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 Real Estate. Show all posts
Showing posts with label Chicago Real Estate. Show all posts
Tuesday, December 20, 2011
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
Friday, April 15, 2011
Taking Inventory: Supply Picture Slowly Improving
Taking Inventory:
Supply Picture Slowly Improving
One closely watched gauge of the local real estate market is Months Supply of Inventory (MSI).
MSI forecasts how long it would take to sell off the remaining supply of active listings given the current pace of sales. As a general rule of thumb, a balanced market, where supply and demand is in equilibrium, has about 6 months worth of inventory. But throughout the real estate downturn, MSI has been well above that benchmark.
Lately, however, MSI has become much more palatable. In fact, in the city of Chicago MSI is at a two-year low as of the end of March. While some areas do indeed have an oversupply of homes for sale, other neighborhoods show a virtual balance between supply and demand.
For example, North Center, Lincoln Square, Forest Glen, Rogers Park and the Near West Side, which includes the West Loop, all had around 6 months worth of inventory in March. Lincoln Park, Lakeview, Edgewater and West Town, which includes Wicker Park, all had less than 8 months worth of supply. The citywide average in March was 7.1 months - 50% below March 2009 levels.
Anecdotally, we are seeing more multiple offer situations. New listings that are priced correctly and in good condition are being snapped up quickly. That has not been the case over the last two years. The perception of an endless supply of flawless, inexpensive homes is far from today's reality.
MSI fluctuates seasonally and, historically, is at its lowest during the spring. In addition, factors such as shadow inventory (homes that are in foreclosure but have not yet been sold) are keeping optimism in check. However, it should be noted that this spring's inventory levels have been achieved without the benefit of last year's housing tax credit. Furthermore, in the city condo market, large chunks of new-construction supply have been taken off the market by investors acquiring units in bulk to rent out as apartments. In the past 12 months, almost 1,000 new condos have been acquired in such a manner - more than the total number of individual new-construction sales for all of 2010.
The upshot is that slowly but surely things are getting better. Buyers are still in a strong position but can't snooze on a great listing. Sellers still may be dealing with some disappointment on the pricing front, but if your home is priced and presented right, the buyers are out there.
Of course, every neighborhood, price point and housing type is subject to a unique set of circumstances. For an in-depth analysis of inventory relative to your property sale or search, contact me anytime. And remember I always appreciate your referrals.
Sources: Broker Metrics for MSI statistics. Appraisal Research Counselors for new-construction condominium sales.
Supply Picture Slowly Improving
One closely watched gauge of the local real estate market is Months Supply of Inventory (MSI).
MSI forecasts how long it would take to sell off the remaining supply of active listings given the current pace of sales. As a general rule of thumb, a balanced market, where supply and demand is in equilibrium, has about 6 months worth of inventory. But throughout the real estate downturn, MSI has been well above that benchmark.
Lately, however, MSI has become much more palatable. In fact, in the city of Chicago MSI is at a two-year low as of the end of March. While some areas do indeed have an oversupply of homes for sale, other neighborhoods show a virtual balance between supply and demand.
For example, North Center, Lincoln Square, Forest Glen, Rogers Park and the Near West Side, which includes the West Loop, all had around 6 months worth of inventory in March. Lincoln Park, Lakeview, Edgewater and West Town, which includes Wicker Park, all had less than 8 months worth of supply. The citywide average in March was 7.1 months - 50% below March 2009 levels.
Anecdotally, we are seeing more multiple offer situations. New listings that are priced correctly and in good condition are being snapped up quickly. That has not been the case over the last two years. The perception of an endless supply of flawless, inexpensive homes is far from today's reality.
MSI fluctuates seasonally and, historically, is at its lowest during the spring. In addition, factors such as shadow inventory (homes that are in foreclosure but have not yet been sold) are keeping optimism in check. However, it should be noted that this spring's inventory levels have been achieved without the benefit of last year's housing tax credit. Furthermore, in the city condo market, large chunks of new-construction supply have been taken off the market by investors acquiring units in bulk to rent out as apartments. In the past 12 months, almost 1,000 new condos have been acquired in such a manner - more than the total number of individual new-construction sales for all of 2010.
The upshot is that slowly but surely things are getting better. Buyers are still in a strong position but can't snooze on a great listing. Sellers still may be dealing with some disappointment on the pricing front, but if your home is priced and presented right, the buyers are out there.
Of course, every neighborhood, price point and housing type is subject to a unique set of circumstances. For an in-depth analysis of inventory relative to your property sale or search, contact me anytime. And remember I always appreciate your referrals.
Sources: Broker Metrics for MSI statistics. Appraisal Research Counselors for new-construction condominium sales.
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, 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.
Thursday, August 6, 2009
Home Sales Are Gaining Ground!
Chicago's real estate market has provided homebuyers and sellers with a plethora of unique opportunities in recent months. Thanks to incentives like the first time home buyer tax credit, and record low mortgage rates, buyers and sellers alike have good reasons to celebrate. With motivations like these, it should come as no surprise that our own city's home sales have increased 1.1% over the last month, one of the best in the nation.
Utilizing Standard & Poor's Case-Shiller Index, a tool that is used to analyze sales activity, economists can report a .5% increase in home sales across the U.S. Experts alike agree that the change in momentum is rather significant, providing additional data which illustrates new home sales up an additional 11% in June. While distressed homes recently accounted for over 50% of the home sales, they have now decreased to a more satisfying 33%*. With improved builder sentiment, and an increase in investor energy, buyers and sellers alike are on the lookout for these incredible opportunities.
Thanks to these extraordinary incentives, homebuyers are materializing all over Chicago's marketplace. The first time homebuyer tax credit — which is available until November 30, 2009 — provides qualified first time buyers with an incredible $8000 tax refund. With record low mortgage rates from the Federal Housing Administration, homebuyers are provided better opportunities to qualify for home loans, and create personalized payment options. As homebuyers gain access to our diverse marketplace, sellers are better able to market and sell their home for a more attractive price.
As opportunities increase for homebuyers and sellers, it is imperative that you have a professional REALTOR® who can be an advocate on your behalf. Thanks to my knowledge, and expertise in the Chicago marketplace I am confident that we can reach your goals together. Please, don't hesitate to call me at any time for questions on market conditions, or to schedule a consultation.
*Source: Wall Street Journal, 7/29/2009
Dave Straub, @properties 773.255.3180
Utilizing Standard & Poor's Case-Shiller Index, a tool that is used to analyze sales activity, economists can report a .5% increase in home sales across the U.S. Experts alike agree that the change in momentum is rather significant, providing additional data which illustrates new home sales up an additional 11% in June. While distressed homes recently accounted for over 50% of the home sales, they have now decreased to a more satisfying 33%*. With improved builder sentiment, and an increase in investor energy, buyers and sellers alike are on the lookout for these incredible opportunities.
Thanks to these extraordinary incentives, homebuyers are materializing all over Chicago's marketplace. The first time homebuyer tax credit — which is available until November 30, 2009 — provides qualified first time buyers with an incredible $8000 tax refund. With record low mortgage rates from the Federal Housing Administration, homebuyers are provided better opportunities to qualify for home loans, and create personalized payment options. As homebuyers gain access to our diverse marketplace, sellers are better able to market and sell their home for a more attractive price.
As opportunities increase for homebuyers and sellers, it is imperative that you have a professional REALTOR® who can be an advocate on your behalf. Thanks to my knowledge, and expertise in the Chicago marketplace I am confident that we can reach your goals together. Please, don't hesitate to call me at any time for questions on market conditions, or to schedule a consultation.
*Source: Wall Street Journal, 7/29/2009
Dave Straub, @properties 773.255.3180
Wednesday, June 10, 2009
Window of Opportunity is Wide Open in the Real Estate Market
Experts across the nation all agree that home prices are becoming more attractive than they have been in recent history. Thanks to incredibly low interest rates, new accessibility to home loans, and a thriving market inventory, buyers and sellers are in a prime position to make the market work for them. As home prices begin to stabilize, buyers and sellers have good reason to look forward to the summer 2009 market.
Given the historically low interest rates, buyers are in a prime position to purchase their new home. If interest rates were to climb, even 1/4% over the next year, buyers would miss out on an additional $12,000 in savings over the life of a 30-year fixed loan. A savings like this is the equivalent of an FHA down payment on a $250,000 condo in the Chicago-area neighborhoods. With opportunities like these buyers can utilize their capital more effectively by creating greater long-term investments. Thanks to recent price adjustments we are urging our buyers to take advantage of these incredible opportunities.
Sellers can also benefit from the market's recent adjustments. As buyers gain access to home loans and low interest rates, many are eager to purchase their long awaited dream home. Thanks to the buyer's new purchasing power, sellers can look forward to the upcoming summer market. Sellers should experience shorter market times and expedited closing transactions.
With the summer market upon us, we at @properties are urging our buyers and sellers to take full advantage of this window of opportunity. Thanks to our innovative marketing techniques, and my expertise as a Real Estate consultant I am confident that I can suit all of your needs.
If you have any questions regarding market conditions, or want to set up an appointment feel free to contact me at anytime. I look forward to working with you.
(@properties June 2009 Newsletter)
Dave Straub @properties 773.255.3180
Given the historically low interest rates, buyers are in a prime position to purchase their new home. If interest rates were to climb, even 1/4% over the next year, buyers would miss out on an additional $12,000 in savings over the life of a 30-year fixed loan. A savings like this is the equivalent of an FHA down payment on a $250,000 condo in the Chicago-area neighborhoods. With opportunities like these buyers can utilize their capital more effectively by creating greater long-term investments. Thanks to recent price adjustments we are urging our buyers to take advantage of these incredible opportunities.
Sellers can also benefit from the market's recent adjustments. As buyers gain access to home loans and low interest rates, many are eager to purchase their long awaited dream home. Thanks to the buyer's new purchasing power, sellers can look forward to the upcoming summer market. Sellers should experience shorter market times and expedited closing transactions.
With the summer market upon us, we at @properties are urging our buyers and sellers to take full advantage of this window of opportunity. Thanks to our innovative marketing techniques, and my expertise as a Real Estate consultant I am confident that I can suit all of your needs.
If you have any questions regarding market conditions, or want to set up an appointment feel free to contact me at anytime. I look forward to working with you.
(@properties June 2009 Newsletter)
Dave Straub @properties 773.255.3180
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
Thursday, November 13, 2008
Confidence Key For Today's Buyers and Sellers
If there's one voice I'm willing to heed in the midst of a global financial crisis, it's Warren Buffet's. So I was encouraged when the Oracle of Omaha offered his sage and steady advice in a New York Times op-ed piece last month: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
Mr. Buffet was referring of course to his philosophy on investing; however, his comments could just as easily apply to today's real estate market. While many Americans are understandably apprehensive about buying or selling a home, I wholeheartedly agree with Mr. Buffet's view that those of us who have the confidence to act in today's uncertain market stand to gain the most.
For buyers, it's no secret that good values abound. If you are pre-approved for a mortgage and rely on your Realtor's thorough knowledge of local markets, you will almost certainly be able to take advantage of today's adverse economic conditions.
For sellers, it is absolutely critical to position your property as the best home, in a given location, at a given price. And for those willing to do so there is good news. One, Chicago once again is showing its resiliency relative to major markets across the country. Two, today's buyers aren't tire kickers; they're serious. But inventories will likely rise early in the year, as they do every year, so now is not the time to "test the market."
Finally, it's important to remember that the same conditions that make this a challenging time to sell will benefit that seller-turned-buyer even more in a move-up transaction.
If you have any questions about whether or not this is the right time for you to get into the market, please contact me.
-Dave Straub, @properties 773.255.3180
(@properties November 2008 Newsletter)
Mr. Buffet was referring of course to his philosophy on investing; however, his comments could just as easily apply to today's real estate market. While many Americans are understandably apprehensive about buying or selling a home, I wholeheartedly agree with Mr. Buffet's view that those of us who have the confidence to act in today's uncertain market stand to gain the most.
For buyers, it's no secret that good values abound. If you are pre-approved for a mortgage and rely on your Realtor's thorough knowledge of local markets, you will almost certainly be able to take advantage of today's adverse economic conditions.
For sellers, it is absolutely critical to position your property as the best home, in a given location, at a given price. And for those willing to do so there is good news. One, Chicago once again is showing its resiliency relative to major markets across the country. Two, today's buyers aren't tire kickers; they're serious. But inventories will likely rise early in the year, as they do every year, so now is not the time to "test the market."
Finally, it's important to remember that the same conditions that make this a challenging time to sell will benefit that seller-turned-buyer even more in a move-up transaction.
If you have any questions about whether or not this is the right time for you to get into the market, please contact me.
-Dave Straub, @properties 773.255.3180
(@properties November 2008 Newsletter)
Tuesday, September 16, 2008
About @properties - The Buying Process
Once you have obtained a mortgage pre-approval and selected a real estate agent, you are ready to begin your home search in earnest.
Today, approximately 80 percent of home searches begin on the Internet, and if you’re searching for a home in Chicago, there’s only one web address you need to know: http://www.atproperties.com/. Our web site includes tools, tips and access to all of the Chicago properties listed in the MLS. Best of all, you’re in control. Sign up for @Home Agent® to manage and customize your search, receive e-mail updates on new listings as they become available, conduct several searches at once and save and compare properties. Atproperties.com also serves as a portal to Chicago’s largest selection of quality new-construction developments featuring thousands of new homes.
Review Listings — Using the guidelines you set forth, your agent will present you with available listings. In addition to price and property attributes, pay close attention to data like property taxes, market time and monthly assessments for condos and town homes.
View Properties — Your @properties agent will schedule showings and accompany you on each appointment. When you walk through a home, some things to consider are: how the space functions for your lifestyle; what’s included in the total square footage (balcony, basement or garage); and, in new construction, which features are standard and which are upgrades.
According to the U.S. Department of Housing and Urban Development, the average buyer will view 15 homes before buying one. But that is just an average. Some buyers will purchase the very first home they see. Others will look at more homes.
Open Houses — Remember, if you are attending Open Houses without your agent be sure to mention that you are being represented by an @properties agent. This will save you from being inundated with calls from other agents trying to represent you. Ask your @properties agent to supply you with some of his or her business cards to make the Open House sign-in process even easier
Compare Properties — Discuss each home you see with your agent, and provide candid feedback. Your expectations and the marketplace will begin to converge, and your agent will be able to adjust certain parameters such as location and features in order to present you with alternatives. Use @properties' Property Comparison Sheet to track and compare each listing. When you find a home and are ready to make an offer, your agent will perform a Comparative Market Analysis or CMA. This report compares the subject property with other properties that are currently listed and recently sold to help you formulate your offer.
-from atproperties.com
Today, approximately 80 percent of home searches begin on the Internet, and if you’re searching for a home in Chicago, there’s only one web address you need to know: http://www.atproperties.com/. Our web site includes tools, tips and access to all of the Chicago properties listed in the MLS. Best of all, you’re in control. Sign up for @Home Agent® to manage and customize your search, receive e-mail updates on new listings as they become available, conduct several searches at once and save and compare properties. Atproperties.com also serves as a portal to Chicago’s largest selection of quality new-construction developments featuring thousands of new homes.
Review Listings — Using the guidelines you set forth, your agent will present you with available listings. In addition to price and property attributes, pay close attention to data like property taxes, market time and monthly assessments for condos and town homes.
View Properties — Your @properties agent will schedule showings and accompany you on each appointment. When you walk through a home, some things to consider are: how the space functions for your lifestyle; what’s included in the total square footage (balcony, basement or garage); and, in new construction, which features are standard and which are upgrades.
According to the U.S. Department of Housing and Urban Development, the average buyer will view 15 homes before buying one. But that is just an average. Some buyers will purchase the very first home they see. Others will look at more homes.
Open Houses — Remember, if you are attending Open Houses without your agent be sure to mention that you are being represented by an @properties agent. This will save you from being inundated with calls from other agents trying to represent you. Ask your @properties agent to supply you with some of his or her business cards to make the Open House sign-in process even easier
Compare Properties — Discuss each home you see with your agent, and provide candid feedback. Your expectations and the marketplace will begin to converge, and your agent will be able to adjust certain parameters such as location and features in order to present you with alternatives. Use @properties' Property Comparison Sheet to track and compare each listing. When you find a home and are ready to make an offer, your agent will perform a Comparative Market Analysis or CMA. This report compares the subject property with other properties that are currently listed and recently sold to help you formulate your offer.
-from atproperties.com
Sunday, September 7, 2008
What does coffee have to do with real estate?
What does coffee have to do with real estate?
As it turns out, a whole lot. In 2007 the coffee shop has become the heart of a neighborhood, any neighborhood. It's where people gather to talk about everything, and these days that includes a whole lot of real estate. Out of this phenomenon, the @spot was born. Located at 2234 W. Taylor St. in Tri-Taylor, the @spot has all the charm (dare we say more charm) of the neighborhood you-know-what. And, in addition to serving a pretty good cup of Sumatra, it's also a place where you can log right on to atproperties.com via free WiFi to check out all the real estate activity in your area. In America and throughout the world, the tradition of the coffeehouse is a tradition of sharing: sharing ideas, sharing beliefs, sharing stories and sharing plans. Those plans often involve buying or selling a home. And there's no better place to get started on those plans than the @spot. Let's meet over a cup of coffee - either at the @spot or your favorite cafe - to talk about your real estate plans. Just send me an e-mail or call to set up a time.
As it turns out, a whole lot. In 2007 the coffee shop has become the heart of a neighborhood, any neighborhood. It's where people gather to talk about everything, and these days that includes a whole lot of real estate. Out of this phenomenon, the @spot was born. Located at 2234 W. Taylor St. in Tri-Taylor, the @spot has all the charm (dare we say more charm) of the neighborhood you-know-what. And, in addition to serving a pretty good cup of Sumatra, it's also a place where you can log right on to atproperties.com via free WiFi to check out all the real estate activity in your area. In America and throughout the world, the tradition of the coffeehouse is a tradition of sharing: sharing ideas, sharing beliefs, sharing stories and sharing plans. Those plans often involve buying or selling a home. And there's no better place to get started on those plans than the @spot. Let's meet over a cup of coffee - either at the @spot or your favorite cafe - to talk about your real estate plans. Just send me an e-mail or call to set up a time.
Subscribe to:
Posts (Atom)