Gary Woltal's Blog

Calling Dr. House. Dr. House?? No, not that House.

What is going on with the housing market? What is the diagnosis these days? The central region of the country does seem to be holding its values better than the east and west coasts. Real estate is so intensely local even that isn't entirely true as Michigan suffers from the automotive industry slowdown. The Pacific Northwest is holding up better than most areas. Florida and Las Vegas have had significant price declines. From the 50,000 foot level these economic factors are still in play:

• Fallout from subprime market imploding
• Overbuilt new home development
• Tightening credit requirements
• Cautiousness by buyers based on media negativity drumbeat
• Average household wages remaining flat for extended period of time
• Increase in price of barrel of oil psychologically and in reality crimping household budgets
• Consumer credit almost maxed out
• Collapsing of home prices causing domestic investors / flippers to flee condos/rentals
• Foreclosures on the rise nearly everywhere

Bright spots include:

• Luxury / second home market steady (the wealthy always have money)
• Foreign investors are cash rich favoring Canadian dollar and Euro over US dollar

When will the market turn to being more balanced again? No one has a crystal ball, but probably as inventories come down, new home starts decrease, the buyers stop being so cautious, and we work our way through the latest round of adjustments on ARMs. Probably at best case May 2008 to worst case Feb 2009. Better times are ahead, we just have to get through this cycle. Dr. House can pull us through this. At least that's the way the story ends on television.

A trend over the last five years or so both in remodeling homes and from new homebuilders is the advent of the specialized game room or Home Theater. Many larger homes that had four or five bedrooms have been making these conversions. The shift has gone from the built in entertainment center with a tube TV and stereo to flat TVs mounted on the wall with surround sound, digital video recorders (DVRs or TiVo), and high definition sources and recorders (Satellite, fiber, Blue-Ray discs). Add to that custom furniture, popcorn machines and one might wonder why go to the movie theater anymore?

What is making all this possible or what is the driver behind this shift? Tastes change. What used to suffice as a game room with a pool table or ping pong table has now become the Home Theater. Prices on large flat screen LCD and Plasma screens have halved in price in recent years. There also is a convergence between television, the Internet, and playing the latest generation of video games.

As you talk to more new home builders you'll see that including a Home Theater option is now one of the most popular amenities.

But the driver for this also is rather surprising. Ask the Moms making decisions on buying a house why they like this room. They'll tell you all the kids will gather there from the neighborhood and she knows where they're at. Yelling down the street to come in for dinner may turn into now just walking upstairs and checking in on the group.

A home theater room has turned into a little oasis from the outside world and provides a variety of entertainment for all in the family to enjoy, from movies and video games to that must watch football game on the weekend.

As we approach the Thanksgiving holiday some selected quotes below on gratitude. When times are great I think it is easy to say we are grateful. When times get tougher due to illness, unforeseen circumstances, (or changes in a housing market), we may struggle to say we are thankful. But a grateful heart is a cheerful heart and we can be grateful "DESPITE" our circumstances.

At times our own light goes out and is rekindled by a spark from another person. Each of us has cause to think with deep gratitude of those who have lighted the flame within us. --Albert Schweitzer

Gratitude consists of being more aware of what you have, than what you don't. --Unknown

We often take for granted the very things that most deserve our gratitude. --Cynthia Ozick

The Pilgrims made seven times more graves than huts. No Americans have been more impoverished than these who, nevertheless, set aside a day of thanksgiving. --H.U. Westermayer

Some complain that roses have thorns--others rejoice that thorns have roses! --Unknown

Thanksgiving dinners take eighteen hours to prepare. They are consumed in twelve minutes. Half-times take twelve minutes. This is not a coincidence. --Erma Bombeck

What if you gave someone a gift, and they neglected to thank you for it--would you be likely to give them another? Life is the same way. In order to attract more of the blessings that life has to offer, you must truly appreciate what you already have. --Ralph Marston

As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them. --John Fitzgerald Kennedy

Every time we remember to say "thank you," we experience nothing less than heaven on earth." --Sarah Ban Breathnach

In working with buyers the chart below from the National Association of Realtors reinforces how important it is to maintain relationships with friends, family, new clients, and past clients. It depicts how buyers find an agent to serve their needs. Oftentimes past clients complain that Realtors never contact them after the sale. If you look at the bar charts on the graph you would think this would be intuitively obvious. Great agents stay in touch with their "sphere" to continue to serve their needs and the referrals they give them.

                                                                            HOW BUYERS FIND AN AGENT

With many more sellers coming on the market these days especially with older houses, a common question arises about remodeling. If I put that new room addition over the attic last year will that fetch me more for my house and how much more? My tax appraisal probably doesn't reflect that. Which upgrades / remodeling ideas add the most to my value? While it does vary by market from some surveys the answer to the payback in percentages goes something like this (rules of thumb):

• Kitchen remodeling  90%
• Add a bathroom  90%
• Bathroom remodeling  80%
• Install central heating  90%
• Install central air  75%
• Add a deck  70%
• Replace windows  70%
• Add a room  55%
• Build a pool  45%
• Finish a basement  40%

It would be interesting to hear from others anecdotally what percentages for other things left behind in the home were valued based on their new price like appliances, window treatments, playsets, hot tubs, chandeliers, outside grills, large screen TVs, pool tables, the family dog....

While not always remodeling, sometimes buyer #2 or #3 can clean up these days with the first homeowners hard work in making a house beautiful to live in.

I think a great appraiser would probably have all the answers for us.

A question was asked, "Who are your Balcony People?" The answer in the real estate world is your team consisting of your excellent agent, your creative lender, your sharp title company, your detailed inspector, your professional stager to name a few.

What I mean by this are people in your corner. We need them in all areas of our life. With you having selected an excellent REALTOR they will have assembled a team to make your life of buying or selling a home a pleasant experience. Even with all the unexpected bumps in the road that are going to occur, they will smooth them out for you. Always as a buyer or seller find an excellent agent to represent you. You will be glad you did.

Also in life be grateful to the other "balcony people" around you, especially as we near Thanksgiving. These may be parents, siblings, dear friends, co-workers, or even casual acquaintances with smiles. They are standing and cheering for you to do well. They unconditionally love you. They want you to do good. You'll know a balcony person when you meet them. There are no phonies in this bunch.

Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos into order, confusion into clarity.... It turns problems into gifts, failures into success, the unexpected into perfect timing, and mistakes into important events. Gratitude makes sense of our past, brings peace for today and creates a vision for tomorrow. ~ Melodie Beattie

We had a very horrific traffic accident out on the Interstate in our area this week. A tanker truck lost control of his vehicle and slid across a concrete median, rolling on its side and exploding. The driver ran out of the truck on fire and later died at the hospital. The passenger, his brother-in-law, remains in the hospital seriously burned. Both men have pregnant wives. There was so much gasoline on board the emergency responders had to let the truck burn itself out. This caused both sides of the Interstate to be shut down for eight hours creating a massive traffic jam at the bottleneck.

This necessitated drivers to take all the two lane back country roads parallel to the Interstate to go around the closed portion of the road. What would normally be a 5 mile trip took "two hours" or more. Daycare centers had to hold kids longer and prepare dinner for them. Other parents that were nearby who could get access to them were called to pick them up.

Apart from this tragedy itself, the extra two hour drive by many reminded us how fragile life can be. Relating this to other parts of our life it reminds us to not sit on the fence with our lives. You never know when it all might change in an instant. I bring this up because our media in terms of the housing market has had this steady drumbeat the last six months of how terrible everything is. But we still need to live our lives. If it is time to buy or sell a house do it. Stop being so cautious. You need to live each day as if it were your last one, BECAUSE, you never know!

So give an extra hug to a child or a spouse today, Say that "I love you." Reminding ourselves of our thinking post 9/11, get off the fence and live. Don't ever put your life on hold.

I got to thinking that buying a new home for an individual or family is more than just a piece of the American dream. If you recall the quote at Ellis Island it went something like this: "Give me your tired, your poor, Your huddled masses yearning to breathe free. "

When you think of working hard for a down payment, moving out of an old dumpy house, moving across the country for a new job, upsizing for a newborn in the family, downsizing for some less maintenance, it is beyond just the dream.

It represents hope. We in real estate help pass that torch of hope on to the buyer. What a great feeling on a Realtor's part. What a great feeling for a new homebuilder salesperson when they hand over the keys. Those smiles of the new homeowner are not just that the transaction took place. It represents a new beginning. Hope for the future.

What a wonderful business to be a part of!

Understanding how powerful a buyers rep agent is to a buyer more and more each day, I'm starting to wonder why any buyer looking at properties WOULD NOT want buyer representation. Most of the time it is educating the buyer on why it is beneficial to them. 

Not only in most cases is it free, and paid by the seller, but your side is represented fully in agency. That means someone is on your side of the table looking after your interest.

But even more so, the buyer with a good agent can be treated royally. What I mean by that is with tools built into many MLS systems you can get listings by your criteria pushed out to you regularly in an email as a web site, with links to the properties, photos, and even maps of where they are located. What a deal. Your own little buyer's wizard. People that don't take advantage of a buyer's rep just don't know what they are missing.

In a slowing buying cycle in the residential market I am always curious about the dynamics of why a buyer selects one house over the other. Beyond condition, location, and qualifying for the loan, I probed deeper. Buyers do buy on emotion and that's where their "gut feel" takes over. Many of the women make the final approval since they just seem to have better intuition.

What I have determined a key element in choosing one house over the other is floorplan or basic layout. How does the house flow? I saw two houses (one pre-owned, one new construction) that had an EXTREME U-turn rear driveway entrance into the garage. Even I don't think I could get a car in there. They both have been on the market exceeding 200 days. So the floorplan / layout issue comes down to competition. Do I have to live at this price with this wacky driveway? NO. Not when for the same price in the next neighborhood I don't have this problem.

Stealing and modifying from Bill Clinton, "It's the competition stupid!"

Home sellers need to understand this and preview similar properties in their price range. You only can change what you can change, then it's time to lower the price.