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North Shore Bank/GMAR Home Affordability Report™ Shows Second Quarter Homebuyers are Paying Less for
08/04/2014

North Shore Bank/GMAR Home Affordability Report™ Shows Second Quarter Homebuyers are Paying Less for More

Monthly home payments fell along with mortgage interest rates

BROOKFIELD, Wis. – People who bought area homes in the second quarter have locked in lower average monthly payments than those who bought similar homes for less late last year, according to the latest North Shore Bank/GMAR Home Affordability Report™.

Case in point: Buyers who paid $111,250 for a South Milwaukee home last fall have a monthly payment of $782.20 on average. Others who paid almost $10,000 more this spring for a $121,100 house in South Milwaukee are paying an average of just $759.10 a month.

Same story in Mequon: Buyers who purchased a home for $320,000 last fall are paying $1,704 a month vs. $1,681 on a $331,000 home that sold there this spring, according to the report

Sampling of Average Monthly Payment For Homes Sold – April to June 2014

  Lowest Third Middle Third Highest Third
  Sales Price Monthly Payment Sales Price Monthly Payment Sales Price Monthly Payment
BROOKFIELD $189,500 $1,008 $254,500 $1,332 $397,350 $2,069
GREENFIELD $85,500 $590 $154,250 $937 $214,690 $1,266
MEQUON $191,500 $987 $331,000 $1,681 $596,500 $3,050
MILWAUKEE $53,885 $390 $98,816 $658 $185,833 $1,162
OAK CREEK $123,000 $742 $180,000 $1,050 $277,000 $1,577
SHOREWOOD $189,250 $1,155 $285,000 $1,673 $410,000 $2,492
WAUKESHA $128,500 $724 $189,000 $1,029 $280,000 $1,529
WAUWATOSA $149,000 $870 $190,750 $1,100 $270,000 $1,516


"Lower mortgage rates are the main reason monthly payments have fallen,” said Mike Kellman, senior vice president of North Shore Bank, which partners with the Greater Milwaukee Association of Realtors (GMAR) to produce the quarterly report tracking monthly home payments.
“The average rate on a 30‐year, fixed‐rate loan with 20% down is a quarter point lower, at 4.18%,
than in April and almost half a point less than the 4.5% year‐end average.

While Kellman said no one could say for sure what caused the rate drop, many economists
are pointing to turmoil in the Mideast, Ukraine and other hot spots. “Global unrest typically causes
a ‘flight to quality,’ meaning money flows into the US from less stable areas. This pushes bond yields
down, causing borrowing costs to fall," Kellman explained, adding that earlier buyers gained the
offsetting benefit of any price appreciation that occurred during the year’s first half.

GMAR Chairman Bob Larson said although home sales are down from 2013, when bargain
hunters were jumping on short sales and foreclosure sales, “The market is much healthier today.
We’re seeing traditional buyers and sellers get back into the market for the normal reasons that
people buy or sell a home.”

“People can see the market has stabilized,” Larson said. “They’re tired of putting off their
dreams and ready to move on with their lives.”

Added Kellman, “There are a ton of monthly payments right around $1,100, including
principal, interest and property taxes. When I compare a monthly rent payment on a typical three‐
bedroom apartment in the range of $800 to $1,200, versus an all‐in monthly payment of $1,100 on
a home you own – plus you’re gaining equity, buying seems to make a lot of sense.”

Published quarterly, the North Shore Bank/GMAR Home Affordability Report™ uses MLS
data to track the current average monthly payment (principal, interest, and property taxes) for
homes that were purchased in three price ranges ‐‐ lower‐end, middle‐market and upper‐end –
during the previous quarter in communities within the metro area where enough recent home sales
took place to compute reliable averages.

Figures are based on 1) the median selling price of homes sold during the previous three
months in each of the three price ranges; 2) the current average interest rate on a 30‐year, fixed
rate mortgage; and 3) the property tax rate in the featured community.

The analysis assumes a 20% down payment, which eliminates the need for mortgage
insurance and results in a smaller monthly payment than lesser down payments

The geographic areas tracked include the following zip codes: Milwaukee NW (53218, 53222,
53223, 53224, 53225), Milwaukee SE (53204, 53207, 53215, 53221, 53235), Milwaukee East (53202,
53203, 53211), Milwaukee WC (53205, 53208, 53210, 53213. 53214, 53216, 53226, 53233),
Milwaukee NE (53206, 53209, 53212), Milwaukee SW (53219, 53220, 53227, 53228). The full report
is available online at www.northshorebank.com/housingaffordabilityguide.

North Shore Bank, headquartered in Brookfield, is one of the strongest banks in the country.
It has assets of over $1.7 billion and 47 offices throughout eastern Wisconsin, and northern Illinois.
Wisconsin branch locations are in metro Milwaukee, Ozaukee County, Racine, Kenosha, Appleton,
Menasha, the Green Bay area, Burlington, Union Grove, Muskego, and Door County.

The Greater Milwaukee Association of REALTORS®, originally founded in 1891, promotes the
interests of its 4,000 members among consumers and policy makers and in the increasingly
competitive real estate marketplace.

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