Dane County Market Update - January 2022 Last year, the real estate market got a little bit out of hand. We were seeing $50,000, $60,000, $100,000 over asking price. Buyers were buying without appraisal or inspection contingencies, and it was nearly impossible for someone to purchase a home if they had a home sale contingency. So what does that mean for today, and what does 2022 have in store for us? Quite frankly, many of us are expecting much of the same for 2022 - a severe lack of inventory, historically low interest rates, and high buyer demand are all going to form a perfect storm that fit together to create high levels of competition and rising prices. Let's take a quick look at where we've been so we can better understand where we're going and how that affects you in the 2022 real estate market. Through November, Dane County almost set a record for homes sold: just over 8,100. That's nearly double where we were 10 years ago. It's quite likely that we're going to see that 2021 set a record for annual number of sales. Likewise, median sales prices also set new records in 2021. We hit $365,000 for the median sales price in June and rates remained low. At the end of the year, interest rates were typically 3% to 3.25%. Finally, 2021 gave us the fewest number of listings we've seen in Dane County since the MLS started keeping track in the late nineties. This means we failed to keep up with demand by replacing the houses that went off the market. What does this mean moving forward? Should you sit the year out? Not exactly. In fact, I shared, in another recent post, the dangers of sitting this year out and waiting for a more buyer friendly market before you purchase your home. In short, waiting to buy is likely going to cost you thousands of dollars due to rising prices and increasing interest rates. It might be best to dig in your heels and make something happen so that you can get the most house for your money. If you are planning to purchase a house this year, it is absolutely essential that you connect with a realtor and a mortgage lender as soon as possible. Realtors will help you stay on top of new properties hitting the market much faster than your own online search on Zillow or Realtor.com, and we can advise you on the best strategies for you to use to put together a winning offer. Meanwhile, your mortgage professional should be a local lender with a strong reputation among local realtors. They will help you work to create your financing options and get you pre-approved so you know exactly what your budget is. In a competitive market, the reputation of your realtor and mortgage lender could be the difference between you getting that dream home you've fallen in love with or losing out to other offers. Choose wisely. Sellers, do not rely on the market to do the work for you. The best offers will come in on the best houses with the most exposure. Sellers that really want to capitalize on this market need to take all the steps necessary to make their house shine - make sure you work with a realtor that's going to maximize your exposure with their marketing so you can reach the highest number of potential buyers possible. Sellers, beware. The lowest cost or the biggest promises are not a good reason to work with a realtor. Make sure you hire an agent that can fully support any price that they promise you and make them show you exactly how they're going to use their marketing package to meet the highest number of buyers they can. If you have any questions about your unique situation, give us a call. We are always happy to talk. 

January 2022 Market Update: Oregon, WI Hey there, Oregon! 2021 was quite the year for our local real estate market. Prices jumped, inventory stayed low and competition for the best houses was fierce.  What does that mean for today? Let's take a look at where we've been and where we're going in the Oregon, Wisconsin housing market update. If you are thinking of selling this year you'll want to make sure you stick around until the end where we have some really interesting information that could save you thousands of dollars on your home sale.  I'm sure you've all heard the stories of the 2021 market, right? 97 offers on a property, $500,000 over asking, houses selling before the seller even knew they were going to sell their house. Those may be exaggerations, but there is certainly some truth to what happened last year. While December data is still trickling in, Oregon had the first year since at least 2011 (which is where my data stops) in which number of homes sold outnumbered the number of homes coming on the market. It's important to note that despite this, the number of listings coming on the market were not that far off from previous years. This is a great demonstration of the high buyer demand. Oregon, WI finished the year with only 16 houses active on the market. This is a reduction of at least 30% over each of the previous years. In 2021 Oregon hit a record (surprise, surprise) with a median sales price of $405,000 for single family homes - a 13% increase over 2020. So, that's last year and where we've been - what does that mean and where exactly are we going? Quite frankly, we expect this year to be very similar to last year, although maybe dialed down just a little bit. Does that mean you should sit the season out? Well, not necessarily. As I've discussed in a previous post, waiting out the season, or waiting for the market to shift, could cost you thousands of dollars down the line in terms of rising prices and increased interest rates. Here's our current advice for local buyers and sellers: Home buyers, if you are looking to buy a home, it is essential that you connect with a realtor and mortgage lender as soon as possible. Realtors can help you stay on top of properties, be aware of properties before they hit the market and connect with properties that aren't even going on the public market; whereas, your online search data is often going to be delayed when compared to what your realtor can offer you. Plus, realtors can advise you on the best strategies for you to use in competitive offer situations. Meanwhile, your mortgage professional should be a local lender with a good reputation among local realtors. They can help you come up with creative financing options and let you know what your preapproval amount is so you can define your budget. In a competitive market the reputation of your realtor and your lender could be the difference between you getting your dream home or losing out to other offers, so choose wisely. Buyers should continue to be prepared to make aggressive offers and get a little outside of their comfort zone if they want to win in this upcoming spring market. Sellers need to make sure that they do not allow the market to do the work for them. The best offers are going to come in on the best houses, and those are the ones in which the seller did not skip the work. Sellers that really want to capitalize on this market need to take all steps possible to make sure that their house really shines in addition to working with a realtor that's going to use new and aggressive marketing tactics to get their house in front of as many potential home buyers as possible.  Oregon sellers, you may want to keep an eye on another interesting statistic. Based on information I compiled from the South-Central Wisconsin MLS: Oregon based realtors, that is realtors that live in Oregon and focus their business in Oregon, averaged 11 days on market, while all other agents, including those that charge a flat rate for their service, averaged 34 days on market. That means outside agents took three times as long to sell your house. Three times? That's insane. Why does that matter? It matters because homes that sold over asking price averaged nine days on market, whereas houses that sold under asking price averaged 65 days on market. Time on the market matters and it's going to affect your bottom line. In addition, properties listed and sold by an Oregon-based agent sold on average for $7900 over asking price, meanwhile, properties sold by outside or flat rate brokers sold on average $2600 under asking price. That means there is a $10,000 swing in the difference between an Oregon-based listing agent and an outside based listing agent. In town we have a ton of great realtors with a bunch of different attributes from all sorts of different brokerages that have many different avenues and ways of doing things. If you pick somebody local you're probably going to be in great hands. As always, if you have any questions about your unique situation give us a call. We're always happy to talk and help our Oregon, Wisconsin neighbors.

January 2022 National Housing Update Welcome to 2022! As with any new year, many of us are wondering: what does this year have in store for us? We don't have a crystal ball, but if we take a look at where we've been and where we're sitting right now, that sheds great light into where we're headed in 2022.  Our prediction for the real state market in 2022 is that we will continue to see an increase in prices as well as a high level of buyer competition - similar to what we saw in 2021. The lack of inventory, the high demand of buyers and the historically low rates are sure signs that the market will continue to remain hot. In 2021 there was such high demand and lack of inventory that prices continued to creep up. Buyers across the board were willing to pay more than listing price for homes, giving sellers almost anything they asked for. Sellers had all the leverage and were taking offers with little to no contingencies - and the terms of those offers were most often in the sellers' favor. According to a recent report from the National Association of Realtors, growth in the housing inventory has slowed over the past decade in the aftermath of the 2008 housing crisis creating an underbuilding gap of 5.5 to 6.8 million housing units across the country since 2001. We have seen a surge of home sales since the pandemic, and in 2021, many regions set records for year-end home sales. What about home appreciation? The average consensus from our expert panel is that home prices will rise 5.7%. Rates are also a big topic of discussion. Most experts believe mortgage interest rates will increase in 2022 with the Federal Reserve raising interest rates at least two times. It's important to understand that from an affordability standpoint, a consumer buying a home today, versus a few years ago and potentially in the near future, is going to have a lower total payment, even though prices have gone up, since interest rates are currently so low. Based upon all the data - with interest rates still incredibly low and the buyer demand extremely high, as well as fewer homes hitting the market - we expect that the 2022 real estate market will be very similar to what we saw in 2021.   Quick recap- On a positive note: Buyers really want to buy Rates are low and should remain low relative to historical rates. The market is incredibly attractive to sellers. Sales will remain competitive, solid and strong throughout next year. Home prices will continue rising. The bad news: We're not building enough homes - there are more buyers than available homes. It is getting more and more difficult for first-time homebuyers to enter the market because of the low inventory and the increase in prices. If you have any questions about your unique situation, give us a call. We're always happy to talk.

The Real Cost of Waiting for the Market to Shift Before Buying Your Home Something we hear frequently right now is that people are waiting for the market to shift before deciding to make a move. There are a lot of life events that come into play in life that affect when it's the right time to buy a house, and waiting is sometimes the best strategy. However, I think there are a lot of people waiting for a crash or a shift in the market or for it to be a better time to be a buyer. I think that's the wrong strategy. Today I'm talking to the people trying to ride this thing out and the people that want to strike while the iron's hot. If that's you, stick around; we'll go over numbers and talk about why now may be the best time for someone like you to get into the market. We are currently on the verge of entering the first quarter of 2022. If we take a look at some basic numbers over the last four years, you'll see that in each quarter we've seen an increase in the median sales price of housing. In fact, over the last three years, we've seen prices at seven to 10% higher for the median in sales price by the end of June when compared to the end of the previous year. An increase of seven to 10% in six months? That's huge. On top of general appreciation, there's always conversation about interest rates. There's often the dooms day thoughts of "rates are going to go up" and "this is the year that rates change". I can tell you, though I've heard this story consistenly over the last number of years without much actual change, experts seem fairly confident that it's actually going to happen this year. Let's look at a chart provided by Fairway Mortgage Company; this is the predicted mortgage forecast from a number of experts. You'll see Fannie Mae and the National Association of Realtors have us at 3.1 or 3.5, whereas the Mortgage Brokers Association and Freddie Mac have us up at 3.7. So, no matter how you cut it, short of the Fannie Mae prediction, everybody else predicts an increase in rates. If that happens, there will be a major impact on what you're able to do within the housing market. Let's take a look at a sample scenario. Imagine you are a person who is pre-approved to purchase a house for $400,000 with 10% down. In other words, the maximum principle and interest payment that you're allowed to have is going to be about $1,567 a month. This assumption also includes you're at 3.25% interest rate. Let's take a look at these sample numbers and see what happens when we bump that rate up to 3.75% to help us understand what we may be seeing this summer. By this summer, that house is going to appreciate. So, that same house is now no longer valued at 400,000, it's $424,000 or $428,000 or $440,000, depending on where that appreciation rate goes. So, let's go at the low end, let's say 6% appreciation, which would be about the lowest we've seen over the past few years. Now, not only is the price of this house up to $424,000, but the interest rate has also gone up. It's up to 3.75%, which means your monthly payment is now about $1,767 per month. In other words, your payment has gone up about $200 a month for the same exact house, just because of appreciation and interest rates. The reality is you may not qualify for that monthly payment amount. If you're still approved at $1,567 we now have a different situation. Because of the rate increase, you can now afford less house. Which means, if you're trying to keep that monthly payment around $1,567 a month, and rates are up to 3.75%, you can now purchase a $375,000 house. Wait, there's more. Don't forget that by this summer that $375,000 house has also appreciated. So, what you're looking at in reality is roughly a $350,000 house today if waiting until summer to purchase. In other words, you've lost about $50,000 in purchase power by waiting until this summer to buy. What if this isn't the year that rates go up? Let's acknowledge that thought and take a look. It's probably unlikely that this will be the year that house prices don't increase as we've seen seven to 10% median sales price appreciation over the last few years, and we still have a significant shortage of  available houses. As a result, we expect to see prices rise once again this year. Let's look at that same 3.25% interest rate, 10% down, $400,000 purchase price. The interest rate remains the same but the house has appreciated. So, the house you can actually afford by June is $360,370; you've cost yourself $30,000 to $40,000 in purchase price, just because of the appreciation. So, what does this all mean? Well, if you're waiting for life events to occur, then by all means, wait. If you're waiting for that baby to come, that wedding to happen, that new job to take hold, or some other life situation is causing you to wait, by all means, live your life, do that thing.  But, if you know you're in the market and you know you're going to purchase, and maybe you're just waiting it out, or trying to decide if this summer would be a better option, now is the time. People buy and sell homes in all markets, so don't let this forecast scare you. If you're waiting for the crash, stop - it's not going to happen this year. By the time the market does balance out and become a favorable market for buyers, prices and interest rates will have gone up, and by then, you're going to end up spending more money for less house than if you do it today. If you want to talk numbers or look at your unique situation, let us know. We're happy to run some numbers and look at some possibilities and scenarios that could affect your decision making. We want to make sure that you make the right decision for you, whatever that may be. Let's talk soon.