Category: Real Estate News

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Summer on Wisconsin’s Waterfronts Just Got Better

Pier on Lake Wausau

Summer on the waterfront in Wisconsin can be quite enjoyable. Waterfront owners now have something more to cheer about; aside from the lovely view from their pier.  Since April when Wisconsin modified the rights of waterfront owners.  The new law grandfathers in almost all existing piers and guarantees that waterfront property owners have the right to place a pier even in areas the Wisconsin Department of Natural Resources (DNR) has deemed to be “environmentally significant.”

Existing Piers
Under the new law all existing piers are grandfathered in as long as the pier meets the guidelines below:

  • The pier must have been originally placed prior to February 6, 2004.
  • The width of the pier could be no wider than eight feet.
  • A loading platform or deck was allowed as long as it is located at the lakeward end of the pier and the platform had a surface area no greater than either (a) 200 square feet, which may be any width, or (b) 300 square feet, if the deck/platform is no wider than 10 feet.

Moreover, the new law allows the waterfront owner to relocate or reconfigure the pier as long as the pier is not enlarged.

New Piers
A new pier can now be placed without getting a permit if the following requirements are met:

  • Width: No more than six feet wide.
  • Length: No longer than what is necessary to moor your boat or use a boat lift, or 3-foot water depth, whichever is greater.
  • Number of boats: Two boat slips/lifts for the first 50 feet of water frontage of your property, plus one more boat slip/lift for each additional 50 feet of frontage.
  • Number of personal watercraft: Two personal watercraft for the first 50 feet of water frontage of your property, plus one more personal watercraft for each additional 50 feet of frontage.
  • Loading platforms: A loading platform/deck with a surface area no greater than 200 square feet.

If a waterfront property owner wants to place a pier that exceeds these standards, a permit must be obtained from the DNR.

New Piers in Environmentally Significant Areas
Piers can now be built in areas that are considered by the DNR to be environmentally significant. While you still have to obtain a general permit for building the pier, the DNR can no longer prohibit the construction of a pier. However, the DNR may impose condition on the location, design, construction, and installation of such piers.

Wet Boathouses
You may now maintain your existing boathouse if it was constructed prior to 1979. You may use unlimited resources to maintain the boathouse. However, the boathouse can not be expanded.

When looking at purchasing waterfront property it will be important to discuss with your realtor whether the current property owner has received notice from the DNR that the pier is detrimental to the public interest and if the pier interferes with the rights of other waterfront owners.

Source: “New Pier Grandfathering Legislation Signed Into Law,” The Wisconsin Realtors Association Real Estate Magazine (May 2012).

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Madison Assessments Still Falling

In the past three years Madison assessments have fallen continuously. The most recent assessments that were received around April 25, 2012 fell an average of 1.6 percent. In some places throughout the city assessments fell by even larger amounts. Some have suggested that the reason for the drop in assessments is because of a backlog of foreclosures and financing concerns.

A decline in your assessment will make it less likely that property taxes will increase. Of course, a drop in assessed values are directly tied to housing prices.

There were a few pockets in Madison where assessment values slightly increased including the isthmus and the near west side.

More information regarding assessments can be found at: http://www.cityofmadison.com/assessor/.

Source: “Assessments drop in Madison for third consecutive year,” Channel3000.com (April 23, 2012).

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Bidding Wars Return

Bidding Wars

These days across the nation and in Madison it is the time to buy. The National Association of Realtors reported in late April that the number of contracts signed to purchase previously owned homes rose in March 2012 to its highest level in two years, up 12.8% from a year ago.

If you are looking to purchase a home you should be prepared to enter a bidding war if you have found the home of your dreams. In some cases buyers have reportedly agreed to waive inspections and other closing conditions in order to purchase the home they wanted. This may sound a lot like the bidding wars that occurred in the early 2000’s during the housing bubble, but the reason for these new bidding wars is different.

This time around instead of a lot of easy credit, there are fewer homes on the market. For example, last July Wisconsin had approximately 72,000 homes unsold. In the first three months of 2012 Wisconsin has had only 52,758 unsold homes. Compared to last March the inventory of homes for sale is down 16%. This low inventory may be the result of many different things: individuals taking their homes off the market until they are able to get a better price; investors making cash offers; or that Fannie Mae and Freddie Mac are keeping inventories low by not listing the foreclosed homes they currently own.

This low inventory has meant that those houses that are on the market are being seen by a number of interested buyers and often receive multiple offers for purchase. In some cases for Sellers this is great, and they receive an offer way above the asking price. However, in other instances, the sale price is sometimes still much lower than what the Seller originally paid for the home.

Regardless of whether you are thinking about buying or selling a home, you should speak with a Realtor to  better understand the current housing market.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012).
Source: Wisconsin Realtor’s Association, “2012 March Home Sales Report,” April 23, 2012.
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FHA Updates

Earlier this year the U.S. Department of Housing and Development issued the following changes to the FHA Loan Program.

April 1, 2012 Changes

Monthly PMI on FHA loans will be increasing by 10 basis points or 0.10 percent. This increase will affect all mortgages that originate on or after April 1, 2012. That comes out to about $17 per month more on a $200,000 loan. FHA has determined that beginning June 1, 2012 in instances where the mortgage exceeds $625,000 the monthly PMI rate will increase by and additional 0.25 percent.

Also effective April 1, 2012 FHA has increased the UpFront PMI or UFPMI. This UFPMI is a one-time mortgage insurance premium collected at closing and is often financed through the loan, by being added to the base loan amount. The premium has increased from 1% to 1.75%. That comes out to about $7 per month more on a $200,000 loan.

Looking to Refinance Your FHA Loan

Effective June 11, 2012 some current FHA clients will be able to complete a streamline refinance loan without being subjected to the current increases in PMI and UFPMI. In these cases the PMI will be lowered from 1.25% to .55% of the loan amount per year. The UFMIP will be reduced from 1% to .01%.

You may qualify for the streamline refinance program if you meet the following criteria:
• The mortgage you wish to refinance originated prior to June 1, 2009.
• You currently have a mortgage insured by FHA.
• You are current on your mortgage payments.
• The refinance will result in lower monthly payments for both principal and interest. In some cases it may be possible to convert an ARM loan to a fixed rate mortgage.
• No cash may be taken out on mortgages refinanced in this manner.

These changes apply to all mortgages insured under FHA Single Family Insurance except:
• Home Equity Conversion Mortgages
• Section 247 Hawaiian Homelands
• Section 248 Indian Reservations
• Section 223(c) Declining Neighborhoods

Take Aways:
• Increases in FHA loans UFMIP and MIP may make a conventional mortgage palatable; research to find out which financing vehicle is best for you.
• Streamline refinancing: If you have an FHA mortgage that originated on or before June 1, 2009 you may want to wait and refinance your FHA mortgage after June 11, 2012 to take advantage of the lower PMI and UFMIP rates. Talk to a mortgage lender to determine if you qualify for this refinancing program.

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Deficiency Judgments Haunt Foreclosed Sellers

As the web of short sales and foreclosures continues to unfold, a new twist has come into play. Investors have begun purchasing deficiency judgments (“an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full” Wickipedia) from banks for around 2 cents on the dollar, according to a recent Wall Street Journal article House is Gone but Debt Lives On.

Silverleaf Advisors LLC, a Miami private-equity firm, is one investor in battered mortgage debt. “We are waiting for the economy to somewhat heal so that it’s a better time to go after people,” says Douglas Hannah, managing director of Silverleaf.

As with all complex business and financial matters, a specialist’s advice is invaluable before signing any documents.  We recommend speaking with an attorney and an accountant to better understand all possible consequences before making any decisions.