Milwaukee Area Home Sales are Sizzling

Fueled by low rates and affordable payments

05/06/2015

When well priced homes are selling before real estate agents can even get the “For Sale” signs pounded into the ground, you know you’re in a hot market.

That’s what happened earlier this month to buyers working with mortgage lender Stephanie Glowinski-Moeller at North Shore Bank. The bank had pre-approved a loan so the couple, shopping for their first home, could move fast if the right one came along. When their agent saw a new listing come in that seemed to fit the bill, they took a look and immediately made an offer. “The house was sold before it ever got advertised,” said Glowinski-Moeller.

Not since 2007 has there been a first quarter as good as 2015’s and the market is only getting stronger, according to Ted Dentice, Shorewest vice president and general sales manager. After seeing year-over-year increases in accepted offers rise by 28% in January, 26% in February and 33% in March, he wondered if the big gains were mainly a reflection of the brutal winter of 2014 holding down that year’s numbers. So he dug into the records. “I had to go all the way back to 2007 to find a first quarter that measured up to this year’s,” he said, attributing the strong performance to an improving employment picture and low interest rates.

The 2015 first-quarter North Shore Bank/GMAR Home Affordability Report show no significant pattern of change in median home sale prices and monthly payments when compared to the fourth quarter of 2014. But since much of the business written during the first quarter is not closed until the second, the quarterly numbers reported in July will be a better reflection of the year’s strong start, Dentice noted.

North Shore Bank’s Glowinski-Moeller said demand for well priced homes in good condition continues to outpace inventory, leading serious buyers to realize they need to be prepared to move fast. Since proof of financial capacity can be a tie-breaker when a seller receives more than one good offer, interest in obtaining pre-approval letters from lenders has surged.

“I see people going on our web site at 10 and 11 p.m. to obtain a pre-approval letter that they can take to their agent first thing the next morning,” she said. Asked how North Shore can pre-approve a loan without meeting face-to-face with a potential borrower, she explained that the bank’s data processing system instantly verifies information submitted by the applicant, pulls credit scores from third-party data bases, establishes a maximum loan amount based on these factors, and generates a pre-approval letter for that amount – in other words, exactly the same steps that would occur with an in-person application.

Dentice said pre-approval letters have become almost a necessity. “With sellers seeing multiple offers on their home, they’re going to be favoring those who are already approved.”

Glowinski-Moeller is seeing greatest interest in two types of mortgages: FHA loans, which feature lower down-payment requirements and are easier to qualify for than conventional loans, and 30-year, fixed-rate loans, which lower monthly payments by spreading them over a long term while locking in today’s low interest rates.

Interest rates rose slightly in the first quarter but then dipped again, Glowinski-Moeller said, adding, “We don’t see them increasing significantly in the short term.” As always, rates vary depending on terms, the type of property being finances, size of down payment, credit score and other factors.

“A lot of consumers will call and say, ‘What’s your rate?’ My answer is, ‘What do you want it to be?’ Some people want to lock in the lowest possible rate. They can have it, but they may have to pay for it. I sit down with my customers and show them all the factors that affect rates and what they would need to come up with in the form of points to get that rate. If you’re shopping for rates, a loan officer needs to ask questions to give you an accurate answer. There are all sorts of different options out there.”

While he expects demand to continue to outpace supply, Dentice expects inventory to rise in the next several months. In addition to the normal increase that occurs as the weather improves, he noted that some homeowners who have been unable to sell because their homes were worth less than their mortgages are realizing that they may no longer be “under water,” thanks to rising prices.

“People realize the economy is improving and home prices are going up,” Dentice said. “When prices are going down, everyone’s afraid to jump in because they might be able to get more for less later. Now that the market has turned the corner, people realize it’s going to cost them money to wait” since home prices and interest rates are likely to edge up.“My advice would be to buy sooner rather than later because prices are definitely going up. Do your homework in advance of getting into the market. Then be prepared to act quickly. If you see something you like, move on it.”


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