs there are gives people a clearer picture of "Could" vs. "Won't". The tricky part is separating the borderline "Must Have"s from the "Should Have"s.

Have you ever heard the advice, "You should always buy a home where there are good schools?" There are advantages to this because these are neighborhoods which are (in general) the last ones to decline and the first ones to appreciate, but remember that if the neighborhood has a reputation for good schools, that reputation is already priced into the house.

If you have school-age children, you may save money by buying in a less expensive neighborhood and sending your kids to private schools. You will get more house for your money if you don't have to pay for the school district's reputation. And you may get more upside from an ascending school district which is building a great reputation than one that's maintaining its high scores. When the best kept secret in the area comes out, people will be looking for that good value.

Most of us consider commuting a necessary evil based on where we live and work. Time is money, right? Well, almost, because no matter where you were born, what your parents have, or what your opportunities are, everyone starts off with 24 hours in a day.

You can measure the value of your time in two ways. Economists measure the value of time in terms of opportunity cost, the amount of money you can make with your time at its highest and best use. Most people measure it in exactly the same way except with things they can be doing - activities like spending time with the family, or reading a book.

Now consider the cost of your commute. Let's say you've live in your home for five years and take the same commute each day. You earn a conveniently round number $100,000 and work 50 weeks out of the year for 5 days a week. Here's what your commute costs:

At only half-an-hour each way, the commute costs $62,500 over that period and $125,000 if your commute is an hour (two hours a day) each way!

There's no value judgment behind these numbers. Some people want to save money to keep their families fed, happy and well-educated so they will trade more commute time for cash savings. Others prioritize spending more quality time doing other things and choose to allocate more resources to the problem. My thanks to Steve Leung for this analysis and the ideas built around it.

The beauty is that the choice is up to you and experiencing a house search with an expert is an effective way of truly understanding what you want and what you're willing to trade-off in your search for your Saline real estate.

PMI - Private Mortgage Insurance

2008-04-23T08:45:38Z

As a home buyer in Saline, you want to know everything about the process before talking with anyone about your plans. That's completely understandable.

Toward that end, I'd like to address the topic of Private Mortgage Insurance, or PMI. You'll be paying PMI, in one way or another, whenever you put less than 20% downpayment on your Saline home purchase. If you're a first-time homebuyer in Saline, coming up with that 20% downpayment may be a real struggle, so it's especially important to understand PMI.

From Wikipedia, the free encyclopedia: Lenders mortgage insurance (LMI), also known as Private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property.

Another way to put it is that PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value.

PMI plays an important role in the mortgage industry by protecting a lender against loss if you default on a loan, and by enabling borrowers with less cash (like a first-time buyer) to have greater access to homeownership. With PMI, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a large down payment.

In the past, most lenders honored consumers' requests to drop PMI coverage if their loan balance was paid down to 80 percent of the property value and they had a good payment history. However, consumers were responsible for requesting cancellation and many consumers were not aware of this possibility. Consumers had to keep track of their loan balance to know if they had enough equity and they had to request that the lender discontinue requiring PMI coverage. (As a side note, I track your home's value for you, and call my clients when it appears that they may be able to drop PMI). In many cases, people failed to make this request even after they became eligible, and they paid unnecessary premiums ranging from $250 to $1,200 per year for several years. With the new law, both consumers and lenders share responsibility for how long PMI coverage is required.

You have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan. If the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon thereafter as the loan becomes current. Lenders must terminate the coverage within 30 days of cancellation or the automatic termination date, and are not permitted to require PMI premiums after this date. Any unearned premiums must be returned to you within 45 days of the cancellation or termination date.

For high risk loans, mortgage lenders or servicers are required to automatically cancel PMI coverage once the mortgage is paid down to 77 percent of the original value of the property, provided you are current on your loan.

If PMI has not been canceled or otherwise terminated, coverage must be removed when the loan reaches the midpoint of the amortization period. On a 30-year loan with 360 monthly payments, for example, the chronological midpoint would occur after 180 payments. This provision also requires that the borrower must be current on the payments required by the terms of the mortgage. Final termination must occur within 30 days of this date.

It's always best to speak with a lender before beginning your Saline home-shopping experience. Your lender will explain to you all of your options regarding PMI. If you'd like the names of some outstanding local lenders, give me a call or send an e-mail.

1469 Middlewood, Saline

2008-04-21T08:56:21Z

Welcome to this brief tour of my new listing at 1469 Middlewood in Saline. Priced at $255,000, it is available immediately.

This super-sharp colonial in Maplewood Farms is in a great location - central to the subdivision, on the northern edge of Saline, within walking distance to the elementary and middle schools, the public library, and near a main road into Ann Arbor.

This traditional, yet highly-versatile home is in beautiful, move-in condition with lots of natural light. You will be impressed.

A bright white kitchen.

Generously large bedrooms.

A partially-finished basement.

And if you act in time, you can enjoy summer evenings in the huge screened porch or out on the deck.

Notables:

* City of Saline

* Taxes: Approximately $5576 (2007)

* Schools: Saline

This is a fabulous home!

Are you Pre-Qualified or Pre-Approved?

2008-04-18T07:53:43Z

Before you begin to shop for Saline real estate, it is best that you set up a time to meet with a mortgage lender, so you can figure out how much you can afford. This will put you in a better position as a buyer.

It is important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.

To get pre-qualified for a loan, a lender will collect information about your debt, income, and assets. The lender will also look at your credit profile and your assets for a down payment, so that you can get an idea of all the different loan programs that would work for you. The lender will then issue to you a pre-qualification letter indicating the amount you are pre-qualified to borrow.

It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow. It is not a commitment to lend.

Getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home, because you have been approved for a loan for a specified amount.

To get pre-approved, you will complete a mortgage application. With the application, you will provide the lender with various information - your employment, assets and financial status. The lender will also review your mortgage options and submit your application to the investor that best meets your needs. Once the application process is complete, you will receive a pre-approval letter indicating the amount your lender is willing to lend you for your home.

A pre-approval letter is not binding on the lender; it is subject to an appraisal of the home you wish to purchase and certain other conditions. If your financial situation changes (e.g. you lose your job), interest rates rise or a specified expiration date passes, your lender must review your situation and recalculate your mortgage amount accordingly.

So, when it's time for you to shop for Real Estate in Saline, ask me for the names of some outstanding mortgage lenders.

Ann Arbor Market Statistics - April 2008

2008-04-16T09:40:25Z

As you all know, I review our market statistics around the middle of each month.

What I'd like to focus on this month is the Ann Arbor real estate market.

The first chart I'd like to review is shown above. I've tracked real estate activity for the Ann Arbor market since 1996. There is a definite seasonality to the market - strength in the summer, weakness in the winter. A reading above 25% is a "seller's" market, while a reading below 20% is a "buyer's" market.

It's no surprise to learn that we have been in a "buyer's" market in Ann Arbor since the end of 2004 - more than three years, now.

What's intriguing about this first chart is the strengthening of the Ann Arbor market since January. What could be the cause of this?

This second chart (above) shows 2 lines. The top line shows the number of homes available for sale (listings) in the Ann Arbor area. The lower line shows the number of homes sold each month.

In answer to my question posed above (What could be the cause of this?), the strengthening of the Ann Arbor market since October is a direct result of fewer homes listed for sale. How could this make the market stronger? Well, with fewer homes competing for the available buyers, it's more likely that any of the homes listed for sale will actually sell during the month. That's what we mean by a strengthening of the market!

Another interesting observation from the chart is that the number of sales in the Ann Arbor area has been rather consistent since 2005! In a previous post, we learned about the three "P's" that you control when you sell. The homes that are selling now, have been selling since 2005, are those that have consistency between the three "P's". Go back and check that post for a reminder.

The final piece of the analysis of the strength of the Ann Arbor real estate market is the months of supply of homes presently on the market.

This table shows the "raw data" that makes up the charts shown above. On the far right hand side of this table shows the "Months Supply" in each price range. Rather than focus on any particular price range, it's more helpful to understand the overall level of inventory of homes for sale.

As of mid-March, at the present pace of sales of homes in Ann Arbor, there are enough homes on the market to supply nearly 12 months of demand. This is down significantly since February, when there was nearly a 20 months' supply of homes for sale. In the past few years, it's been typical to have about 6 months' supply of homes for sale, so our market is improving toward our average.

If you're looking to sell your Ann Arbor real estate in this market, take heart! Call me!

Mill Pond Park in Saline

2008-04-14T08:35:13Z

Every city and town has one park that tends to define the best features of the community. In Saline, that would be the Mill Pond Park. When you're looking for Real Estate in Saline, Michigan, having a great park in town is an important consideration.

To those families with young children, most of us know the park more simply as the ROMP, which is an acronym for Re-create Our Mill Pond park. A number of years ago, civic leaders in Saline organized an effort to build a "super structure" playground for young children at Mill Pond. The ROMP structure has been a hit with my kids over the years! Here's what it looks like from the sledding hill:

And speaking of a sledding hills, one of the better ones in Saline is located at the northeast corner of the park. From the bottom, here's what the sledding hill looks like in the spring:

Many of us have our family pets, and the Mill Pond Park accommodates the dog owners in Saline with a "leash free" zone. Here's what that looks like:

It's a really large area, and borders the Saline river, so your dog can go for a swim if it's really warm out. Just watch out for the swans and geese - they bite!

The entire length of Mill Pond park borders the "Mill Pond" area. Back in the 1800s, when Saline was being built, the Saline River was dammed up to create the mill pond. The pond water was used to drive a water wheel at the lumber mill, where area trees were converted to lumber for home building.

One of the other enjoyable activities at ROMP (as I call it) is to take the kids fishing. There are mostly panfish in the pond these days, but occasionally you'll hook a large carp - and then, hang on!

While you're at the play structure area, you can shade yourself under the pavilion, which is available for lease for large groups through the city of Saline.

Or, you can simply enjoy a walk around the park, which extends upstream from the mill pond into the Saline river, where you can enjoy the babbling brook.

Each summer, Saline is host to the Celtic festival. Much of the Celtic festival takes place at the Mill Pond park.

The park is also used by the Saline High School Cross Country teams. When you walk around the park and see some of the hills the XC runners have to go up (!!!), it takes your breath away. Thank goodness they're young when they do those runs!

Shop, or Buy?

2008-04-11T12:32:50Z

Just another quick note to let you know about recent happenings in the Saline real estate market, and with a question: Do you Shop, or do you Buy?

What's the difference?

Shopping means that you check out all of your available options and research until you conclude which choice is best for your needs. Then, you go out and buy.

These days, over 80% of home buyers do their shopping via the Internet. In years past, most home shoppers would dread having to drive around and look at many homes before making a decision. These days, buyers use the Internet to narrow down their home search choices to a few homes, which they then go out and see in person.

So, when it comes time to sell your home, you want to be absolutely certain that your home is marketed effectively and extensively via the Internet.

And you can be certain that will happen with me.

What are you waiting for?

Been Away for So Long

2008-04-07T09:54:07Z

There sure is nothing like an unplanned absence from the office to bring new perspective to the work we do as Realtors®!

In a blurred history of the past two weeks, here's the "Cliff Notes" version.

I've written about my mother in the recent past, and her recent medical challenges. When she called me one morning about two weeks ago, complaining of general soreness and slurring her words, I jumped into action. Too many of my friends have had parents suffer strokes for me not to have recognized the symptoms immediately. I left everything at my office and raced over to take my mom to emergency medicine. In less than an hour of her phone call to me, she was hooked up to every medical contraption I've seen in an ER. Then the waiting began. Meanwhile, I had to arrange for home-health assistance for my dad, who's nearly chair-bound. And so went about a week of my life, in a blur of hospital rooms, doctor consultations, home-health-care aides, and so on.

The new perspective I have for the work we do as Realtors is that you can still serve your clients in an awesome way, even in the midst of turmoil! I'm so grateful for the unselfish assistance of so many of my office peers, who stepped in to handle various deals in process. They have earned my undying gratitude.

So now begins the task of picking up my business - pulling the various fragments back together, and getting a general sense of the pulse of the market.

Never have I appreciated the joy of the work we do as Realtors® more so than today.

It's good to be back!

Curb Appeal - Part 1

2008-03-26T07:28:42Z

Despite the residual snow on the ground outside - I know, it's ONLY the end of March! - it's time to start thinking about ways to improve your likelihood for selling your Saline, Michigan home this spring.

Curb appeal is the aspect of your home which a prospective home buyer can see from the curb or the street. It's the first impression your home gives to anyone who approaches your home.

There are many aspects of curb appeal to consider, including the condition of your home (roof, trim, paint, clean windows, etc) and landscape (lawn, gardens, sidewalk(s), driveway, patio(s)). Today I'll focus exclusively on only one aspect of the "Curb Appeal" of your home - the landscape as you approach your front door.

What is the condition of your front sidewalk? Is it smooth and level? Are there trip hazards - raised/sunken sections of the sidewalk?

Are the plants along the edge of your front sidewalk overhanging and interfering with a buyer's walk to the front door?

Do you have a fresh "Welcome" mat outside your front door?

Are the windows on the front door, or to the side of the front door, clean and shiny?

Does the doorbell work?

I'll always recall the sale of home several years ago, for the complete effectiveness of the curb appeal as we approached the front door.

As we approached the home, the sellers had installed, to each side of the sidewalk approaching the front door, a hanging flower basket. The metal pole holding the hanging basket on each side was shaped in the form of a half-heart. In other words, when you looked at the poles from a distance, you saw the form of a Heart outlined by the poles. The hanging flower baskets were full of vibrantly colored flowers. All in all, the setting was incredibly inviting. Once we were inside the home, the buyers (who already had a fabulous first impression of the home), fell in love with the interior, and immediately made an offer to purchase. Sadly, though, this example is more unique that you might imagine.

When it comes time for you to sell, be sure to ask your Realtor® to help you maximize the first impression of your home's curb appeal. It can earn you a higher sale price and a likely faster sale.

Who Are We All Talking To?

2008-03-24T08:35:59Z

When you drive down the road these days, here's what you'll see the most:

Two out of three drivers are talking on a cell phone!

Who are we all talking to?

Is it my neighbors in Saline, Michigan all talking about the Real Estate market in their neighborhood? Is it an excited buyer talking about the sweetheart deal they just got on their new home? Are they calling a friend to join them for dinner at a local watering hole? Are they calling all their friends to b**ch about their property taxes?

Nearly every day, I watch my across-the-street neighbor back out of his driveway. As soon as he has his truck out on the street, he's dialing his cell phone. By the time he gets to the stop sign at the end of the street, he's happily gabbing away. What? He couldn't talk on a land-line phone before he left? Or, are we all so craving for privacy that we have to escape to our cars to carry on a private conversation?

No wonder the plethora of "all inclusive" deals from the major cellular carriers. Apparently the 3000 minutes per month plan (that's 50 hours each month on the cell phone) wasn't enough! Judging from all the folks talking on their cells while driving, it clearly wasn't enough!

There is a definite movement among our (nanny) governmental bodies, at all levels, to address the problem of distracted driving.

Folks, if we don't get a handle on our need to constantly be holding a cell phone to our ears, that privilege will be taken away from us.

And then how shall we talk?

This is Spring?

2008-03-21T18:53:51Z

OK, all you global warming folks. Where are you now?

Today being the first day of spring, isn't it lovely to have 6" of snow (so far) on the ground? Here's a look out my back window right now:

Isn't it lovely?

Just yesterday, we had green grass emerging in the back yard. Not any more!

Climate change? I think not!

Ann Arbor's Field of 64

2008-03-21T16:44:24Z

The Ann Arbor News has taken the concept of March Madness to another level!

In yesterday's "Connection" section, we looked upon a familiar sight - March Madness brackets. Except, this one was a bit different.

What the News has done is take 64 great things about Ann Arbor, seeded them into 4 regions and 16 seeds, and matched them against each other.

The result? The greatest thing about Ann Arbor is Zingerman's.

Now, you may or may not agree with the ultimate champion - is there ever consensus agreement about the eventual NCAA basketball champion? This bracket will sure get tongues wagging on what was included and left out!

The other three in the final four? Football Saturdays, the Michigan Theatre, and the Art Fairs. Now, really, is there anything better about Ann Arbor than these final four?

Congratulations to Zingerman's!

Read to Write

2008-03-19T08:18:17Z

Every once in a while, I like to veer off the course of all Real Estate, all the time. Today's topic is just such a diversion for me.

It's always been my impression that those who write well - and those who write for a living - are also likely to be those who read widely and extensively. There are some who are so gifted with the ability to write well that they may never read more than they write themselves, but those folks are likely to be few and far between.

While I've always enjoyed reading, it never was a priority for me. Other than the local newspaper (mostly my favorite writer in the Sports section), several Real Estate periodicals, and an occasional book (maybe 5 books each year), reading tended to end up in my "C" priority list.

So, in order to improve my ability to write, I set an ambitious goal for this year (2008). My goal this year is to read at least 50 pages in books each day.

As of mid-March, I'm averaging nearly 60 pages per day. Not bad.

I've even gone so far as to post on my Facebook profile both my goal and the books I've read (and am reading even now). Bold, but it sure keeps me motivated!

As I write this, I've just begun Leaves of Grass, by Walt Whitman. I'll say right off the bat that I've never been one for poetry, so this book is a challenge for me. But, we grow stronger by meeting and beating our challenges. Some of verse can really hit me ("I project the history of the future" - think about this awhile), while others become just a jumble of words in my head. Still, I plow onward.

Mostly this year, I've read biographies. Andrew Carnegie (U.S. Steel), John D. Rockefeller (Standard Oil), J.P. Morgan (Investments),Edmund Burke (British statesman), Mark Twain, and Frederick Douglass so far. Yet to read - Einstein, Lincoln, Washington, Horace Greeley, Edison, Tesla, Henry Ford, and many others.

Some of the biographers have done an outstanding job of writing, as the text is riveting. Some of these works were a challenge, too. It has struck me that one of the more difficult challenges is to write a biography. It certainly helps that the subject is a fascinating historical figure. Above that, though, a crafty biographer weaves a narrative story of the life and times of the subject. Many of these books have carried me back in time, such that I was made to feel like I was walking alongside the subject during their lifetime.

The fascinating part of a biography, for me, is that you can "see" across the horizon of the subject's lifetime over the course of a week of reading. You learn how the subject's early life affected them throughout the rest of their life. You learn how they made lemonade out of lemons. You learn how they conducted themselves with family, friends, and associates - sometimes for the good, sometimes not! You also learn how they aged - sometimes surrounded by family and friends, sometimes terribly alone. Each of these events in the subject's life is a teaching moment for my own life - again, sometimes for the good, and sometimes how NOT to live one's life.

It's been said that you learn from your mistakes, but that you can become brilliant by learning from the mistakes of others. Perhaps the flip side of this idea holds true, as well. You can also become a better person by learning how great people have conducted themselves and modeling that same behavior yourself.

Has all of this reading helped me to write well?

That's really for you, the reader, to judge.

All this reading has certainly made it easier for me to write. When you read and absorb how others have assembled their thoughts into words, sentences, paragraphs, chapters, and entire books, it helps you to begin to do the same. You have to learn to crawl before you can walk. With the books I've read so far this year, it has felt like I had to begin as a world-class sprinter!

All this reading has also taught me to savor each day, whether filled with success or with challenges. It's uncanny how you can read of an event in a biography, and then witness a nearly identical event in today's world. Scary, too. Those who fail to learn by their mistakes are doomed to repeat them.

With each book I've read, I've kept a journal of notes. Sometimes it's the way the author has developed an idea, or the way the words just seem to flow together. Other times, it's a summation of an idea the author was trying to convey in their work. I captured that thought while doing my research for this post:

What if you could learn the success secrets of the greatest people who ever lived? You can.

The lives of the famous and the infamous have been recorded in biographies and are ready for you to read and research.

The lives of great government leaders, businesspeople and humanitarians are there. You will read about successes and triumphs. You will also learn how many times champions lose on their way to winning.

In reading biographies, you may come to the startling conclusion of how much greatness you possess. You may conclude, "Hey, I can do that." You can make your life significant. Biographies help show the way. You only have to take the action to go to the library, bookstores or surf the Internet.

So, friendly reader, will you be the judge of how my reading has impacted my writing this year?

Market Statistics for Saline, MI

2008-03-17T08:32:38Z

As many of you know, I review our market statistics around the middle of each month.

What I'd like to focus on this month is the overall strength of the market in, and around, Saline.

The first chart I'd like to review is shown above. I've tracked real estate activity for the Saline market since 1996. There is a definite seasonality to the market - strength in the summer, weakness in the winter. A reading above 25% is a "seller's" market, while a reading below 20% is a "buyer's" market.

It's no surprise to learn that we have been in a "buyer's" market in Saline since the end of 2004 - more than three years, now.

What's intriguing about this first chart is the strengthening of the Saline market since October. What could be the cause of this?

This second chart (above) shows 2 lines. The top line shows the number of homes available for sale (listings) in the Saline area. The lower line shows the number of homes sold each month.

In answer to my question posed above (What could be the cause of this?), the strengthening of the Saline market since October is a direct result of fewer homes listed for sale. How could this make the market stronger? Well, with fewer homes competing for the available buyers, it's more likely that any of the homes listed for sale will actually sell during the month. That's what we mean by a strengthening of the market!

The final piece of the analysis of the strength of the Saline real estate market is the months of supply of homes presently on the market.

As of mid-March, at the present pace of sales of homes in Saline, there are enough homes on the market to supply over 12 months of demand. This is down significantly since February, when there was nearly a 20 months' supply of homes for sale. In the past few years, it's been typical to have about 6 months' supply of homes for sale, so our market is improving toward our average.

If you're looking to sell in this market, take heart! Call me!

Sure Signs of Spring

2008-03-13T17:01:47Z

Sure Signs of Springtime in Southeast Michigan!

The first hint of green grass through the snow and ice!

Flooded farm fields.

A half-moon through budding trees!

A snowy, flooded firepit, just aching for some roasting marshmallows!

Blue skies behind the switchgrass.

After the winter we've had, today was a GLORIOUS day! The first time we've hit 50 degrees since last fall.

The robins, red-winged blackbirds, and killdeer have all returned - albeit with some consternation about the snowy, frozen ground. Good thing we have plenty of neighbors who keep their bird feeders filled.

One more good thing about today? All of the melt-off is flowing into our ponds, streams, rivers, and eventually into the Great Lakes, which were in sore need of re-filling.