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Vince's Northwoods Notes blog is dedicated to providing market statistics, real estate news and listings, and community information relevant to Manitowish Waters and the surrounding communities of Northern Wisconsin.
I would like to recap a conversation I had recently with a couple contemplating moving to another community. The conversation started off with them inquiring of me “How’s business been?”, which, rather than just making polite conversation, was actually a way for them to broach the subject of the likelihood of them being able to sell their home in a reasonable time frame. I replied with my take on the activity in the market, and eventually the conversation turned to just who is best positioned to do well (and who isn’t) with today’s market conditions. We discussed how we have different “classes” (types) of buyers and sellers in our Northwoods market, and it really is not a level playing field for all concerned. Let’s first look at the different types of buyers in our market. First-time home buyers. Not too many in our market. Young people tend to move out of the area, unfortunately. However, for our first-time home buyers, buying opportunities are the best in many years -- low interest rates, $8,000 tax credit, 2003 prices, sellers more willing to negotiate. Buyers relocating from out of the area. Excellent opportunities for these buyers for the same reasons above, except for the tax credit. Plus these buyers may have credit scores qualifying them for better interest rates than the typical first-time home buyer. Local buyers trading up or down or moving closer to town. Again, buying opportunities are the best in many years, considering the low interest rates and softening of list prices. However, these buyers have an additional consideration -- they must sell their existing home in our local market. As sellers, this can work just as well for them in this market as any market if what they have to give up as sellers they can make up for as buyers -- and they should be able to. Vacation home buyers. The majority of our market, especially in communities like Manitowish Waters. If it made sense to buy in 2004 and 2005 when the market was really “hot”, does it make any less sense to buy now when interest rates are even lower and prices have dropped back to more reasonable, sustainable levels? In vacation homes, like many investments, it makes quite often makes sense to stay out of the market when everybody else is bidding it up, and to be in the market when most are sitting on the sidelines. Buying opportunities are the best today since 2003. Speculators/flippers. They have left our market, for the obvious reasons. No one expects much in the way of price appreciation for a number of years, and it is very difficult to identify a property that is so under priced that could be purchased and resold at a large enough profit to be worth the trouble. Our first real loser in this analysis. Now lets look at different “classes” of sellers. Sellers looking to purchase a replacement property. As discussed above, this could work out as a wash -- what the seller has to give up as a seller could be made up as a buyer. This would probably be the largest classification of sellers. Not a loser or a winner. Sellers planning on moving into rental housing. This is perhaps the antithesis of the first-time home buyer. The seller will not realize the gain on the sale of their home that he would of at the peak of the market, and will not offset the “paper loss” with the purchase of a replacement property at favorable pricing. Whether that makes this seller a loser or not depends on your mind-set on such matters. Sellers desiring to sell their second home and not replacing it. The same problems as above; if they purchased their property in 2004-2006, they may even have to take a slight loss to get a signed contract. Sellers who have their property listed at 2005 price levels. There is still a good amount of that in our market. They say that they have their property for sale, but it isn’t, really. These sellers apparently are content to wait for the market to catch up (even 5-10 years?) to what they think their property is worth.
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About Vince Hoehn
REALTOR associate at CENTURY 21 Pierce Realty of Mercer and Manitowish Waters, Wisconsin.
(715) 543-2384 / (800) 440-7879
vince@c21piercerealty.com
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