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» Made in USA
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Prime Time

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Posted 05-08-2011 at 10:18 AM by Roy Sanborn

As of May 1, we have 1146 homes available for sale In the towns that we track in this Lake Region Real Estate Market Report with an average asking price of $546,127 and a median (or mid-point) price of $277,392. That compares to 1169 homes on the market last May and 1083 in May of 2009. The average asking price last May was $586,170 and a median of $289,900. In 2009, the average was $555,857 and a median of $299,000. Homes prices are definitely down and the inventory is definitely back up which is to be expected this time of year.

After all, it is “PrimeTime” and lots of properties are coming on the market. Maybe we need Deion “Prime Time” Sanders, the infamous showboating Dallas Cowboy cornerback, to make an appearance here and get things fired up? The current inventory level represents an 18 month supply of homes on the market. It was only a few months ago that we were down to a 12 month supply of homes on the market so we definitely need to get some sold…

However, things are getting definitely busier. Just about every agent I have spoken with say they have had more showings and buyers out looking at property. Maybe it’s just the spring market, but It’s a pretty good feeling just the same. Deals are still extremely hard to put together and keeping them together once the parties agree on a price is not easy, either. We have had a couple of issues that have come up lately with appraisals and mortgage underwriters that are going to continue to be headaches moving forward.

One issue is that many of the homes that we have in the Lakes Region have finished lower levels (that’s a fancy term for basement) that are used for living space. Walk out basements are done to take advantage of the sloping topography of the area to create some affordable square footage to the home. The walk out lower levels are usually every bit as nice as the upper floors and contain family rooms, bedrooms, and bathrooms. While the square footage cost of the lower level spaces is substantially lower, you do get taxed on the space. Just ask anyone who got a permit to finish their basement to take advantage of that unused space. The problem is that appraisers and banks don’t always count that space. Say you are trying to sell a 2,000 square foot home with 1,000 square feet upstairs and 1,000 square feet down in the lower level walk out. There are two bedrooms on the upper level and one on the lower. Appraisers and loan underwriters look at this as a 1,000 square foot two bedroom home, so that’s that what they have to use for comparable sales. Guess what that does to a home’s value?

Another problem we’ve had is with flood zone issues around Lake Winnipesaukee. Lenders want to make sure that a waterfront home being purchased is not in the flood zone and to make sure that the buyer gets flood insurance if it is. That sounds fairly reasonable despite the fact that Winnipesaukee’s level is controlled by a dam and it is not likely to flood. The problem is that the FEMA flood maps are pretty inaccurate. The maps show that part of every property on Winnipesaukee is in the flood zone, but that doesn’t mean the actual house is. So when loan underwriters see that a property being purchased could be in the flood zone they may ask for an Elevation Certificate for the property which is then filed with FEMA to get the flood maps amended . That means you need to establish the elevation of the basement floor to show that it is out of the flood zone. The house could be ten feet above the flood level but the underwriters can’t see that from their cubicle. So this little glitch can cost the home owner $1,500 to $2,000 for a surveyor to go out to the site, determine the elevations, and file the appropriate paperwork which can then take 60 days to process. Buyers can close on the property if they get flood insurance and then get a refund once they prove the structure is out of the flood zone. But it still will cost the seller a lot of money unnecessarily. Not all lenders will require Elevation Certificates, but waterfront sellers shouldn’t be surprised if it happens.

On another note, this has certainly been a great week for the United States and a bad week for terrorists! Hats off to the armed forces and our intelligence community for performing flawlessly and avenging the atrocious acts of 9/11. They have restored a sense of pride to an American public in dire need of some good news. Thank you!

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