Be Resolute about Resolutions

Homebuyer Associates January 2011 E-Note

Homebuyer Associates           www.homebuyerassociates.com

414.254.4129                               homebuyeba@gmail.com

Michael D. Holloway/Seamus Holloway/Paul Wollersheim

Be Resolute about Resolutions

It’s a new year and if you are like most, you’ve made some resolutions for 2011.  There is an Irish aphorism, “Talk’s cheap, it takes money to buy a drink.”   I won’t belabor it.  I think you know what I’m saying.

Most resolutions involve money and weight loss.  Each affects how we live in the short and long term.  A recently published book  –  Self Control in an Age of Excess – speaks to one of my two favorite topics regarding personal conduct – discipline.   My other favorite is accountability.

( http://motherjones.com/riff/2011/01/six-scientific-self-control-tips)

We lost the concept of each during the housing bubble.  According to the Wall Street Journal

(Mother Jones and WSJ in the same E-Note?) from 2000-2007 the national average home price rose 50% while the consumer price index rose 17.5% and median household income rose 1%.  Never before had home prices jumped that far ahead of prices and incomes.

Robert Shiller of Yale University and the Shiller/Case Index notes from 1945-2006 the maximum cumulative decline in the average price of homes was 2.84% – in 1991.  From 2006 to the present that percentage reached double digit figures.

The correction that occurred was needed.  Thankfully the correction in the four-county Milwaukee area was less severe than the national average, probably because of our Midwestern values.  From local analysis our area was hit with a drop of 10-20%, depending upon the location.

I hope the preceding also speaks to the end of the concept of “I’ll use Sophie or Marty as my real estate agent because they are a friend of my Aunt Paula.”  We are talking about money discipline and accountability.  Take the first step and begin to understand who works for whom in a real estate transaction, how they are paid and the experience they possess.  In fact, do the same with all of your investments.

We all need a place to live.  At age 26 “mom and dad’s” house doesn’t have a good ring to it.   Cramped quarters, acceptable as a college student, gets old by age 28.  And spending $1,200 a month for rent when it could be building equity via home ownership may not be the best choice.   With today’s lending climate, buyers are going to need discipline and are going to have to be accountable for getting their financial house in order.

While housing prices are very affordable and mortgage money cheap, I’d suggest you first talk to a lender and check your credit report If you are a first time buyer.  Then, create a plan for the type of home you need  – not the home mom and dad have – rather a starter place to live and build equity.  And plan to remain in the home for 5-7 years.  Maybe establish roots in a neighborhood and make it yours.

In the coming months I plan to write about a young couple who are doing a wonderful thing from my perspective.  They bought a home cheaply and are in the process of remodeling it.  I also want to touch on some fine starter homes with great access to Milwaukee’s ever expanding biking/people paths.

Last week, as I biked the new Hank Aaron trail (yes, it was a bit brisk), the thought came to me – why not meld housing and biking as an entry to a starter home?  The thought struck me what a benefit the bike paths could be for first time homeowners.  Living near a bike path, in an affordable home with the ability to bike to work would provide a healthy routine with the benefits of home ownership.  This topic will take a bit of research but I hope to have more information by spring.  The link to the Hank Aaron trail is below.  http://www.hankaaronstatetrail.org/pdf/Hank%20Aaron%20State%20Trail%20Map.pdf.

Speaking of biking, I’d encourage you to check out the Bike Federation of Wisconsin (BFW). (http://www.bfw.org/).  The BFW is a fine organization spreading the word of bike paths

(people paths – as I refer to them – for those who walk or run).

I’m available to talk and answer questions if you want to plan for a wise home purchase.  My first meeting is always in a coffee shop and it is nothing more than a listening session with a few opinions provided from my real estate experiences.  You buy the coffee.  I’ll provide the information (remember to always buy based on information not emotion).

If you are a past client, thank you for your business and know I am always interested in referrals.  Thanks for reading.  If you found this information of interest please share it with a friend