Detroit Real Estate

The politicians are running all over trying to put band-aids on the Metro Detroit housing market.   NAR is screaming to do this, mortgage lenders are yelling to do that, and real estate agents are saying another something else.  There is no clear plan.  Some Metro Detroit real estate agents are even dumb enough to advocate down payment assistance programs so they can help themselves right now.  The lobbyists are getting rich, and the average American are getting mad at big business, banks, and politicians.  Some of the fixes are helping but they won't be able to fix the Detroit housing market.

The only thing that will fix the Metro Detroit housing market is time.  At issue is the huge home price devaluation.  I don't believe ever in American history before have homes lost 25 - 90% of their value before.  People are stuck in their Metro Detroit homes because they owe more than their house is worth.

Even if they

•  lost their job
•  have a major medical illness that they can't work
•  get a divorce
•  have a death in the family

......they have no way of selling the house.  The option is either to short sale the house or let it go into foreclosure.  This option is not going to change for many years to come no matter what anybody does.

The house has to go back to the bank as a foreclosure.  I had several calls this week from clients who lost a family member but they can't afford to pay the mortgage to sell the house as a short sale.  The house is just isn't worth it.  They are letting it go as a foreclosure.

The second is basic economics.  We have too much supply for the amount of demand.  That again won't change for years.  Because of bank rules every Detroit foreclosure and short sale seller won't be able to buy for 3 to 5 years.  ( Yes you heard me right.....FHA and VA won't let you buy a home for 3 years if you have a short sale)  

Until these Metro Detroit foreclosures and short sellers are back in the market to buy a home the Metro Detroit housing market can't be fixed by anybody, any solution.

We need more Metro Detroit home buyers and the only sources they can come from is:

1. New immigrants
2. Young people buying their first home
3. or the foreclosed people or short sales sellers

 So until time passes and all of these 3 categories of home buyers can increase to meet the supply of foreclosures the Detroit suburb housing market will remain the same.

So my advice to Metro Detroit home buyers is to buy for the long term.  Plan on living in the home for 5 years +.

Russ Ravary your Metro Detroit real estate agent

helping Oakland and Wayne County real estate buyers and sellers (Michigan)

 Livingston County Lakefront homes for sale 

 In the last year 167 Livingston County lakefront homes have sold for an average price of $259,193  and were on the market an average of 126 days.  There even was one home that sold for as little as $20,000.  Right now there are 287 Livingston County lake homes for sale and they have been on the market an average of 233 days.

So taking all this into account there is about a 1.71 year supply of Livingston County lakefront homes for sale.  If you are looking to buy a lakefront home soon give me a call or email me with any questions.

Search Livingston County lake front homes for sale and get the latest listings emailed to you weekly!

Russ Ravary your Metro Detroit real estate specialist

My quote of the day is:

Each day is a gift use it wisely

Comp information courtesy of RealComp II Ltd

I'm going to cheat tonight and tag team off another blog I read and explain where I think the Metro Detroit real estate bottom will be.  All these people that say the bottom is coming I think are wrong.  And I don't think whether it is Metro Detroit real estate, California, Texas, or the Carolinas.  I think we are a ways away from the real estate bottom.

Here are my reasons:

It is simply about supply and demand we have too many homes for sale for the amount of qualified home buyers.  This is my thinking.

1. When you have had a foreclosure you can not buy for 3 years at the minimum because of bank rules.  You have to be out of a foreclosure for 3 years before you can buy again.  That is for a FHA Loan for conventional loans it is longer.  So all these people in foreclosure can't buy.  That is a large amount of potential home buyers that can't buy.
2. What we need to fill those homes with an equal amount of people.  That has to be new immigrants from other countries, kids growing up and being able to afford a home (they have to have a job), investors, foreign investors.  The number of foreclosed homes has to equal the number of new buyers.
3. Many of these foreclosed people will never be able to buy  a Metro Detroit home again because the loan rules have changed.  There are no more stated loans, there are very few 100% loans, there are no more sub-prime loans.  Will they ever be able to qualify with the new bank rules?   Many of them will never be able to buy a home.
4. Some of the people will never buy again because they are too old.  It's not because of the banks won't let them buy because of their age, it's will be their choice.  Some of these foreclosed people are in their 50's and 60's.  They may decide not to buy so close to retirement.
5. Some of these people that were foreclosed never saved for a down payment.  Now you have to because of the stiffer bank rules.  So some of these people will never buy again because they don't have the saving habits.

The economy and confidence has to come back for people to afford the higher priced homes.  The younger new buyers need jobs.  All of us need jobs.  Plus mortgage interest rates have to stay low  in order for people to afford the higher priced homes.  Salaries will have to go up to make all the large homes that have been built in the last 10 years to be affordable.

My opinion the rash of foreclosures will slow down this year because 2006 was close to the end of subprime mortgages. Now I am saying the majority of foreclosures will slow down, not all of them.  We will still be seeing more foreclosures because there are people that have struggled for years and still letting them go.  Some people just can't hang on because of the economy.

BUT WE NEED THE ECONOMY to turn so people can stay in,  and afford their homes.  Otherwise the home foreclosures will continue.  Where the bottom is or when it will happen nobody knows.  Not I or any of the self proclaimed "experts" know.

If you are a real estate agent the key is to work hard and don't worry about where or when the bottom is.  If you are a seller don't bank on when the market will turn.  Make a decision each year whether it is a good time for you to sell in the current market.  If you are a buyer buy for the long term.  Buy for 10 years or more.  Don't wait for the bottom, because by the time everybody realize it is the bottom prices will be rising.

Just my thoughts about the real estate bottom

Russ Ravary your Metro Detroit Real estate agent

Livingston County Lakes

Many Hamburg Twp Lakes are part of Livingston County "chain of lakes" that are connected by the Huron River.  You can go from one lake to another via the chain of lakes.  Like Oakland County MI Hamburg Township has a large amount of lakefront properties.  Years ago this area was a resort area for Detroit residents.  Metro Detroit residents had their summer cottages and weekend getaways here.  You have to realize years ago there were no major highways.  Many roads were dirt and rough so it took longer to get to Livingston County from Detroit.  Even though Livingston County is only 40 minutes today it may have taken hours to get to their lakefront cottage years ago.

Hamburg Township comes alive during the summer months with residents enjoying the lakes.   Whether they are fishing, boating, or just sunbathing Livingston County lakes are relaxing for all ages.  You can see families and friends putting around Hamburg Twp Lakes on a pontoon boat.  Whether they are speeding around on jet skis, wakeboarding, or water skiing Livingston County all sports lakes have it all. 

Livingston County Lakefront properties range from small 900 square foot lake cottages built in the 1940's to modern colonials built as late as last year.  What happens many times is that people will buy the old cottages and tear them down to build a brand new bigger home.  So sometimes you will see beautiful waterfront colonials right next to a small lake cottage.  

Below is a list of Hamburg Township Lakes.  Some are all sports lakes but some are just small lakes.

• Appleton Lake
• Bass lake
• Brighton Lake
• Buck Lake
• Cordley Lake
• Crystal Spring Lake
• Gill Lake
• Hamburg Lake
• Lake Gallagher
• Lake Ibis
• Lake Oneda
• Lake Tioga
• Little Hamburg Lake
• Mill Pond
• Ore Lake
• Portgage Lake
• Pleasant Lake
• Rush Lake
• Shangrila Lake
• Strawberry Lake
• Tamarak Lake
• Whitewood Lake
• Winans Lake
• Wolf Lake
• Zukey Lake  

                                                            Current Hamburg Lakefront homes for sale

 Search Livingston County Lakefront homes for sale

On the internet yesterday they said 48% of all subprime mortgages where either in foreclosure or at least one month late on their payments.  I just don't understand how Wall Street, and the banks did not understand the potential problems with these loans.  There are guys with masters and doctorate degrees that work for these banks and wall street.  They have high priced economists working for them.  The banks and Wall Street have so many people making over 6 figures that it would stun you on how much some of them make.

    Yet collectively nobody in this country or around the world in the banking industry realized how toxic these loans were.  Here are some interesting facts. 

• Proportion of sub prime mortgages made from 2004 to 2006 that come with "exploding" adjustable interest rates: 89-93%
• Proportion approved without fully documented income: 43-50%
• 1 in 5 subprime loans from 2005 and 2006 will end in a lost home
• Proportion with no escrow for taxes and insurance: 75%
• Percentage increase of interest rate on an "exploding" ARM resetting to 12% from 7%:70%
• Typical increase in monthly payment (3rd yr): 30% to 50%
• over 50% of all loansmade to African-Americans and over 40% to Latinos were subprime compared to only 19% of white borrowers
• Number of sub prime mortgages set for an interest-rate reset in 2007 and 2008: 1.8 million
• Valued at: $1.4 trillion loans outstanding
• 70% of subprime have prepay penalties; only 2% in prime

The problem is that these Metro Detroit subprime mortgages will affect us all.

American families not facing foreclosure will see the value of their homes decline by an estimated $265 billion.  Every neighborhood in Michigan has lost from 25 - 60% of the homes value back in 2004 -2005.
A city can lose up to nearly $20,000 a year in lost property taxes and other costs for every property abandoned by foreclosure.  I honestly don't know how some cities will survive with the loss of revenue.   Many Detroit homes that once sold for $70,000 - $90,000 are now selling for an average of $10,000.  The City of Detroit can't survive with the loss of revenue of that magnitude.

The years ahead will be interesting for many cities.  Unfortunately the only thing that can stem this tide is an influx of new home buyers.  That means either we have to have a large immigrant population buying homes and our kids grow up and need homes.  That is what the housing market will depend on.

                         Russ Ravary YourLivingston, Wayne, and Oakland County Realtor

Search Metro Detroit area foreclosures and get the latest listings emailed to you.