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Is the Housing Bubble Back on the Rise? Local Real Estate Agent Says 'Yes'

Data shows 2012 to be the year that the housing bust finally levels out. A few more foreclosed homes are expected to hit the market, but conditions are right for them to be snapped up.

It was a burst that turned the U.S. economy upside down, but could the housing bubble be filling up once again?

Shorewest Realty agent says all signs point to “yes.”

As a Sussex native working at Shorewest Realtors’ “Office of the Year” in Menomonee Falls, Mazza has a first-hand grasp on housing trends in Waukesha County. Between the data reported by the Federal National Mortgage Association and county trends, she thinks 2012 could be the year home values begin to level off.

Mazza began her career in what could be considered the worst year for a real estate agent: 2008, the height of the market crash. Experiencing that, however, has led her to believe the area is on the cusp of normalcy.

“Right when I started, it was really the downfall of the market, but I can see really significant improvements in this area, especially when it comes to foreclosure properties and short sale transactions,” Mazza said. “Now getting into 2012, we’re still seeing the those transactions, but there’s less and less mortgage holders going into default. We’re starting to see that level off, so that’s where we’re hoping to see our home values get back to normal.”

"Right now we’re in a complete buyer's market... It’s affecting home prices."

Mazza said a major contributor to lower home values is "shadow foreclosures." When a bank forecloses on a home, there’s no homeowner maintaining the property and it brings the market down overall.

Banks are holding on to these foreclosed properties, Mazza said, because if they flooded the market with these homes, the entire market drops significantly. Though banks are expected to put out more on the market in 2012, according to her data, a healthier appetite for buying homes should level out home values when they’re finally sold.

“Do we know exactly what’s going to happen? No, we don’t,” Mazza said. “But we’re getting predictions from the CEOs and the CFOs and the lenders and the private investors like Fannie Mae. It’s their prediction of the housing market, along with other factors like the job market. Are people employed? Can they afford a home? Employment is a big factor, and it all plays a part in our home values coming back up.”

National unemployment has continued a rapid drop from 9.9 percent almost two years ago to 8.3 percent today. Wisconsin's rate has fallen from 9.1 percent in February 2010 to 7.1 percent in December 2011.

"An average Waukesha County home dropped in value by more than $10,000 compared to the year before, while the average home in Sussex dropped in value by more than $60,000..."

And Shorewest’s data proves there’s been a massive peak in interest. By tracking the number of interested visitors on its website, the realtor group saw double the amount of traffic in 2011 compared to 2009.

The company also sold almost 300 additional homes in 2011 compared to the previous year. And while official numbers for 2012 are just rolling in, Mazza expects even more sales this year.

However, there’s no disputing the drop in home value in the last year. In 2011, an average Waukesha County home dropped in value by more than $10,000 compared to the year before, while the average home in Sussex dropped in value by more than $60,000, according to the Multiple Listing Service.

“Right now we’re in a complete buyer's market, which means there’s more buyers, there’s more inventory out there for them to choose from and the interest rate is so historically low,” said Mazza. “It’s affecting home prices. The rates are so low in fact, that this is probably the best time to buy that we’ve seen in ages, in lifetimes honestly. It’s just that low.”

However, with the expected sale of the foreclosed homes hitting the market this year, Mazza says her data shows it’s only a matter of time before home values level out.

Sarah Wonderiling February 29, 2012 at 04:01 PM
Sorry but she is clearly wrong. Until employment confidence is up there will be no rise in house buying. Over 50% of homes being purchased are foreclosures. These are not purchased by homeowners for the most part, but are purchased to rehab and rent. Sorry but she doesn't seem to understand the real estate market.
Vic Hentz February 29, 2012 at 04:35 PM
"this is probably the best time to buy" Never, never, NEVER ask a barber if you need a HAIRCUT!
Vic Hentz February 29, 2012 at 04:39 PM
Also, just because the totally fudged unemployment figures are down, DOES NOT MEAN EMPLOYMENT IS UP, or that someone who held down a bread and butter position isn't now flipping burgers to scrape by!
St. Swithin February 29, 2012 at 05:08 PM
I agree with the others, and want to add that rising prices do not necessary mean a 'bubble'. The housing market has rising prices for decades without any bubble. The last 15 years saw rampant speculation coupled with sub-prime loans that made prices rise much faster than normal. That was the bubble.
Tracy Lee February 29, 2012 at 05:22 PM
I would like to see where Sarah's numbers are coming from,but isn't it good that someone is buying these houses? While I agree that unemployment figures are a joke, at 10 or 15% unemployment, that leaves 85 or 90% of people with jobs, able to move if motivated. I think what the article is saying is that because of the lower prices and low interest rates, that 85% of people have a great opportunity.
Sarah Wonderiling February 29, 2012 at 06:59 PM
Tracy, I understand your misconceptions regarding employment. If you understood the actually numbers of people who are underemployed or working at companies at risk of layoffs or closing you would have a better understanding of the reality of the market. Clearly the Realtor was speaking from a self serving point of view. The fact is that many Realtors have not renewed their licenses because the market has been so horrible for them. Many Realtors will sell maybe one or two homes a year. Tracy I don't mean to critizize you, but as an ecomonist I know and understand very well the trouble we will be in for the next few years
Craig February 29, 2012 at 07:38 PM
Good point. To paint an agent with less than 5 years of experience as an 'expert' is highly flawed as well. This will be the lost decade similar to Japan's Stock Market of the 90's. Anyone who thinks the market is coming back is either taking stupid pills or doesn't know enough to have a legitimate opinion.
Tracy Lee February 29, 2012 at 09:05 PM
You aren't criticizing me, you are patronizing me. All I asked was to please site your "over 50% of homes being purchased are foreclosures". As an economist you understand how important statistical data is in stating your point. True unemployment continues to drive poor consumer confidence, but according to the statistics at www.mlswis.com, the Milwaukee MLS, for January 2012, Closed sales are up 15.0%, sales price is down 8.6%, and there is 12.8% change in inventory, which I assume means not so many homes on the market. Unless the MLS is lying, I would say the agent is correct in saying that prices are low and people are buying. So although my percentages on unemployed people are estimated, it does seem like a good time to buy a house if you are ready. Im sorry that you want to see the negative to this story, but I'll be happy if this does turn around, and will take the word of an agent who clearly is successful if she can afford to do it for 4 year. Thanks!
Craig February 29, 2012 at 09:27 PM
Don't put a whole lot of stock in an agent who can do it for four years. How many sales does that come to? Interview an agent who has been through good times and bad- now there is some information that may have some validity.
Tracy Lee February 29, 2012 at 10:46 PM
I do agree with that Craig. You should check out an agents track record though. An agent that sold 30 homes a year for 4 years may have a better knowledge of this crappy market though than one who has been doing this for 20 years but only sold 5 a year for the last 4 and doesn't keep up with what's going on.
Andy Ambrosius (Editor) March 05, 2012 at 06:48 PM
In response to this article, another local realtor submitted a Letter to the Editor with new facts, numbers and opinions on how a "recovery" isn't the same as a "bubble." Read her take on the housing market here: http://patch.com/A-rvnV

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