Ballpark Figures
Online home values often come out of left field DECEMBER 2011
About the only online segment growing faster than Cyber Monday sales might be real estate search websites such as Zillow.com, Realtor.com and Homes.com. One reason for the huge gains in web traffic (the above three sites now draw approximately 50 million unique visitors per month - and growing) is the home-valuation tools many of these sites offer. Resources like Zillow.com's Zestimator have become the first place many consumers turn in order to gauge the value of their own home or one they're considering buying.
Online value estimators are certainly interesting and more than a little entertaining. But they aren't the best way (and, in many cases, not even a good way) to get an accurate picture of a home's market value. A recent article in The Wall Street Journal pointed out that online home valuation models can "veer off target with alarming frequency." And most of the websites themselves acknowledge the potential for inaccuracies.
For example, Zillow features an accuracy table that rates the site's pricing estimates for major metro areas on a scale of one to four stars. Chicago is a three-star market for accuracy. The site claims that 78% of Chicago-area Zestimates fall within 20% of the actual sale price, and there is an average margin of error of 7.9%. Of course, that's for the entire metro area. What do those stats tell you about the accuracy of price estimates in your town, your neighborhood or your block?
To put it another way, if your real estate agent told you that slightly more than one in five of their pricing analyses missed the mark by 20 percent or more, you'd probably go out and find yourself another agent. Which begs the question... Why not call your agent in the first place?
If Zillow can give you a "three-star" guesstimate of your home's value, then a full-service professional REALTOR®, who's working from up-to the-minute MLS data, walks through dozens of homes each month, and has knowledge of those homes that can't be found in the public record, is probably worth five stars at least!
Of course that's not to say these websites and their home valuation models aren't relevant. Full disclosure - @properties advertises on many of these sites because we do recognize their value to the consumer. Sites like Zillow, REALTOR.com and Trulia have invested millions of dollars in developing excellent search technology. And it's important to recognize that online valuation tools are new. Algorithms are constantly being updated, and the better sites encourage participation from their user communities to acquire more data on individual homes. Over time, online valuation models can only get better.
Ultimately, however, the best estimate of your home's value will come from a professional REALTOR®. And you don't have to be buying or selling right this minute to get that information. I'm happy to provide an informal estimate or a thorough comparative market analysis anytime - even if you're just curious. Just pick up the phone and call me, or send me an e-mail or text.
On a final note, let me take this opportunity to wish you a very happy holiday season and a joyous New Year. I value our continued relationship and I'm grateful for your support. If I can be of assistance to you, your family or friends in 2012, please let me know. And remember that I always appreciate your referrals.
Showing posts with label Chicago Homes For Sale. Show all posts
Showing posts with label Chicago Homes For Sale. Show all posts
Tuesday, December 20, 2011
Tuesday, August 23, 2011
Did you get out of bed today?
Did you get out of bed today?
I know what you're thinking. 'Here we go again. It's the Bear Market of 2008 back to punch us in the stomach and take our lunch money one more time. There goes the stock market. There goes the real estate market. There goes the global economy.'
Certainly the events of early August have been unsettling, even maddening. The triple whammy of a slowing U.S. economy, the ongoing European debt crisis and Standard & Poor's downgrade of U.S. credit has rattled an already fragile consumer confidence.
Lou Barnes, a mortgage banker from Boulder, Colo. said it best in an August 8 interview with The Wall Street Journal's Developments blog: "Who wants to get out of bed today, let alone buy a house?"
Yet a lot of people right here in Chicagoland did get out of bed today and buy a house. Why is that? Is it because the same fundamentals that existed yesterday - record low mortgage rates and record high affordability - still exist today? Is it because local apartment rents are rising faster than Starlin Castro's batting average? Or could it be that real estate (like our now AA+ rated US debt) is still considered a relatively safe long-term investment?
That's a radical concept in 2011. But an investment that can also shelter you and your family, provide a large tax deduction, serve as a hedge against inflation, and allow you to put down roots in a top community or school district has to be given serious consideration - especially if it comes at a discount of more than 33% off its peak value... especially if it's in the business, cultural, tourism and innovation hub of the Midwest... especially if you plan to live there for a while.
As it stands today, there are only 18 nations in the world rated AAA by Standard & Poor's. Among them are Guernsey, Liechtenstein and Isle of Man. I don't know about you, but I'd rather live in AA+ Chicago, Illinois, USA.
What will the stock market do tomorrow? What will the housing market do tomorrow? If we knew that, we'd all be sipping fruity drinks on our own private island. But if the last century of American economic history is any indication, the long-term trend is up. I believe that, which is why I'm in the real estate business. And @properties believes that, which is why we're continuing to invest in and expand our business even in tumultuous times.
As in 2008, we're keeping a cool head, focusing on hyper-local market conditions and framing most conversations about housing, not around the headline of the moment, but around your individual wants and needs at your particular stage in life.
I'm here to help, so please contact me if you have any questions or are getting ready to buy or sell. And remember I always appreciate your referrals.
I know what you're thinking. 'Here we go again. It's the Bear Market of 2008 back to punch us in the stomach and take our lunch money one more time. There goes the stock market. There goes the real estate market. There goes the global economy.'
Certainly the events of early August have been unsettling, even maddening. The triple whammy of a slowing U.S. economy, the ongoing European debt crisis and Standard & Poor's downgrade of U.S. credit has rattled an already fragile consumer confidence.
Lou Barnes, a mortgage banker from Boulder, Colo. said it best in an August 8 interview with The Wall Street Journal's Developments blog: "Who wants to get out of bed today, let alone buy a house?"
Yet a lot of people right here in Chicagoland did get out of bed today and buy a house. Why is that? Is it because the same fundamentals that existed yesterday - record low mortgage rates and record high affordability - still exist today? Is it because local apartment rents are rising faster than Starlin Castro's batting average? Or could it be that real estate (like our now AA+ rated US debt) is still considered a relatively safe long-term investment?
That's a radical concept in 2011. But an investment that can also shelter you and your family, provide a large tax deduction, serve as a hedge against inflation, and allow you to put down roots in a top community or school district has to be given serious consideration - especially if it comes at a discount of more than 33% off its peak value... especially if it's in the business, cultural, tourism and innovation hub of the Midwest... especially if you plan to live there for a while.
As it stands today, there are only 18 nations in the world rated AAA by Standard & Poor's. Among them are Guernsey, Liechtenstein and Isle of Man. I don't know about you, but I'd rather live in AA+ Chicago, Illinois, USA.
What will the stock market do tomorrow? What will the housing market do tomorrow? If we knew that, we'd all be sipping fruity drinks on our own private island. But if the last century of American economic history is any indication, the long-term trend is up. I believe that, which is why I'm in the real estate business. And @properties believes that, which is why we're continuing to invest in and expand our business even in tumultuous times.
As in 2008, we're keeping a cool head, focusing on hyper-local market conditions and framing most conversations about housing, not around the headline of the moment, but around your individual wants and needs at your particular stage in life.
I'm here to help, so please contact me if you have any questions or are getting ready to buy or sell. And remember I always appreciate your referrals.
Thursday, June 16, 2011
Getting The Right Answers On Buying Or Selling Starts With The Right Questions
Getting The Right Answers On
Buying Or Selling Starts With
The Right Questions
Like so many of life's big decisions, the right answers about buying or selling a home derive from asking the right questions. So when people ask me if now is the right time to buy or sell, I usually recommend setting aside the immediate or short-term considerations involved in this debate and first framing the question in the context of long-term goals. After all, homeownership, as we've all been reminded, is a long-term proposition.
And long-term, it still appears to pay off for most Chicagoans. Earlier this month Crain's Chicago Business reported that, "despite double-digit drops in the bust of recent years," a number of Chicago-area neighborhoods and communities still experienced healthy price increases over the 10-year period from 2000 to 2010. Citing data from Fiserv Inc., the article reported increases in newly gentrified areas like Uptown/Andersonville (+39.3%) as well as more established neighborhoods like the Gold Coast (+33.2%). These figures might come as a surprise given the housing crisis, but they average out to between 3% and 4% per year, which is about the historical norm for annual home-price appreciation going back decades.
Another long-term factor buyers and sellers must consider is borrowing costs. No one knows exactly where interest rates will be in a few years, but a decade ago the cost of money was almost double what it is today.
Not to be overlooked are the lifestyle considerations that factor into buying, selling or standing pat. These include things like growing families, schools and retirement. Sometimes, short-term financial factors (like today's prices) outweigh these issues, but other times they don't. For example, a buyer who wants to move into a specific school district because their child is starting kindergarten may be less concerned that prices could decline for another year or two before starting to recover. Likewise, a seller nearing retirement may decide they would rather sell now and retire with less equity, than wait an indeterminate amount of time until their home equity approaches pre-crash levels.
For these individuals, now is the right time to buy or sell. I'm here to help you ask and answer the questions that will determine if the time is right for you. Please feel free to call on me anytime. And remember, I always appreciate your referrals.
Dave Straub
@properties
773.255.3180
Buying Or Selling Starts With
The Right Questions
Like so many of life's big decisions, the right answers about buying or selling a home derive from asking the right questions. So when people ask me if now is the right time to buy or sell, I usually recommend setting aside the immediate or short-term considerations involved in this debate and first framing the question in the context of long-term goals. After all, homeownership, as we've all been reminded, is a long-term proposition.
And long-term, it still appears to pay off for most Chicagoans. Earlier this month Crain's Chicago Business reported that, "despite double-digit drops in the bust of recent years," a number of Chicago-area neighborhoods and communities still experienced healthy price increases over the 10-year period from 2000 to 2010. Citing data from Fiserv Inc., the article reported increases in newly gentrified areas like Uptown/Andersonville (+39.3%) as well as more established neighborhoods like the Gold Coast (+33.2%). These figures might come as a surprise given the housing crisis, but they average out to between 3% and 4% per year, which is about the historical norm for annual home-price appreciation going back decades.
Another long-term factor buyers and sellers must consider is borrowing costs. No one knows exactly where interest rates will be in a few years, but a decade ago the cost of money was almost double what it is today.
Not to be overlooked are the lifestyle considerations that factor into buying, selling or standing pat. These include things like growing families, schools and retirement. Sometimes, short-term financial factors (like today's prices) outweigh these issues, but other times they don't. For example, a buyer who wants to move into a specific school district because their child is starting kindergarten may be less concerned that prices could decline for another year or two before starting to recover. Likewise, a seller nearing retirement may decide they would rather sell now and retire with less equity, than wait an indeterminate amount of time until their home equity approaches pre-crash levels.
For these individuals, now is the right time to buy or sell. I'm here to help you ask and answer the questions that will determine if the time is right for you. Please feel free to call on me anytime. And remember, I always appreciate your referrals.
Dave Straub
@properties
773.255.3180
Saturday, February 5, 2011
@properties' Market Reports
Stay Informed In 2011
With @properties' Market Reports
With record low interest rates and record high affordability, 2010 was a banner year for just about anyone who bought a home. The favorable buying conditions were reflected in overall sales numbers for 2010, which showed slight improvement versus 2009. Total sales volume was up and market times were down for @properties' principal market areas of the city and North Shore (see charts below).
Heading into 2011, buyers are still in the driver's seat but will want to keep an eye on interest rates, which are expected to top 5% before long. Locking in a rate below 5% on a 15- or 30-year fixed-rate mortgage, or below 4% on an ARM, is a phenomenal opportunity given current home prices. For sellers, getting the job done in 2011 will once again require an in-depth understanding of hyper-local market conditions and price trends, as well as a comprehensive sales and marketing plan.
A great way to keep tabs on the market in 2011 is with @properties' Market Reports. The reports instantly generate real time market stats for almost every neighborhood and village in the Chicagoland area. You can drill down to view market stats for specific housing types and sizes, and observe trends over 3, 6 or 12 months. While on the site, search Chicagoland's most complete property database, and sign up to receive New Listing alerts and Status Updates for properties you want to track.
If you're considering a real estate transaction, now is the perfect time for us to sit down and discuss potential buying or selling strategies. Contact me at your earliest convenience, and please keep me in mind if you know of someone who is looking to buy or sell property this year.
City of Chicago Market Comparison: 2010 vs. 2009 Totals
City of Chicago Total $ Volume Days on Market Average Sales Price
2010 $5,619,459,483.00 150 $284,948.00
2009 $5,587,165,396.00 156 $279,904.00
2010 vs. 2009 $32,294,087.00 -6 $5,044.00
% Comparison 0.6% -3.8% 1.8%
North Shore Market Comparison: 2010 vs. 2009 Totals
North Shore Total $ Volume Days on Market Average Sales Price
2010 $1,502,902,690.00 196 $656,576.00
2009 $1,183,205,540.00 207 $655,516.00
2010 vs. 2009 $319,697,150.00 -11 $1,060.00
% Comparison 27.0% -5.3% 0.2%
Source: Broker Metrics. Data supplied through MRED LLC, based on closed transactions for detached and attached single-family homes and parking. North Shore includes Evanston, Wilmette, Kenilworth, Winnetka, Glencoe, Highland Park, Lake Forest and Lake Bluff. 1/1/10 - 12/31/10 vs. 1/1/09 - 12/31/09.
With @properties' Market Reports
With record low interest rates and record high affordability, 2010 was a banner year for just about anyone who bought a home. The favorable buying conditions were reflected in overall sales numbers for 2010, which showed slight improvement versus 2009. Total sales volume was up and market times were down for @properties' principal market areas of the city and North Shore (see charts below).
Heading into 2011, buyers are still in the driver's seat but will want to keep an eye on interest rates, which are expected to top 5% before long. Locking in a rate below 5% on a 15- or 30-year fixed-rate mortgage, or below 4% on an ARM, is a phenomenal opportunity given current home prices. For sellers, getting the job done in 2011 will once again require an in-depth understanding of hyper-local market conditions and price trends, as well as a comprehensive sales and marketing plan.
A great way to keep tabs on the market in 2011 is with @properties' Market Reports. The reports instantly generate real time market stats for almost every neighborhood and village in the Chicagoland area. You can drill down to view market stats for specific housing types and sizes, and observe trends over 3, 6 or 12 months. While on the site, search Chicagoland's most complete property database, and sign up to receive New Listing alerts and Status Updates for properties you want to track.
If you're considering a real estate transaction, now is the perfect time for us to sit down and discuss potential buying or selling strategies. Contact me at your earliest convenience, and please keep me in mind if you know of someone who is looking to buy or sell property this year.
City of Chicago Market Comparison: 2010 vs. 2009 Totals
City of Chicago Total $ Volume Days on Market Average Sales Price
2010 $5,619,459,483.00 150 $284,948.00
2009 $5,587,165,396.00 156 $279,904.00
2010 vs. 2009 $32,294,087.00 -6 $5,044.00
% Comparison 0.6% -3.8% 1.8%
North Shore Market Comparison: 2010 vs. 2009 Totals
North Shore Total $ Volume Days on Market Average Sales Price
2010 $1,502,902,690.00 196 $656,576.00
2009 $1,183,205,540.00 207 $655,516.00
2010 vs. 2009 $319,697,150.00 -11 $1,060.00
% Comparison 27.0% -5.3% 0.2%
Source: Broker Metrics. Data supplied through MRED LLC, based on closed transactions for detached and attached single-family homes and parking. North Shore includes Evanston, Wilmette, Kenilworth, Winnetka, Glencoe, Highland Park, Lake Forest and Lake Bluff. 1/1/10 - 12/31/10 vs. 1/1/09 - 12/31/09.
Wednesday, November 17, 2010
5 Reasons You Should Use a Real Estate Professional
Should you spend the money on a real estate commission or save that money by selling your home by yourself? That is a question many home sellers ask themselves. Today, we want to discuss why it is crucial to have a true professional guiding you through the minefield of challenges that exist in the current real estate market.
The housing market today is more challenging than it has ever been and seems to be becoming more difficult each day. What impact will foreclosures have on prices? Which loan products that were available just last month are no longer available? How do you convince perspective purchasers to pull the trigger on an offer when everyone is telling them that they should see another 100 houses before they make a decision? These are tough questions for a trained, experienced professional. The lay person would find it almost impossible to keep abreast of this rapidly evolving industry.
Here are five important reasons to use a real estate professional:
1. Pricing Is Difficult
Just a few years ago, you didn’t have to worry about overpricing your home. If it was too high, all you needed to do was wait as historic appreciation was taking place. The situation is quite different today. With experts calling for another drop in home values, overpricing your property will cost you time. In this market, time costs you money. A professional real estate agent will discuss how increasing inventory could dramatically impact the value of your property in the months to come. They will help you set the right price in today’s market.
2. Negotiating Ability Is Crucial
Buyers today have an almost unlimited supply of homes from which to choose. They realize that puts them in a great negotiating position. Most buyers are now being represented by an agent. Sellers need to also be represented by a professional expert trained to negotiate real estate contracts.
3. Mortgaging Is Key to the Deal
The biggest impact of the housing market collapse is that lending standards are much stricter today than they were a few short years ago. Rules are constantly changing. Even FHA has gone through a guidelines overhaul in the last several months. You need a real estate expert who has teamed up with a knowledgeable mortgage professional to make sure that the buyer in the deal is in fact capable of obtaining a mortgage. Losing time with an unqualified buyer costs you money in a market where prices are falling.
4. Your Family’s Safety
We have always found it puzzling that the same person that will lock every door and window and set the alarm today will then allow total strangers into their house tomorrow. The real estate industry trains its practitioners to take steps to protect themselves and their clients. Take advantage of putting a person between you and the person calling on an ad or yard sign.
5. You Probably Have More Important Things to Do
Selling a home could turn into a full time job. Learning the necessary disclosures, coordinating the dates of your closings, dealing with a challenge regarding your appraisal and re-negotiating the offer after an engineer’s report are just a few of the concerns you may face. You would probably be better off spending that time with the items important to you and your family and leaving the challenges to your agent.
Bottom Line
To make sure the sale of your home is handled professionally – hire a trained professional. In the long run, you will wind-up with more money in your pocket and have fewer challenges with the move.
The housing market today is more challenging than it has ever been and seems to be becoming more difficult each day. What impact will foreclosures have on prices? Which loan products that were available just last month are no longer available? How do you convince perspective purchasers to pull the trigger on an offer when everyone is telling them that they should see another 100 houses before they make a decision? These are tough questions for a trained, experienced professional. The lay person would find it almost impossible to keep abreast of this rapidly evolving industry.
Here are five important reasons to use a real estate professional:
1. Pricing Is Difficult
Just a few years ago, you didn’t have to worry about overpricing your home. If it was too high, all you needed to do was wait as historic appreciation was taking place. The situation is quite different today. With experts calling for another drop in home values, overpricing your property will cost you time. In this market, time costs you money. A professional real estate agent will discuss how increasing inventory could dramatically impact the value of your property in the months to come. They will help you set the right price in today’s market.
2. Negotiating Ability Is Crucial
Buyers today have an almost unlimited supply of homes from which to choose. They realize that puts them in a great negotiating position. Most buyers are now being represented by an agent. Sellers need to also be represented by a professional expert trained to negotiate real estate contracts.
3. Mortgaging Is Key to the Deal
The biggest impact of the housing market collapse is that lending standards are much stricter today than they were a few short years ago. Rules are constantly changing. Even FHA has gone through a guidelines overhaul in the last several months. You need a real estate expert who has teamed up with a knowledgeable mortgage professional to make sure that the buyer in the deal is in fact capable of obtaining a mortgage. Losing time with an unqualified buyer costs you money in a market where prices are falling.
4. Your Family’s Safety
We have always found it puzzling that the same person that will lock every door and window and set the alarm today will then allow total strangers into their house tomorrow. The real estate industry trains its practitioners to take steps to protect themselves and their clients. Take advantage of putting a person between you and the person calling on an ad or yard sign.
5. You Probably Have More Important Things to Do
Selling a home could turn into a full time job. Learning the necessary disclosures, coordinating the dates of your closings, dealing with a challenge regarding your appraisal and re-negotiating the offer after an engineer’s report are just a few of the concerns you may face. You would probably be better off spending that time with the items important to you and your family and leaving the challenges to your agent.
Bottom Line
To make sure the sale of your home is handled professionally – hire a trained professional. In the long run, you will wind-up with more money in your pocket and have fewer challenges with the move.
Saturday, November 13, 2010
Should You Buy or Rent?
Renting may be smarter if home prices in your area will fall further.
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, April 2010
If you're a renter, you may be champing at the bit to buy a house after watching prices fall for four years. Is it time to jump? It may well be, especially if you want to capture the home buyer's tax credit (you'll need to have a contract by April 30 and close by June 30). But before you leap, you need to go beyond calculating the impact on your monthly budget and figure out how much home-price froth is left in your local housing market.
Encouraging signs. A key number to consider when switching from renter to homeowner is the price-rent ratio. This figure compares a city's median home price with its median annual rent. At the housing market's peak in 2005, the national median home price had inflated to nearly 21 times the median annual rent. By the third quarter of 2009, however, the ratio had deflated to 15, returning to the historical norm, according to Hessam Nadji, managing director of Marcus & Millichap, a commercial real estate brokerage company in Encino, Cal.
If the price-rent ratio where you're looking to buy is 18 or higher, your market may still be in the bubble zone, with a greater probability that home prices will fall after you buy. That could put you underwater -- meaning your home would be worth less than what you owe on the mortgage. If the ratio has fallen below 15, there's less chance that home prices will sink.
The table on Rent or Buy below shows the ten cities in which home prices are least likely to drop further, as well as those most likely to fall further, based on price-rent ratios. We also show the gap between median monthly apartment rents and median monthly mortgage payments. Five years ago, the difference between monthly mortgage payments and rent was $745 nationally; by the end of 2009, it was just $181.
To get a rough estimate of your local price-rent ratio, divide the average list price of several homes that meet your criteria by the average annual rent of several rental units with the same number of bedrooms and comparable amenities.
Weighing the decision. A year ago, the price-rent ratio in Phoenix was 14 -- down from almost 19 a year earlier. Home prices had fallen by half, and mortgage rates were at historic lows. Financial planner Brendan McNamar decided it was finally time for him to buy. He had rented since moving to the city in 2006, just after the housing bubble peaked, and was sitting on a nice nest egg from a home he had sold in 2004.
McNamar shopped for a long time, made offers on several houses and eventually bought a ten-year-old, four-bedroom, three-bathroom short sale listed for $219,000. (In a short sale, the sellers get permission from the lender to sell for less than the mortgage amount.) The house had sold for $355,000 in 2007. McNamar offered the full price, which the bank eventually accepted after 90 days. He put down 20% and took out a 30-year mortgage with a low fixed rate of 5.25%. He pays $1,176 a month (including taxes and insurance), which is more than twice his former monthly rent of $550. But because he hadn't owned a home in the past three years, he was able to snag the $8,000 first-time home buyer's tax credit.
From an investment perspective, McNamar wanted a house that would allow him to break even or earn a profit if he sold in three years. But given that prices have fallen even further in Phoenix since last spring -- the price-rent ratio is a rough guide, not an infallible one -- he reckons that his break-even point now may be four years away. But it's not a big financial setback to him because he has no plans to move.
Good deals for renters. Renting can be a smart strategy while waiting for this choppy housing market to settle down. Consider Jeremy Portnoff and his wife, Heather, of Edison, N.J. By mid 2009, the median home price in Edison had fallen a healthy 19%, to $317,000, from the market's peak in mid 2006.
The Portnoffs had their heart set on a home with three or four bedrooms to accommodate the family they hope to have, plus an office for Jeremy. The house they could afford was a starter home, probably a small townhouse -- which, on an after-tax basis, they figured would cost them about the same as renting.
But the Portnoffs also figured that if they sold it in three years, real estate commissions would consume any gains they could reasonably expect. Plus, Jeremy believed that the price of their ideal home in that area would continue to decline.
So they took a pass on buying and got a great deal on renting a two-bedroom townhome -- $1,550 a month, $300 less than when they looked at the same development three years before. The couple prudently plan to continue to pay down debt and save for a larger down payment on their next home.
In some markets, rental prices have dropped as supply has increased. By the end of 2009, the vacancy rate nationally had grown to 8.2%, a 30-year high, according to Nadji, of Marcus & Millichap. Meanwhile, rents had fallen 5.8% from the year before.
Markets with the highest vacancy rates include Jacksonville, Fla. (forecast at 14% in 2010), Atlanta, Houston, Las Vegas, Orlando, Phoenix, Tampa and Tucson. Renters in such markets can afford to shop around and negotiate hard. A building's leasing manager may be willing to lower the rent to attract or keep your business.
Nadji expects the vacancy rate nationally to tighten up a bit (to 7.8%) by year-end and start a rapid recovery beginning in 2011, with very strong rent growth between 2011 and 2015. Demographics (five million people will enter the peak renter age range of 20 to 34 over the next decade) and plummeting construction starts in 2009 and 2010 drive his forecast.
Not all cities have an excess of rental units, though. In some large cities, such as New York, downtown Chicago, San Francisco, Los Angeles and Washington, D.C., vacancy rates have remained tight -- and home prices have remained stubbornly high.
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, April 2010
If you're a renter, you may be champing at the bit to buy a house after watching prices fall for four years. Is it time to jump? It may well be, especially if you want to capture the home buyer's tax credit (you'll need to have a contract by April 30 and close by June 30). But before you leap, you need to go beyond calculating the impact on your monthly budget and figure out how much home-price froth is left in your local housing market.
Encouraging signs. A key number to consider when switching from renter to homeowner is the price-rent ratio. This figure compares a city's median home price with its median annual rent. At the housing market's peak in 2005, the national median home price had inflated to nearly 21 times the median annual rent. By the third quarter of 2009, however, the ratio had deflated to 15, returning to the historical norm, according to Hessam Nadji, managing director of Marcus & Millichap, a commercial real estate brokerage company in Encino, Cal.
If the price-rent ratio where you're looking to buy is 18 or higher, your market may still be in the bubble zone, with a greater probability that home prices will fall after you buy. That could put you underwater -- meaning your home would be worth less than what you owe on the mortgage. If the ratio has fallen below 15, there's less chance that home prices will sink.
The table on Rent or Buy below shows the ten cities in which home prices are least likely to drop further, as well as those most likely to fall further, based on price-rent ratios. We also show the gap between median monthly apartment rents and median monthly mortgage payments. Five years ago, the difference between monthly mortgage payments and rent was $745 nationally; by the end of 2009, it was just $181.
To get a rough estimate of your local price-rent ratio, divide the average list price of several homes that meet your criteria by the average annual rent of several rental units with the same number of bedrooms and comparable amenities.
Weighing the decision. A year ago, the price-rent ratio in Phoenix was 14 -- down from almost 19 a year earlier. Home prices had fallen by half, and mortgage rates were at historic lows. Financial planner Brendan McNamar decided it was finally time for him to buy. He had rented since moving to the city in 2006, just after the housing bubble peaked, and was sitting on a nice nest egg from a home he had sold in 2004.
McNamar shopped for a long time, made offers on several houses and eventually bought a ten-year-old, four-bedroom, three-bathroom short sale listed for $219,000. (In a short sale, the sellers get permission from the lender to sell for less than the mortgage amount.) The house had sold for $355,000 in 2007. McNamar offered the full price, which the bank eventually accepted after 90 days. He put down 20% and took out a 30-year mortgage with a low fixed rate of 5.25%. He pays $1,176 a month (including taxes and insurance), which is more than twice his former monthly rent of $550. But because he hadn't owned a home in the past three years, he was able to snag the $8,000 first-time home buyer's tax credit.
From an investment perspective, McNamar wanted a house that would allow him to break even or earn a profit if he sold in three years. But given that prices have fallen even further in Phoenix since last spring -- the price-rent ratio is a rough guide, not an infallible one -- he reckons that his break-even point now may be four years away. But it's not a big financial setback to him because he has no plans to move.
Good deals for renters. Renting can be a smart strategy while waiting for this choppy housing market to settle down. Consider Jeremy Portnoff and his wife, Heather, of Edison, N.J. By mid 2009, the median home price in Edison had fallen a healthy 19%, to $317,000, from the market's peak in mid 2006.
The Portnoffs had their heart set on a home with three or four bedrooms to accommodate the family they hope to have, plus an office for Jeremy. The house they could afford was a starter home, probably a small townhouse -- which, on an after-tax basis, they figured would cost them about the same as renting.
But the Portnoffs also figured that if they sold it in three years, real estate commissions would consume any gains they could reasonably expect. Plus, Jeremy believed that the price of their ideal home in that area would continue to decline.
So they took a pass on buying and got a great deal on renting a two-bedroom townhome -- $1,550 a month, $300 less than when they looked at the same development three years before. The couple prudently plan to continue to pay down debt and save for a larger down payment on their next home.
In some markets, rental prices have dropped as supply has increased. By the end of 2009, the vacancy rate nationally had grown to 8.2%, a 30-year high, according to Nadji, of Marcus & Millichap. Meanwhile, rents had fallen 5.8% from the year before.
Markets with the highest vacancy rates include Jacksonville, Fla. (forecast at 14% in 2010), Atlanta, Houston, Las Vegas, Orlando, Phoenix, Tampa and Tucson. Renters in such markets can afford to shop around and negotiate hard. A building's leasing manager may be willing to lower the rent to attract or keep your business.
Nadji expects the vacancy rate nationally to tighten up a bit (to 7.8%) by year-end and start a rapid recovery beginning in 2011, with very strong rent growth between 2011 and 2015. Demographics (five million people will enter the peak renter age range of 20 to 34 over the next decade) and plummeting construction starts in 2009 and 2010 drive his forecast.
Not all cities have an excess of rental units, though. In some large cities, such as New York, downtown Chicago, San Francisco, Los Angeles and Washington, D.C., vacancy rates have remained tight -- and home prices have remained stubbornly high.
Wednesday, September 29, 2010
Luxury Sales Are Clicking At @properties
@properties has built the #1 luxury market share in Chicago* thanks to the knowledge, skill and hard work of our incomparable real estate professionals, as well as marketing programs that generate maximum exposure for listings priced at $1 million and above. Now high-end buyers and sellers alike will benefit from our latest marketing innovation: the @properties Luxury Collection Online Magazine.
Click through dozens of pages of spectacular homes - each featuring an average of seven professionally shot color photos. And link directly to the listing on the @properties web site for complete property details, additional photos, video tours, neighborhood info, school ratings and more. Separate editions highlight city and North Shore properties.
The @properties Luxury Collection Online Magazine can be viewed online anytime. It’s updated quarterly and e-mailed to our database of more than 450,000 clients, prospects and subscribers twice a year (winter and summer). Whether you’re looking for a new luxury home or just looking for inspiration, be sure to check out this exciting new feature at atproperties.com.
5000 REASONS TO CELEBRATE
For the 5th consecutive year, @properties has been named to the prestigious Inc. 500 | Inc. 5000 list of the fastest growing private companies in America. We continue to grow, create local jobs, and, most importantly, sell homes throughout Chicagoland.
@properties and the Inc. 500 | 5000
Inc. 500: 2006Inc. 5000: 2007, 2008, 2009, 2010One of only 38 real estate companies in the Inc. 5000 The only Illinois broker of for-sale homes Among the top 25% of real estate companies by revenueGRAND OPENING IN WINNETKA
Moving to the North Shore? @properties is proud to announce the grand opening of our new Winnetka office, located at 30 Green Bay Road, just south of the Indian Hill Metra station. Peruse listings in our state-of-the-art conference rooms, learn about our industry-leading marketing programs and see why @properties is the fastest-growing real estate brokerage firm on the North Shore. Contact me to make an appointment.
* #1 luxury market share based on closed-sales dollar volume, year to date, for transactions $1 million and above in the city of Chicago. Source: BrokerMetrics / MRED LLC.
Inc. 500|5000 is a registered trademark of Mansueto Ventures LLC.
Dave Straub
@properties
773.255.3180
Click through dozens of pages of spectacular homes - each featuring an average of seven professionally shot color photos. And link directly to the listing on the @properties web site for complete property details, additional photos, video tours, neighborhood info, school ratings and more. Separate editions highlight city and North Shore properties.
The @properties Luxury Collection Online Magazine can be viewed online anytime. It’s updated quarterly and e-mailed to our database of more than 450,000 clients, prospects and subscribers twice a year (winter and summer). Whether you’re looking for a new luxury home or just looking for inspiration, be sure to check out this exciting new feature at atproperties.com.
5000 REASONS TO CELEBRATE
For the 5th consecutive year, @properties has been named to the prestigious Inc. 500 | Inc. 5000 list of the fastest growing private companies in America. We continue to grow, create local jobs, and, most importantly, sell homes throughout Chicagoland.
@properties and the Inc. 500 | 5000
Inc. 500: 2006Inc. 5000: 2007, 2008, 2009, 2010One of only 38 real estate companies in the Inc. 5000 The only Illinois broker of for-sale homes Among the top 25% of real estate companies by revenueGRAND OPENING IN WINNETKA
Moving to the North Shore? @properties is proud to announce the grand opening of our new Winnetka office, located at 30 Green Bay Road, just south of the Indian Hill Metra station. Peruse listings in our state-of-the-art conference rooms, learn about our industry-leading marketing programs and see why @properties is the fastest-growing real estate brokerage firm on the North Shore. Contact me to make an appointment.
* #1 luxury market share based on closed-sales dollar volume, year to date, for transactions $1 million and above in the city of Chicago. Source: BrokerMetrics / MRED LLC.
Inc. 500|5000 is a registered trademark of Mansueto Ventures LLC.
Dave Straub
@properties
773.255.3180
Monday, April 19, 2010
Chicago's Temperate Spring
Chicago's Temperate Spring
(the weather's not bad either)
A real spring. It's a rarity in Chicago. We're talking flowers, warm weather and picture perfect Opening Days on both sides of town. Spring 2010 not only arrived with great weather; it revealed a fair real estate market as well.
A sampling of data from nearly 40 Chicago neighborhoods and North Shore communities shows a market that is vastly improved from last year. At properties analyzed inventory, sales and market times from the first quarter of 2009 vs. the first quarter of 2010. Year-over-year sales activity was up significantly from Hyde Park to Lake Forest and inventory levels and market times came down as buyers and sellers moved closer on price in a number of submarkets.
Closed sales were up 100% or more in several areas, including Lincoln Park, Rogers Park and the Loop in the city, and Highland Park, Kenilworth, Lake Bluff, Lake Forest and Northbrook on the North Shore – an encouraging sign heading into the peak spring market. A nearly universal increase in homes under contract seems to confirm the notion that the market is gaining traction.
Still, with predictions and postulations filling the spring air like milkweed, the next couple of months will be an important measure of the local market. Fortunately, it's easy to stay informed with At properties' Market Reports. Just log on and choose a neighborhood or town from the interactive map. Then view the latest market data. Of course, numbers alone don't account for all of the factors affecting real estate in your neighborhood. For that, there's nothing like a knowledgeable REALTOR®.
Spring in Chicago can be unpredictable, but at least this spring's real estate market is looking a little more temperate. So, if you or someone you know is thinking about buying or selling a home in the coming months, please contact me. And remember, I always appreciate your referrals.
Dave Straub 773.255.3180
(the weather's not bad either)
A real spring. It's a rarity in Chicago. We're talking flowers, warm weather and picture perfect Opening Days on both sides of town. Spring 2010 not only arrived with great weather; it revealed a fair real estate market as well.
A sampling of data from nearly 40 Chicago neighborhoods and North Shore communities shows a market that is vastly improved from last year. At properties analyzed inventory, sales and market times from the first quarter of 2009 vs. the first quarter of 2010. Year-over-year sales activity was up significantly from Hyde Park to Lake Forest and inventory levels and market times came down as buyers and sellers moved closer on price in a number of submarkets.
Closed sales were up 100% or more in several areas, including Lincoln Park, Rogers Park and the Loop in the city, and Highland Park, Kenilworth, Lake Bluff, Lake Forest and Northbrook on the North Shore – an encouraging sign heading into the peak spring market. A nearly universal increase in homes under contract seems to confirm the notion that the market is gaining traction.
Still, with predictions and postulations filling the spring air like milkweed, the next couple of months will be an important measure of the local market. Fortunately, it's easy to stay informed with At properties' Market Reports. Just log on and choose a neighborhood or town from the interactive map. Then view the latest market data. Of course, numbers alone don't account for all of the factors affecting real estate in your neighborhood. For that, there's nothing like a knowledgeable REALTOR®.
Spring in Chicago can be unpredictable, but at least this spring's real estate market is looking a little more temperate. So, if you or someone you know is thinking about buying or selling a home in the coming months, please contact me. And remember, I always appreciate your referrals.
Dave Straub 773.255.3180
Wednesday, January 20, 2010
@properties Is #1
@properties Is #1
2009 was a challenging year for businesses across the globe. Some companies took it sitting down. Not @properties. We invested in new marketing and technology, opened new offices, and expanded programs to serve you better. The result: Our independent locally-owned company is stronger today than ever before. In fact, @properties far and away leads the Chicago market in more key categories than any other real estate company. And that means more resources, better service and ultimately better results for you.
@properties is clearly #1.
2009 Market Performance #1 in Market Share (City): 12.4%
#3 in Market Share (Northern Illinois Region): 4.4%
#1 Increase in Market Share (City): 28.0%
#1 Increase in Market Share (Northern Illinois Region): 18.8%
#2 Increase in Market Share (North Shore): 68.6%
#1 New Construction Market Share (City): 16.5%
#1 Buyer's Representative (City): 12.0%
#1 Seller's Representative (City): 12.9%
#1 Average Market Time (Northern Illinois Region): 147 Days
#1 Selling Price to Original Listing Price (Northern Illinois Region): 93.8%
For more information on @properties' services or your local market area, please contact me. I'm here to help.
Source: MRED, LLC, 1/1/09-12/31/09. Based on top 10 companies per category. Market share figures are based on sales volume.
2009 was a challenging year for businesses across the globe. Some companies took it sitting down. Not @properties. We invested in new marketing and technology, opened new offices, and expanded programs to serve you better. The result: Our independent locally-owned company is stronger today than ever before. In fact, @properties far and away leads the Chicago market in more key categories than any other real estate company. And that means more resources, better service and ultimately better results for you.
@properties is clearly #1.
2009 Market Performance #1 in Market Share (City): 12.4%
#3 in Market Share (Northern Illinois Region): 4.4%
#1 Increase in Market Share (City): 28.0%
#1 Increase in Market Share (Northern Illinois Region): 18.8%
#2 Increase in Market Share (North Shore): 68.6%
#1 New Construction Market Share (City): 16.5%
#1 Buyer's Representative (City): 12.0%
#1 Seller's Representative (City): 12.9%
#1 Average Market Time (Northern Illinois Region): 147 Days
#1 Selling Price to Original Listing Price (Northern Illinois Region): 93.8%
For more information on @properties' services or your local market area, please contact me. I'm here to help.
Source: MRED, LLC, 1/1/09-12/31/09. Based on top 10 companies per category. Market share figures are based on sales volume.
Saturday, March 21, 2009
Independence Keeps @properties on the Right Path
Independence Keeps @properties on the Right Path
Volatility begets change, so it should come as no surprise that there's a shakeout occurring in today's real estate brokerage industry. Over the past 15 months, Chicago brokerage has experienced a consolidation trend as a number of independent offices have been acquired by, or rolled into, bigger shops. Notable independents have left the marketplace.
@properties is well-positioned to take advantage of the inevitable market recovery. That's because our growth — while extraordinary in market share — has been controlled, non-leveraged and almost entirely organic. Our largest investments have been in technology, training and marketing programs that assure our clients the best service, greatest exposure and strongest representation in the marketplace. As a result, despite the challenging market, @properties increased its market share by 30 percent in 2008. In the city of Chicago, our '08 sales volume of $1.875 billion was second in the city only to a firm with three times as many agents. And for the third consecutive year, @properties was #1 among all major Chicago brokerage firms for shortest market time (68 days) and had one of the highest ratios of selling price to listing price.
Most importantly, we have maintained our independence. At @properties, we control our own destiny. Financially, we have the strength to weather the changes in the economy. And culturally, we continue to promote the values that attract great agents and great clients like you. So if you're getting ready to buy or sell, or you have questions about today's market, remember that the city's #1 independent real estate broker is not only here to help, we're also here to stay.
(@properties March 2009 Newsletter)
Dave Straub @properties 773.255.3180
Volatility begets change, so it should come as no surprise that there's a shakeout occurring in today's real estate brokerage industry. Over the past 15 months, Chicago brokerage has experienced a consolidation trend as a number of independent offices have been acquired by, or rolled into, bigger shops. Notable independents have left the marketplace.
@properties is well-positioned to take advantage of the inevitable market recovery. That's because our growth — while extraordinary in market share — has been controlled, non-leveraged and almost entirely organic. Our largest investments have been in technology, training and marketing programs that assure our clients the best service, greatest exposure and strongest representation in the marketplace. As a result, despite the challenging market, @properties increased its market share by 30 percent in 2008. In the city of Chicago, our '08 sales volume of $1.875 billion was second in the city only to a firm with three times as many agents. And for the third consecutive year, @properties was #1 among all major Chicago brokerage firms for shortest market time (68 days) and had one of the highest ratios of selling price to listing price.
Most importantly, we have maintained our independence. At @properties, we control our own destiny. Financially, we have the strength to weather the changes in the economy. And culturally, we continue to promote the values that attract great agents and great clients like you. So if you're getting ready to buy or sell, or you have questions about today's market, remember that the city's #1 independent real estate broker is not only here to help, we're also here to stay.
(@properties March 2009 Newsletter)
Dave Straub @properties 773.255.3180
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