There is no doubt that the burst housing bubble continues to have a dramatic effect on the real estate market. Wisconsin and more closely, Waukesha County feel the devastating consequences of the foreclosure market. Waukesha County Sheriff’s department has processes about 50 sheriff sales per month. The pace is the same as in 2010. However the notices of foreclosure action filed with the department year to date equal 1,258 new cases! 125 new notices of future foreclosures are filed with the sheriff’s department each and every month. This coupled with the short sales have created an interesting toxic brew in the real estate industry. Now, let’s pull the numbers apart.
The chart to the right shows the average sales price of homes from 2000 to 2011 based on MLS statistics in the greater Lake Country area. If you purchased your home in 2000 for $262, 515 and your home is now worth $344,418 and you put 20% down on your home your new equity for your home is $82,000 or a 56% return on your initial investment (ROI). Yes, your home is worth much less than the peak in 2006 but your ROI is an astounding 56%! How did the S&P do for the same period? According to MSNMoney.com, the S&P is down 19% from January 2000 to October 1, 2011. So why do we have all the distress? Many used their home as a piggy bank during the run-up in prices and re-leveraged their home to the 2004 or 2005 prices. Their home was a good investment but the misuse of the investment has left some upside down which in the end has adversely affected current pricing. The level of incoming foreclosure action comes down to an important point: The oversupply of inventory will remain for some time. If you are selling now it would be wise to price your home compellingly.
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