Wednesday, November 15, 2006

For Whom the Housing Market Tolls

Toll Brothers, a leading upscale home builder that has continued to forecast lower and lower earnings as the year has progressed and whose financial health is looked upon as an indicator for the residential building sector as a whole, reported Tuesday that contracts for new homes fell 57% during its fiscal fourth quarter, which ended Oct. 31.

"We continue to look for signs that a recovery is imminent but can't yet say that one is in sight," CEO Robert Toll said in a statement.

Toll said during a conference call with analysts that the company reported 585 contract cancellations on new homes during the last quarter -- the highest quarterly number ever recorded by the upscale builder.

The company will report its end of year numbers on Dec. 5.

Thursday, November 02, 2006

Home Prices Drop, Mortgage Rates Rise

The median price of a new home in the United States dropped to $217,100 in September, a 9.7 percent decline from September 2005 and the biggest annual fall in more than 35 years, according to the Commerce Department. That median price was the lowest since September 2004, and the annual decline also was sharper than the 2.5 percent drop in the price for existing homes reported in September, the largest annual plunge on record.

Friday, October 06, 2006

33rd Annual Historic Pullman House Tour

October 7 & 8, 2006 Homes open 11:00am - 5:00pm

One weekend each year, Pullman residents open their homes to the public for the annual Historic Pullman House Tour.

These 120-year-old landmark homes range from executive mansions to14-foot wide worker's cottages to multi-unit apartments, all with a charm and uniqueness that is part of the Pullman experience.

Tour homes are chosen to present a cross-section of the different types of housing in Pullman and the many ways that homeowners blend the past and present in their historic homes.

Come visit Pullman and see behind the beautiful facades into the interiors of these landmark homes.

Proceeds from the Historic Pullman House Tour will help fund restoration and preservation projects in the Historic Pullman District.

Tickets are $18.00 and can be bought at the Historic Pullman Visitor Center 11141 S. Cottage Grove Avenue, Chicago.

Sunday, September 24, 2006

The Historic Chicago Bungalow and Green Home Expo

The Fifth Annual Historic Chicago Bungalow Expo and Green Home Expo should prove to be the biggest and best Expo yet. It will take place on Saturday, September 30, from 10 a.m. to 4 p.m., at the Merchandise Mart, 222 Merchandise Mart Plaza, 7th Floor - an excellent venue that provides large amounts of space for vendors and visitors.

Visitors of the Historic Chicago Bungalow & Green Home Expo will experience a one-stop shop for bungalow and green home rehab and financing needs. There are over 100 vendors and 50 workshops guiding homeowners on all of their rehabilitation and improvement projects with a special focus, this year, on environmentally friendly and energy efficient products and services.

Friday, September 22, 2006

Burton Hales House, Oak Park, IL Posted by Picasa

Burton Hales Mansion Open Saturday

Oak Park has its share of large houses, but only a few real mansions. The Burton Hales House will be open to the public Saturday September 23rd from 10am to 3pm.

The Hales house is currently on the market for sale. $2.95 million will buy you this 9,500 square foot, 21 room, tudor revival home designed by Henry Fiddleke.

Tickets are $25.00 and benefit the Historical Society of Oak Park & River Forest.

Saturday, September 16, 2006

4 renovations that kill a home's value

As the housing market cools, you need to think twice about these upgrades.

Money magazine says that even in good times "Not all projects have widespread appeal". The risky projects actually may hurt your appeal.

Swimming Pools: In some areas, especially hot-weather spots like Arizona and Florida, a pool is a must-have. In the Southwest, adding one boosts your home's value by 11 percent on average, according to a National Association of Realtors study.

But elsewhere it can just as easily turn off buyers, who worry about affording the upkeep and insurance. And if the most likely buyer of your home is a family with small children, think long and hard before installing a pool.

The Addition: "A badly designed addition can kill your resale value," says Sal Alfano, the editorial director of Remodeling. "People focus on the floor plan and the flow, but not on how it fits into the neighborhood or even the house itself." Watch out for boxy, poorly detailed additions. Proportions matter.

Trendy Finishes: Be careful of a style that will look dated when you throw your open house. Spotting the trend that's on its way out is trickier than you think. While it is easy to assume that sleek red European kitchen cabinetry is tomorrow's harvest gold fridge, other design staples that seem like sure bets can quickly drift into obscurity too.

The Jacuzzi: The elaborate master bath is okay, but the big circular tub with 15 jets that can pulse or massage is risky. Busy boomers have little time to spend hanging out in the bathtub, and parents with small kids prefer a conventional tub. Ultimately, don't expect a future buyer to pay up for the luxury you considered an essential.

Read the entire article at Money Magazine

Saturday, September 09, 2006

'Prices are falling' becomes real estate mantra

Mortgage market commentary

Bond yields rose slightly this week in a long-overdue correction from straight-line decline, but not enough to move mortgages above 6.5 percent for low-fee deals.

A bigger rate rise was intercepted at mid-week by declines in price in the whole commodity complex. Oil has broken to $67, natural gas to $5.71 (60 percent below last winter's spike), wholesale gasoline to $1.63 (retail gas should fall below $2.50 in a month or so), and gold may shortly fall below $600. Oil patch people still say that energy markets are vulnerable on the upside, but I have to believe that the last year's high prices are at last affecting both consumption and supply.

Basic economic data continues to be good: the purchasing managers' service-sector numbers were fine, and there was no increase in this week's claims for unemployment insurance.

The housing market is now the all-consuming economic topic, and "prices are falling" is the everybody-says, everybody-knows factoid du jour.

It's not a whisper-turns-to-hysteria deal. The dominant tone in the prices-are-falling pronouncement is pleasure, often self-satisfied and/or envious: I knew they would fall. Serves 'em right (most common among those who missed the party, couldn't afford to buy what they thought they deserved, or don't much care for Realtors). Every bond trader wants a housing collapse and recession. Stock market types are delighted that housing may finally look worse than their (flat) stuff.

Whenever somebody recites the prices-are-falling mantra, take a second to check content. Asking prices? Upside asking prices are always subject to downward revision. Average or median prices? Those are statistical curiosities moving with the mix of houses sold, saying nothing about the fate of individual homes. Or the real deal: homes that cannot be re-sold for a price paid a year or two ago?

Read more of the Inman News article at Citywide Services

Tuesday, September 05, 2006

Is now a good time to remodel?

Several factors determine remodeling project profitability

Many people think that fixing a house is a sure way to make money. Yet, homeowners are often disappointed when they discover that their renovations didn't add as much to the market value of their home as they thought they would.

There are several factors that determine whether a remodeling project will be profitable. One is that renovation costs and the market value of those renovations vary from one part of the country to the next.

For example, it costs less to replace windows with new, high-end, dual pane windows in the Midwest than it does in the West. But, the homeowner who lives in the West is likely to recoup more than 100 percent of what he invested, while the Midwesterner will probably only recoup about 84 percent, according to the annual 2005 Cost Versus Value Report published each year by the National Association of Realtors in conjunction with Remodeling Magazine.

Another variable is the current rate of appreciation, which also varies over time and from place to place. Generally, the past five years was a good time to remodel. For example, if you had bought a fixer-upper in the San Francisco Bay Area in 2000 and enhanced it with cost-effective improvements, you probably would have realized a healthy profit when you sold in 2005.

Let's say you pay $300,000 for the fixer. According to the Cost Versus Value Report, improving curb appeal (such as adding new siding and windows) and kitchen and bathroom projects have been consistent high-return investments in most markets. So you concentrate your efforts on these high-performing improvements and invest $50,000 in the property.

After the renovations, the house is worth about $350,000. The market appreciates at a rapid clip -- let's say 10 percent per year from 2000 until 2005. So, your property is now worth $563,678. If you had not done the renovations, your property would only be worth $483,153, or $80,525 less.

By making the improvements, you not only enhanced your enjoyment of the property while you lived there, you received an added bonus of more than $80,000 because you received appreciation on a more valuable asset. This assumes that the appreciation rate is constant across different price ranges.

Now that the resale housing market is slowing, does it still make sense to invest in home improvements? Not if you live in an area where the appreciation rate is waning and you're planning on moving again soon. Depending on where you live, you might only recoup 70 percent to 90 percent of the money you invested on renovations at the time of sale if you don't stay long enough to benefit from appreciation.

Read the entire Inman News article at Citywide Services

Sunday, September 03, 2006

Two-month bond rally hits bottom

Mortgage market commentary

The two-month-long bond rally has hit bottom. It's been fun: From a peak at 5.24 percent, the 10-year T-note made it to 4.73 percent yesterday, which has taken mortgages from just below 7 percent to just below 6.5 percent.

This morning's news that August payrolls had grown by 128,000 jobs was the rally killer -- the economy is slowing, not crashing. Bonds are way ahead of a chance for Fed easing; in the presence of current inflation numbers it cannot ease unless it sees a real threat to economic growth.

We might get some inflation relief from a decline in oil prices. One hint: on Tuesday morning, when Ernesto's forecast changed from Gulf to Atlantic impact, oil prices fell below $70 as soon as markets opened. To have so much money deployed in a weather wager is a reminder that as a betting parlor, the financial markets make Las Vegas look like a Christmas Club. There is an ocean of oil in storage, and the speculative owners may tire of hoarding.

Read the entire article at Citywide Services

Friday, September 01, 2006

Homebuyer Education I

The Lakeside Development Corporation will be offering its free seminar Homebuyer Education I on September 9, 2006.

Buying a home in today's market can be a confusing process. If you are a first time homebuyer, you need someone who can help guide you through the process and connect you with the information and services you need. In our first time homebuyer workshop, we explain how the home buying process works, how to determine what you can afford, and the pros and cons of different purchase options. We go over common terms, review the importance of credit, and point out how to save money by avoiding high interest and unnecessary fees. This workshop will save you money and it is provided for free.

The seminar will be held at Warren Park 6601 N Western Ave, Saturday at 10am. Please RSVP

Thursday, August 31, 2006

What to do when appraisal doesn't match purchase price

Most home buyers need a mortgage to buy a home. Before a mortgage is approved, the lender or mortgage broker usually hires an appraiser to verify the market value of the property. Ideally, the appraised value matches the price the buyer has agreed to pay.

When a property appraises for less than the purchase price, the transaction can be in jeopardy. However, a low appraisal won't necessarily stand in the way of the lender granting the loan if the borrowers are making a large cash down payment.

For example, let's say you agree to pay $1 million for a property, and you have $300,000 for a down payment. The appraiser puts a $950,000 value on the property, which is less than you've agreed to pay. You're a well-qualified buyer, so the lender is willing to give you a loan for 80 percent of the appraised value, or $760,000.

With a $300,000 cash down payment, you only need a $700,000 mortgage. So, the sale can proceed unless you have a problem buying a property that appraised for less than you agreed to pay.

Read the entire Inman News article at Citywide Services

Wednesday, August 30, 2006

Foreclosures of All Sizes Are Mounting

AMONG Westchester properties that have recently been forced into foreclosure are a $1 million house in Harrison, one costing $1.5 million in Scarsdale, a 1,850-dwelling condominium project in Yonkers that is $28 million in arrears, and a $75,000 house in Yonkers.

What they represent is the wide range of properties in the county that are in trouble, said Roger Sirlin, a lawyer in Mamaroneck who specializes in real estate.

Falling real estate prices, a faltering economy and loss of jobs have all contributed to the foreclosures, which number more than at any time in recent memory, Mr. Sirlin said.

Remembering the Downturns

Read the entire article at The New York Times

Sunday, August 27, 2006

How to Sell your Home in 5 Days

"The true value of the property will be discovered by the buying public"

This is not your tipical way to sell your house. In the new book by Bill Effros, "How to Sell your Home in 5 Days" outlines an auction-type method that users call a "round-robin" bidding process.

"In traditional real estate transactions, we start artificially high and work down," says George Cappony, a 5-day sale coach who runs the Web site "Here we start artificially low and let the market tell us what the house is worth." "It works just like on eBay. If I don't reach that [reserve], I don't sell the property."

The biggest financial advantage is that the method enables the seller to save on broker commissions and fees. And if the final sale price does not bring what the seller originally thought the house would bring, that may be due more to unrealistic expectations than a faulty method

Friday, August 25, 2006

Economy allays fears of huge home-price declines

Mortgages are stuck in a happy place, near 6.5 percent for the low-fee deals, the 10-year T-note's decline to 4.79 percent not enough to move the mortgage market.

At the moment, this whole six-week decline in rates rests on the assumption that the housing market is in a progressive collapse that will soon take the whole economy with it. The bond-betting housing bubblers have one big risk: the only bubble may be in the froth on their own Kool-Aid. Housing is slowing, steadily and a lot (sales of existing homes down another 4.1 percent in July, unsold inventories to a 7.3-month supply, last seen in 1993), but slowing in the real economy is undetectable.

July orders for durable goods rose a modest .5 percent, but on the heels of a big upward revision to June -- so strong that second-quarter GDP growth may be revised from mid-2 percent to 3 percent. The leading indicator for employment is new claims for unemployment insurance, and there is not the slightest upward flicker.

Yes, we're 17 Fed rate hikes deep, but from an emergency low, and now at a rate level at which the economy thrived in the 1990s. The big growth engine is global trade, growing so fast and in so many new ways (electrons!) that economic models and measurement can't keep up, let alone predict.

Read the entire Lou Barnes Inman News article at Citywide Services

Friday, July 21, 2006

Mortgage rates fall after Bernanke's speech

Fed chief says economy is 'moderating,' but outcome may be worse

The 10-year T-note is again falling toward 5 percent, and has taken low-fee mortgage rates to 6.75 percent

Newspapers today say that "mortgage rates rose" this week, but this factoid is based on Freddie Mac's bone-headed method of early-week survey and delayed (Thursday) release. Rates had risen in nervous anticipation of Federal Reserve Chair Ben Bernanke's Wednesday testimony to Congress, but fell instantly -- before he began to speak -- on release of his prepared remarks.

Bernanke's communication skills are improving: the testimony was as bland and even-handed as could be. However, the heart of his testimony, and the strong reaction in the bond and stock market, were odd. Bernanke, now repeatedly referring to a "moderating" economy, offered a forecast of GDP growth to decline from "3.5-3.25 percent in 2006 to 3.25-3 percent in 2007," and core inflation to decline from "2.5-2.25 percent in 2006 to 2.25-2 percent in 2007."

Oddity number one: a centerline decline in GDP growth of .25 percent from 2006 to 2007 is too small to measure, the insignificant over-the-weekend change in the waistline of a binge eater on a diet.

Number two: how would a .25 percent GDP moderation reverse the obvious inflation problem at hand? Bernanke seems supremely confident that if oil stabilizes here, inflation will gradually abate without economic sacrifice, and stock and bond markets gleefully agreed.

Number three: Bernanke indicated no particular angst that core inflation has crawled out of its 2 percent box. When one senator asked him his reaction to inflation above the 2 percent target, he snapped, "We have no target."

I think you get a post-testimony bond-buying surge like this only if the market believes that the economy is going to moderate a hell of a lot more than Bernanke's .25 percent, and that if the Fed goes to 5.5 percent on Aug. 8 it will result in deeper moderation -- ideally, a recession.

Now, there's nothing really odd about that line of thought. It is, after all, the standard, end-of-Fed-cycle, bond-market dream of Christmas. And, in the short run, the bond market is always more worried about the Fed than inflation. If the Fed sounds as tough is done, it's safe to buy bonds.

The deepest peculiarity here is the absence of caution in the market, especially the bond market. The worst moment for bonds in a hundred years was the 1970s, during which the Fed tolerated the gradually rising inflation pushed by energy costs, refusing to inflict the economic pain necessary to keep inflation in the box. Inflation ultimately spun out of control altogether.

Read the entire Lou Barnes article at Citywide Services

Sunday, April 30, 2006

'Roaring' economy hikes real estate rates

U.S. faces 'worst inflation risk in 25 years'

Strong economic data gave long-term rates a tough time this week, the 10-year T-note rising as high as 5.14 percent and mortgages threatening a lurch to 7 percent, but stabilizing in response to Fed Chair Ben Bernanke's we-may-pause remarks to Congress.

The long-term-rate lid has been clamped down by bond market expectations for an economic slowdown, and trust in inflation vigilance at the Fed. Both expectations had less foundation at the end of this week than at the beginning.

The economy is accelerating -- roaring, really. First-quarter GDP raced to a 4.8 percent gain on big spending by both consumers and businesses, its internal inflation indicator right at the 2 percent cliff-edge.

Housing was supposed to have faltered badly by now, leading a slowdown. Instead of falling, March sales of existing homes were steady; sales of new homes were supposed to flatten and instead surged 13 percent. Consumer confidence has sailed to a four-year high, consistent with a better and better market for jobs, ignoring three-buck gasoline. Orders for durable goods were supposed to rise by 1.6 percent in March and instead screamed to a 6.1 percent gain, plus a half-again revision for February.

That kind of growth has combined with $70-plus oil to produce the worst inflation risk in 25 years.

Read the entire Lou Barnes article at Citywide Services

Tuesday, March 21, 2006

Another Condo Hotel for Downtown Chicago

Developers propose a 65 story tower for Lake & Stetson

Here comes another one, the Mandarian Oriental Tower is the latest condo hotel offering. Located one block north of Millennium Park the project will have 250 condo hotel rooms and 150 residential condominiums. Prices start at $500,000.00 for a hotel room and $600,000.00 for a condo.

The complex is located one block east of Michigan Avenue and will have an address of 215 N. Michigan. They are able to use this address as part of Illinois Center.

Just got to have that Michigan Avenue address!

Monday, March 20, 2006

Real estate loan delinquencies could rock economy

Bond market may be the least of Fed's worries

Two weeks of rates-are-going-to-the-moon concluded in a disorderly reversal late this week. The 10-year T-note fell from its run to 4.8 percent almost to 4.6 percent, which in turn pulled mortgages back from the 6.5 percent brink, now close to 6.25 percent.

The bond market is operating in a Ben Bernanke vacuum. The Federal Reserve Board chairman has thus far not said anything about Fed policy (he will speak on Monday night, content optional), and in a void of that kind the bond market tends to lose its marbles -- descending into complacent snoozing, or panic at shadows. As of last week, deep in the latter, the market had convinced itself that the Fed would raise its rate to 5.5 percent or beyond (after a certain hike to 4.75 percent on March 28), and the 10-year T-note would move quickly through 5 percent.

That panic may turn out to be correct, but in the near term everyone brave or frightened enough to short-sell the bond market had done so by Wednesday. Surprisingly pleasant data then caught the shorts: CPI in February rose a meager .1 percent. Year-over-year CPI is still a tad high at 2.1 percent, but that includes the shock interval to $60 oil. There is some hint of rising wages, but also an off-the-bottom rise in newly unemployed. February industrial production rose .7 percent, but the whole gain came from utility production boosted by high energy prices and some cold weather.

Read the entire Lou Barnes article at Inman News

Monday, March 13, 2006

The Legacy at Millennium Park

Real estate around Millennium Park just keeps getting hotter. Sales have started at the proposed 72 story tower in Chicago's Loop. The Legacy at Millennium Park will contain 355 condominium units ranging in price from the mid $300's to $5 million. Check out the Legacy website.

Sunday, March 12, 2006

Appraisal Week in Review

Another week with assignments all across Chicagoland.

Monday's assignment was for a refinance on a 53 year old two story house in Chicago's Mount Greenwood neighborhood. On tuesday it was up north to Beach Park to remove PMI on a 6 year old split level. On wednesday it was back to Chicago to refnanance a loft condominium on the Near South Side. On thursday it was a sale of a gut rehabbed two story in Chicago's North Center neighborhood. Friday to South Holland for a 50 year old bungalow home. And to end the week we did an equity appraisal of a 147 year old farmhouse in Channahon.

Long-term Mortgage Rates Highest Since September 2003

McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.37 percent, with an average 0.6 point, for the week ending March 9, 2006, up from last week's average of 6.24 percent. Last year at this time, the 30-year FRM averaged 5.85 percent. The 30-year FRM has not been higher since September 5, 2003, when it was 6.43 percent.

Saturday, March 11, 2006

New Sales Center for Trump Tower Chicago

The Trump Tower Chicago has opened a new sales center on the 20th floor of the IBM building at 330 N. Wabash. Designed to give prospective purchasers a view similar to that of the proposed Trump Tower under construction at Wabash and the Chicago River.

The 92 story Trump Tower Chicago will contain condominium hotel units as well as residential condominiums that range from studio to five bedroom homes. Click here for a PDF brochure.

Check out their website for what is being slated as the hottest thing in River North.

Real estate rates could hit 7% by summer

Fed's inflation fight gets more complicated

The high for mortgage rates in '03, '04 and '05 was 6.5 percent; we're almost there, and likely to rise above. The word "seven" may be in vogue by summer.

February employment data confirmed a solid economic expansion underway, and a new pattern of wage growth on top of energy-price pressure is pushing the Fed from a neutral rate target toward a restrictive one. Late in all Fed tightening cycles the bond market comes to the depressing conclusion that the Fed will keep going forever. It won't, of course, but a market convinced that the Fed would almost be done at 4.75 percent on March 28 now faces a sure-thing 5 percent in May, a probable 5.25 percent in June, and an ultimate stopping point higher than that.

Reade the entire Inman News article at Citywide Services

Monday, March 06, 2006

Real estate rates may soon succumb to global pressure

How Germany, Japan impact U.S. bond market

Long-term Treasury rates broke out of a month-long range…upward, and today above last November's two-year high at 4.68 percent. Mortgage damage is modest for now, fixed-rate loans still within sight of 6.25 percent, but we are going higher.

The source of pressure is global, having nothing to do with new domestic economic data. The rate rise on Thursday was, if anything, limited by weakish news: February retail sales disappointed, consumer confidence continued to sag, home sales slid for the fourth-straight month, and long rates rose anyway.

Global: the European Central Bank raised its cost of money for the second time, from 2.25 percent to 2.5 percent, and signaled that more hikes are coming. Inflation in Germany is running 2.7 percent; all modern central banks are trying to hold it below 2 percent.

Global: Japan's consumer prices appear to have risen for the first time in a half-dozen years. During that time the Bank of Japan has kept the cost of money at zero, trying to get out of a deflationary spiral that began 15 years ago. The BOJ this week said that it will soon reinstate a cost of money –- no matter how low, a shock.

Yields rose on all bonds everywhere in response to these changes in foreign central bank outlook, German 10-year bunds to 3.6 percent, and the 10-year JGB to 1.64 percent (after years and years 1.5 percent or lower).

Reade the entire Lou Barnes article at Inman News

Sunday, March 05, 2006

Appraisal Week in Review

Another week in the life of an appraiser. This week I had six residential assignments. The purposes of these appraisals were as varied as the properties and neighborhoods they were located in.

Monday I inspected a condominium in Chicago's Streeterville neighborhood. This combination of two units was being appraised for estate purposes.

On Tuesday the assignment called for the appraisal of a 113 year old home in the Lincoln Park neighborhood. Located in a red hot area of tear downs and rehabilitations, this home had been completely gut renovated and had an appraised value of 2 million. The purpose of this appraisal was a refinance.

My next job was for an older single family home in Evanston. The purpose of this appraisal was to establish market value prior to listing the house for sale.

On Friday it was to the Lakeview neighborhood for a high rise condo facing Lake Michigan, then on to Roscoe Village in the North Center neighborhood to inspect a tear down property for a builder.

On Saturday I had one appointment at a single family home in Chicago's Edison Park neighborhood. This is another red hot teardown market. The purpose of this appraisal was to remove private mortgage insurance.

Thursday, March 02, 2006

Katrina Cottage
 Posted by Picasa

Modular Housing for the Gulf Coast

The cute, cozy proposed alternative to the Federal Emergency Management Agency hurricane relief trailer along the Mississippi Gulf Coast could also be a huge boon to the second home and retirement home markets around the country.

Representatives from the Mississippi rebuilding effort have begun a huge recruiting effort to bring builders, suppliers, interior designers, developers and architects to the state's 11 coastal communities to help put its hurricane-devastated coastline back together.

Officials say they can build the cottages for $30,000. With help from pre-fab companies that specialize in modular and manufactured homes, coupled with the efforts of conventional "stick" builders, the structures can be put together quickly for about the same price as the temporary trailers deployed by FEMA for emergency housing.

Read the entire Inman News article at Citywide Services

Wednesday, March 01, 2006

Recession talk makes comeback

Bond giant makes 'good case' for real estate slowdown

Mortgage rates are still within a closing-cost argument of 6.25 percent, held stationary by 10-year T-notes locked in trading between 4.5 percent and 4.6 percent.

The bond market is in a total standoff: fears of an overheating economy and energy-pushed inflation are matched by belief that a rapidly cooling housing market will slow the economy. In the slowdown equation, it doesn't matter how high the Fed pushes short-term rates; the farther it does, the quicker and more the economy will slow, and the more money that owners of bonds will make in the slowdown.

Fed Chairman Ben Bernanke says GDP growth this year and next will be in the 3.5 percent range. If so, with unemployment low and falling, energy price pressure still high, a 5 percent Fed funds rate (up from 4.5 percent today) would be the soul of prudence. PIMCO, the giant of bond-market mutual funds, fee-fie-foe-fums that GDP will slow to 2 percent before the end of 2006. If the economy is in the early stages of that slowdown, then 5 percent Fed funds would be an even-money recession bet.

Read the entire Lou Barnes article at Citywide Services.

Saturday, February 18, 2006

Fed plans more rate hikes

Economists brace for fallout from mortgage, construction sectors

Mortgage rates stayed near 6.25 percent this week, but gradually improved in the face of upward pressure from all news.

January economic data have been red hot, but so was the weather, and we really can't tell the extent of distortion by the warmth. The employment gain, the best month for retail sales in five years, the surge in new-home starts and construction permits, today's wholesale "core" prices up by double the Fed's target -- that combination should have pushed long-term rates to new highs.

Did not. The 10-year T-note approached the highs of last November, a now-crucial 4.68 percent, and fell back, by this morning all the way to 4.51 percent.

The whole world of finance paused for Fed Chairman Bernanke's first command performance on Wednesday, ready to buy, sell or hide on any hint of policy change. From the early-morning Web-posting of his remarks, to the end of Congressional questioning, the bond market stayed unchanged. Not a flicker.

Read the entire Lou Barnes Inman News article at Citywide Services

Friday, February 17, 2006

Home prices will barely budge in 2006

Chicago can expect a 0.6% price increase!

According to the latest housing price forecasts from Fiserv Lending Solutions, a provider of mortgage and consumer lending services, Las Vegas real estate will tumble a whopping 8.2 percent in 2006, the largest predicted fall among the 379 metro areas studied.

Fiserv forecasts a significant stagnation in housing prices for the United States in 2005; median home prices overall will inch up only 1.5 percent this year.

And many metro areas will experience drops, including some of the largest, and most expensive, ones such as New York, down 2.43 percent; Los Angeles, 3 percent; and Washington, D.C., 1.9 percent.

Read the entire article at

Thursday, February 16, 2006

May be you need a second Zestimate of value!

Miller-Samuel's Jonathan Miller has some comments on AVM's and Zillow.

"A few months ago, a national lender told me that out of the 10 major automated valuation services (AVM’s), 8 were totally unreliable, 1 was marginal and 1 was pretty good. This lays the groundwork for my initial skepticism about Zillow, but I am open minded. I think it will evolve and will have more strength in certain markets than others depending on the data they are fed."

Read the entire story at

Wednesday, February 15, 2006

Need a property value? Get a Zestimate!

You just have to check out This is a new website that gives you a free AVM on any piece of residential property in the USA.

AVM is short for an Automated Valuation Model. AVM's have been touted as the next best thing to sliced bread. They give you the value of a piece of real estate in an instant, without the time and expense of an appraisal. Except they are not an appraisal.

Zillow calls their product a Zestimate! And they are free!!. This is the brainchild of Richard Barton, the man that brought you I don't know what the grand plans for Zillow are but they are getting real estate brokers licenses across the USA. It seems like they are going after the full service real estate company's.

The website just went live last week and already I had several calls from mortgage brokers telling me that says a house is worth "this and that" and they need this value to make their deals work. Yea these guys say so and it must be true! Except its not an appraisal.

AVM's take into account information that is available in public record. They track recent sales in a neighborhood and based on some secret formula, they are able to come up with a value. Banks use AVM's as support for low loan to value transactions. Such as you own a $550,000.00 house with a $175,000.00 existing mortgage and now you want to borrow 10 grand. So the value is off by $50,000.00, who cares?

The difference in having an appraisal is that a licensed professional will see the property. Individual homes vary widely in modernization and condition. The appraiser will select comparable's that are truly representative of the home being appraised. In addition the appraiser will verify that the comparable sale was an "Arms Length Transaction" and the sale was from the open market. Just a few things that a computer cant do.

So go to and get a Zestimate, Hey the price is right! Just don't call it an appraisal.

Sunday, January 22, 2006

View MLS Listings with Google Earth Posted by Picasa

Using Google Earth to Sell Chicago Real Estate

Now you can use the power of Google to search for Chicago Real Estate!

Prudential Preferred Properties has launched a plugin for Google Earth along with a Google Maps interface that will both allow you to search MLS listings in a manner never before possible.

To download the application go to Prudential Preferred Properties

Saturday, January 21, 2006

Real estate rates stuck in neutral

Markets hold all bets until new Fed chief's commentary

Mortgage rates are still in the same narrow band they've been in since the holidays: 6.125 percent, plus or minus a debate about closing costs, but no points and no origination fee.

This narrow range should not be confused with stability.

In the last two days, concerns about Iran have overwhelmed everything; but, before laying out the market implications of that one, everything else first.

At the top of the list of standard economics is the standoff between the bet on economic slowdown and the one that all is well. In late December, bond yields fell in growing belief that a slowdown was inevitable, the Fed was not merely going to stop its campaign but would have to reverse, and the only question for 2006 would be how steep the slowdown. Everybody else -- economists, stock-market heroes, small-business execs -- disagrees.

The bond (and hence, mortgage) market is stuck, waiting for data to show who is right. On the good-news side, December industrial production rose .6 percent, on target, and capacity in use rose to 80.7 percent, the best figure since 2000. New claims for unemployment insurance fell a surprise 36,000 to 271,000, also the best number since 2000. The slowdown side expects an abrupt cooling in the housing market, and the newest data supports a cool-off: December housing starts fell twice as far as the already-weak forecast, down 8.9 percent, and new permits fell 4.4 percent.

On net, the week's good-news-bad-news data were a standoff.

Read the entire Lou Barnes article at Inman News

Friday, January 20, 2006

How to maximize tax savings on second home

If you or someone you know is among the millions of taxpayers who own a secondary residence, you can maximize tax savings from your vacation or second home. Depending on your personal use time, a bit of advance tax planning can result in saving hundreds or even thousands of tax dollars.

Read the entire Inman News article.

Thursday, January 19, 2006

Wynant House looks like a total loss Posted by Picasa

Wilburt Wynant House destroyed by fire

One of the last remaining examples of Frank Lloyd Wright's venture into precut homes was destroyed by fire January 9, 2006. The Wilburt Wynant House at 600 Fillmore in Gary, Indiana was an example of a American System Built Home. At the time of the fire the Wynant House was in the process of restoration by a nonpofit group.

I drove out to Gary this afternoon to see what remains of the Wynant House. Fire has gutted the entire structure. It would be nice to believe that it could still be saved, but I think its a total loss.

Preservation Online noted that the two-story stucco house was one of only 11 of Wright's American System-Built houses, an affordable modular line the architect produced with the Wisconsin-based Richards Co. The Wynant House was the last model of its kind.

Read the entire Margaret Foster article at Preservation Online

Wednesday, January 18, 2006

Must-have home features of 2006

Dropped ceilings, awnings, wallpaper fail to make the cut

Nearly three decades ago, hardwood floors were the absolute rage. They were the first home features highlighted by real estate salespersons and the most popular "standard" item builders would include in mid-level construction packages.

Hardwood floors may no longer be on the leading edge of home design but agents say quality and durability will continue to outsell trendy every time in residential real estate.
Mark Nash, a Chicago-based Coldwell Banker broker and real estate author whose book "1001 Tips for Buying & Selling a Home" is a helpful guide for consumers considering the residential market, has compiled a list of what's "in" for housing this year--and what is definitely "out." The list is a result of input from Realtors from around the country who, in turn, have solicited feedback from home buyers and sellers as they visit resale and new homes.

Leading the "out" column has nothing to do with tasteless interiors or boxy exteriors. Topping the chart is any more discussion about a possible housing bubble. Most analysts--including David Lereah, the National Association of Realtors chief economist--concur that no national bubble exists, that any bubbles must be regional, and point to poor local employment figures as the reason. There will be flat appreciation in some areas but sales will remain strong nationally.

Read the entire Tom Kelly article at Inman News