April 2018
First Weber is Number one in Wisconsin

Even with tight inventories, winter home sales hit new record

Wisconsin REALTORS Association,

Extremely strong demand propelled usually slow winter Wisconsin home sales to record levels, according to the Wisconsin REALTORS Association. The three month period between December 2017 and February 2018 saw 13,471 homes sold, which is the highest winter season seen since the WRA recalibrated its data systems beginning in 2005. Winter home sales exceed the previous winter by 1.8 percent, and they are 15.8 percent higher than winter sales five years ago. February housing statistics were also in record territory, with sales and prices hitting new peaks. February home sales rose 5.8 percent relative to February 2017, and median prices rose 7.4 percent to $166,000 over that same period.

Other economic factors are boosting housing demand. "The economy is healthy with the statewide unemployment rate sitting at 3.1 percent in January," said WRA President & CEO Michael Theo. The state rebenchmarked its labor market data in January, and the revision showed that Wisconsin added 23,300 private sector jobs over the period between January 2017 to January 2018, with 9,100 of those jobs in the manufacturing sector. Theo noted that strong demand and tight supply are why prices have gone up so quickly the last couple of years.

Nationally, the Federal Reserve increased short-term interest rates to counter the inflationary pressures brought about by the tight labor markets. "With the Fed tightening monetary policy to keep inflation in check, mortgage rates will continue to rise over the course of 2018, but it is important to remember that rates are still quite low by historical standards," said Theo. "Still, buyers would be well advised to move quickly before rising rates further hinder their housing options," he said.

Explosive home prices will reduce speed

Explosive home prices will reduce speed

RISMedia, RISMedia Staff,

The growth in home prices is set to slow this year, according to CoreLogic's latest HIP, Home Price Index Report. Analysts at CoreLogic expect home prices to rise 4.8 percent by January 2019. In January 2018, prices rose 6.6 percent year over year. The HPI in January 2018 was 1.1 percent higher than it was in April 2006, its peak prior to the recession. According to the report, homes with lower prices have appreciated the most, 9 percent year over year, com-pared to a 5.3 percent gain for the highest-priced homes, a 6.9 percent gain for middle to moderate priced homes, and an 8.2 percent gain for low to middle priced homes.

Source: CoreLogic
Why your mortgage is getting more expensive

Why your mortgage is getting more expensive

RISMedia, by Taylor Tepper,

World events are conspiring to make it more expensive for you to borrow money to buy a house. Mortgage rates have increased while home prices continue to rise due to a lack of available homes. After years of tepid economic growth, animal spirits are aflame. Inflation and wage growth recently found a groove, while the Federal Reserve's plan to raise short term interest rates multiple times for a consecutive year has reduced the value of government debt.

Homebuyers Should Get off the Fence

Mortgage rates are moved by the yield on 10-year Treasuries, rather than short-term rate hikes by the Fed. That's why mortgage rates fell throughout 2017, for instance, even as the central bank raised the federal funds rate three times.

Rates remain cheap, however, compared to historical prices. A 30 year fixed rate mortgage came with an interest rate above 6 percent just before the Great Recession in 2007.

Potential homeowners should get off the fence and make a bid, assuming you have an affordable home target and adequate savings, because rates are likely only heading north.

Why Mortgage Rates Are Increasing

You've seen this movie before. Immediately after the 2016 election, investors sold government debt en masse, causing the 10 year yield to rise from 1.88 percent on November 8 to 2.60 percent five weeks later. That dramatic rise was predicated on investors thinking a newly Republican controlled Washington would bring about faster economic growth through infrastructure spending and tax cuts.

Optimism waned throughout 2017, though, as the GOP failed to overhaul the Affordable Care Act, casting doubt on their cohesion as a governing party. The long promised massive infrastructure bill never materialized, while the prospects of a tax overhaul dampened. By the first week of September, the 10-year yield was 2.05 percent.

But then Republicans made progress on a $1.5 trillion tax bill, while the employment picture continued to brighten, and the U.S. economy grew at a solid clip over the last six months of the year.

With Congress agreeing to a $300 billion spending bill which will only throw more coal on the burning economy, investors see fewer reasons to own bonds. Economic growth and higher pay could result in long awaited inflation gains. Prices have been rising below the Fed's 2 percent target, according to the central bank's preferred prices gauge, for years now.

Higher inflation is a boon for fixed rate borrowers but hurts debtors. The January jobs report, which showed a 2.9 percent year over year earnings increase, was a signal to market observers that inflation may be coming. Meanwhile, Bloomberg reported in January that China, the largest foreign holder of U.S. debt, may reduce or cease U.S. debt purchases, causing market jitters.

Should You Be Worried?

Given the recent run-up in yields, you may be worried, but don't panic just yet. "This is not alarming," notes Chris Vincent, fixed income portfolio manager at William Blair. "There is no significant drama in the credit markets."

Markets, after nearly a decade of low rates and low growth, are adjusting to the new normal and corresponding volatility. And while China may own over a trillion dollars of U.S. debt, that's less than 20 percent of all debt owned by foreign nations, and a fifth of what America owes itself.

We are entering a world where it's going to become more expensive to borrow money. It's time we all get used to it.

IRS clarifies home equity loan tax deductions under new law

IRS clarifies home equity loan tax deductions under new law

RISMedia, by Liz Dominguez, February 26

"The National Association of Home Builders, NAHB, applauds the announcement by the IRS clarifying that households can take a tax deduction on a home equity loan or home equity line of credit if the loan is used for home improvements," said Randy Noel, chairman of the National Association of Home Builders, NAHB, in a statement. "This is a major victory for remodelers and for homeowners who want to invest in their homes. NAHB has been pushing hard for this outcome since December, when The Tax Cuts and Jobs Act of 2017 was signed into law."

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High resale value projects you can tackle in a weekend

RISMedia's Housecall, by Megan Wild,

1. Repaint Your Kitchen Cabinets
Old wooden cabinets with equally dated hardware, don't require a complete gut job. Instead, spend a weekend repainting them a more neutral hue. Finish the project off with new metallic knobs and pulls to complete the modernized look.

2. Make the Eye Go up With Crown Molding
Most homes have roughly the same ceiling heights, but there's a little trick to make yours look bigger. It's crown molding. Yes, that white line at the top of your painted walls will draw eyes upward, making the room appear airier than it may very well be. The project is easy enough to complete, too. Crown molding adds a bit of detail, a feeling of luxury that'll certainly add to the bottom line.

3. Boost Curb Appeal and Add Backyard Bonuses
Something as simple as adding a path of pavers to your front yard or sprucing up your flowerbeds with colorful blooms will catch the eye of potential buyers and fatten up the bottom line of the offers they make.

Another easy fix is your garage door. It has a great return on investment.

Imagine the payoff with a functioning fire pit in your backyard. Not only will you be able to enjoy it while you're still living in your home, but potential buyers will easily be able to envision themselves sitting around a fire.

4. Beautify the Bathrooms
Overhauling your powder room is an easy weekend task that might require small swaps, such as a new modern light fixture over the vanity or a new vanity altogether.

5. Out With the Really Old
The the biggest offenders of outdated design elements are old-school wallpaper, the floor-to-ceiling wood paneling that may or not be actual wood, and, of course, popcorn ceilings.