Northern Michigan Real Estate Market Conditions - October 2008

Sales of single family homes and condominiums in the Petoskey, Harbor Springs, Charlevoix and Boyne City real estate markets were down year over year, with 58 sales in October of 2008 compared to 64 sales in October of 2007. Total sales by dollar volume decreased from $23,832,500 in October of 2007 to $17,551,855 in October of 2008, a decline of over 26%. The dollar volume of Petoskey home sales alone declined almost three million dollars, or over 36%, from just under $8 million last year to just over $5 million this year.

The median home price declined from $224,500 in October of 2007 to $212,500 in October of 2008, a decline of just over 5% year over year. The average days on market for homes which sold during the month of October of 2008 increased to 222 days, from 185 days in October of 2007.

Sales of bank owned properties more than tripled, from five to eighteen. Bank owned properties accounted for almost one in three sales during the month of October, 2008 continuing to put pressure on prices.

This report is based upon sales information obtained from the Northern Michigan Multiple Listing Service for the months of October 2007 and October 2008.

Fannie Mae Guidelines for Short Sellers

I often receive calls from Northern Michigan homeowners who are looking for advice as to how to proceed when they are no longer able to make their house payments. Fannie Mae has released updated underwriting guidelines which will apply to new mortgage loans sought by individuals with various types of prior credit problems. These guidelines certainly may impact the decisions made by these homeowners who are trying to decide how to deal with their present situation.

Potential borrowers with a foreclosure on their credit record must wait 5 years to be considered for new funding, and are subject to additional credit and down payment requirements for 5 to 7 years. This is an increase from the previous 4 year waiting period. Bankruptcies (other than Chapter 13) require a 4 year waiting period from either the discharge or dismissal date, while Chapter 13s require only a two year waiting period from the discharge date or 4 years from the dismissal date. In the case of multiple bankruptcies, the waiting period is extended to 5 years. The waiting period for Deed-in-lieu-of-foreclosures is unchanged at 4 years, with additional requirements for 4 to 7 years. The biggest change is the implementation of a mandatory two year waiting period from the completion date of any preforeclosure or short sale. The shortened waiting period for short sale sellers will certainly make short sales a more attractive option for homeowners over the alternatives.

I always advise people who need help to seek the advice of not only competent mortgage and real estate professionals, but also to consult with a real estate attorney before taking any action which they may later regret.