My New Blog

In the RISmedia story below published in the REALTOR® online magazine, sellers still believe the value of their home is greater than the market indicates.  I have written in many blog posts, that there are three primary components to the successful sale of your home in ANY market.  They are:

• Correct Pricing
• Adequate Condition
• Proper Exposure

You wouldn't hire a cardiologist to pour the foundation for your new home....right?  So when you ask for the opinion of value from a REALTOR®, trust their advice.  Certainly, discuss their findings and understand the criteria and comparable properties they used to derive the value of your home. 

There are still real estate practitioners who will "BUY" your listing by promising an unrealistic value or who will say "O.K., we will try your price".  This is usually followed by continuous price reductions until you hit the correct market price.  Worse yet, the market will continue to fluctuate and your buyer will have purchased another home, passing over your listing because of an unrealistic asking price.

Many of the major real estate markets in the country are improving (watch for my new posts).  However, loan underwritting criteria is still very tough.  There are not as many buyers in the market.  Chasing the market to the correct price based on a feeling of what your home is worth can cost you valuable time.  Most often, it will cause you to take an offer well below the sale price of your home if you would have priced it correctly to begin with.

Remember, my business is built on referral.  If you or someone you know needs profession Real Estate services, please consider me.  I can be reached as follows:

907-230-3372  mjdroege@gci.net  www.MichaelDroege.com  http://mjdroege.wordpress.com

• 2011 President, Anchorage Board of REALTORS®
• 2011 President-Elect, Alaska Association of REALTORS®
• 2011-14 RPAC Trustee and Major Investor Chair

Sellers Overvalue Their Home’s Worth, Study Finds Daily Real Estate News | Wednesday, December 07, 2011 About 76 percent of home owners believe their home is worth more than their agent’s recommended listing price -- that’s up from 73 percent last year, according to a new survey conducted by HomeGain of real estate professionals and home owners. On the other hand, 68 percent of home buyers say homes are overpriced, with 32 percent saying homes are overpriced by more than 10 percent. “Home buyers and sellers continue to remain apart as to home valuations with the vast majority of home owners thinking their homes are worth more than their agents and the market are telling them,” Louis Cammarosano, general manager of HomeGain said in a statement. Source: “Three Quarters of Owners Continue to Overvalue,” RISMedia (Dec. 6, 2011) Read More Be More Persuasive on Pricing Pricing: Finding the Magic Number

In the article below published by Reuters, Lawmakers agree that 20% down payment requirements are onerous and will further damage the housing industry and homes values nationwide.  In our recent trip to Washington D.C. REALTORS (May 9-15, 2011) made our position on GSE reform and QRM's very well know.  REALTORS strongly oppose many of the provisions of Dodd-Frank and the proposed 20% down payment requirements to obtain a QRM (Qualified Residential Mortgage).

It is our contention that the size of the down payment does not indicate the quality of the loan.  It is much more important to vet the buyers credit worthiness and their ability to re-pay the loan.  Proper underwriting and scrutiny of a buyer is imperative.  Our current housing crisis was not caused by low down payments.  It was caused by unrealistically lax lending requirements including, Stated Income, Stated Wage, Stated FICO and low or no documentation loans.  These were highly speculative and DANGEROUS practices.  We are ALL still paying for these sins.

Residential housing accounts for $2.23 Trillion to the annual economy, nearly 1/6th of the nations economic activity.  The nation's finances WILL NOT get better without a healthy housing market.  Mandating higher down payments, lower loan limits and modifying or eliminating the Mortgage Interest Deduction is  NO WAY to insure a housing recovery.  We need reasonable lending practices to return and affordable loans available to consumers.  We enjoy the lowest interest rates in decades and the most affordable housing markets we have seen in years.  Washington needs to get out-of-the-way and quit trying to help.  Their continued manipulation is ill-advised and will lead to further economic declines.

Remember, my business is built on referral.  If you or someone you know needs professional Real Estate services, please consider me.  I can be reached as follows:

 Michael J. Droege  907-230-3372  mjdroege@gci.net  www.MichaelDroege.com  mjdroege@wordpress.com

 Lawmakers: 20% Down Payment Is Too High

A bipartisan group of lawmakers are urging federal regulators to overhaul a mortgage proposal that includes a call for a 20 percent down payment for the “safest mortgages,” saying that it could threaten a full economic recovery “from years to come.” In a letter obtained by the media on Wednesday, more than 160 lawmakers in the House of Representatives called the federal regulator’s mortgage proposal “overly burdensome government dictate” and said that the proposal would reduce the availability of affordable mortgages. In an effort to urge more responsible lending and borrowing, several federal agencies have been developing a proposed risk-retention regulation under the Dodd-Frank Wall Street reform law, which requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is considered a safe mortgage or a “qualified residential mortgage.” (FHA and VA mortgages would be exempt.) QRMs would be exempt from the 5 percent credit requirement but would have to meet certain guidelines, such as the proposed 20 percent downpayment requirement. Borrowers with less than 20 percent down could then be forced to pay higher fees and interest rates. In the letter, the lawmakers called the 20 percent downpayment guideline too high and asked federal regulators to consider lower downpayment loans that have mortgage insurance that would constitute a QRM. The National Association of REALTORS® has been an outspoken critic to the higher downpayment requirement, arguing that the 20 percent down payment would greatly jeopardize a housing recovery. “We need to strike a balance between reducing investor risk and providing affordable mortgage credit,” NAR President Ron Phipps said in a public statement last week. “Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home.” Source: “House Lawmakers to Regulators: Kill Mortgage Plan,” Reuters News (June 1, 2011)

According to the National Association of Home Builders and in the article below published yesterday in the Daily Real Estate News, housing affordability is at a 20 year high.  With interest rates low and housing prices affordable for most home buyers, now is the time to get your piece of the American Dream.

In an earlier post today I outlined the current mortgage rates from Homestate Mortgage (Lic. #189191).  Begin your quest for a home by meeting with a LOCAL mortgage originator.  My favorite is Lisa Falon (Lic.# 198601).  She can be reached at 907-762-7546 or via e-mail at Lfalon@homestatemtg.com.

I represent Spinell Homes, which has the BEST new construction values in all of Alaska at West Park in Anchorage.  Homes start at $300,700 for a 3 bed, 2 bath, 2 car ranch on lots up to 12,284 sf.

Have a great Memorial Day....the freedoms you enjoy today have been paid by the sacrifices of our men and women who serve in the Armed Forces.  Give them their proper respect and thanks on this weekend.

Remember my business is built on referral.  If you or someone you know needs professional real estate services, please consider me.  I can be reached as follows:

Michael J. Droege 907-230-3372  mjdroege@gci.net  www.MichaelDroege.com  mjdroege@wordpress.com

Affordability Reaches Highest Level in 20 Years
Homes are more affordable to more families, according to the latest index for the first quarter of 2011 that shows affordability reaching its highest level in more than 20 years.

Nearly 75 percent of all new and existing homes sold in the first quarter of 2011 were affordable to families earning the national median income of $64,400, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. The previous high was set in the fourth quarter of 2010 with 73.9 percent.

"With interest rates remaining at historically low levels, today's report indicates that home ownership is within reach of more households than it has been for more than two decades," says Bob Nielsen, chairman of the National Association of Home Builders.

The most affordable metro housing market in the nation? Syracuse, N.Y., in which 94.5 percent of all homes sold were affordable to households earning the area's median family income of $64,300.

Other metro cities ranking high on the affordability index were Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; Warren-Troy-Farmington Hills, Mich.; and Toledo, Ohio.

Meanwhile, the least affordable major housing market for the first quarter of 2011 was New York-White Plains-Wayne, N.Y.-N.J.

Source: “Housing Affordability Rises to Record Level, Tight Financing Continues to Constrain Sales,” National Association of Home Builders (May

We have been saying it all year....Mortgage rates are at an all-time low.  But it is not expected to remain this way.  The Fed will cease buying T-Bills in June which would indicate that interest rates will have to rise, unless private sector money will come in to fill the gap.

Lisa Falon (Lic. # 198601) from Homestate Mortgage (Lic. # 189191) reported today that they are offering the following rates: 

• 30 year fixed (conv) 4.5% 
• 15 Year fixed (conv) 3.75% 
• FHA and VA 3.75%  
• 5/1 ARM 3.0% 
• VA/VMP through Alaska Housing at 4.375

Home values abound and there are mortgages available at the lowest rates in years.  Lisa can be reached by calling her at (907) 762-7546 or via e-mail at Lfalon@homestatemtg.com

Remember my business is built on referral.  If you or someone you know needs professional real estate services, please consider me.  I can be reach as follows:

Michael J. Droege 907-230-3372  mjdroege@gci.net  www.MichaelDroege.com  mjdroege@wordpress.com

Buyers Better Hurry: Rates Reach New Lows
For the sixth straight week, fixed mortgage rates inched down, reaching new lows for 2011. The 30-year fixed-rate mortgage averaged 4.60 percent this week while the 15-year mortgage averaged 3.78 percent, Freddie Mac reports in its weekly mortgage market survey.

Meanwhile, the National Association of Home Builders reported this week that home affordability reached its highest level in 20 years, making the purchasing power for home buyers even better during this traditionally prime buying season.

Here’s a closer look at mortgage rates:

• 30-year, fixed-rate mortgage: Averaging 4.60 percent this week, it was down slightlyfrom last week’s 4.61 percent average. Last year at this time, 30-year rates averaged 4.84 percent. The 30-year fixed rate mortgage hasn’t been under this week’s 4.60 percent average since early December 2010 when it fell to 4.46 percent.
• 15-year, fixed-rate mortgage: Averaging 3.78 percent this week, it also was down from last week’s 3.80 percent average. Last year at this time, the 15-year fixed-rate mortgage averaged 4.21 percent. It has not been under this week’s 3.78 percent average since late November 2010 when it fell to 3.77 percent.
• 5-year adjustable-rate mortgage: Averaging 3.41 percent this week, it was down from last week’s 3.48 percent average. A year ago at this time, the 5-year ARM averaged 3.97 percent.

Source: “Fixed Mortgage Rates Continue to Find New Lows,” Freddie Mac (May 26, 2011)

According to the Housing Affordability Index and Case-Shillers Housing Price Index, the time to become a home owner is NOW.  Interest rates are on the rise (each 1/4 point rise can cost you 2.5% - 5% in buying power).  Housing has never been more affordable and rents continue to rise.  Lending requirements are still a bit tough and it is harder to pre-qualify, but get started with a LOCAL lending professional and get the ball rolling TODAY. 

Remember, my business is built on referral.  If you or someone you know needs professional real estate services, please consider me.  I can be reached as follows:

Michael J. Droege 907-230-3372  - mjdroege@gci.net  -  www.MichaelDroege.com  -  http://mjdroege.wordpress.com

Tables Turn in 2011 on Rent vs. Own
Rents have surged as home prices have dropped, which have prompted some to ponder whether homeownership is really worth it. Moody’s Analytics data has suggested that it makes more financial sense to rent than buy in many U.S. cities, but Moody’s chief economist Mark Zandi now says that is about to change.

"By mid 2011 and certainly by end of 2011, buying will be superior to renting in most parts of the country," Zandi says.

Home prices are expected to fall further, making more homes affordable, whereas rent prices are expected to continue to rise this year.

The following are a few of the top cities where it makes more sense to buy than rent, according to Moody data. (Experts often recommend buying when the price-rent ratio is below 15 and rent when it’s above 20.)

? Cleveland: 11.43
? Pittsburgh, Pa.: 11.71
? Detroit: 12.32
? Phoenix: 12.35
? Atlanta: 12.82
? Tampa, Fla.: 13.08
? Orlando, Fla.: 13.1
? Cincinnati: 13.74
? Las Vegas: 13.89

Source: “Rent vs. Own Ratio to Flip in 2011?” Fortune (Jan. 4, 2011)

Listed below are some very important reasons to get into your new home is 2011.  As discussed in the article below, Mortgage Interest Rates are up and climbing.  They are not changing rapidly yet, but rates have done from the high 3's to over 5 and at present are about 4.875. 

The Mortgage Interest deduction is one of the only tax deductions most Americans can take and it is SIGNIFICANT in tax savings and in amassing personal wealth.

Most economists believe in housing as an investment and believe that there will be positive growth in the housing market within 5 years.  Remember, values are down versus the highs of 2005-2006, but values are still up in double digits from 2000.  This is evidence that the housing market is not a short-term investment.  It can and will be most people's most valued asset over time.

Remember, my business is built on referrals  If you or someone you know needs professional Real Estate services, please consider me.  I can be reached as follows:

Michael J. Droege 907-230-3372  mjdroege@gci.net  http://www.MichaelDroege.com

Michele Lerner, author of Homebuying: Tough Times, First Time, Any Time, offers reasons why real estate is likely to improve in 2011. Here are five reasons she thinks consumers should consider a home purchase next year:

? Mortgage rates will stay low. Even with rates climbing — maybe to as high as 6 percent by 2012 — they are still well below where they have been historically.
? Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.
? Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.
? Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.
? Homes are shrinking. Homes are getting smaller, which has made them more affordable.

Source: Investopedia, Michele Lerner (12/24/2010)

I have been advising clients for well over a year, that if you are preparing your home for sale or wondering what projects return the most value, begin outside.  The article  below is from the National Association of Realtor's Value and Remodeling Report.  It validates the fact that the curb appeal and the well maintained look of the exterior of your home and grounds makes a BIG difference in the value (or perceived value) of your home.

If you have moss on your roof, immediately, a prospective buyer assumes you need a new roof and discounts the value of your home by $10,000 to $20,000 in his or her mind.  Worse yet, they may never give your home a second thought.  Imagining that it is a deferred maintenance nightmare.

Prospective buyers will fall in love with your home when they pull into your driveway if you prepare your home properly.  So, make that yard look million bucks, If you paint, put most of your work in the prep, it will show.  Consider some rock work wainscoting, maybe cedar shingle accents or a multi tone paint scheme.  Plant some trees and shrubs and MOW THAT LAWN (or snowblow....depending on the season).

Whatever it is, start from the outside, in.  Pay attention to detail and make sure to do quality work.  It is all for naught if the work appears to be disjointed and done sloppily.

Remember my business is built on referrals.  If you or someone you know needs professional Real Estate services, please consider me.  I can be reached as follows:

Michael J. Droege, Realtor - 907-230-3372 - mjdroege@gci.net - http://www.MichaelDroege.com  

Owners Recoup More with Exterior Home Projects
As part of the 2010-11 Remodeling Cost vs. Value Report, Realtors^® recently rated exterior replacement projects among the most cost-effective home improvement projects, demonstrating that curb appeal remains one of the most important aspects of a home at resale time.

“This year’s Remodeling Cost vs. Value Report highlights the importance of exterior projects, which not only provide the most value, but also are among the least expensive improvements for a home,” said National Association of Realtors^® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “Since resale value can vary by region, it’s smart for home owners to work with a Realtor^®through the remodeling and improvement process; they can provide insight into projects in their neighborhoods that will recoup the most when the owners are ready to sell.”

Nine of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. The steel entry door replacement remained the project that returned the most money, with an estimated 102.1 percent of cost recouped upon resale; it is also the only project in this year’s report that is expected to return more than the cost. The midrange garage door replacement, a new addition to the report this year, is expected to recoup 83.9 percent of costs. Both projects are small investments that cost little more than $1,200 each, on average. Realtors^® identified these two replacements as projects that can significantly improve a home’s curb appeal.

“Curb appeal remains king – it’s the first thing potential buyers notice when looking for a home, and it also demonstrates pride of ownership,” said Phipps.

The 2010-11 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 13^th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed in cooperation with REALTOR^® Magazine.

Realtors^® provided their insight into local markets and buyer home preferences within those markets. Overall, Realtors^® estimated that home owners would recoup an average of 60 percent of their investment in 35 different improvement projects, down from an average of 63.8 percent last year. Remodeling projects, particularly higher cost upscale projects, have been losing resale value in recent years because of weak economic conditions.

According to the report, replacement projects usually outperform remodel and addition projects in resale value because they are among the least expensive and contribute to curb appeal. Various types of siding and window replacement projects were expected to return more than 70 percent of costs. Upscale fiber-cement siding replacement was judged by Realtors^® the most cost effective among siding projects, recouping 80 percent of costs. Among the window replacement projects covered, upscale vinyl window replacements were expected to recoup the most, 72.6 percent upon resale. Another exterior project, a wood deck addition, tied with a minor kitchen remodel for the fourth most profitable project recouping an estimated 72.8 percent of costs.

The top interior projects for resale value included an attic bedroom and a basement remodel. Both add living space without extending the footprint of the house. An attic bedroom addition costs more than $51,000 and recoups an estimated 72.2 percent nationally upon resale; a basement remodel costs more than $64,000 and recoups an estimated 70 percent. Improvement projects that are expected to return the least are a midrange home office remodel, recouping an estimated 45.8 percent; a backup power generator, recouping 48.5 percent; and a sunroom addition, recouping 48.6 percent of costs.

Although most regions followed the national trends, the regions that consistently were estimated to return a higher percentage of remodeling costs upon resale were the Pacific region of Alaska, California, Hawaii, Oregon and Washington; the West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia.

The regions where Realtors^® generally reported the lowest percentage of costs recouped were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and Middle Atlantic (New York and Pennsylvania).

“It’s important to remember that the resale value of a particular improvement project depends on several factors,” said Phipps. “Things such as the home’s overall condition, availability and condition of surrounding properties, location and the regional economic climate contribute to an estimated resale value. That’s why it is imperative to work with a Realtor^®who can provide insight and guidance into local market conditions whether you’re buying, selling or improving a home.”

Results of the report are summarized in the January issue of REALTOR^® Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 80 cities covered by the report, visit www.costvsvalue.com.

Source: NAR

President Obabma's Debt Reduction Commission has a difficult task, without a doubt.  However, changing, modifying or eliminating the Mortgage Interest Deduction (MID) is pure economic Suicide!  Instead of cutting back spending and harshly reigning in the size and scope of the Federal Government, the commission is looking to the "Low Hanging Fruit" to reduce the debt and deficit THEY created.

The MID represents a large and vast amount of new revenue for the federal government.  But what amazes this writer, is that they continually miss the target.  The modification or elimination of the MID would be a catastrophic mistake.  The Housing market represents nearly 17% of the economy.  134 people (on average) are involved or touch every Real Estate transaction.  For every home sold (on average) more than $65,000 is cycled into the economy.

Maybe we should look back to remember how this whole financial meltdown began a few years back.  Bad lending policy dictated by the Federal Government was at the root of the Housing/Lending crisis.  Bad Tax policy relating and directly affecting the Housing industry will be devastating to the WHOLE economy.

Realtors, Builders, Lenders, Tradesmen, Retailers and many, many affected groups will be lined up to oppose this change.  Be aware, make calls, write your Legislators, get involved!  Too many serious decisions are being made that will be detrimental to our way of life. 

Daily Real Estate News  |  December 1, 2010  |  

NAR: MID Must Not be Targeted for Change
President Obama's deficit commission released its final report Wednesday recommending a host of controversial spending cuts and tax changes that would cut $4 trillion in debt over the next decade. Among the proposals is a scaled-back mortgage interest deduction (MID) for home owners.

The NATIONAL ASSOCIATION of REALTORS® immediately challenged the recommendation to reduce the deduction. “As the leading advocate for housing and home ownership issues, NAR firmly believes that the MID is vital to the stability of the American housing market and economy,” said NAR President Ron Phipps.

Here is the remainder of Phipps’s statement:

“The MID must not be targeted for change. NAR is actively engaged on behalf of the nation’s 75 million home owners and 1.1 million REALTORS® to ensure that the current deduction is not modified as was recommended in the Deficit Reduction Commission report released today.

"The tax deductibility of interest paid on mortgages is a powerful incentive for home ownership and has been one of the simplest provisions in the federal tax code for more than 80 years. In a new survey commissioned by NAR and conducted online in October 2010 by Harris Interactive of nearly 3,000 homeowners and renters, nearly three-fourths of homeowners and two-thirds of renters said the mortgage interest deduction was extremely or very important to them.

"Recent progress has been made in bringing stability to the housing market and any changes to the MID now or in the future could critically erode home prices and the value of homes by as much as 15 percent, according to our research. This would negatively impact home ownership for millions of Americans, including those who own their homes outright and have no mortgage.

"Any further downward pressure on home prices will hamper the economic recovery, raise foreclosures and hurt banks’ abilities to lend and likely tip the economy into another recession resulting in further job losses for the country. It will effectively close the door on the American dream.

"NAR will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest.”

—NAR

In the article below, nationally,  new construction for the month of September is showing some positive change.  Although off versus a year ago the trend is moving in the right direction and signaling some stability.  In Anchorage, Alaska new home sales for the month of September was up 7% and sales year over year were up 5%.  Prices versus a year ago are down 4.3% for new homes.  The average price of a new home in the Municipality of Anchorage was $436,572.

Remember, my business is built on referral,  If you or anyone you know needs professional Real Estate Services, please c0nsider me.  I can be reached as follows:

Michael J. Droege, Prudential Jack White/Vista Real Estate, mjdroege@gci.net, www.MichaelDroege.com, 907-230-3372

Daily Real Estate News | October 28, 2010 | Share New-Home Sales Rise; Builders See Stabilization Sales of new homes rose 6.6 percent in September to a seasonally adjusted annual rate of 307,000, the U.S. Commerce Department said Wednesday. Sales have been on the increase for two months, although year-over-year, new-home sales in September were down by 21.5 percent. “After dropping precipitously following the expiration of the first-time homebuyer tax credit, it looks as though new home sales have stabilized,” said Nicholas Tenev, an economist at Barclays Capital. “We expect a gradual recovery over the coming months.” Meanwhile, the National Association of Home Builders on Wednesday cut its 2010 forecast for single-family home construction, but predicted that home building will begin to recover in 2011 and 2012. Source: MarketWatch, Steve Goldstein and The Wall Street Journal, Jeffrey Sparshott (10/27/2010) Browse all of today's news