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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.
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Big problems seem to require big solutions. When the housing bubble burst and millions of homeowners fell into default and foreclosure, Wall Street and the big banks were subjected to great financial distress due to the over- and miss-use of mortgage-backed securities. The big solution was to bail out these institutions. The bail-outs enabled the banks and Wall Street to recover nicely (perhaps too nicely, especially considering all the unethical and most-likely illegal activities), but the underlying problems remain for many homeowners. According to an article in the January/February issue of Money magazine, 2.5 million homes have fallen into foreclosure since the bubble burst, and another 4.5 million are in danger of reaching the same fate. Millions more are underwater (owe more than their house is worth) and may be tempted to give up. Help has been and remains available from both government and private institutions to assist borrowers so that they may continue to make their payments and remain in their homes. This assistance mostly consists of modifying mortgages by reducing interest rates and/or extending the term of the loan. According to Laurie Goodman, an expert on mortgage-backed securities cited in the article, these efforts do not work as they don't fix the fundamental problem -- an unsupportable debt load. Goodman favors another approach, one that may be looked upon as a bailout for the little guy, but isn't it about time? Goodman proposes something very simple -- that lenders attempt to rehabilitate their delinquent borrowers by reducing the principal of the loans. She has statistics to prove that lenders and the investors in mortgage securities come out ahead by utilizing this approach vs. following the traditional course and allowing the mortgage fall into foreclosure. Now here is the good part -- to avoid the "moral hazard" of allowing foolish borrowers to escape the consequences of their foolishness, Goodman recommends that lenders swap the principal reduction for a share of any gains when the house is sold. In other words, share the pain, share the gain. This idea, "shared-appreciation mortgage modifications", does not have wide acceptance. Fannie Mae and Freddie Mac won't have anything to do with it. Banks don't want to take immediate write-downs, they would rather delay and hope for the best. Mortgage servicers don't like it because their fees are based on the amount of principal. And principal reductions often require those holding second mortgages to take a total loss on those notes. Which brings us to Goodman's main point: "Many of the rules in place now are large-bank-friendly, but borrower- and investor-unfriendly." And to my point: We are past due for a change in those rules.
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I like to believe that reasonable people can have differences of opinion and still get along, but sometimes I despair. The following content is courtesy of the NAR and worth sharing for its entertainment value alone. Regarding Home Owners Associations, they are the exception in the Northwoods, but most condominiums have covenants and restrictions, as do a number of subdivisions, and it certainly is possible to run afoul of the some restriction if you are either uninformed or uncaring.
Visit houselogic.com for more articles like this.
Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®
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According to Freddie Mac, the national average commitment rate for 30 year fixed rate mortgages fell in November to another new low -- 3.99%. 
See monthly average rates back to 1971 at the Freddie Mac website. Remember the days of 18% back in 1981?
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The Mayan calendar ends on December 21, 2012, one year from today. According to various theories we can expect everything ranging from another day like today to the end of the world. If your own personal hunch leans to some sort of apocalypse, or you just want to hedge your bets, this might be the ideal time to invest in some real estate. True, if you perish on that day your purchase won't do you much good going forward, but you will have enjoyed the use of your property up until then, and if the apocalypse does come to pass and you some how survive, it may possible that you will never have to pay off the balance on your loan (as money will be worthless.) That's the glass half-full approach.
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Today a organization that I belong to, the National Organization of REALTORS (NAR), had to do a little back-pedaling on home sale statistics as reported for the last four years. The NAR has been criticized at times for being too much of a housing market cheerleader, and perhaps the criticism has some justification. From 2007 through 2010, home sale statistics as reported by the NAR have been overinflated by 11% to 16% due to faulty data analysis. Unlike some other analysts, the NAR doesn't report actual counts of home sales but estimates them based
on the number of transactions reported by local Realtors, and applying adjustments utilizing certain assumptions, such as the percentage of closings due to for-sale-by-owner transactions. From the NAR website: A divergence developed over time between sales reported by MLSs and
sales determined by a U.S. Census benchmark; the variance began in 2007.
Reasons include growth in MLS coverage areas from which sales data is
collected, and geographic population shifts. “It appears that about half
of the revisions result solely from a decline in for-sale-by-owners
(FSBOs), with more sellers turning to Realtors® to market their homes
when the market softened. The FSBO market was overwhelmed during the
housing downturn, and since most FSBOs are not reported in MLSs,
national estimates of existing-home sales began to diverge based on
previous assumptions,” Yun said.
http://www.realtor.org/press_room/news_releases/2011/12/ehs_nov Still though, the market is what it is, just as it was what it was, regardless of perceptions. The revisions do, I suppose, provide some cold comfort to those who did not believe that the market was as healthy as the NAR had been reporting.
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The problems of the big banks are not problems that I lose any sleep over -- if it was up to me, I would look for a way to break them up, not make things easier for these "too big to fail" behemoths. Such is the sorry state of affairs that even what would normally be good news for these institutions can have negative consequences for them. The following information comes from an article in the December 10th issue of The Economist.
As you know, our wise and esteemed members of congress are considering lowering the top federal corporate tax rate of 35%. If enacted, this may create a peculiar type of problem for banks such as JPMorgan Chase, Bank of America, and Citigroup who hold on their balance sheets as assets something called the tax-deferred asset (DTA.) DTAs are losses amassed during the financial meltdown that financial institutions may use to offset future tax bills and are recorded as assets on the balance sheet. (Imagine that -- losses recorded as assets!) These three banks alone have DTAs valued at close to $100 billion. If the corporate tax rate is reduced, a bank's DTA is also reduced in value. For instance, at the present tax rate of 35%, one dollar of DTA saves the bank 35 cents in taxes. If the corporate tax rate is cut to 20%, each dollar saves only 20 cents. According to numbers quoted in the article, a tax rate reduction of that magnitude would reduce the combined book value of these three banks by $41 billion, affecting profits, shareholder's equity, and even the banks' regulatory-capital ratios. Perhaps an example of the old admonition of "be careful what you ask for because you might get it"? Never fear -- it is probably a safe bet that banking industry lobbyists are working overtime to ensure that any tax law changes reducing the tax rate include provisions to mitigate any negative effects to the banks.
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I have been holding off on writing about this topic lately as, quite honestly, sometimes I don't quite know what to make of all of it. As I am member of the town Planning Commission, one might naturally think that I would have access to information and resources to guide my decision making that a regular citizen does not have -- well, you would be wrong to think so. But that is a whole 'nother story. We did see some movement on the issue this past week. (For background, links to Lakeland Times story, and Part IV.) On Tuesday a hearing was held on several petitions by Tom Baer and his companies to amend the Land Use Plan and rezone several parcels. The petitioner's attorney presented it as a compromise, though many in attendence characterized it differently. Following the public hearing, it had been scheduled for the Planning Commission to take up discussion and possible action on the petition but a mistake in the posted meeting notice prevented us from doing so. We rescheduled for Thursday night. Thursday night we moved right into our Planning Commission meeting. Firstly, we approved a request for a rezone that we considered relatively non-controversial (a parcel along Hwy 51 from Multi-family to General Business) as the request conformed to our existing Land Use Plan. Secondly, we took up the matter of the petition to amend the Land Use Plan to reclassify the attempted cranberry operation south of Pine Lane (Phase II) from Single Family to Agriculture. Several hours of discussion and comments followed. As the two nights of meetings together must have run about 5 hours in total, I cannot cover everything here. But the gist of it is that we unanimously approved the petition to amend the Land Use Plan (with conditions). Now let me tell you why. Remember this important point -- Planning Commission actions are advisory to the Town Board, i.e., the Commission takes an action, and the Town Board either ratifies it or reverses it. If a petition to change something comes to the Planning Commission and it is denied, the matter does not go to the Town Board for further action. Our discussion Thursday night made it apparent to me that the best option for us was to kick the matter up to the Town Board so that the board may have the opportunity to hopefully negotiate some sort of resolution. Therefore, I moved that the petition regarding the Phase II property to amend the Land use Plan to reclassify from Single Family to Agriculture be approved subject to the Town of Manitowish Waters and the petitioner entering into an agreement relative to the various zoning and litigation issues. My motion was approved 7-0. The meeting was ended at this point, no action was taken on the other two rezone petitions. Now, I recognize that my motion is controversial. Some folks appear to be so angry that they simply want to go ahead with the lawsuit and consequences be damned. From where I am sitting though, I prefer to explore other options first.
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Had an interesting and uplifting conversation with a gentleman yesterday. He had stopped into the office to inquire about the actual sale price of a property that hold sold recently, and our conversation proceeded into all directions from there. The part that I want to relate to you is basically this: This gentleman is "of means", as they used to say, as are naturally a number of his friends and associates. As such, these folks have the "means" to have a second home (or choose to spend their vacation time) just about anywhere in these great United States that they desire -- but, and here is the really great part, between his three homes, he likes it best right here in Manitowish Waters! And his guests, who come from all over the country, consider Manitowish Waters one of their most favorite locations, also! It was really great to hear such a testimonial. Just like many of you, I have been all over this country, and we all know that there are many, many beautiful places where one could choose to hang his or her hat. Manitowish Waters continues to hold its own in that regard.
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Today the sale of my listing of 324 Point O' Pines, right here in Manitowish Waters, closed. Sale price was 100% of list, or $329,900. I believe that it is the first listing of a Manitowish chain property to sell this year, which means so far the score for listing agents is Vince Hoehn 1, everybody else 0. Days on market is 39. 
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By no means is this a comprehensive list as I don't have access to a comprehensive list myself, but you may find this useful. Countywide: Vilas County Musky Marathon May 28-Nov. 30 Open to all for any legal muskie caught and released or kept from any Vilas County lake. Information: 800-236-3649 or the Vilas County Musky Marathon page.
Local: A little farther out: 
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Lots 31 and 32 Hewitt Lake have just been significantly reduced in price -- to $114,000 for Lot 31 and to $99,000 for Lot 32. Both are gorgeous lots with 300 feet of lake frontage each, and are well worth the money. I have featured the lots in one of my signature amateurish You Tube videos -- you can find it here (You Tube video.) Where will you find a high and dry fully forested 1.6 acre lake lot with 300 feet of frontage for $99,000? No where else but here. 
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Gorgeous water views!
MLS® #118141 $28,900 - New reduced price! Winchester, Vilas County - Beautiful lake views give this residential parcel real value. This slightly elevated off-water lot is ideally situated to provide soul-satisfyingly peaceful views of deep, clear water Adelade Lake to the south, and Helen Lake to the east. Located at the intersection of Old O and Adelaide Rd, this parcel provides convenient access to Adelade Lake as public access to Adelade Lake is directly across Adelaide Road with over 400 feet of sand and gravel shoreline. (The right-of-way of Adelaide Road runs to the shoreline.) Terrific four season location with convenient access to ski hills, snowmobile trails, neighboring communities, and dozens of area lakes. As an added bonus, the DNR lands encompassing Lake Rose and Lake Mary (3 acres and 67 feet deep!) are only several hundred feet away. The view, the location, lake access, off-water taxes, priced to sell - you have to check this out! Property information
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Last Saturday afternoon, after the sun finally came out again, I went back to my new listing and attempted to shoot some video that I hopefully would be able to stitch together into some type of virtual tour that, the results of which, wouldn't reflect too badly upon my abilities. The result is definitely amateurish, but then, I am an amateur at such things. But don't let me scare you off -- please take a look. Comments are always welcomed. Link to You Tube video of 324 Point O Pines I am apparently unable to embed the player directly into this post -- or at least, I haven't been able to figure out how to do it. It might have something to do with support, or lack thereof, for Flash on this platform. 
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Take a look at this solid 3 bedroom cottage on Spider Lake. At $329,900 it is priced below tax roll assessed and fair market values. Its great location at the confluence of Spider and Stone Lakes positions it centrally on a 10 lake, 2 river chain with well over 4,000 acres water.   
For more, see the listing information.
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The headline a few days ago was that 13% of US homes are vacant, up from 12.1% in 2007 (from the US Census Bureau. Wisconsin is at 13.1%, up from 10.2% in 2000.) Excel spreadsheet with data on all 50 states What made it a headline is the concern that an increase in vacancy rates translates into increased downward pressure on home prices. This may sound alarming, but there is more to be told. The story behind the headline is that the census counts second homes, guest homes, vacation condos, etc., as vacant. The increase in vacancies may (or may not) be due to an increase in foreclosures -- it may seem to be reasonable to believe foreclosures are the culprit, but we do not know for sure as the census studies do not distinguish between types of vacancies. Part of the increase may be due to an increase in second and vacation homes, which would be more of an indication of health in the housing market, not weakness -- but we don't know for sure. How many second homes are there? -- a 2004 study
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