Realtors predict that real estate sales will revive in Clare County

CLARE – While the exact impact of the economy on real estate in Clare County may not be determined, area Realtors are in agreement that there has been a definite change in the market.
“There’s been a significant change,” said Wayne Terpening, broker and owner of ReMax Brookside.
“The market is definitely down, but it is still active,” said Micky Davis, owner and broker of Statewide Real Estate. “Right now the market is slow due to the economy, but conditions in our area always seem a little slower in summer with vacations.”
Davis said a certain amount of the entire market has been hit by the economy based on her observations and 32 years of real estate experience.
“We have seen an adjustment in prices,” said Alan Reiss, owner and broker at Reiss Real Estate.
Reiss said economy and foreclosures have definitely affected the market.During 34 years in real estate, Reiss has seen changes before.
Terpening said, based on his numerous years of experience, the market has highs and lows but real estate is a good investment over time.
He said changes started in 2004-2005 with a gradual change and by 2006 there were dramatic changes being made.
Foreclosures, job losses, prices down and volume down all are changes he has seen.
“The hope is we’re approaching the bottom of the barrel,” Terpening said. “Some economists are saying it still will decline another couple years. My sense is it won’t take quite that long to get to the bottom of the barrel.”
Terpening anticipates it will take five to seven years for the values to climb back up to where they were.
“I can only be hopeful the property values will get back sooner,” said Dawn Peyton, owner and broker of Peyton Properties LLC. “It will be a slow process though.”
Davis believes many prices were overinflated so real estate may never reach the high point it once was at.
Peyton said her office has remained busy with selling properties, but the sale price of every type of property definitely is down considerably.
“We’ve been working harder than we’ve ever worked, but we’ve been able to stay stable,” Peyton said. “Foreclosures definitely have affected the overall prices.”
“Everything has been hit hard,” Terpening said. “Second homes have been hit hard because they’re optional.”
Sales on second homes have been “very slow” in his observations. Terpening anticipates that investors will start buying vacant land and vacation homes during the next couple of years to resell when the market climbs.
While Reiss said the number of sales of vacant land have been fewer than normal, it has been stable. “Cottages and second homes are still being sold, but it is longer to get through than in the past,” Reiss said.
Residential homes have been selling for less and there has been a decrease in sales. “It’s being driven by foreclosure activity,” Terpening said.
“Once foreclosures are sold off then the market and prices will pick up,” Terpening said. “Of course, all this is prefaced on Michigan getting some jobs again.”
Terpening said his office does not handle a lot of commercial real estate, but has seen vacant office buildings so believes the economy has hit that market as well.
“Businesses have been hit hard I do expect,” he said. “If people are approaching retirement they may to decide to get out.”
While Reiss said commercial also is a small percentage of their business, it seems to be impacted about the same.
More than one third of the market Terpening deals with is in recreational properties and waterfront homes. ReMax Brookside also sells a lot of vacant acreage for hunting opportunities as well.
“The homes have declined a great deal. Vacant land has slowed up there too,” Terpening said.
“Residential homes have been hit the hardest though,” Terpening said.
Reiss also feels residential has definitely been the biggest drop. While the number of units sold may not be down significantly, people are buying homes for lower prices.
Foreclosures and repossessions can have more damage so it is hard to put those in the same categories, Reiss said. “You’re not comparing apples to apples.”
“You can get more home for your money,” Reiss said.
Davis said she has seen an increase in first time homebuyers though. Some people also are investing in second homes as their 401k plans and retirement accounts are losing money.
“Prices have definitely come down,” Davis said. “Lots of properties that were overpriced, those are in foreclosure.”
“People were buying what they wanted and not what they could afford,” Davis said. “There are good buys out there, but people are trying to get properties that are being given away.”
People leaving the state in pursuit of employment, loss of homes due to foreclosures and job loss all have an impact. “There are a larger supply of homes and a short supply of buyers,” Terpening said.
Banks also are revising standards for loans as more foreclosures are on the market.
The requirements of higher credit scores, higher own payments and fewer no money down loans also have affected the market. “There are not as many loan options as a few years ago,” he said.
Employment, credit history play a larger factor at closings.
Terpening said some Board of Realtors data show that home prices in 2008/2009 compared to 2006 are down about 50 percent less in price.
“Home values are down. People are buying smaller and more energy efficient homes,” he said. “People are buying. People are just proceeding with caution.”
“Overall, things are down 50 percent on price,” Terpening said. “Volume is down at least 50 percent as well and possibly higher.”
Board of Realtors data shows the volume down as much as 75 percent in some areas.
The loss of business has caused some agents to move on, which also impacts the business in sales. “We’re not always comparing apples to apples,” he said.
As to agents leaving the career field, Davis admits people need to work harder for sales now but it is very rewarding.
“Real estate is a very interesting and rewarding field,” she said. “There is nothing more exciting than to see young people get into homes they can afford or older people working with someone to go in the proper direction.”
“Real estate is not just selling and buying, it is a lot of counseling,” she said. “Real estate is like anything else it has highs and lows if you can weather the storm.”
“Closings have been more time consuming and demanding,” Terpening said. “The deals we are closing are tough and require a lot attention.”
“There are some super good programs and super good interest rates out there,” Davis said.
“Some houses were inflated in price. There were excess closing costs pushing the price up,” Davis said. People who are selling are trying to get what they paid. “That’s difficult to do at this time,” she said.
Davis said some local banks can have lower closing costs than mortgage companies. “People should be extremely cautious where they get their funds.”
“Big questions a homebuyer should be asking: how much is this mortgage going to cost me, how much do I need to bring to the table and how much do I need to ask the seller to give me to buy the house,” she said.
Sellers may not want to pay six to seven percent in closing costs so they may try to ask for more in the house purchase price.
“Always go to two to three lenders before getting a loan,” Davis suggested. “Credit is extremely important.”
“The market recovery certainly is going to happen,” Terpening said. “We’ve seen all this before.”
Terpening gave an example of a centennial farm in Lapeer County that has been in his family. In the 1960s, an offer of $3,300 per acre was made. A 1982 appraisal valued it at $500 per acre and in 2006 the family was offered $4,650 per acre. Now, he is told the land would sell at $2,000 per acre.
“If you look at real estate as an investment over time, about once every 10 years, homes double in value,” Terpening said. “We’re confident for example that the property will be worth more in the future.”
“You’ve got to keep it in perspective,” Terpening said.
He said many people say they are losing their home, but actually they just are losing money in the value of the home. “They owe more than what it is worth. The value will return. It’ll all pick back up,” he said.
 “People were buying what they wanted and not what they could afford,” Davis said.
“There are good buys out there, but people are trying to get properties that are being given away.”
Values will come up, but Davis anticipates appraisers will be a little more cautious.
 “People should definitely try to work with their lender if they are in the process of losing their home,” she said.
There is “definitely more scrutinization” from banks for those trying to buy homes though, Reiss said.
“One thing I’ve really noticed is surrounding areas like Midland and Mount Pleasant that are primarily residential…they have been harder hit dollar per dollar than our area,” Reiss said.
While the gross amount of sales are down more significantly, Reiss said the amount of properties sold are not down as much. People are buying smaller homes below the $100,000 threshold.