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.

Are Unemployment Rates Good or Bad for Interest Rates?

Last Friday, November 3, 2006, the Department of Labor released the new unemployment figures which fell to 4.4%. This number represents an increase in jobs in the nation overall. The economy is doing better and better each day. In fact the Unemployment rate was almost 6% in 2004 and has steadily declined (more people going to work) each year. Now here is the interesting part of the story. The current interest rates are artificially low to encourage people back into the housing market. The Fed is concerned that with more people now working more homes will be bought so they will naturally try to fiddle with the interest rates. That is exactly what we saw happen on Friday. Rates were all over the map. So if you are a buyer now is the time to get into the market before rates go higher. Unemployment is a GOOD thing, just remember that with all market economies, the more people that want a particular item, in this case interest rates, the market will drive the price of that "thing" that they want upwards. This is a classic market force at work.

My Carpet is not That Bad!

"I will let the buyer pick the carpet, after all what ever I choose they may not like!" So said a seller once to a Realtor. The response that the seller received was priceless. "If you're planning on orange shag then I would have to agree with you, but let's pick a color that 95% of the buyers will want." Amen! What I have learned over the past 20 years of selling homes is that what sellers are really saying is "I don't want the hassle of putting in new carpet." That is a fair answer. But let's take a look at this in detail. Most buyers, especially in today's market, do not want the hassle either. If the buyer has to go through this process they want to be compensated at the Seller's expense. So a wise Seller will re-think this and find a carpet that 95% of the buyers will want. So how do you do that? Well the first step is to consult with a Realtor who knows something about colors and what's in and what's not or get the opinion of a good decorator. Why spend needlessly on the wrong color and carpet when you can get maximum bang for the dollar with the right carpet. This does make a difference for buyers believe it or not. As long as you are replacing the carpet, why not consider putting a fresh coat of paint on the walls and ceilings if need be. If you are not a painter or do not like to paint, please do not do this by yourself. Do-it-yourself painters hurt their cause. I have been through too many homes that have paint on the trim, around doors and splotched on the ceiling. This is a real turn-off for buyers. Always check with a professional about any changes you are going to make to your home before you proceed. A good Realtor can save you lots and lots of time and money.

Have we hit the bottom?

The media is full of reports today that real estate has not hit the bottom and we are in for a few more months of declining prices. Well that may be the case for parts of the country (the coasts) but for the stable Midwest this is the bottom. The irony is this. For the past 5 months the local Realtor community knew of the precipitous slide in prices and we tried to convey that to our sellers. Some listened and preserved their profits, while others insisted that we were 'trading in fear'. That was hardly the case at all. We look for indicators in the market that will give us clues as to what the 'market' will and will not do. A classic example is showing activity. Over the past several months--a usually good time in real estate, the showing activity was slowing quickly. Was it because of interest rates? No, those are still low. How about the oversupply of homes? Yes, that was it. Some sellers are beginning to realize that we were in a price slump. It is better to realize it at some point then not at all. On the other hand many of today's buyers are still under the impression that the prices will fall even further, using national data as their support for this position. What they will realize this spring is that the bottom was indeed in the fall of '06--the best time to buy, and that the spring '07 market will not yield as many great deals as the 4th quarter of 2006. The real winners are those who look ahead, plan and take decisive action. So, have we hit bottom? Yes that happened a few weeks ago. We are now moving forward.

Squirrels & Ice Makers

I was startled to discover that there are two items that all home insurers will not cover which could add up to big dollars. Not completely convinced that I was correct I then asked a good friend of mine who is in the business and he was startled too! How did these get by me and possibly you too. The first item is "Squirrel" damage. Let's say you leave for an extended period of time and while you are away a squirrel manages to get into your home. Can you imagine the damage that little critter will do trying to find his way out. Insurance companies will not cover for the little beasts who have a one way ticket to destruction in your home. Now the odds of this happening are very very slight, but nonetheless Squirrels are not covered.

The next item is interesting. If you have an ice maker in your refrigerator chances are the line that feeds that ice maker is plastic. If it leaks it is generally a slow leak which left unchecked, could cause damage your floor under the refrigerator before you notice it. This is not covered under all insurance policies. A good idea is to replace that plastic tubing every 8-10 years. If you have copper you're in good shape, but it is worth an inspection from time to time.

Squirrels and ice makers now have something in common.

Cold Weather is Approaching--Tips

With the heating season just around the corner it is wise to have your furnace technician do a regularly scheduled cleaning and inspection. While they are there, have them replace the furnace filter (it's usually recommended to do this twice a year) and perform a CO test. Carbon monoxide is a typical problem on some older forced air furnaces. If you do not have a good CO detector, they are a good investment. You can purchase one of these from your local hardware store. I have my furnace checked and cleaned twice each year, once in late spring and once in late fall. An ounce of prevention is well worth it. If you have a recommendation on a good CO detector let us know about it.

The one that got away

I was talking to a friend of mine the other day who was fishing off the pier on Fowler Lake. He was not having any luck with the fish so he thought "I will just finish up with this last worm and then I am gone." Just then he saw a small fish start to nibble on his bait. Thinking that this would not last long he continued to hang out as the sun started to set. Just then the little fish took a bite of the worm. Knowing full well that the fish was not of a legal size he thought he would reel the little guy in and release him. Just then a lunker appeared and as he was pulling the little guy out of the water the lunker lunged up out of the water and grabbed what now appears to be bait for the bigger fish. The little guy didn't make it. The worst part of this story is that my friend had no one there to witness this event. I believe him though.

Oconomowoc is ready to move up

Little Oconomowoc Wisconsin, once the quiet rural community west of Milwaukee Wisconsin was known in the late half of the 20th century as the "Newport of the Midwest". The beautiful terrain dotted with tranquil blue lakes this small community boasts many a large 'lake cottage' for the wealthy. Well things managed to stay the same for quite some time until now. Houses now dot the landscape and the need for shopping and activities dominate the requirements for those living in and around Oconomowoc. Pabst Farms is now a reality with homes everywhere and a new mall is now in the planning stages with the City. What does all this mean to the local residents. Well with any growth some like and it and others do not. Let's look at the glass as half full rather than half empty. We will have more opportunities for shopping and entertainment than we have ever had in the past. When we moved here 20 years ago the closest place for entertainment was Brookfield or downtown Milwaukee. I personally do not want to drive 30-40 minutes each time I want to see a movie or dine at a nice restaurant. So we have much to be thankful for. Growing pains are just that. It happens and we all move on. The best part of a city like Oconomowoc is that all the voices are heard. We live in a great city!