Fed Cuts Rate

The Federal Reserve cut the Fed rate from 4.5% to 4.25% on Tuesday. Many on Wall Street had hoped that the decrease would be more than the 25 basis points, however this is great news. Can the Fed keep reducing the rate? Only time will tell. If the losses by the major banks begin to end I think we will see a slowing of future Fed rate declines. Their chief concern is inflation. The constant lowering of rates will not alleviate those fears. With the looming real estate crunch what else can they do to spur the economy? So goes the wisdom. Part of the problem is Wall Street itself. If you look at Main Street USA for clues to the economy I think you get a different picture. I know this is anecdotal, but so are the economists so called models. How else could they be so drastically wrong on consumer spending for November? They predicted a .6% growth but when the numbers came out they were double the estimate. That is hardly close to the mark, if you ask me. The WSJ article this morning pointed to the fact that the economy is doing better than they (the economists) all thought.

So, on to my anecdotal experience. When I was in Kansas City last week, I went out for dinner on a Monday evening. The parking lots were full, the restaurant was 1/2 full, while most of the other eating establishments were packed. That was a Monday night in Kansas City! Now think about all the other cities around the country that were experiencing that same effect. The big banks may be feeling the pinch from their greedy money grabs with SIV's and CDO's and got caught with their collective pants down, but the average American isn't feeling the same pain. I think the reason that most of this is so sensational is that these are the 'elite' banks and they made several bad calculations. The media has pounced on this like a rabid dog. I realize that parts of the country are in turmoil, but the Midwest has done very well despite the zealous appetite of the newshounds to pronounce death to real estate every waking moment.

Guess what guys and gals at NBC, CBS and ABC? Average Americans are going about the business of buying and selling homes without giving into the hysteria and hype that you are selling. After all the news business is a business. Let's not forget that little point.

Interesting Interest Rates

Will a lowering of interest rates spur housing activity? That is the million dollar question. While many of the potential home buyers out there waiting for the other shoe to drop (a national declaration that the real estate market has hit bottom) a word of caution. Some are waiting for the actual 'bottom' to occur, but the real problem is that we will not know when that day is since most of our data is historical. If one looks at the current interest rates compared to the history of rates since the 70's there are only a handful of times when the interest rates have been this low. What does that mean? It means that they will go up. They have to. The Fed is currently worried about the risk of inflation on our economy and raising interest rates is one of the tools that a concerned Fed can use to slow that monster. Lowering rates only encourages a higher risk of inflation. But with the housing slowdown reducing rates seems to be the effective tool for the moment to spur activity in the housing sector. Herein lies the rub. Buyers are waiting for that 'great low rate' and will probably miss it as the economy moves along. The good news for our real estate market is that we have not suffered like other parts of the country. We don't see the escalation of property values like California, Arizona or Florida. That does not mean that we have not seen our share of problems, but Wisconsin is doing well comparatively. With interest rates now below 6% and an ample inventory level I can not think of a better time to invest in Real Estate. A year from now some will be lamenting that they should have gotten into Real Estate. Oh well that is how it goes.

It is Easy...Really...

If your home is currently on the market and you have moved to a new home you may want to make sure that your insurance properly reflects that you now own a vacant home. Don't make the mistake of thinking the insurance company will never find out. Most homeowners policies offer a vacancy rider that is very affordable--$40.00 per year! Who wouldn't want this very important coverage. If you suffered from vandalism without the coverage you will be on your own for the repairs. Many companies will not refund your annual premium, but it is a small price to pay for that peace of mind. No matter what you do check with your agent to get all the facts if you have a vacant home. Just another helpful hint from HEY GLEN.

One more thing...

YOU CAN SIGH A BIG RELIEF--THIS MEASURE WAS DEFEATED. The Governor's proposal to raise the transfer tax had me thinking and thinking. Isn't this really double taxation? You already pay very high property taxes, but when you go to sell your home now you will have to pay a tax to sell. That seems like double taxation to me. I guess that is why they call it a fee. What happens to the seniors who sell their homes and are in dire need of every penny of equity that they can get out of that house? Well this proposal will strip that money right out of their hands. I could keep going and going but here are three additional points of why I think this is unfair to everyone.

1. This 'home tax' hurts the buyers and the sellers. Someone will be paying for this tax.
2. Seller's loose more of their equity.
3. The 'home tax' is unfair. The Governor wants to use the increased revenue to fund a Youth Aids Program. But the program will be funded by just the people selling their homes. So just a few citizens will be required to fund this project.

When we look to the government to solve our problems we get fees like this. Let's ask them to lower our taxes. If this goes through Wisconsin will be the 12th most expensive state in the Union for this fee. Not a distinction we can be proud of.

NO New Taxes?

Governor Doyle




Before his re-election Governor Doyle promised to not raise our taxes. Ahhemm... No new taxes, seems like I have heard that pledge before. Any way, our Governor has decided that this does NOT pertain to raising certain fees in the state. Let's take for instance, the State Transfer FEE funny how it is called a fee, but in all reality it is a tax, but it is really a fee. My head spins on this one. Any way, the fee, a.k.a. tax is $3/thousand dollars of the sale price of your home. For example, if you sell a $300,000 home at the closing table you will pay the State of Wisconsin a $900.00 fee. The Governor, in all his, "I will not raise your taxes" wisdom has decided to raise the fee to $5/thousand. That would result in a $1,500.00 fee at the closing table for the above example. There is no way around this fee. You pay regardless. As a Realtor our organization is fighting this tooth and nail. We need your help though. Don't think that the Realtors will get this through. Call your representative and let them know what you think about this tax increase. I am in favor of limiting the spending at the state level rather than finding loopholes in campaign promises. Let's encourage the Governor to veto the pork in his budget and leave the State Transfer Fee alone. Wouldn't it be great if he would actually lower the rate! Now there's an idea.

Thumb on the Pulse

2006 ended with a bang! The last 15 days of December saw a surge in showing activity for homes in the greater Lake Country Area. Showing activity is a good barometer for market activity and December ended up being the best month for 2006 for Glenn Hanon. This increased activity parallels what a number of other national commentators are saying. “60% of investors planned to increase their stakes in U.S. real estate this year...a majority and a vote of confidence”1 With interest rates still so low and a small likelihood that the Fed will change the rates in the first quarter, savvy investors are buying up real estate now. If you have thought about rental properties now is a good time to jump into the market. You may want to consult with an attorney to set up a LLC (limited Liability Company) that you can use for the purchase of rental properties or additional home.


1) Wall Street Journal January 3, 2007

Avoid the Headaches of a Remodel Project

Here is a list of 10 things you can do to avoid the headaches of a home improvement project.

1. Plan your budget. Be realistic too when preparing for the remodel project and then add 10% to your budget for unexpected items.
2. Know your limitations. The biggest mistake people make when starting a remodeling project is they think they can do everything. “How hard can this be?” is not a good starting point.
3. Hire an expert. Don’t be afraid to hire a contractor to do some of the work.
4. Get the necessary permits. When it comes time to sell your home you will have to disclose if you obtained the proper permits for your job. It is more cost effective to pay for the permits than to pay later. Trust me on this one.
5. Plan your time. Many do-it-yourselfer’s do not plan on how much time this project will really require. Then in haste corners are cut.
6. Get it in writing. If you hire a contractor, get your bids in writing. Handshake deals can lead to higher than expected costs.
7. Don’t just buy on cost. Picking finishing materials just on cost alone can come back to haunt you. I look at hundreds of houses each week and I can spot in a minute which seller cheated on cost. Believe it or not it stands out like a sore thumb.
8. Eco Improvements. If you can buy materials that are Eco-Friendly or save money in the long run potential buyers like this.
9. Get good opinions. We all like to think we know what will work, but good advice from experts will save you thousands of dollars.
10. Think of re-sale. If you want to be compensated for your home improvement then think in terms of re-sale. “Will anyone else like what I have done?” is a good starting point. It is a good idea to run your project past a number of people and experts. If they think it is a good idea, then proceed. If not, you can proceed, but a future buyer may not reward you for your hard work.