The Mall at Pabst Farms

Will the Mall Come to Pabst Farms?

Recently in the local paper here in Oconomowoc an article mentioned that the mall at Pabst Farms may be in question. I would like to weigh in on this topic. Just because I am a Realtor does not mean that I am always for growth, in fact I like to think that I am in favor of "Good Growth". Good growth is development that makes sense and is not development for the sake of development.

Pabst Farms originally indicated to the community that the mall would be a regional pull. I think most everyone knows what a "regional pull" entails. This would be stores that will pull shoppers from the region to Oconomowoc. I know that is a little sarcastic, but let's be serious--Kohl's is not a regional pull store. I like Kohls and I know my wife shops there quite a bit. I have nothing against Kohl's, but let's face it, the folks from Mequon are not going to hop in their cars and drive 60 minutes to go to Kohl's when they can visit one in their own backyard. However if Nordstroms were located in Oconomowoc you can safely bet that they will make the 60 minute drive to Oconomowoc.

If the city allows the mall that features tenants that the local market will use and enjoy, then I think the hope that so many retailers have put in the mall, and its efforts to revitalize downtown Oconomowoc, will not materialize. If Oconomowoc is going to be on the map for a destination city for retailing then we must hold out for a mall that will have a larger draw than the city itself. We have lived with driving to Delafield for Kohl's and other stores and we can certainly live a little longer with this fact. But if we settle for second best now, the ability to attract stores that will draw from the region, in my opinion will be limited. Pabst only has so much land to develop, let's do it right from the get go and not settle for second best.

So to all the folks at Pabst and the City, for the sake of our community let's push for the best mall development that has been promised to our area.

Just Minutes From Oconomowoc

I try to keep most of these entries about the local happenings around Oconomowoc, but I have to make this exception. My wife and I were spending some time in downtown Milwaukee last week and it was close to lunch time. I had been to Soup Bros before and thought that I would treat her to a different experience. Located on Florida Street just a block west of Water in the Historic Third Ward, Soup Bros is a real treat. As a Seinfeld aficionado, I love quirky places like this. The proprietor is not like the Soup Nazi, in fact he is a real nice guy, but can he make soup! For a little over $6 you get the best soup of your life and a large piece of freshly baked bread to dip into your little bowl of heaven. The establishment probably sits only 12 people ( I'm not exaggerating either) and if you get there when there is a crowd you will most likely be waiting outside, in line, for one of the days delights--BUT it's worth it. So if you want a little adventure head to Milwaukee for a bowl of soup that you will not forget anytime soon.

Silver Lake Intermediate School

A few weeks ago a friend of mine, who is working towards his commercial pilots license, asked if I would like to go flying with him. Without hesitation I said YES! On a calm August evening we took off and I literally hung my head out the window as I feverishly snapped pictures of my favorite city-Oconomowoc. One of the first places I wanted to see was the new middle school just north of Silver Lake. This stylish and exceptional building looks great from the ground, but from the air you really sense how large the building is. What a beautiful site too! If you were in town this past weekend you may have stopped by the open houses for both intermediate schools. Oconomowoc has made such amazing progress with respect to our schools. The old middle school, which was severely outdated and in need of tons of repair is now replaced by two intermediate schools. Nature Hill Intermediate School is located off of Z and Lapham Road on the north side of town. If you have a chance stop by and check out the new digs!

Is Real Estate a Good Investment?

Real Estate is still a great investment. In fact this year, with all the ups and downs in the financial markets, will probably be remembered as the best year to buy housing in the State of Wisconsin for quite some time. In fact if you can obtain financing for investment purposes now would be the time to act. However if you are thinking about flipping the house and making a bundle of money overnight --forget that notion. Part of the problem from years past, that we are now feeling the pains of, is that insatiable desire to make big bucks overnight. Real Estate was never meant to be a get-rich-quick scheme. Rather it should be a part of a well thought out portfolio.

Another reason why this is a good time is because the supply of good renters is increasing. Think about all those folks who have lost their homes due to the re-setting of adjustable notes. They need a place to live. Some are probably not credit worthy, but my guess is that you will be able to find several who are.

At some point the Fed is going to have to raise interest rates, so if you are buying your next home for yourself or as an investment now is the time. Rates have been artificially low for quite some time and as soon as we string together a quarter or two of good solid economic news you can bet that the Fed chairman will be raising the interest rates.

If you watch the stock market at all it was not too long ago that gold was near the $400 dollar mark. Folks are now saying, "I wish I would have bought more gold!" Well in a year or so people will be saying that about Real Estate as well.

Now is the time to act. Remember when you are watching TV that the national news is just a snapshot of the national market. Wisconsin, Southeastern Wisconsin is in a entirely different financial state. Don't make the mistake of making a decision on whether to buy or not buy based on a national snapshot.

Carpe Diem--Seize the Day!

What Do REALTORS Do?

Here is a quick example of what your REALTORS do for the homeowners in the State of Wisconsin. The REALTORS lobby just defeated a proposal that would allow assessors to trespass on your property without your permission to conduct their assessments. These are just a few of the examples that your REALTOR community does on behalf of all homeowners, whether you are or are not selling your home.

Last year the REALTORS also defeated a proposal by Gov. Doyle to increase the state transfer fee from $3/1000 to almost $6/1000. This is a fee that is paid by the seller at the time of closing. Most homeowners do not care about this fee until it is time to sell their home. As REALTORS we know that this grab for extra dollars was particularly unfair. We successfully defeated this measure for you!

What Will Ben Do?

The FOMC is set to meet very shortly and Ben Bernake, the chairman of the Fed, is expected to reduce the Fed Funds Rate 3/4 of a point. Some bets are now on a full 1 percentage point drop. The infusion of cash to the banking system this week was seen by Wall Street as a good sign and stocks rallied for a day. However if the news continues to, regarding the financial markets, be dire, some analysts conclude that Mr. Bernake must reduce the Fed rate by at least that 3/4 mark. With the upcoming election and a continuing sag in the credit markets some now are hinting that Bernake has a 59% chance of keeping his job. This is the worst thing that could happen. The minute the Fed is politicized we are all in deep trouble. For years Greenspan was free from populist pressure and Mr. Bernake should be free from that as well--Republican or Democratic. Monetary policy should never be governed by the 'flavor of the day' sentiment of a politician. If you are old enough you will remember the failed price controls of the 70's under Richard Nixon. Let's all hope that Mr. Bernake and the Fed governors next rate reduction is enough to provide some stability in the credit markets.

It's Time To Act!

If you have a chance to pick up the latest Time Magazine read the article by Dan Kadlec on page 54, titled "Ignore the Headlines!", the author makes the point in this piece that waiting until you think the market has bottomed out may actually cost you money in the long run. He says, "...let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious--before an inevitable rise in interst rates (italics mine)wipes out your advantage"

Did you notice the "inevitable rise in interest rates" part of that statement? The Fed has to raise interest rates. They are artificially low and they will go up. Kadlec goes on to point that even if the house you were interested in buying goes down in price a simple 1/2 point rise in interest rates will wipe out any gain in a lower price. John D. Rockefeller said, "The way to make money is to buy when blood is running in the streets"

Some parts of the country are feeling this "blood running" but in the upper mid-west we are not seeing the downturn to this degree. Personally I think we hit bottom last fall and are now starting to move out of that position. We have seen a retreat of sellers to just give in to buyer demands and buyers are now realizing that a "wholesale" purchase price is no longer available. The worst thing a buyer can do now is to wait. The inventory levels are receeding and I think we will see rates begin to creep up. That creep up may not be next month, but it is on its way.

HEY GLEN!

This past Thursday evening House Hunters, HGTV's leading show, featured yours truly as the agent assisting a young couple find their first home. Erin and Jon, the buyers, were fantastic and very camera friendly. We had a great time shooting this show.

What I found interesting is how long it takes to make a reality show. We were in one home and I made a comment about the color of a bathroom. Everyone laughed and then the producer said, "Let's do that again, say the same thing." Well we re-shot that scene 5 or 6 times. For this 30 minute episode the filming consisted of a day in May, a full day in August and then another full day in October. They actually filmed this episode in 2006! I thought that our little show would never be aired, but then one day in late January I received a call from California and they said that we would be on air next week--that was exciting.

When you live in a city and then see it on TV it appears slightly different. The film crew did a fantastic job of showcasing Oconomowoc and all of its beauty. What an experience!

How Do I know If This is a Good Offer?

I was asked the above question just the other day and I would like to share with you what I told my client. Any offer that you receive on your home, in a good market or bad market, must be assessed based on the current market. If a seller makes a decision to accept or reject the offer that is before them based on; what they want for the house, what the house cost to build, or what the seller has 'into' the house then those decisions generally result in lower net prices for the seller. Let me explain. The emotions of selling can run high, but as a seller you have to remember that the buyer is not that emotionally involved in your home--yet. The buyer has seen literally dozens of homes and has compared them to yours. By the time they make the offer they have done some research and have come up with a fairly good estimate of what they think the home is worth. I liken this to the stock market. If you buy a good stock at $30/share and for some reason, out of your control, that stock goes down to $25/share, just because you think it is a great stock does not change the value. Real Estate is a little more complicated than that but the same principles apply. Your home is only what it is worth in the current market. The hard part of all of this is when the market is in decline, you can not accept the new value or market price of your home. But conversely when the market is accelerating I rather doubt you would have a hard time accepting the accelerated value of your home. It works both ways.

Have One Of These?

Yikes! If your electrical service looks like this you should consider upgrading your service to breakers. Currently real estate contracts do not forbide selling homes with old fuses, but insurance companies will not issue an home owners policy with the old style fuses; bottom line--you can't sell with fuses. With today's electronics, microwaves and hair dryers, the old fuses just can not handle the electrical load. So if you have this in your basement and you are thinking about selling, it will be a good idea to contact your electrician and have them install a circuit breaker panel--minimum of 100 amps. Taking care of this issue now will save you some greenbacks later when you have an offer on the table. What might cost you $500 now could literally cost you the deal later. So why wait? If you have fuses, currently in service, and are not thinking about selling why not change it out anyway. From a safety perspective it would be a great idea. Just a thought from HEY GLEN!

Tchotchke

What?? Tchotchke (pronounced chotskee)... you know nick nacks around the house; like the greens around this lamp. You may or may not have heard of the term, it is used often when decorating a house. A designer or decorator may say "We need some more Tchotchke to finish off this space." When I first heard that I thought not on your life will I do that to a room. But then my lack of a good vocabulary didn't allow me to know what the decorator was talking about. Now that I know the word I feel like a big shot. But try working that into a conversation--it's not that easy. Just remember when selling your home. Let's have some good Tchotchke around the house, after all who likes lousy Tchotchke anyway.

Will We See Rates Drop?

Now that the FED cut the Fed Funds rate for the second time this month down to 3% the question on the consumers mind is will we actually see lower rates for home mortgages. The answer is a likely--'Yes'. But wait a minute Glenn--You just wrote in the blog below that the interest rates will not go down, what gives? While it is true that some banks will not reduce rates we operate in a competitive business climate and some lenders will price their 15/30 mortgages accordingly to capture more business. But with all predictions I can be wrong. Interst rates have been hovering below the 6% mark now for quite some time--a historic low. We can and should anticipate that 15yr and 30yr rates will be in the low 5% range. There is a current pent up demand for housing, despite the negative media accounts. Families still plan moves and corporations still relocate people so there is demand out there. With this drop I think we will see more and more buyers get into the market. Time will tell.

What Will The Fed Do?

Shortly we are going to find out what the Fed is going to do with the Fed rate. All bets are on another sharp delcine in the rate, perhaps 50 basis points. Will this translate into lower interest rates for homeowners? Not necessarily. Here is why. Banks are businesses and they want good loans. They are also aware that funding for many loans are tightening or have tightened up. So they are not interested in marginal loans or loans that generate little to no profit. So banks may actually do nothing with their interest rates, or we may see a slight increase. Case in point, when the Fed unexpectedly reduced the Fed rate 3/4 of a point, the interest rates on 15 year and 30 year loans acutally increased slightly. We shall see what happens today. At the end of the day what matters most to buyers is, can I get a loan to purchase the house I want? The answer is yes. But if you are a buyer who has shaky credit or conventional wisdom says that you should not be purchasing that house, you may find it more difficult to get a loan. All in all that is good for the economy right now.

Does Staging a Home Really Work?

I have written about this topic several times and I think it is worth repeating. Often times I will hear a sellers frustration expressed like this, "Buyers are not very sharp when it comes to projecting how they will fit in a house!" My reply is often a yes and a no answer. Here is a classic example. If you have ever built a house this will make sense. Do you remember going over the plans and then the day finally comes when the builder digs your basement. If you were like me, when I arrived to the job site, I took one look at the hole in the ground and I said "They dug a hole too small!" Then when the builder capped the basement you looked at the first floor deck and said the same thing. It is not because you are not sharp it is because many people find it difficult to conceptualize space. Builders like to furnish their spec homes because it gives people an idea as to how the space can be used--and therein lies the rub. When a homeowner is selling their home they are not thinking like a builder or developer. They are thinking like sellers--and there is nothing wrong with that. BUT, in this market if you want to have maximum impact then you may want to consider staging your home to sell. Here is what staging accomplishes: first, the furniture that will be used is more in line with what is being sold, today, in showrooms. Second the color scheme for the house will also be current, based on today's demands of very very picky buyers. And finally, the room will be designed and shown to bring out your homes best features. Well placed furniture always makes a room look bigger. So if you are thinking about selling and you want to maximize your homes return then you should consider staging to sell! I highly recommend it.

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