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October 2013 | |
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| MARKET DISLOCATIONS CREATE OPPORTUNITY | |
| With interest rates, inventory and pricing still deviating from historic norms, consumers have ample opportunity in today's real estate market. | |
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| Let's talk for a minute about "not normal." Sometimes not normal can be scary, like when your teenage daughter brings home the bass player from a Norwegian heavy metal band. But not normal can also be a beautiful thing. Recently, a few seemingly unwitting patrons in New York City bought paintings by the renowned graffiti artist Banksy for a couple hundred dollars each. The paintings are believed to be worth over $100,000.
In real estate, too, not normal can be scary or beautiful. But getting comfortable with the idea of not normal can shine a light on unique opportunities that otherwise go unnoticed. While today's real estate market is well along the path back to normal, there are still a number of anomalies that buyers or sellers can use to their advantage.
• Inventory - A normal level of housing supply is 6 months. Currently, supply across Chicagoland is just 4.3 months. That means sellers currently face about 30% less competition than they would find in a typical market.
• Mortgage Rates - The average 30-year mortgage rate since 1990 is 6.72%. Today's 30-year mortgage rate is 4.38%. We have gotten so used to abnormally low borrowing costs that many people take little notice of the monumental opportunity arising from this deviation.
• Rent vs. Own - Trulia.com's latest Rent vs. Buy Report estimates that it's about 36% cheaper to own than to rent in the Chicago area. This major discrepancy in housing costs should make any prospective homebuyer (or landlord) take notice. Learn more about the Rent vs. Buy Report in this month's Market Minute video.
@properties Market Minute:
Renting is far more expensive than owning. Watch video.
While each of these current dislocations opens doors for certain buyers and sellers, they won't last forever. We can count on mortgage rates, inventory, prices and other measures of the housing market and economy to eventually return to historic trend lines. So embrace not normal...unless, of course, his name is Sven, he's 6'4", and he's wearing white face paint and spiked wrist bands.
If you're thinking about buying or selling, or looking for more information on your local market, contact me today.
In the news:
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U.S. Mortgage Rates Rise For The First Time In Five Weeks
By Elizabeth Dexheimer | October 10, 2013
The shutdown has lengthened the wait for some borrowers seeking mortgages backed by the Federal Housing Administration and Department of Agriculture. It also has postponed the release of economic-data reports, including the Department of Labor's monthly employment figures, which Federal Reserve officials use to determine whether to continue stimulus efforts. |
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Five Ways Government Shutdown Impacts New Mortgages
By Brian O'Connell | October 2, 2013
Under normal conditions, home buyers would be leaping off the fence to grab lower mortgage rates, but with the shutdown, there's enough uncertainty in the air to keep mortgage consumers on the sideline until Uncle Sam is open for business again. |
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Median Price Heat Map
October 15, 2013
Where are home prices headed? Select a county, then choose current median home prices or property value changes over the past 1, 3 or 5 years. If the map does not appear below, use our price/ location search from the box at right. |
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