Snapshot Wisconsin: Winter's chill slows first-quarter home sales

A cool economy and a colder winter hurt first-quarter home sales, according to the Wisconsin Realtors Association.

Home prices dropped 3.1 percent in Wisconsin in the first quarter, compared to the same period in 2007. The number of home sales, however, dropped 24.1 percent from 2007 to 2008.

First-quarter real estate statistics

Median price Number of sales
County 2008 2007 Change 2008 2007 Change
Brown $136,700 $144,000 -5.1% 410 586 -30%
Calumet $150,000 $154,700 -3% 73 95 -23.2%
Door $174,000 $228,100 -23.7% 53 75 -29.3%
Fond du Lac $112,600 $120,000 -6.2% 153 174 -12.1%
Green Lake $95,000 $108,600 -12.5% 49 59 -16.9%
Kewaunee $96,400 $117,100 -17.7% 22 21 4.8%
Manitowoc $92,500 $92,000 0.5% 132 168 -21.4%
Marinette $76,400 $70,000 9.1% 58 92 -37.0%
Menominee NA NA NA 3 3 0%
Oconto $95,000 $132,000 -28% 57 84 -32.1%
Outagamie $131,400 $128,600 2.2% 296 401 -26.2%
Shawano $85,000 $95,800 -11.3% 48 69 -30.4%
Waupaca $95,600 $92,200 3.7% 84 99 -15.2%
Winnebago $120,000 $127,100 -5.6% 278 343 -19%
Regional total $123,100 $127,700 -3.6% 1,716 2,269 -24.4%
Source: Wisconsin Realtors Association

Wisconsin Economic Snapshot

Wisconsin is At Risk For Recession according to a recent USA Today online article. There were, however a handful of cities that are currently seeing expansion. Among those seeing expansion were Appleton, Eau Claire, Fon Du Lac, Green Bay, Madison, and Sheboygan. The Moody's survey examined four key indicators: Employment, Industrial Production, Retail Sales - Adjusted for inflation, and Income. A 3 month decline equated to At Risk assessment while a 6 month decline indicated a recession.

January 2008 Wisconsin Foreclosure Stats

According to recently released data compiled by ForeclosuresWI.com, a provider of Wisconsin foreclosure resources and statistics, there were a record 2,443 Wisconsin homes entering foreclosure in January, nearly 45 percent more than in the same month a year ago.

Over the last three years, foreclosures have risen more than 70 percent, to 20,995 in 2007 compared with 12,311 in 2005.

Milwaukee County leads the way with 616 in January 08 vs 410 in January 07.

Wisconsin 26th in January Foreclosures

Wisconsin ranked 26 in RealtyTrac's January 2008 Foreclosure Report. With 565 Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a banks). Eleven states are responsible for 80% of the January foreclosures with California, Texas, Ohio & Florida leading the way.

Comparatively speaking Wisconsin's numbers are a drop in the bucket, when considering those of California & Florida.

As I've speculated, this crisis is less detrimental to the housing market here in Wisconsin than in other parts of the country. If we can weather the current shower of Foreclosures, I think the real estate market will be at least satisfactory in Wisconsin before it is in many other areas of the country.

How Soft is the WI Housing Market - Lending Standards Tighten Across the Board

Countrywide kicked things off a few weeks back when they tightened their lending standards by implementing what they referred to as Soft Market policies. These New Soft Market policies are designed to help serve qualified borrowers in markets which are either declining or projected to decline in 2008.

The risk range is based on a Category scale wherein Category 5 is considered High Risk and Category 1 is Low Risk.

All Wisconsin counties fall into either Category 1 or Category 2 (Both Lower Risk)

What does this mean if your are trying to buy a house in Wisconsin?

For Countrywide Purchase Loans:
Maximum financing will be reduced by 5% if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.

For Countrywide Home Equity Loans:
Maximum financing will be reduced by 5% if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.

This recent move by Countywide is probably more of a sign of things to come than anything else. Tightening up on appraisals is an obvious place to start trying to eliminate some lending risks.

Today's headlines reiterate the trend of US Banks tightening their lending standards. According to a recent Fed Survey "About 55% of domestic respondents indicated that they had tightened their lending standards on prime mortgages," the Fed survey said. That was up from about 40% in a previous survey released in November.

According to an article in todays USA Today By Sue Kirchhoff,

About 60% of U.S. banks instituted tougher criteria for revolving home-equity credit lines. And 80% of domestic lenders set higher standards for commercial real estate development loans, the highest level since the Fed started asking that question in 1990.

"Banks are increasingly unwilling to lend, even to creditworthy borrowers," Moody's Economy.com said in an advisory to clients. "A major risk to the outlook is that lenders overtighten credit standards."

The Fed survey covered a swath of U.S. and foreign banks for the three-month period ended Jan. 17. It was completed before the Fed cut a key interest rate by an aggressive 1.25 percentage points in two moves on Jan. 22 and Jan. 30, noting that credit had tightened for some firms and consumers.

Just further evidence that lending criteria is and will continue to become more stringent. Yes, even taking into consideration the recent rate cuts. Even if the survey were completed today my feeling is that credit standards would still be moving in the same direction. The rate cut cannot in and of itself repair the current damage.

Wisconsin's Economic Outlook: Snapshot of the Midwest

According to the Wisconsin Bankers Association CEO Economic Conditions Survey, bank CEO's feel that Wisconsin's economy is weaker than last year at this time, but most feel a recession is not in the cards for 2008. The December 07 survey of 132 Wisconsin Bank CEO's is a forward looking questionnaire geared toward Bank CEO experiences in the previous 6 months and expectations for the next 6 months - in this case the first half of 2008. 52 % of respondents feel that the current health of Wisconsin's Economy is good and 36% feel that it is fair.

In The Next 6 Months

- Residential Loan Demand

60% feel that demand will stay the same

- Commercial Loan Demand

65% feel that demand will stay the same

- Rates

85% feel short-term interest rates will decline

46% feel long-term interest rates will decline

44% feel long-term interest rates will remain the same

In The Past Six Months

- Foreclosures

49% home foreclosures remained the same

49% home foreclosures increased

- Bankruptcy

54% residential and business BK's stayed the same

41% residential and business BK's increased

- Past Dues on Residential Mortgages

50% saw increases

47% stayed the same

Being a broker and small business owner this survey seems like a fair assessment of the state of things right now. Not necessarily sold on the idea that it's a great representation of the midwest as a whole, but I think it's probably not too far off, with the exception of Ohio from what I here.

After a crazy day like today it will be interesting to come back and look things in June!

WHEDA Loans - A Unique Opportunity for 1st-time Homebuyers in Wisconsin

By Shannon Luscher

History of Why WHEDA was Created

The Wisconsin State Legislature created the Wisconsin Housing and Economic Development Authority (WHEDA) in 1972 to meet a vital need for affordable housing for low and moderate income residents. Further legislation in 1983 broadened WHEDA's mission to include both small business & farming financing options.

Who they are & What they do!

WHEDA is an independent authority, they are not a state agency. WHEDA is a lender, they are not a granting Agency. WHEDA issues bonds and notes for sale to finance housing development for homebuyers at attractive rates and terms.

WHEDA Programs

HOME Loan

Offers low cost, fixed interest rate financing to low-to-moderate income first-time homebuyers.

HOME Loan for Veterans

Offers low cost, fixed interest rate financing to military veterans purchasing a home.

Zero Down Loan

Offers first-time homebuyers an affordable, fixed-rate mortgage with no down payment.

HOME Plus Loan

Provides financing of up to $10,000 for down payment and closing costs and, a line of credit for future home repairs.

Partnership for Homeownership

A partnership between WHEDA and the US Department of Agriculture - Rural Development that provides affordable home financing for Wisconsin's rural residents.

Lindsay Heights

A unique homeownership opportunity in the City of Milwaukee.

There are income limit and purchase price limit eligibility requirements for the WHEDA Loan Programs. Furthermore it is easier to qualify for a HOME Loan if the property resides in a designated Target Area.

WHEDA Grant Opportunity

Funding WHEDA grants was made possible through a grant WHEDA received from the Federal Home Loan Bank of Chicago (FHLBC). Grants are available on a first-come, first-served basis and are designated to be used for down payment and closing cost assistance to first-time home-buyers in specific urban and rural markets. Down payment assistance is in the form of a 0% interest, no monthly payment, 5-year forgivable grant of $5,000 per household.

Am I eligible for a grant?

• Available to first-time homebuyers that meet specific income requirements and use a WHEDA HOME Loan

• All borrowers must participate in six to eight hours of face-to-face homebuyer education

• Borrowers must invest a minimum of $500 into the loan transaction

• Borrowers cannot receive cash back at the time of loan closing

• These grant assistance dollars cannot be used with other FHLBC funds, such as Down Payment Plus

• Disbursement of the grant assistance funds will come from a designated FHLBC grant administrator

• WHEDA standard HOME Loan underwriting guidelines apply

For more info on WHEDA's 1st-time Home-buyer programs and for current WHEDA rates - Wisconsin residents can contact Shannon.

Shannon Luscher
VP Elite Mortgage Solutions, Inc.

Visit the Elite Mortgage Daily Blog for Mortgage News & Insights at
http://elitemortgagesolutionsdailyblog.com/
Wisconsin borrowers can find more information about rates and products by visiting my comprehensive website - http://www.elitemortgagesolutions.com/

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