Think about the last piece of media you encountered that reported a story on the housing market. Did it say where that story took place? California? Florida? Las Vegas? Well, what happens in Vegas, stays in Vegas. The media has done a poor job of distinguishing between what's happening nationally and what's happening here in Dane County. Contrary to media hype regarding a "crash" in the housing market, homes in Madison continue to increase in value – 4.8% in the last year alone.(1) Read on to discover the truth about national stories that you may have heard, and why Dane County is different.

"Interest rates are going up."
The truth is interest rates are going down, and hovering near 40-year lows. The market rate for a 30-year fixed-rate mortgage currently stands just above six percent. And, several lenders are offering promotional interest rates that are lower than six percent – including Veridian's mortgage lender, InterLink Funding.

"Home prices are dropping."
In fact, home prices in Madison have continued to steadily increase in value – 4.8 percent in the last year alone.(1) Homes have appreciated in Madison at a relatively stable rate – with a statewide average increase of 3.4 percent from the second quarter of 2006 to the second quarter of 2007. Only five states in the U.S. have shown a decline, Nevada being the worst, with a 1.45 percent decline for the year after posting 16 percent increases annually over the last four years.(2) The truth is, if you are looking to buy a home, you don't have to worry about falling prices.

"Let's offer $30,000 less than asking price!"
Don't let media sensationalism create unrealistic expectations. National media stories like to report on gross discounts being offered off of homes prices and even on auctions that sell homes for $100,000 less than the asking price. This is a fine example of an abnormal scenario in California gaining media attention, rather than the normal and mundane in Dane County. Truth be told, Dane County continues to be a steady and stable market for buying and selling your home. In 2006, homes sold for 98.5 percent of the asking price, while in 2007 homes are selling for 97.3 percent of the asking price. But don't take our word for it – this is straight from the Multiple Listing Services report.(3)

"Foreclosures rates hit the Midwest region hardest."
Chicago economist, Asha Bangalore, says the Midwest economy is suffering due to the ongoing woes of the domestic auto industry. This has hit the economies of Michigan and Ohio harder than other states in the region.(4) Unfortunately the Midwest headline assumes Wisconsin is included, when Michigan, Ohio and Indiana are the main victims. As for Dane County, foreclosure rates are up compared to last year. However, they remain lower than the national average. In fact, Wisconsin is ranked 33rd among all 50 states for foreclosures. Plus, Dane County's market is more stable since it is home to a large university, the state capital and a steady job market. A November 4, 2007 article in the New York Times simply stated that "As the inner cities, along with much of Florida and the interior of California, face the prospect of a foreclosure meltdown, American college towns appear to be islands of stability."(5)

"It is difficult to get a home loan today, even if you have good credit."
Loans in Dane County are readily available for qualified buyers – and with desirable rates. The housing market today has made it more difficult for financially strapped buyers to receive a home loan. In recent years, lenders have been providing sub-prime loans to financially strapped borrowers, when they should have been scrutinizing these loans more closely. (Sub-prime loans are given to borrowers with low credit ratings at an above prime rate in order to let them purchase a home when they otherwise may not have been approved with a traditional lender.) Now buyers, who received a sub-prime loan for a home they could not truly afford, are having trouble paying their mortgages. According to the Federal Financial Institutions Examination Council, only 14 percent of loans in Madison were sub-prime in 2006, the fifth-lowest rate among metropolitan areas. The national average was 29 percent.(6) Basically, if you are looking to buy a home with a price tag you can afford, headlines about rising foreclosures and sub-prime loans should not worry you.

"The market shows that now is not a good time to buy."
Actually, the market shows that now is a great time to buy! You can select from a variety of homes at affordable prices and financing with low interest rates. Plus, you'll save money by starting to build your equity and realize your tax benefits sooner. According to Virchow Krause & Company, home ownership offers some of the best tax advantages available today. Homeowners can claim an itemized deduction on their income tax return for real estate taxes and home mortgage interest. The important aspect of the housing market is that it is cyclical, just like the stock market. Trying to time the market is an impossible task; even those that follow the market for a living cannot predict what will happen. If they did, they would be millionaires!

1 2007 Property Tax Base Report, City of Madison Assessor
2 Office of Federal Housing Enterprise Oversight, House Price Index, August 2007
3 South Central Wisconsin Multiple Listing Service (MLS)
4 Chicago Tribune, 2007
5 The New York Times, November 4, 2007
6 Wisconsin State Journal, November 5, 2007