With winter approaching, many homebuyers and sellers assume now is the time to put real estate matters on hold. That logic may have held true in years past, but in the current market the idea of hibernating for the winter may not be the best decision. Following are a few reasons why right now is the right time for both buyers and sellers to be in the market.
Good Time to Buy
1. Price - The #1 reason qualified individuals are reluctant to buy today is a fear that prices will fall. And they may. But according to a recent story on MSN.com, "it doesn't really matter in the long haul." Housing affordability is near an all-time high, and according to the S&P/Case Shiller Home Price Index, local prices have increased for six consecutive months through August.
2. Interest Rates - Mortgage interest rates are 30% lower than they were four years ago. When you layer today's rates on top of prices that are 30% lower, you get monthly principal and interest that is only slightly more than half of what it was four years ago. That's a big deal.
3. Less Expensive Than Renting - According to the latest Trulia.com Rent vs. Buy Index, it is less expensive to own a home in Chicago than it is to rent. The 50-city index is calculated using the average list price compared with the average rent on two-bedroom apartments, condos, townhomes and co-ops listed on Trulia.com.
Good Time to Sell
1. Buyers Are Serious - It may be fun to drive around and look at open houses on a beautiful summer day, but when the weather starts to turn and people get busy with holiday schedules, kicking the tires on a new home is usually the last thing on someone's mind...unless, of course, they actually need to buy. Sure, there are fewer buyers in the fall and winter, but the ones who are out there are serious.
2. You're Moving Up - The thought of losing equity on a sale doesn't appeal to anyone, but in this market, sellers who trade up have more to gain than to lose. That's because, dollar for dollar, the more expensive home they're buying almost certainly has come down in price more than the home they're selling, which means move-up buyers will actually come out ahead provided they have the finances to complete a transaction.
3. Less Competition - While inventories remain high relative to past markets, the number of homes for sale in the fall and winter is generally about 25% less than in the spring. In addition, the recent moratorium on foreclosures has kept thousands of homes off the market. Those homes will eventually be put up for sale. So if you can capture the last few weeks of fall, you will face less competition than if you wait until next spring.
If you're considering buying or selling, there are many more reasons why it makes sense to do so now. To talk about your specific real estate needs, call or e-mail me today. And please remember that I always appreciate your referrals.
Dave Straub
@properties
(773) 255-3180
Thursday, October 28, 2010
Sunday, October 24, 2010
Should We Buy a New House?
Should We Buy a New House?
Q: I've recently married, and would like to give my new wife a new home. I'm tempted to buy one now, since builders have been giving away things like finished basements—one even will credit 1% of the price of the home towards upgrades for teachers like me. But since new-home prices still seem to be falling, we're nervous about committing. Plus, we see a lot of great deals on apartments, too, like one month's free rent for a unit with free WiFi and utilities. What should we do?
—Chicago
A: If you're motivated by incentives, suggest that you keep house-hunting. I don't think great builder incentives are going to last too much longer, and may even disappear before a newly-signed lease can expire.
It's true that there are deals on new homes now, spurred by the Chicago's still-weak economy. In its Chicago Market outlook PNC Financial Services Group noted that the city experienced a "more draining downturn" during the recession than the rest of the country due to heavy job losses and slow population growth.
But the city has a broad-based business sector that's beginning to revive, causing unemployment to tick down to a projected 9.8% in August from 10.1% a year earlier, according to the U.S. Bureau of Labor Statistics. While the recovery is still nascent and fragile, the housing market is responding. According to the most recent statistics from the Illinois Association of Realtors, in the Chicago metro area, 49,293 homes were sold from January to August this year, up 15.8% from the same period a year ago.
View Full Image
Associated Press
A sign advertises a new home's reduced price in a development in Twinsburg, Ohio.
.Although it's unclear what impact the current foreclosure mess will have on home prices, Standard and Poor's Case-Shiller indexes based on housing futures, while lightly traded, point to a possible turnaround in the offing, at least for Chicago. The composite index, which tracks 10 major metro areas, predicts that overall home prices will decline an additional 5.7% by Nov. 2011, while in Chicago, they'll fall only 0.5%. Then Chicago's prices are expected to pick up steam, rising 3% in Nov. 2012 and 5.4% in Nov. 2013. Meanwhile, the composite index for the same period is expected to fall 4.5% in 2012 and 1.4% in 2013.
All of which points to the likelihood that the days where you can score free finished basements and granite countertops are numbered. Indeed, last month the Federal Reserve's Beige Book noted that while residential building activity in Chicago has been minimal of late, despite falling inventory levels, "downward pressure on new home prices had likely bottomed out " and that "builders were refraining from reducing prices below costs, as many had done earlier in the year."
JUNE FLETCHER Wall Street Journal
HOUSE TALK
OCTOBER 21, 2010, 3:27 P.M. ET.
Q: I've recently married, and would like to give my new wife a new home. I'm tempted to buy one now, since builders have been giving away things like finished basements—one even will credit 1% of the price of the home towards upgrades for teachers like me. But since new-home prices still seem to be falling, we're nervous about committing. Plus, we see a lot of great deals on apartments, too, like one month's free rent for a unit with free WiFi and utilities. What should we do?
—Chicago
A: If you're motivated by incentives, suggest that you keep house-hunting. I don't think great builder incentives are going to last too much longer, and may even disappear before a newly-signed lease can expire.
It's true that there are deals on new homes now, spurred by the Chicago's still-weak economy. In its Chicago Market outlook PNC Financial Services Group noted that the city experienced a "more draining downturn" during the recession than the rest of the country due to heavy job losses and slow population growth.
But the city has a broad-based business sector that's beginning to revive, causing unemployment to tick down to a projected 9.8% in August from 10.1% a year earlier, according to the U.S. Bureau of Labor Statistics. While the recovery is still nascent and fragile, the housing market is responding. According to the most recent statistics from the Illinois Association of Realtors, in the Chicago metro area, 49,293 homes were sold from January to August this year, up 15.8% from the same period a year ago.
View Full Image
Associated Press
A sign advertises a new home's reduced price in a development in Twinsburg, Ohio.
.Although it's unclear what impact the current foreclosure mess will have on home prices, Standard and Poor's Case-Shiller indexes based on housing futures, while lightly traded, point to a possible turnaround in the offing, at least for Chicago. The composite index, which tracks 10 major metro areas, predicts that overall home prices will decline an additional 5.7% by Nov. 2011, while in Chicago, they'll fall only 0.5%. Then Chicago's prices are expected to pick up steam, rising 3% in Nov. 2012 and 5.4% in Nov. 2013. Meanwhile, the composite index for the same period is expected to fall 4.5% in 2012 and 1.4% in 2013.
All of which points to the likelihood that the days where you can score free finished basements and granite countertops are numbered. Indeed, last month the Federal Reserve's Beige Book noted that while residential building activity in Chicago has been minimal of late, despite falling inventory levels, "downward pressure on new home prices had likely bottomed out " and that "builders were refraining from reducing prices below costs, as many had done earlier in the year."
JUNE FLETCHER Wall Street Journal
HOUSE TALK
OCTOBER 21, 2010, 3:27 P.M. ET.
Saturday, October 23, 2010
Rise of the renting class
By Nin-Hai Tseng, reporter July 28, 2010: 9:33 AM ET
FORTUNE -- Modern America has long paired the "American Dream" with home ownership. The idea of staying put, paying property taxes and periodically mowing the lawn belonged to citizens who were somehow more American than the poor saps who could only afford to rent the place they called home.
The notion isn't accidental. Ownership and the American Dream are deeply linked in government policies that favor mortgages over rent payments, dating back before Herbert Hoover was elected president in 1929. As secretary of commerce, amid the Red Scare, Hoover trumpeted homeownership, believing that if one had an equity stake in the country, they'd less likely fall under the spell of Communism. What followed during the Great Depression were a spate of federal measures to help troubled homeowners, at a time when half of all mortgages were in default.
CommentMassive government programs supporting ownership still exist today, but record home foreclosures and spiraling prices have forced a redefinition of the American Dream -- one that includes renting.
In today's weak housing market, ownership has ceased to be an investment vehicle that millions used to trade up into the houses of their dreams in the boom years. And it's not an ATM machine for constant refinancing, either. Instead, for the past four years, ownership has been a culprit of distress. In June, one in every 411 housing units received a foreclosure filing, according to RealtyTrac Inc. Between 2006 and 2009, home prices fell more than 32%, according to the S&P/Case-Shiller Home Price Index.
Renting on the rise
With homeowner markets stressed, it appears renting has become more appealing than owning. Between 2004 and 2009, the number of renter households rose nearly 10% or by 3.4 million, according to a 2010 study of the Joint Center for Housing Studies of Harvard University. The rise was most dramatic in the Midwest, where growth of renter households swung upwards by 15.4% between 2004 to 2009. The South added the biggest number of renter households with a 1.2 million increase from 2004 to 2009, the study states.
All that has made Capitol Hill rethink its definition of the American Dream. As recently as the Clinton and George W. Bush administrations, the mantra of homeownership was almost synonymous to civic duty, but top policymakers now say that homeownership isn't necessarily good for everyone.
In May, U.S. Housing and Urban Development Secretary Shaun Donovan testified before a House committee that the financial crisis proved the need for a better balance between ownership and rental housing. And HUD senior official Raphael Bostic last week told the Washington Post: "In previous eras, we haven't seen people question whether homeownership was the right decision. It was just assumed that's where you want to go," Bostic said. "You're not going to hear us say that."
Owning a home wasn't always as easy as the liar loans of 2000's made it. When the economy went bust during the Great Depression, legislation intended to stimulate plummeting housing starts and defaulting mortgages laid the foundation for a bigger role of government over the housing market. Hoover signed the Federal Home Loan Act, and in 1933, Franklin D. Roosevelt created the Home Owners' Loan Corporation to provide low interest loans.
And the government was just getting started: a flurry of legislation was passed over the ensuing decades, helping veterans, minorities and the populace as a whole secure mortgages. But it appears the pendulum has swung.
"The government shouldn't blindly encourage homeownership," says Joe Gyourko, real estate finance professor at University of Pennsylvania's Wharton School. "If the government does anything the government should encourage people to make the right decision."
Gyourko says that he's not entirely against the idea of homeownership. After all, as a father of two, the 53-year-old professor owns a home. But he stresses that ownership should be looked at more broadly -- beyond any kind of long-term investment or cost benefit over renting.
Owners don't pay the landlord, but they pay taxes and maintenance costs on their house, and Gyourko says those costs can end up being roughly the same.
As far as buying a house as a smart long-term investment, Gyourko says that's not always true. He says between 1975 and 2008, the price for houses of similar quality and size appreciated an average of about 1% per year after inflation. Investors could have earned more by buying Treasury bills.
The post-crisis role the federal government decides to play in the housing market remains to be seen. In response to plunging home prices and record foreclosures rates, the Obama administration is pursuing an overhaul of policies that could put much less focus on homeownership. The administration could also scale down government support of home loans and put more focus on affordable rentals, but it isn't clear what direction officials will take.
The issues with Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), the mortgage-finance giants seized by the government in September 2008 amid huge problems with bad loans, remain a touchy topic with lawmakers.Their combined bailout, according to some estimates, could reach $1 trillion -- a figure some might pin as the ultimate cost of generations of policies geared to favor home ownership.
Many blame the agencies' loose lending practices for contributing to the financial crisis. Republicans wanted the mortgage giants' fates to be addressed in the recently approved Dodd-Frank bill overhauling the nation's financial regulations, but that didn't happen.
However lawmakers define the government's role in the housing market, consumers have already begun redefining the American Dream: One where it has become socially OK to mail in a rent check rather than a mortgage coupon.
FORTUNE -- Modern America has long paired the "American Dream" with home ownership. The idea of staying put, paying property taxes and periodically mowing the lawn belonged to citizens who were somehow more American than the poor saps who could only afford to rent the place they called home.
The notion isn't accidental. Ownership and the American Dream are deeply linked in government policies that favor mortgages over rent payments, dating back before Herbert Hoover was elected president in 1929. As secretary of commerce, amid the Red Scare, Hoover trumpeted homeownership, believing that if one had an equity stake in the country, they'd less likely fall under the spell of Communism. What followed during the Great Depression were a spate of federal measures to help troubled homeowners, at a time when half of all mortgages were in default.
CommentMassive government programs supporting ownership still exist today, but record home foreclosures and spiraling prices have forced a redefinition of the American Dream -- one that includes renting.
In today's weak housing market, ownership has ceased to be an investment vehicle that millions used to trade up into the houses of their dreams in the boom years. And it's not an ATM machine for constant refinancing, either. Instead, for the past four years, ownership has been a culprit of distress. In June, one in every 411 housing units received a foreclosure filing, according to RealtyTrac Inc. Between 2006 and 2009, home prices fell more than 32%, according to the S&P/Case-Shiller Home Price Index.
Renting on the rise
With homeowner markets stressed, it appears renting has become more appealing than owning. Between 2004 and 2009, the number of renter households rose nearly 10% or by 3.4 million, according to a 2010 study of the Joint Center for Housing Studies of Harvard University. The rise was most dramatic in the Midwest, where growth of renter households swung upwards by 15.4% between 2004 to 2009. The South added the biggest number of renter households with a 1.2 million increase from 2004 to 2009, the study states.
All that has made Capitol Hill rethink its definition of the American Dream. As recently as the Clinton and George W. Bush administrations, the mantra of homeownership was almost synonymous to civic duty, but top policymakers now say that homeownership isn't necessarily good for everyone.
In May, U.S. Housing and Urban Development Secretary Shaun Donovan testified before a House committee that the financial crisis proved the need for a better balance between ownership and rental housing. And HUD senior official Raphael Bostic last week told the Washington Post: "In previous eras, we haven't seen people question whether homeownership was the right decision. It was just assumed that's where you want to go," Bostic said. "You're not going to hear us say that."
Owning a home wasn't always as easy as the liar loans of 2000's made it. When the economy went bust during the Great Depression, legislation intended to stimulate plummeting housing starts and defaulting mortgages laid the foundation for a bigger role of government over the housing market. Hoover signed the Federal Home Loan Act, and in 1933, Franklin D. Roosevelt created the Home Owners' Loan Corporation to provide low interest loans.
And the government was just getting started: a flurry of legislation was passed over the ensuing decades, helping veterans, minorities and the populace as a whole secure mortgages. But it appears the pendulum has swung.
"The government shouldn't blindly encourage homeownership," says Joe Gyourko, real estate finance professor at University of Pennsylvania's Wharton School. "If the government does anything the government should encourage people to make the right decision."
Gyourko says that he's not entirely against the idea of homeownership. After all, as a father of two, the 53-year-old professor owns a home. But he stresses that ownership should be looked at more broadly -- beyond any kind of long-term investment or cost benefit over renting.
Owners don't pay the landlord, but they pay taxes and maintenance costs on their house, and Gyourko says those costs can end up being roughly the same.
As far as buying a house as a smart long-term investment, Gyourko says that's not always true. He says between 1975 and 2008, the price for houses of similar quality and size appreciated an average of about 1% per year after inflation. Investors could have earned more by buying Treasury bills.
The post-crisis role the federal government decides to play in the housing market remains to be seen. In response to plunging home prices and record foreclosures rates, the Obama administration is pursuing an overhaul of policies that could put much less focus on homeownership. The administration could also scale down government support of home loans and put more focus on affordable rentals, but it isn't clear what direction officials will take.
The issues with Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), the mortgage-finance giants seized by the government in September 2008 amid huge problems with bad loans, remain a touchy topic with lawmakers.Their combined bailout, according to some estimates, could reach $1 trillion -- a figure some might pin as the ultimate cost of generations of policies geared to favor home ownership.
Many blame the agencies' loose lending practices for contributing to the financial crisis. Republicans wanted the mortgage giants' fates to be addressed in the recently approved Dodd-Frank bill overhauling the nation's financial regulations, but that didn't happen.
However lawmakers define the government's role in the housing market, consumers have already begun redefining the American Dream: One where it has become socially OK to mail in a rent check rather than a mortgage coupon.
Friday, October 22, 2010
Contingency Strategies for a Smooth Sale
Great Tips for Sellers:
Contingency Strategies for a Smooth Sale
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, April 2010
Contingencies protect you and your buyer, but they can also sabotage a sale.
Once you've negotiated price and closing costs with your buyer, it's time to get down to the special provisions of the contract -- the contingencies -- that protect your interests and those of your buyer. As a seller, you want to ensure that the buyer's contingencies don't ruin the deal for you.
Sellers most often include in the contract two common contingencies: The purchase contingency gives you 30 or 45 days to buy your next home, and the leaseback allows you to live in your current home for a while after closing. Those provisions will help you avoid the hassle of moving twice -- first into a rental, and then into your next home. Seller Steve Vieux asked his buyer for both contingencies, as did the sellers who sold him his next home. The downside? While you're renting your former home, you're responsible for fixing anything that fails on your watch. For example, Vieux had to pay to replace a water heater.
--------------------------------------------------------------------------------
Buyers typically request a financing contingency. If they fail to get a mortgage or loan terms agreeable to them, they can bail out of your contract and you must refund their earnest-money deposit. This could send you back to square one, looking for a new buyer. You could avoid such a delay by accepting cash-only offers, but that limits the number of buyers.
The best strategy is to price your home so you receive multiple offers, and then you can be selective. Choose the buyer whose financing is most likely to go through. "Twenty percent down is a very warm and fuzzy feeling. Fifty percent is beautiful, and cash is great," says agent Janis Morgan.
If your house will appeal to first-time buyers, they may want Federal Housing Administration financing because it requires a down payment of only 3.5%. Be forewarned: If the home has defects that will cost a borrower of modest means too much to repair, you will have to ante up the cost of repairs or FHA will refuse financing for that home.
If you're anxious to settle and move on, consider passing up a higher offer with a financing contingency in favor of a lower one without it, says agent Bob Bower. Don't agree to a financing contingency unless the buyers present a preapproval letter from their lender (or a "certificate of eligibility," if they will seek a VA loan) with their offer.
Most buyers will want a home-inspection contingency. Purchase contracts generally say that sellers will turn over homes in "normal" working condition (unless the property is being sold "as is"). If the inspection turns up a problem that affects the home's habitability, you'll have to repair it. If the inspection turns up other, lesser issues, the buyer may ask you to take care of those, too. You can protect yourself from excessive costs by setting a limit upfront on the contingency.
Contingency Strategies for a Smooth Sale
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, April 2010
Contingencies protect you and your buyer, but they can also sabotage a sale.
Once you've negotiated price and closing costs with your buyer, it's time to get down to the special provisions of the contract -- the contingencies -- that protect your interests and those of your buyer. As a seller, you want to ensure that the buyer's contingencies don't ruin the deal for you.
Sellers most often include in the contract two common contingencies: The purchase contingency gives you 30 or 45 days to buy your next home, and the leaseback allows you to live in your current home for a while after closing. Those provisions will help you avoid the hassle of moving twice -- first into a rental, and then into your next home. Seller Steve Vieux asked his buyer for both contingencies, as did the sellers who sold him his next home. The downside? While you're renting your former home, you're responsible for fixing anything that fails on your watch. For example, Vieux had to pay to replace a water heater.
--------------------------------------------------------------------------------
Buyers typically request a financing contingency. If they fail to get a mortgage or loan terms agreeable to them, they can bail out of your contract and you must refund their earnest-money deposit. This could send you back to square one, looking for a new buyer. You could avoid such a delay by accepting cash-only offers, but that limits the number of buyers.
The best strategy is to price your home so you receive multiple offers, and then you can be selective. Choose the buyer whose financing is most likely to go through. "Twenty percent down is a very warm and fuzzy feeling. Fifty percent is beautiful, and cash is great," says agent Janis Morgan.
If your house will appeal to first-time buyers, they may want Federal Housing Administration financing because it requires a down payment of only 3.5%. Be forewarned: If the home has defects that will cost a borrower of modest means too much to repair, you will have to ante up the cost of repairs or FHA will refuse financing for that home.
If you're anxious to settle and move on, consider passing up a higher offer with a financing contingency in favor of a lower one without it, says agent Bob Bower. Don't agree to a financing contingency unless the buyers present a preapproval letter from their lender (or a "certificate of eligibility," if they will seek a VA loan) with their offer.
Most buyers will want a home-inspection contingency. Purchase contracts generally say that sellers will turn over homes in "normal" working condition (unless the property is being sold "as is"). If the inspection turns up a problem that affects the home's habitability, you'll have to repair it. If the inspection turns up other, lesser issues, the buyer may ask you to take care of those, too. You can protect yourself from excessive costs by setting a limit upfront on the contingency.
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, September 6, 2010
Chicago renters, condo buyers could get protections
Daley proposal would increase conversion warning from 4 to 9 months.
Renters and condominium buyers in Chicago would get more protection from developers under a plan unveiled Thursday by Mayor Richard Daley, who acknowledged that it comes too late to protect people who had problems during the real estate boom that preceded the recession.
The proposal, which Daley will introduce at Wednesday's City Council meeting, would increase the forewarning developers have to give renters if they plan to convert apartments into condos from four months to nine months. It also would require landlords to give renters at least $1,500 to relocate if their building is going to be converted.
Developers also would have to give condo buyers a standardized "disclosure summary" about taxes and assessments on the property and the condition of the building before purchase, Daley said.
Though developers aren't doing much conversion work now because of Chicago's glut of condos and the depressed housing market, Daley said the proposal will be important when the city's real estate market heats up again.
"It's going to come back, and we want to be able to learn by mistakes, let's be realistic, things that did not take place in order to protect people, simple as that," the mayor said during a news conference at a park in the Belmont Cragin neighborhood on the Northwest Side.
"These proposals will serve residents and neighborhoods now, and when the housing market begins to rebound, so there's no better time to enact them into law," Daley said.
The proposed ordinance is based on the recommendations of the Condominium Conversion Task Force. The mayor appointed the group of aldermen, real estate agents, developers and renters' rights advocates in 2007 to recommend stronger standards. The group released its report Thursday.
jebyrne@tribune.com http://www.chicagotribune.com/news/local/ct-met-daley-0902-20100902,0,4498761.story
Renters and condominium buyers in Chicago would get more protection from developers under a plan unveiled Thursday by Mayor Richard Daley, who acknowledged that it comes too late to protect people who had problems during the real estate boom that preceded the recession.
The proposal, which Daley will introduce at Wednesday's City Council meeting, would increase the forewarning developers have to give renters if they plan to convert apartments into condos from four months to nine months. It also would require landlords to give renters at least $1,500 to relocate if their building is going to be converted.
Developers also would have to give condo buyers a standardized "disclosure summary" about taxes and assessments on the property and the condition of the building before purchase, Daley said.
Though developers aren't doing much conversion work now because of Chicago's glut of condos and the depressed housing market, Daley said the proposal will be important when the city's real estate market heats up again.
"It's going to come back, and we want to be able to learn by mistakes, let's be realistic, things that did not take place in order to protect people, simple as that," the mayor said during a news conference at a park in the Belmont Cragin neighborhood on the Northwest Side.
"These proposals will serve residents and neighborhoods now, and when the housing market begins to rebound, so there's no better time to enact them into law," Daley said.
The proposed ordinance is based on the recommendations of the Condominium Conversion Task Force. The mayor appointed the group of aldermen, real estate agents, developers and renters' rights advocates in 2007 to recommend stronger standards. The group released its report Thursday.
jebyrne@tribune.com http://www.chicagotribune.com/news/local/ct-met-daley-0902-20100902,0,4498761.story
Friday, August 13, 2010
The Hot List
The Hot List
It's August in Chicago. And that means it's hot. But when it comes to housing in Chicago the words "hot" and "real estate" rarely appear in the same sentence. Nevertheless, in deference to summer, we've come up with a list of what really is hot in the city real estate market. And believe it or not, we filled the page without breaking a sweat.
Low Interest Rates
In June, 30-year mortgage rates averaged around 4.75%. Less than 60 days later, the average rate on the 30-Year Fixed has dropped below 4.5%, its lowest level since Freddie Mac began surveying rates back in 1971. That's not hot; that's scorching.
Skip a Step
Low prices and the prospect of slow appreciation have many buyers taking a longer-term view of their home purchase. Buyers today are thinking about how the home they buy will meet their needs five to 10 years down the road versus the three- to five-year window that was common during the boom. As a result, many buyers are skipping a step on the housing ladder and purchasing larger homes they can grow into.
New Construction Deals
Price cuts and special financing programs have been effective in whittling down excess new-construction inventory in several areas including River North, the West Loop and the Loop. By the end of next year, new construction in these neighborhoods should be largely absorbed, with no new product scheduled to come online. Translation: if you like new, your time is now.
Shrewd Buyers
Buyers today are approaching the market not only with more information but also with a totally different psychology. The focus is on location and space, and value is the watchword in every price range from $200,000 to $2 million. If you're selling, be prepared to demonstrate that your home is the best in its class, because today's astute buyers won't settle for anything less.
Putting Down Roots
A large home, in good condition, near top-rated city schools is suddenly attainable for the first time in years. That's causing many homebuyers to rethink typical suburban migration patterns and put down roots in the city. And the neighborhood improvements that can result from long-term investment might just be one of the most positive outcomes of the housing bubble. That's hot...and very cool.
Buying, selling or just looking for more information -- I welcome the opportunity to help. And please remember that referrals are always hot.
Dave Straub
@properties
773.255.3180
It's August in Chicago. And that means it's hot. But when it comes to housing in Chicago the words "hot" and "real estate" rarely appear in the same sentence. Nevertheless, in deference to summer, we've come up with a list of what really is hot in the city real estate market. And believe it or not, we filled the page without breaking a sweat.
Low Interest Rates
In June, 30-year mortgage rates averaged around 4.75%. Less than 60 days later, the average rate on the 30-Year Fixed has dropped below 4.5%, its lowest level since Freddie Mac began surveying rates back in 1971. That's not hot; that's scorching.
Skip a Step
Low prices and the prospect of slow appreciation have many buyers taking a longer-term view of their home purchase. Buyers today are thinking about how the home they buy will meet their needs five to 10 years down the road versus the three- to five-year window that was common during the boom. As a result, many buyers are skipping a step on the housing ladder and purchasing larger homes they can grow into.
New Construction Deals
Price cuts and special financing programs have been effective in whittling down excess new-construction inventory in several areas including River North, the West Loop and the Loop. By the end of next year, new construction in these neighborhoods should be largely absorbed, with no new product scheduled to come online. Translation: if you like new, your time is now.
Shrewd Buyers
Buyers today are approaching the market not only with more information but also with a totally different psychology. The focus is on location and space, and value is the watchword in every price range from $200,000 to $2 million. If you're selling, be prepared to demonstrate that your home is the best in its class, because today's astute buyers won't settle for anything less.
Putting Down Roots
A large home, in good condition, near top-rated city schools is suddenly attainable for the first time in years. That's causing many homebuyers to rethink typical suburban migration patterns and put down roots in the city. And the neighborhood improvements that can result from long-term investment might just be one of the most positive outcomes of the housing bubble. That's hot...and very cool.
Buying, selling or just looking for more information -- I welcome the opportunity to help. And please remember that referrals are always hot.
Dave Straub
@properties
773.255.3180
Thursday, July 15, 2010
The New Normal
The New Normal Feeling
A Bit More...Well...Normal
Over the last few years, there has been a lot of talk in real estate circles about "the New Normal." At first, the New Normal meant the days of double-digit price appreciation were over. Then the financial crisis hit, and suddenly the New Normal became a barrage of bad news that seemed to never end. Eventually, the economy started to regain its footing, the Housing Tax Credit took hold, and the Chicago real estate market enjoyed a rally through the spring of 2010. Today, the tax credit is gone, and while trouble spots remain, the general sentiment is the worst is behind us. Finally, the New Normal is starting to feel a bit more...normal.
A number of data points support the trend toward normalization. Home prices as tracked by the Case Shiller index have returned to the historical trend line, and April marked the 12th straight month of improvement in the Chicago index. Though the data still shows a year-over-year price decline in the city, the fall-off has slowed dramatically. The inventory picture is also far more stable with a 10.4 month supply of homes on the market - a reduction of about 50 percent since June 2008.
The city housing market remains challenging, but equilibrium is slowly returning, which means today's low prices and record-low mortgage rates make the next six to twelve months a prime opportunity - especially for first-time and move-up buyers.
#1 in Chicago
Yet another phenomenon that is becoming the norm is seeing @properties atop the Chicago real estate market. Through the halfway point of 2010, in the city, @properties was #1 in total transactions, #1 in shortest average market time, #1 in dollar volume sold, and #1 in market share. We continue to gain strength, add marketing programs and increase our level of service for Chicago homebuyers and sellers - all of which gives our clients a distinct advantage in the marketplace. Thank you for making @properties #1.
I'd be delighted to help you gain (or regain) perspective on the real estate market in your area. Please feel free to contact me anytime. And if someone you know is looking to buy or sell a home, remember that I always appreciate your referrals.
Dave Straub
Realtor,@properties
Illinois Licensed Real Estate Salesperson
Member, NAR, IAR, CAR, MLS
773.255.3180 DIRECT
A Bit More...Well...Normal
Over the last few years, there has been a lot of talk in real estate circles about "the New Normal." At first, the New Normal meant the days of double-digit price appreciation were over. Then the financial crisis hit, and suddenly the New Normal became a barrage of bad news that seemed to never end. Eventually, the economy started to regain its footing, the Housing Tax Credit took hold, and the Chicago real estate market enjoyed a rally through the spring of 2010. Today, the tax credit is gone, and while trouble spots remain, the general sentiment is the worst is behind us. Finally, the New Normal is starting to feel a bit more...normal.
A number of data points support the trend toward normalization. Home prices as tracked by the Case Shiller index have returned to the historical trend line, and April marked the 12th straight month of improvement in the Chicago index. Though the data still shows a year-over-year price decline in the city, the fall-off has slowed dramatically. The inventory picture is also far more stable with a 10.4 month supply of homes on the market - a reduction of about 50 percent since June 2008.
The city housing market remains challenging, but equilibrium is slowly returning, which means today's low prices and record-low mortgage rates make the next six to twelve months a prime opportunity - especially for first-time and move-up buyers.
#1 in Chicago
Yet another phenomenon that is becoming the norm is seeing @properties atop the Chicago real estate market. Through the halfway point of 2010, in the city, @properties was #1 in total transactions, #1 in shortest average market time, #1 in dollar volume sold, and #1 in market share. We continue to gain strength, add marketing programs and increase our level of service for Chicago homebuyers and sellers - all of which gives our clients a distinct advantage in the marketplace. Thank you for making @properties #1.
I'd be delighted to help you gain (or regain) perspective on the real estate market in your area. Please feel free to contact me anytime. And if someone you know is looking to buy or sell a home, remember that I always appreciate your referrals.
Dave Straub
Realtor,@properties
Illinois Licensed Real Estate Salesperson
Member, NAR, IAR, CAR, MLS
773.255.3180 DIRECT
Friday, July 2, 2010
Drop in Interest Rates
Drop in Interest Rates
a Welcome Surprise
Just about everyone (myself included) expected mortgage interest rates to rise when the Treasury Department ended its $1.25 trillion purchase of mortgage-backed securities in March. But Europe's ongoing debt crisis has driven investors to the safety of Treasury notes, a benchmark for mortgage interest rates. And as the yield on Treasuries has come down so too have mortgages. Bankrate.com, a website that tracks interest rates, said it was hard to identify the last time mortgage rates were this low, but estimates put the timeline in the fall of 1956. Sock hop, anyone?
This latest development should come as welcome news to both home buyers and sellers. For buyers, today's interest rates could be even more valuable than the recently expired Federal Housing Tax Credit. The chart below compares today's interest rates with those from a year ago to illustrate the monthly, annual, 5-year and 10-year savings for a range of conforming and jumbo loan amounts. On loans upwards of $300,000, the 5-year savings exceed the maximum $8,000 tax credit. On jumbo loans, the savings are far more substantial.
Sellers also have reason to cheer the recent drop in rates. Bearish housing analysts predicted that the absence of the tax credit and an anticipated spike in interest rates would put new downward pressure on prices, which have begun to tick up in many markets and submarkets. With rates moving in the other direction, cheap money should help buoy prices - hopefully until the Europe situation and U.S. employment picture begin to brighten. Lower rates also create a wider pool of home buyers and should provide a sense of urgency to house hunters who are in the market this summer.
Source: Bankrate.com 30-year fixed-rate mortgage index, 6/23/10
For more information on how today's historically low interest rates affect your buying power or selling strategy, feel free to contact me. And remember, I always appreciate your referrals.
Dave Straub
Realtor,@properties
Illinois Licensed Real Estate Salesperson
Member, NAR, IAR, CAR, MLS
773.255.3180
a Welcome Surprise
Just about everyone (myself included) expected mortgage interest rates to rise when the Treasury Department ended its $1.25 trillion purchase of mortgage-backed securities in March. But Europe's ongoing debt crisis has driven investors to the safety of Treasury notes, a benchmark for mortgage interest rates. And as the yield on Treasuries has come down so too have mortgages. Bankrate.com, a website that tracks interest rates, said it was hard to identify the last time mortgage rates were this low, but estimates put the timeline in the fall of 1956. Sock hop, anyone?
This latest development should come as welcome news to both home buyers and sellers. For buyers, today's interest rates could be even more valuable than the recently expired Federal Housing Tax Credit. The chart below compares today's interest rates with those from a year ago to illustrate the monthly, annual, 5-year and 10-year savings for a range of conforming and jumbo loan amounts. On loans upwards of $300,000, the 5-year savings exceed the maximum $8,000 tax credit. On jumbo loans, the savings are far more substantial.
Sellers also have reason to cheer the recent drop in rates. Bearish housing analysts predicted that the absence of the tax credit and an anticipated spike in interest rates would put new downward pressure on prices, which have begun to tick up in many markets and submarkets. With rates moving in the other direction, cheap money should help buoy prices - hopefully until the Europe situation and U.S. employment picture begin to brighten. Lower rates also create a wider pool of home buyers and should provide a sense of urgency to house hunters who are in the market this summer.
Source: Bankrate.com 30-year fixed-rate mortgage index, 6/23/10
For more information on how today's historically low interest rates affect your buying power or selling strategy, feel free to contact me. And remember, I always appreciate your referrals.
Dave Straub
Realtor,@properties
Illinois Licensed Real Estate Salesperson
Member, NAR, IAR, CAR, MLS
773.255.3180
Monday, June 7, 2010
After the Tax Credit
What to do now
So the Housing Tax Credit has come and gone. The Treasury Department estimates that 1.8 million people took advantage of the credit at a cost to the government of about $13 billion. For those who missed out on the credit, there may be a tinge of disappointment. But in the days following the deadline we at @properties have been reassured by healthy market activity in showings, listings and contracts. Still, with the tax credit in the history books, it's a good time to ask, "What should I do now?"
If you're a buyer who was in the market prior to April 30, you've answered an important question. It's not just about finding the right deal. It's about finding the right home. The fact is buying a home today is a longer-term proposition than it was a few years ago, and a home has to work for you not only as a place to invest but as a place to live. From that point of view, $8,000 probably isn't a make or break. Of course that doesn't mean the right deal isn't out there – especially with today's low mortgage rates and plentiful inventory.
If you're a seller now is a good time to step back and evaluate pricing and positioning. With the increase in recent transaction volume, there are more comparable sales today than six months ago. If your home has been on the market for a while, it's a good idea to revisit the comparative market analysis. But it's also important to point out that we at @properties do not subscribe to the notion – as some brokers do – that sellers need to fill the government's role as a provider of homebuyer subsidies by automatically dropping asking prices or offering cash credits. The market needs to stand on its own, and we believe it can and will.
If you have questions about the real estate market, post tax credit, please contact me.
Celebrating 10 years and a new office
Finally, last month brought two important milestones for @properties. First, we announced that we will be opening a new North Shore office in Winnetka. We are set to begin construction on the office on Green Bay Road this month and should be open by late summer 2010. We are excited about serving the North Shore from this new location.
April also marked @properties' 10th anniversary. We opened our doors back in spring 2000 with one goal: to provide the best real estate brokerage service in Chicago. Today, we're the #1 broker in the city and the fastest-growing firm on the North Shore. Most importantly, our goal remains the same, and we're working harder than ever to see it through. Thank you to all of our clients, associates, partners, family and friends for making @properties a success.
Dave Straub
@properties
773.255.3180
http://www.atproperties.com/agents/davestraub/listings
So the Housing Tax Credit has come and gone. The Treasury Department estimates that 1.8 million people took advantage of the credit at a cost to the government of about $13 billion. For those who missed out on the credit, there may be a tinge of disappointment. But in the days following the deadline we at @properties have been reassured by healthy market activity in showings, listings and contracts. Still, with the tax credit in the history books, it's a good time to ask, "What should I do now?"
If you're a buyer who was in the market prior to April 30, you've answered an important question. It's not just about finding the right deal. It's about finding the right home. The fact is buying a home today is a longer-term proposition than it was a few years ago, and a home has to work for you not only as a place to invest but as a place to live. From that point of view, $8,000 probably isn't a make or break. Of course that doesn't mean the right deal isn't out there – especially with today's low mortgage rates and plentiful inventory.
If you're a seller now is a good time to step back and evaluate pricing and positioning. With the increase in recent transaction volume, there are more comparable sales today than six months ago. If your home has been on the market for a while, it's a good idea to revisit the comparative market analysis. But it's also important to point out that we at @properties do not subscribe to the notion – as some brokers do – that sellers need to fill the government's role as a provider of homebuyer subsidies by automatically dropping asking prices or offering cash credits. The market needs to stand on its own, and we believe it can and will.
If you have questions about the real estate market, post tax credit, please contact me.
Celebrating 10 years and a new office
Finally, last month brought two important milestones for @properties. First, we announced that we will be opening a new North Shore office in Winnetka. We are set to begin construction on the office on Green Bay Road this month and should be open by late summer 2010. We are excited about serving the North Shore from this new location.
April also marked @properties' 10th anniversary. We opened our doors back in spring 2000 with one goal: to provide the best real estate brokerage service in Chicago. Today, we're the #1 broker in the city and the fastest-growing firm on the North Shore. Most importantly, our goal remains the same, and we're working harder than ever to see it through. Thank you to all of our clients, associates, partners, family and friends for making @properties a success.
Dave Straub
@properties
773.255.3180
http://www.atproperties.com/agents/davestraub/listings
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
Sunday, March 14, 2010
A New Window of Opportunity
The lure of contemporary floor plans, custom finishes and upscale amenities drew Chicagoans to new construction in record numbers in the early 2000s. Now, as the market stabilizes, new construction has become attractive once again. In fact, today might be the best opportunity to invest in a new home for years to come. Here's why:
Below Replacement Cost - While land has gotten significantly less expensive, labor and material costs have not come down proportionately. That means many developers simply cannot build the homes they are selling today for the prices at which they're being offered.
See Before You Buy - Traditionally, one of the biggest obstacles to purchasing new construction was buying from a floor plan. However, almost all new homes on the market today are completed. That means buyers can see room sizes, touch finishes and experience views before making a decision – a luxury that wasn't available at the height of the market.
Locked and Low - Another obstacle that has been removed is interest-rate uncertainty. Buying new construction used to mean rolling the dice on where rates would be when your home was finished six to 18 months after you signed a contract. With today's move-in-ready inventory, buyers are virtually assured the lowest rates in history.
Tax Credit - The Federal Homebuyer Tax Credit (up to $8,000 for first-time buyers and up to $6,500 for move-up buyers) is available for new-home purchases as well as re-sales. With the April 30 contract deadline approaching, builder inventory gives new-construction buyers some added flexibility.
Cycling Out - Believe it or not, if you like the idea of owning a brand new condominium in downtown Chicago, the window of opportunity is closing. While 3,400 new condos were delivered downtown in 2009, only 1,200 will be finished this year. In 2011, less than 300 new condos are slated for delivery, and no new condominium deliveries are scheduled for 2012 or beyond.*
Buying or selling, new or existing, I'm here to help with all of your real estate needs. Contact me anytime, and please remember that I always appreciate your referrals.
*Source: Appraisal Research Counselors Downtown Benchmark Report
Below Replacement Cost - While land has gotten significantly less expensive, labor and material costs have not come down proportionately. That means many developers simply cannot build the homes they are selling today for the prices at which they're being offered.
See Before You Buy - Traditionally, one of the biggest obstacles to purchasing new construction was buying from a floor plan. However, almost all new homes on the market today are completed. That means buyers can see room sizes, touch finishes and experience views before making a decision – a luxury that wasn't available at the height of the market.
Locked and Low - Another obstacle that has been removed is interest-rate uncertainty. Buying new construction used to mean rolling the dice on where rates would be when your home was finished six to 18 months after you signed a contract. With today's move-in-ready inventory, buyers are virtually assured the lowest rates in history.
Tax Credit - The Federal Homebuyer Tax Credit (up to $8,000 for first-time buyers and up to $6,500 for move-up buyers) is available for new-home purchases as well as re-sales. With the April 30 contract deadline approaching, builder inventory gives new-construction buyers some added flexibility.
Cycling Out - Believe it or not, if you like the idea of owning a brand new condominium in downtown Chicago, the window of opportunity is closing. While 3,400 new condos were delivered downtown in 2009, only 1,200 will be finished this year. In 2011, less than 300 new condos are slated for delivery, and no new condominium deliveries are scheduled for 2012 or beyond.*
Buying or selling, new or existing, I'm here to help with all of your real estate needs. Contact me anytime, and please remember that I always appreciate your referrals.
*Source: Appraisal Research Counselors Downtown Benchmark Report
Friday, February 12, 2010
Degrees of Control
The past 18 months have taught us many things, not the least of which is that we don't have control over a number of variables that affect the real estate market. However, we do have control over the actions we take to prepare for and react to these variables. During the next 60 to 90 days, some significant housing-related changes are imminent. We can't control those changes, but to a certain degree we can control how they affect us.
Can't Control: Expiration of Federal Housing Tax Credit
Can Control: Purchase Date / Closing Date
While we can't control how the expiration of the Federal Housing Tax Credit will affect the real estate market, it is an absolute certainty that qualified first-time buyers will receive up to $8,000 and qualified repeat buyers will receive up to $6,500 if they enter into a purchase contract by April 30 and close by June 30. With less than 90 days until the expiration of the Federal Housing Tax Credit, buyers need to be in the market now.
Can't Control: Mortgage Interest Rates
Can Control: Locking in Today's Rates
No one knows what will happen to mortgage interest rates when the Fed ends its $1.25 trillion purchase of mortgage backed securities in a few weeks. But one thing is for sure. Home buyers who lock in their interest rate today will benefit from some of the best mortgage financing conditions in history.
Can't Control: Selling Price
Can Control: Asking Price
If you're a seller, the price you paid for your home or the amount you owe on your mortgage has no bearing on your home's ultimate selling price. What does determine that price is the market. And today sellers must show consideration for the market with correct pricing right out of the gate. The chart below shows just how important Original List Price (OLP) is to selling your home for the highest possible price in the shortest amount of time.
2009 Sales Data
Homes with no price changes Homes with at least one price change
Average selling price as a percentage of OLP Average days on market Average selling price as a percentage of OLP Average Days on market
96%
116
82%
240
Source: Agent Metrics, MRED LLC data, 2009, Selling Price to Original Listing Price, City of Chicago.
One more thing you can control is your choice of real estate agent. Thank you for allowing me to serve you, and please contact me if you or anyone you know needs help navigating today’s real estate market.
Can't Control: Expiration of Federal Housing Tax Credit
Can Control: Purchase Date / Closing Date
While we can't control how the expiration of the Federal Housing Tax Credit will affect the real estate market, it is an absolute certainty that qualified first-time buyers will receive up to $8,000 and qualified repeat buyers will receive up to $6,500 if they enter into a purchase contract by April 30 and close by June 30. With less than 90 days until the expiration of the Federal Housing Tax Credit, buyers need to be in the market now.
Can't Control: Mortgage Interest Rates
Can Control: Locking in Today's Rates
No one knows what will happen to mortgage interest rates when the Fed ends its $1.25 trillion purchase of mortgage backed securities in a few weeks. But one thing is for sure. Home buyers who lock in their interest rate today will benefit from some of the best mortgage financing conditions in history.
Can't Control: Selling Price
Can Control: Asking Price
If you're a seller, the price you paid for your home or the amount you owe on your mortgage has no bearing on your home's ultimate selling price. What does determine that price is the market. And today sellers must show consideration for the market with correct pricing right out of the gate. The chart below shows just how important Original List Price (OLP) is to selling your home for the highest possible price in the shortest amount of time.
2009 Sales Data
Homes with no price changes Homes with at least one price change
Average selling price as a percentage of OLP Average days on market Average selling price as a percentage of OLP Average Days on market
96%
116
82%
240
Source: Agent Metrics, MRED LLC data, 2009, Selling Price to Original Listing Price, City of Chicago.
One more thing you can control is your choice of real estate agent. Thank you for allowing me to serve you, and please contact me if you or anyone you know needs help navigating today’s real estate market.
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.
Friday, January 8, 2010
Local commercial delinquencies dip in likely ‘anomaly’
By Alby Gallun, Dec. 14, 2009
(Crain’s) — Local banks reported a lower percentage of troubled commercial real estate loans in the third quarter, though delinquencies are likely to resume their climb over the next year because of depressed property values and the languishing economy.
The delinquency rate for commercial mortgages at Chicago-area banks fell to 5.9% in the quarter, down from 6.2% in the second quarter, according to Foresight Analytics LLC, an Oakland, Calif.-based research firm. That’s still up sharply from a rate of 3.5% a year earlier.
The third-quarter drop is probably a “statistical anomaly,” not the beginning of a turnaround, says Foresight Partner Matthew Anderson.
With occupancies and rents at many properties continuing to decline, more borrowers will struggle to keep up with their monthly loan payments, especially those who piled on debt when lending was loose.
Other investors will default as loans come due and they struggle to find replacement financing.
Though distress continues to build, regulators are showing flexibility in how banks deal with problem loans, one reason Mr. Anderson expects it could take a lot longer to clean up the financial mess than many observers previously believed.
And many vulture investors could find it harder than expected to scoop up distressed properties on the cheap.
“You’ve got almost all the ingredients for a massive wave of foreclosures or loan sales,” he says. “The part that’s missing is the regulatory pressure.”
Chicago is faring worse than the nation as whole, probably because the job market, a key driver of demand for real estate, is especially bad here, Mr. Anderson says.
Chicago’s third-quarter delinquency rate ranked 14th highest among the 100 biggest U.S. metropolitan areas, and it exceeded the national rate of 4.6%, according to Foresight.
Though he doesn’t offer a forecast for Chicago, Mr. Anderson expects the U.S. delinquency rate to peak at 7.5% to 8.0% near the end of 2010. That would be the highest since 1991, during the last commercial property crash, when the rate hit about 9.5%.
The Foresight data, which is based on bank regulatory filings, does not cover loans packaged and sold off as commercial mortgage-backed securities (CMBS), a segment of the market blamed for some of the biggest lending excess during the boom.
Foresight calculates the delinquency rate by dividing the dollar value of delinquent loans by the value of all outstanding mortgages on operating commercial properties. A loan is classified as delinquent if it’s at least 30 days past due.
Foresight also tracks the delinquency rate for construction and land loans, which hit a new high locally of 24% in the third quarter, up from 21.3% in the second quarter and 13.7% in the year-ago period.
One big source of distress: residential builders who have finished projects but are struggling to sell them out. Others are sitting on undeveloped property that has plunged in value, and they can’t develop it or refinance.
Though banks are required to write off bad loans, federal regulators issued new guidelines in October that could take some of the pressure off. The new rules encourage “loan modifications and restructurings, which will curb defaults associated with the wave of upcoming maturities,” Real Capital Analytics, a New York-research firm, writes in a recent report.
That’s good news for some banks on the edge, but “it could have the unintended consequence of stretching out the whole adjustment process,” Mr. Anderson says. Originally, he expected banks to clear out their bad loans within two years. Now he expects it to take four to five.
In the Chicago area, 398 commercial properties and developments are in various stages of distress, accounting for $5.6 billion in loans, according to Real Capital. The retail sector represents the biggest source of trouble, with $1.3 billion in troubled loans, followed by hotels, at $1.0 billion, and apartments, at $848 million.
(Crain’s) — Local banks reported a lower percentage of troubled commercial real estate loans in the third quarter, though delinquencies are likely to resume their climb over the next year because of depressed property values and the languishing economy.
The delinquency rate for commercial mortgages at Chicago-area banks fell to 5.9% in the quarter, down from 6.2% in the second quarter, according to Foresight Analytics LLC, an Oakland, Calif.-based research firm. That’s still up sharply from a rate of 3.5% a year earlier.
The third-quarter drop is probably a “statistical anomaly,” not the beginning of a turnaround, says Foresight Partner Matthew Anderson.
With occupancies and rents at many properties continuing to decline, more borrowers will struggle to keep up with their monthly loan payments, especially those who piled on debt when lending was loose.
Other investors will default as loans come due and they struggle to find replacement financing.
Though distress continues to build, regulators are showing flexibility in how banks deal with problem loans, one reason Mr. Anderson expects it could take a lot longer to clean up the financial mess than many observers previously believed.
And many vulture investors could find it harder than expected to scoop up distressed properties on the cheap.
“You’ve got almost all the ingredients for a massive wave of foreclosures or loan sales,” he says. “The part that’s missing is the regulatory pressure.”
Chicago is faring worse than the nation as whole, probably because the job market, a key driver of demand for real estate, is especially bad here, Mr. Anderson says.
Chicago’s third-quarter delinquency rate ranked 14th highest among the 100 biggest U.S. metropolitan areas, and it exceeded the national rate of 4.6%, according to Foresight.
Though he doesn’t offer a forecast for Chicago, Mr. Anderson expects the U.S. delinquency rate to peak at 7.5% to 8.0% near the end of 2010. That would be the highest since 1991, during the last commercial property crash, when the rate hit about 9.5%.
The Foresight data, which is based on bank regulatory filings, does not cover loans packaged and sold off as commercial mortgage-backed securities (CMBS), a segment of the market blamed for some of the biggest lending excess during the boom.
Foresight calculates the delinquency rate by dividing the dollar value of delinquent loans by the value of all outstanding mortgages on operating commercial properties. A loan is classified as delinquent if it’s at least 30 days past due.
Foresight also tracks the delinquency rate for construction and land loans, which hit a new high locally of 24% in the third quarter, up from 21.3% in the second quarter and 13.7% in the year-ago period.
One big source of distress: residential builders who have finished projects but are struggling to sell them out. Others are sitting on undeveloped property that has plunged in value, and they can’t develop it or refinance.
Though banks are required to write off bad loans, federal regulators issued new guidelines in October that could take some of the pressure off. The new rules encourage “loan modifications and restructurings, which will curb defaults associated with the wave of upcoming maturities,” Real Capital Analytics, a New York-research firm, writes in a recent report.
That’s good news for some banks on the edge, but “it could have the unintended consequence of stretching out the whole adjustment process,” Mr. Anderson says. Originally, he expected banks to clear out their bad loans within two years. Now he expects it to take four to five.
In the Chicago area, 398 commercial properties and developments are in various stages of distress, accounting for $5.6 billion in loans, according to Real Capital. The retail sector represents the biggest source of trouble, with $1.3 billion in troubled loans, followed by hotels, at $1.0 billion, and apartments, at $848 million.
Tuesday, January 5, 2010
Downtown apartments slip as glut looms
(Crain’s) — After taking two steps forward, downtown apartment landlords took one step back in the third quarter.
Demand for apartments remains surprisingly strong, but competition for tenants is heating up amid a swelling supply of new units. That’s one reason rents and occupancies at high-end downtown buildings slipped in the third quarter after rising in the first two, resuming a downward trend that began more than two years ago, according to a report by Appraisal Research Counselors.
“It’s really not a signal that it’s a weak market,” says Ron DeVries, vice president at the Chicago-based real estate consulting firm. “Demand is strong. We’ve just got a supply bubble right now.”
The average net effective rent at Class A downtown apartment buildings fell to $2.10 a square foot in the third quarter, down 3.2% from the second quarter and 7.1% from the year-earlier period, according to Appraisal Research.
Effective rents, which include concessions such as free rent, have fallen 10.6% from their peak of $2.35 in third-quarter 2007.
The average Class A occupancy also declined, to 91.9%, down from 93.4% in the second quarter and 92.8% in the year-ago period.
Demand for apartments typically falls in a recession as more renters try to save money by doubling up or moving in with their parents. But that hasn’t happened in downtown Chicago, where more people are renting now than were before the economy went south.
Renters occupied 17,617 downtown apartments surveyed by Appraisal Research at the end up the third quarter, up 16.7% from 15,093 two years earlier. Appraisal Research tracks about 80% of the apartments in downtown Chicago.
Normally, apartment landlords lose a certain percentage of tenants who move out to buy a condominium or single-family home. But the turnover rate has slowed dramatically, possibly because would-be buyers are hesitant to commit to a mortgage when the economy is so shaky and condo vales could fall further, Mr. DeVries says. Other renters simply may not be able to qualify for a mortgage.
“The path to home ownership is a lot tougher right now,” Mr. DeVries says.
While that’s good for landlords, the current building boom isn’t. Developers have added 3,270 units to the downtown apartment market in 2008 and 2009 and will complete another 2,236 next year, boosting the total downtown inventory by 25%, according to Appraisal Research.
“I could still see demand remaining reasonable, but I could see pressure on rents because of the supply,” says Michael Newman, president and CEO of Golub & Co., the Chicago-based developer of Streeter Place, a new 480-unit apartment tower at 355 E. Ohio St.
Golub is offering tenants two months of free rent on a 12- to 14-month lease in the building, which is about 55% leased, he says. Though the property is not meeting financial projections set a few years ago, when the market was much stronger, “we’re kind of happy where we’re at,” considering the state of the economy, Mr. Newman says.
The so-called shadow rental market is another concern. Amid a glut of condominiums, more downtown condo owners are renting out their units rather than trying to sell them. And they’re competing with traditional landlords for tenants.
There were 1,747 downtown condos listed for rent on the Multiple Listing Service at the end of the third quarter, up 45% from the year earlier, according to Appraisal Research.
Whether the market can absorb all the extra supply will depend in part on the job market, the key driver of demand for apartments, says Anthony Rossi, president of RMK Management Corp., a Chicago-based property manager. He’s also a partner in the Parc Huron, a 221-unit apartment building under construction in River North.
“The big thing that we’ve got to hope for is that employment stabilizes and comes back,” Mr. Rossi says. “That will make everybody a little more comfortable.”
By Alby Gallun, Nov. 23, 2009
Demand for apartments remains surprisingly strong, but competition for tenants is heating up amid a swelling supply of new units. That’s one reason rents and occupancies at high-end downtown buildings slipped in the third quarter after rising in the first two, resuming a downward trend that began more than two years ago, according to a report by Appraisal Research Counselors.
“It’s really not a signal that it’s a weak market,” says Ron DeVries, vice president at the Chicago-based real estate consulting firm. “Demand is strong. We’ve just got a supply bubble right now.”
The average net effective rent at Class A downtown apartment buildings fell to $2.10 a square foot in the third quarter, down 3.2% from the second quarter and 7.1% from the year-earlier period, according to Appraisal Research.
Effective rents, which include concessions such as free rent, have fallen 10.6% from their peak of $2.35 in third-quarter 2007.
The average Class A occupancy also declined, to 91.9%, down from 93.4% in the second quarter and 92.8% in the year-ago period.
Demand for apartments typically falls in a recession as more renters try to save money by doubling up or moving in with their parents. But that hasn’t happened in downtown Chicago, where more people are renting now than were before the economy went south.
Renters occupied 17,617 downtown apartments surveyed by Appraisal Research at the end up the third quarter, up 16.7% from 15,093 two years earlier. Appraisal Research tracks about 80% of the apartments in downtown Chicago.
Normally, apartment landlords lose a certain percentage of tenants who move out to buy a condominium or single-family home. But the turnover rate has slowed dramatically, possibly because would-be buyers are hesitant to commit to a mortgage when the economy is so shaky and condo vales could fall further, Mr. DeVries says. Other renters simply may not be able to qualify for a mortgage.
“The path to home ownership is a lot tougher right now,” Mr. DeVries says.
While that’s good for landlords, the current building boom isn’t. Developers have added 3,270 units to the downtown apartment market in 2008 and 2009 and will complete another 2,236 next year, boosting the total downtown inventory by 25%, according to Appraisal Research.
“I could still see demand remaining reasonable, but I could see pressure on rents because of the supply,” says Michael Newman, president and CEO of Golub & Co., the Chicago-based developer of Streeter Place, a new 480-unit apartment tower at 355 E. Ohio St.
Golub is offering tenants two months of free rent on a 12- to 14-month lease in the building, which is about 55% leased, he says. Though the property is not meeting financial projections set a few years ago, when the market was much stronger, “we’re kind of happy where we’re at,” considering the state of the economy, Mr. Newman says.
The so-called shadow rental market is another concern. Amid a glut of condominiums, more downtown condo owners are renting out their units rather than trying to sell them. And they’re competing with traditional landlords for tenants.
There were 1,747 downtown condos listed for rent on the Multiple Listing Service at the end of the third quarter, up 45% from the year earlier, according to Appraisal Research.
Whether the market can absorb all the extra supply will depend in part on the job market, the key driver of demand for apartments, says Anthony Rossi, president of RMK Management Corp., a Chicago-based property manager. He’s also a partner in the Parc Huron, a 221-unit apartment building under construction in River North.
“The big thing that we’ve got to hope for is that employment stabilizes and comes back,” Mr. Rossi says. “That will make everybody a little more comfortable.”
By Alby Gallun, Nov. 23, 2009
Friday, December 18, 2009
Happy Holidays from @properties!
The holidays are a time of celebration but also a time of reflection. And as a REALTOR®, naturally I tend to reflect on the significance of home. These days we seem to spend more time than ever selecting our homes, improving our homes and focusing on our homes. After all, our home is certainly one of the most important places - if not the most important place - in our lives.
But the holidays are also a great reminder of what truly makes a home: the friends, family, love, laughter and special occasions that fill it throughout the year. So I'd like to extend my warmest wishes for a happy and healthy holiday, a prosperous New Year and, most of all, a joyous home.
Dave Straub
@properties
773.255.3180
But the holidays are also a great reminder of what truly makes a home: the friends, family, love, laughter and special occasions that fill it throughout the year. So I'd like to extend my warmest wishes for a happy and healthy holiday, a prosperous New Year and, most of all, a joyous home.
Dave Straub
@properties
773.255.3180
Friday, November 27, 2009
Homebuyer Tax Credit
It's Official.
The First Time Homebuyer Tax Credit has been extended through April 30, 2010, and that's great news for you whether you are buying or selling. On the heels of an improving market, there really is no better time to take advantage of an incentive like this.
The new Tax Credit is similar to its predecessor only the government has expanded the program and sweetened the pot. Initially, only First Time Buyers were eligible for the $8,000 credit, contingent on the purchase of their first home. That opportunity is still available, but now there is a new incentive: $6,500 for existing homeowners who purchase a new home provided they have lived in their current residence for at least five years. Income limits also have been increased, so more borrowers are eligible. Homebuyers must close by June 30, 2010.
Need help establishing your qualifications? As your REALTOR®, I can help you determine how to successfully take advantage of these incentives. Whether you're looking to buy your first home, sell or move up, I'm here to offer you candid advice on market conditions, and of course the updated Homebuyer Tax Credit.
The First Time Homebuyer Tax Credit has been extended through April 30, 2010, and that's great news for you whether you are buying or selling. On the heels of an improving market, there really is no better time to take advantage of an incentive like this.
The new Tax Credit is similar to its predecessor only the government has expanded the program and sweetened the pot. Initially, only First Time Buyers were eligible for the $8,000 credit, contingent on the purchase of their first home. That opportunity is still available, but now there is a new incentive: $6,500 for existing homeowners who purchase a new home provided they have lived in their current residence for at least five years. Income limits also have been increased, so more borrowers are eligible. Homebuyers must close by June 30, 2010.
Need help establishing your qualifications? As your REALTOR®, I can help you determine how to successfully take advantage of these incentives. Whether you're looking to buy your first home, sell or move up, I'm here to offer you candid advice on market conditions, and of course the updated Homebuyer Tax Credit.
Saturday, November 14, 2009
@properties Launches New Chicago Real Estate Website
RISMEDIA, November 5, 2009—@properties, one of Chicago’s leading real estate brokerage companies launched a new company website (www.atproperties.com). According to the company, the site gives consumers all of the Chicago-area real estate listings from the MLS, neighborhood information and hyper-local market data; while also providing the company and its agents with a set of digital marketing tools that will give them a competitive advantage.
Highlights of the new @properties site include: Chicago neighborhood guides featuring business reviews, photos, detailed school reports and hyper-local news content; a customizable property search tool that allows users to draw their own search boundaries directly on an area map; an open house touring tool that allows users to choose the homes they wish to tour and get printable point-to-point directions and email listing alerts for both new properties and property status changes, so users can monitor specific properties and market segments.
“This new website is the most advanced, most comprehensive and most user-friendly online tool for Chicago real estate. It was designed around Chicago homebuyers and sellers to instinctively deliver the content they want in a usable fashion,” said Thaddeus Wong, co-founder of @properties. “At the same time, the site will also drive business and serve as a valuable marketing resource for our agents.”
For more information, visit www.atproperties.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Read more: http://rismedia.com/2009-11-04/properties-launches-new-chicago-real-estate-website/#ixzz0WrNuurdT
Dave Straub's @properties web site: http://www.atproperties.com/agents/DaveStraub
Highlights of the new @properties site include: Chicago neighborhood guides featuring business reviews, photos, detailed school reports and hyper-local news content; a customizable property search tool that allows users to draw their own search boundaries directly on an area map; an open house touring tool that allows users to choose the homes they wish to tour and get printable point-to-point directions and email listing alerts for both new properties and property status changes, so users can monitor specific properties and market segments.
“This new website is the most advanced, most comprehensive and most user-friendly online tool for Chicago real estate. It was designed around Chicago homebuyers and sellers to instinctively deliver the content they want in a usable fashion,” said Thaddeus Wong, co-founder of @properties. “At the same time, the site will also drive business and serve as a valuable marketing resource for our agents.”
For more information, visit www.atproperties.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Read more: http://rismedia.com/2009-11-04/properties-launches-new-chicago-real-estate-website/#ixzz0WrNuurdT
Dave Straub's @properties web site: http://www.atproperties.com/agents/DaveStraub
Thursday, November 12, 2009
More positive news on new-home sales
(Crain’s) — After enduring a three-year freefall, local homebuilders have nowhere to go but up — or at least sideways.
Chicago-area new-home sales rose for the third quarter in a row on a seasonally adjusted annualized basis, according to housing consultant Tracy Cross & Associates Inc., another sign that the worst is over for homebuilders.
Yet where the market goes from here will depend on the broader economy and job market, which isn’t likely to surge back anytime soon.
“You can’t get blood out of a turnip, and that’s where the problem is,” says Tracy Cross, president of the Schaumburg-based firm.
On a seasonally adjusted annualized basis, local residential developers sold 4,666 homes in the third quarter, up 15% from a rate of 4,054 in the second quarter, according to a recent report published by the firm. The market bottomed out at 2,786 sales in fourth-quarter 2008.
The bad news is that 2009 will likely go down as the worst year for homebuilders since World War II. Even with the recent pickup, the beginning of the year was so bad that Mr. Cross expects developers to sell just 3,700 homes this year, down 42% from 6,374 in 2008 and 89% from the peak of 33,287 in 2005.
Sales in the city bounced back in the third quarter, as developers lured buyers by slashing prices by as much as 35%. Chicago builders sold 1,967 units at a seasonally adjusted annualized rate, nearly triple the 674-unit pace in the second quarter.
Chicago condo developers are still sitting on several thousand unsold units, ensuring that the discounting will continue. The developer of the 168-unit Park Monroe recently reduced prices on several condos in the project at 65 E. Monroe St.; one-bedroom, one-bathroom condos there now are listed at $299,500 down 25% from $399,900 previously, according to the development’s Web site.
The quarter was tougher on the suburban market, where seasonally adjusted annualized sales fell 20% from the second quarter, to 2,699 units. One reason: The $8,000 federal tax credit for first-time homebuyers boosted suburban demand in the first half of the year, but sales petered out in the third quarter because the credit is set to expire Nov. 30, Mr. Cross says.
Because of the time it takes to build a new home, suburban buyers who signed contracts in the third quarter wouldn’t have been able to close on the purchases until after the deadline, removing the sense of urgency to buy, he says. Tracy Cross records a sale when a purchase contract is signed, not at closing.
The tax credit has been less of a factor in the city because new homes there, with an average price of $587,158 in the third quarter, are beyond the means of many first-time buyers, Mr. Cross says.
Congress is considering extending and expanding the homebuyer credit, possibly until April 30, but that won’t be enough to ensure a recovery in the U.S. housing market.
Even if the credit is extended, “home demand and prices will deteriorate again once the credit eventually expires — especially if job creation does not materialize in light of further anticipated increases in housing inventory as mortgage delinquencies and foreclosures rise,” CreditSights Inc., a New York-based research firm, writes in a recent report.
The other key factor is the availability of mortgage financing. Condo developers continue to gripe that lenders have tightened their underwriting standards so much that creditworthy borrowers can no longer get a loan to finance a new condo purchase. And mortgage rates are rising again, fueling concerns that higher borrowing costs could stall a market recovery.
Though he’s written off 2009, Mr. Cross expects new home sales to rise about 20% in 2010, rising ultimately to about 22,000 units annually.
“We don’t see Chicago ever coming back to what we saw in ’04 and ’05,” he says.
By Alby Gallun, Nov. 02, 2009
Chicago-area new-home sales rose for the third quarter in a row on a seasonally adjusted annualized basis, according to housing consultant Tracy Cross & Associates Inc., another sign that the worst is over for homebuilders.
Yet where the market goes from here will depend on the broader economy and job market, which isn’t likely to surge back anytime soon.
“You can’t get blood out of a turnip, and that’s where the problem is,” says Tracy Cross, president of the Schaumburg-based firm.
On a seasonally adjusted annualized basis, local residential developers sold 4,666 homes in the third quarter, up 15% from a rate of 4,054 in the second quarter, according to a recent report published by the firm. The market bottomed out at 2,786 sales in fourth-quarter 2008.
The bad news is that 2009 will likely go down as the worst year for homebuilders since World War II. Even with the recent pickup, the beginning of the year was so bad that Mr. Cross expects developers to sell just 3,700 homes this year, down 42% from 6,374 in 2008 and 89% from the peak of 33,287 in 2005.
Sales in the city bounced back in the third quarter, as developers lured buyers by slashing prices by as much as 35%. Chicago builders sold 1,967 units at a seasonally adjusted annualized rate, nearly triple the 674-unit pace in the second quarter.
Chicago condo developers are still sitting on several thousand unsold units, ensuring that the discounting will continue. The developer of the 168-unit Park Monroe recently reduced prices on several condos in the project at 65 E. Monroe St.; one-bedroom, one-bathroom condos there now are listed at $299,500 down 25% from $399,900 previously, according to the development’s Web site.
The quarter was tougher on the suburban market, where seasonally adjusted annualized sales fell 20% from the second quarter, to 2,699 units. One reason: The $8,000 federal tax credit for first-time homebuyers boosted suburban demand in the first half of the year, but sales petered out in the third quarter because the credit is set to expire Nov. 30, Mr. Cross says.
Because of the time it takes to build a new home, suburban buyers who signed contracts in the third quarter wouldn’t have been able to close on the purchases until after the deadline, removing the sense of urgency to buy, he says. Tracy Cross records a sale when a purchase contract is signed, not at closing.
The tax credit has been less of a factor in the city because new homes there, with an average price of $587,158 in the third quarter, are beyond the means of many first-time buyers, Mr. Cross says.
Congress is considering extending and expanding the homebuyer credit, possibly until April 30, but that won’t be enough to ensure a recovery in the U.S. housing market.
Even if the credit is extended, “home demand and prices will deteriorate again once the credit eventually expires — especially if job creation does not materialize in light of further anticipated increases in housing inventory as mortgage delinquencies and foreclosures rise,” CreditSights Inc., a New York-based research firm, writes in a recent report.
The other key factor is the availability of mortgage financing. Condo developers continue to gripe that lenders have tightened their underwriting standards so much that creditworthy borrowers can no longer get a loan to finance a new condo purchase. And mortgage rates are rising again, fueling concerns that higher borrowing costs could stall a market recovery.
Though he’s written off 2009, Mr. Cross expects new home sales to rise about 20% in 2010, rising ultimately to about 22,000 units annually.
“We don’t see Chicago ever coming back to what we saw in ’04 and ’05,” he says.
By Alby Gallun, Nov. 02, 2009
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