Archive for tag Cathy butschke
February 15, 2010 at 07:20 AM · Posted under Cathy Butschke
I just read an excerpt from an interview of executives from two large real estate firms in the United States; – the same day I attended our company Awards Breakfast at which we were treated to an update by Steve Harney, my “main man” when it comes to getting up to date information on what’s happening in the real estate economy. Guess what! The messages are in direct conflict about the future role of the Federal government in the housing market. It’s no wonder buyers and sellers find it difficult to predict what’s going to happen!
A little background – banks can sell their mortgages on the secondary market to Fannie Mae and Freddie Mac. The mortgages are then “bundled” and sold to private investors. In the past, these investments were very secure, but with so many homeowners’ currently in default and foreclosure, fewer investors want to risk their money on mortgage backed securities. To take the risk, investors want more interest. The Treasury Department and the Federal Reserve Board are purchasing these securities from Fannie Mae and Freddie Mac, the goal being to free up money and maintain lower interest rates so that buyers can get mortgage financing. According to the real estate executives in the interview, the Treasury Department is prepared to continue financial support to Fannie Mae and Freddie Mac for at least the next three years. Furthermore, the government is prepared to be involved in the housing industry for as long as it takes to keep the economy moving in the right direction. On the other hand, Steve Harney has stated that the contributions from the government to Fannie and Freddie have just about reached the levels committed to, and that after March 31st, the government may back off and allow the mortgage markets to adjust independent of government intervention. Furthermore, Harney commented that the President only briefly mentioned the real estate market in his latest address, indicating that the administration intends to turn its focus away from the housing market.
Both the executives interviewed and Steve Harney agree that less involvement by the Feds will most likely mean a rise in interest rates. According to the executives, a 1% increase in interest rates will hardly be felt in the real estate industry as a whole and is not enough to slow down sales, given that home prices are still low. Steve Harney takes the view of the CONSUMER. A 1% increase in interest rates has a large impact on buying power, translating into a higher monthly cost for the same home. In other words, higher interest rates mean YOU will get less “bang for your buck.
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Cathy Butschke
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September 25, 2009 at 04:02 PM · Posted under Cathy Butschke
I heard a great commentary today about what qualifies as “news”: it is information that is either different from or a change from what everyone expects to hear. So what about the news? There is lots of news being reported about the real estate market these days. I keep hearing “on the news” that prices are up, home sales are increasing, things are better; certainly a different message than 6 months ago. Is it all true? Is what they are saying based on fact? Is the market turning, has it bottomed out? Are we on the road to recovery?
Let’s take a look at three indicators of where the real estate market is going in the next few months:
- The accumulation rate.
- The delinquency rate.
- The cure rate.
Accumulation rate – now that’s newsworthy! Have you heard that term anywhere before? Well, I heard it today. I think we all know that the market has been flooded with more homes for sale than there are buyers. Guess what, folks: MORE HOMES ARE COMING. A recent study has shown that there are 7 million Americans SERIOUSLY considering putting their home on the market for one reason or another. (There are 20 million giving it some thought!) To put those numbers in perspective, there were 5 million American homes sold for the entire year last year. What happens when there are more homes for sale than can be sold? Market time goes up, and sales price goes down. Sound familiar? No real “news” there.
Now let’s take look at the latest stats on the delinquency rate and the cure rate for current mortgages. What am I talking about? I am talking about FORECLOSURES. This real estate market is all about foreclosures! In the past, about 45% of all owners who were delinquent on their mortgages were able to catch up, or “cure” their delinquency. How did they do this? Some took second jobs, some borrowed money from friends or family – whatever it took to get current on their mortgage payments. Under current economic circumstances - second jobs are hard to find, and who has money to loan to someone else? -less than 7% of these homeowners are able to catch up! WOW! That means that over 90% of the mortgages currently delinquent will ultimately go to foreclosure…i.e. more homes on the market, prices dropping. Again, I am having trouble finding a change to report…
Ok, what about Wisconsin? Wisconsin missed much of the trauma associated with the earlier busts in California, Arizona, Las Vegas and Florida. Why – because we are a little more conservative here. The extreme highs and lows in the market missed us. We are not, however, escaping the impact of unemployment. What happens when people lose their jobs? It becomes hard, and then maybe impossible, to make their mortgage payments. Guess what? Their mortgage then becomes delinquent, and only about 6.6% of them will be able to cure that delinquency and stay in their homes; the rest will face foreclosure, adding to the number of homes for sale, and again, lowering prices.
Perhaps the real “news” is that nothing has really changed: we aren’t at the bottom of the real estate market yet and prices will continue to fall…..
Posted by:Cathy Butschke
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May 14, 2009 at 08:26 AM · Posted under Cathy Butschke
Imagine:
It is 80 degrees. Puffy white clouds are floating in the endless blue sky. A constant, gentle breeze is folding the corners of your “beach towel”, though you are not at the beach - there is no sand in your face, on your feet, or in your mouth. Feel the warmth of the sun on your back, the firm surface beneath you. The lake is lapping rhythmically under the pier. In the distance, you hear the gentle purr of engines on the water, boaters out enjoying the day. You are a peace.
Summer is coming! We can’t wait to escape the indoors, drawn by all kinds of fun on the lake. Appreciation and the enjoyment of the water nurture all of us here, through childhood, our teen years, and into adulthood. How blessed we are to be here in the summer, in this beautiful part of Wisconsin called Lake Country! Oh “happy days!” as my mother likes to say.
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Cathy Butschke
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April 24, 2009 at 03:00 PM · Posted under Cathy Butschke
When I started in real estate in the mid-90’s interest rates were pretty stable, fluctuating between 7 and 8%. Real estate agents and mortgage lenders thought those rates were GREAT. Apparently buyers and sellers did too, since home owners were selling and buyers were buying. Well, guess what – interest rates are now PHENOMINAL!! I just saw a posted rate of 5%, which is actually up a tic from the 4.875% I noted last week. Oh my gosh! Over the last 10 years I have refinanced my home 3 TIMES to get my current rate ….Now you can buy a home for a still lower rate. What does that mean? It’s all about monthly payments.
Suppose you fall in love with a home for $250,000. For simplicity’s sake, you can afford the traditional 20% down, and have a good credit rating (KEY to qualify for the best rates).
*Note – only loan principle and interest are included in payment information above.
The difference in monthly payments is disposable income! Money to spend on vacations, a new car…….whatever! It can mean that you qualify to buy more house – either in size, features or location - than you will be able to when rates increase again to 7-8%. If you are selling your home now, this difference in monthly payments means more buyers qualify to buy your home. A definite plus on both sides!
If you need more evidence that this can be a good market for buyers and sellers, check out my previous blog, Building wealth the real estate way.
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Cathy Butschke
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April 06, 2009 at 04:14 PM · Posted under Cathy Butschke
Realtors all over Metro-Milwaukee are telling you that NOW is a great time to buy. Believe it or not, it is not because they are starving and need a sale. Historically, real estate is not a get rich quick investment, contrary to all the speculators in the marketplace going into 2005! Even in a market of falling prices, there is money to be made over the long term. Perhaps I can help you understand how wealth is created in today’s market, based on a podcast I recently listened to by Steve Harney, a well known real estate economist.
Perhaps you spent $400,000 for your home at the height of the market. You would really like to move into a larger, more expensive home costing $600,000, but are concerned that you will lose too much in the sale of your current home to justify the move. Check out the illustration below - you will see that over the long term, you will actually GAIN WEALTH by making the move now:
Price you paid: $400,000
Price will sell today (-15%): 340,000
You lose $60,000 by selling now, right? Ouch! Consider, however, that the larger home you are purchasing has also depreciated in value.
Value of new home at height: $706,000
Price in today’s market(-15%) 600,000
You gain $106,000 by buying the larger home in this depressed market - thus you end up with a net gain in wealth of $46,000 RIGHT AWAY. ($106,000 devaluation in purchased home less $60,000 devaluation in home you sold = gain in value of $46,000.)
t helps me to put it another way: think cash. In the old market, the new house would have cost you $706,000 - 400,000 (proceeds of sale of your home) = $306,000 cash to buy the new house. To make the same move today, it will only cost you $600,000 - 340,000 (sale proceeds) = $260,000 cash - you save $46,000 CASH by moving now!!!
There’s more! Look into the future; think long term. If you stay put, your home will not appreciate as fast as the home you want to buy:
Value of current home: 340,000
Increase 5-7 yrs (+15%) 391,000
If your home appreciates 15% over a 5-7 year period, your wealth will increase by $51,000. However, look what happens to the larger home:
Purchase now 600,000
5-7 years from now (+15%) 690,000
Your net worth has increased by $90,000. $90,000 if you move, - $51,000 gain if you stay = $39,000. Therefore, it actually costs you $39,000 in lost wealth to stay put!
If you decide to make the move today, in 5-7 years your overall wealth has increased by the $46,000 that it would have cost you for the same home in a good market, plus, the larger appreciation in value of the new home of $39,000, for an overall wealth building amount of $85,000!!! Now that’s wealth building the real estate way…
Have a great day!
Posted By:
Cathy Butschke
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April 03, 2009 at 04:36 PM · Posted under Cathy Butschke
Do you tweet on Twitter? Are you LinkedIn? Is your face in my FACEBOOK. Will you be my friend? Or maybe I should ask, “What are you doing now?” I hear from all sides that to stay in business - ANY BUSINESS - it is important to participate in all this social networking stuff. Is there value there? Am I making good use of my time “following” my friends and reading their posts?
I must say that I most enjoy reading blogs. It’s facinating to read how a CEO in a completely different field spends his day; or how an individual trains for an upcoming triathalon. It’s like meeting the writer face to face. Blogging is so personal! It creates a connection between the writer and the reader. Therein lies the value of “social networking” to my business: it gives me the opportunity to go beyond merely telling you what I do, and to allow me to share with you who I am. So - HERE I AM and welcome to my blog!
Posted By:
Cathy Butschke
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April 03, 2009 at 04:35 PM · Posted under Cathy Butschke
Shorewest - Lake Country
1296 Summit Avenue
Oconomowoc, WI 53066
Contact me
Office: 262.567.8351
Direct Line: 262.567.8302 X119
Agent Mobile: 414.690.2063
Email:
cbutschke@shorewest.com
Website:
cathy.shorewest.com
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Broker Associate
Lifetime Member of the Million Dollar Club
Master Sales Professional
Over 10 years of Full Time Real Estate Experience
Lake Country Resident Since 1982
Extraordinary Customer Service
Friendly and Professional
Selected to Mentor New Agents
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