Monday, December 31, 2007
Taking this chance on New Year's Eve to look back at 2007 I decided to post a few statistics on Chicagoland real estate obtained from the Northern Illinois MLS. In 2007 there were a total of 55,720 detached home sales and 42,785 attached homes and condominium sales. This gives us a total of 98,505 sales in the single family market. On average that breaks down to 8,208 sales per month on an annual basis.
The total number of active listings as of December 31, 2007 was 53,838 detached homes, and 33,302 attached homes and condominiums. The total number of active listings in the MLS is 87,140, and that's a lot of listings. On an average basis those listings, represents a 10.61 month supply of available inventory. Good news if you are a home buyer, bad news if you are a seller.
When we say that the real estate market is in "Balance" this means a 3 to 4 month supply of inventory. A 10+ month supply of available inventory is known as an "Oversupply". Expect sales prices to decrease as the market is out of balance, at this time there are more sellers than buyers.
The market has changed and only the most competitively priced homes will be selling soon. How to be sure that your listing is competitive? Get a current appraisal.
Sure it costs $275, however, this is a small price to pay for knowledge that will help you position your house in the current market.
On January 1st we start the long process of our market analysis on the Chicago area. I will be posting the results daily here at the Chicago Real Estate Blog. Check back often I am sure you will find it informative.
Hotline for help - an existing hotline that homeowners can call for assistance.
"And let me say to those listening out there: If you are worried about losing your home, call this number, 888-995-HOPE, to see if you are eligible for assistance,"
Sunday, December 30, 2007
Well it's Sunday morning December 30, 2007, there's a very interesting article in the Chicago Sun-Times real estate section,written by Sally Duros. entitled Goodbye 2007, hello 2008.
The point of the article is that as bad as it is out there, things in Chicago are not near as bad as we find in California, Florida and New York. I agree with that, now on to some of the stated statistics.
"To prove a point, the latest data from Standard & Poor's/Case-Shiller home price index shows home prices falling nationally in October for the 10th consecutive month, posting their largest monthly drop since early 1991. But here in Chicago, home prices dropped only 3.2% in October 2007 from October of 2006. This was less than half the record national rate of 6.7%"
Now does this mean your house has only dropped 3.2%? Unfortunately, No.
Statistics are great, they deal with what is called a "Sample" of a "Population", In this case the sample is Chicago homes out of the population of national real estate.
In Chicagoland most real estate has declined in value in the last year, some is still stable and some sub-markets may still be appreciating. The problem with a large sample is it does not zero in on your neighborhood and your property type, which may have reacted to these times in a much different way than the whole of Chicagoland.
So starting January 1, 2008, I will examine the Chicagoland real estate market at the neighborhood level. My source will be the data from the Northern Illinois Multiple Listing Service. Using this neighborhood level sample I will report on Average Sales Prices, Average Days on Market, Absorption Rate, Current Active Listings and the Number of Months of Unsold Inventory.
These detailed statistics will give you a better insight into your neighborhood, and what to expect in 2008.
Happy New Year -- and its ugly out there.
Saturday, December 29, 2007
New-home sales declined 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995. In the Midwest, new-home sales plunged 27.6 percent in November from October.
"I think you can classify what we are seeing in the housing market as a crash," said Mark Zandi, chief economist at Moody's "Sales and home prices are in a free fall. The downturn is intensifying."
Tuesday, December 25, 2007
Wednesday, December 19, 2007
Appraisal on the Near North Side
This morning I had the opportunity to inspect one of the new condominiums at 600 N. Fairbanks in Chicago, Il. 60611
This 41 story building contains 212 units and was designed by Helmut Jahn architect. If you want one, better hurry as 207 units are sold already.
Monday, December 17, 2007
A slow market is perceived as an opportunity by some buyers, as it takes longer for listings to sell. The inventory of unsold listings tends to grow, giving buyers more choice than is the case in a hot seller's market when listings sell quickly.
In a high-inventory market, there are usually fewer multiple offers so buyers can cut a better deal with the seller. However, it pays to be careful about what you buy and how you finance the purchase.
A risk of buying in a slow market is that the value of what you buy might drop before it rises. Or, prices could stay flat for some time, which means that you won't build equity unless you pay down principal on your mortgage. If you should have to move during a time when prices are soft, you might not be able to sell for the amount you paid. To decrease this risk factor, don't buy for the short term.
All good things to consider in today's market.
Sunday, December 16, 2007
In as strange a stew of news as you'll ever see, mortgage rates have risen close to 6.25 percent, led by the 10-year T-note's leap from 3.85 percent to 4.25 percent.
Beginning two weeks ago, the financial markets began to trade on the prospects for government bailout of a fibrillating financial system. Then, yesterday, new economic data whiplashed them from preoccupation with financial failure to worry about inflation.
Last first. The data surprises: reasonably healthy retail sales for November; a full stop to the rise in new claims for unemployment insurance (i.e., no increase in layoffs); a modest 0.3 percent gain for industrial production; and awful inflation numbers. November CPI jumped 0.8 percent -- 4.3 percent year-over-year -- and the all-important "core" rate rose 0.3 percent, way out of the Fed's 2 percent annual range. $95 oil will have is effects.
"Trade on prospects for government bailouts ..." Wahazzat?!
Sunday, April 08, 2007
As you can see we work Citywide
Wednesday, April 04, 2007
Further, "the 15-year fixed-rate mortgage fell 1 basis point, to 5.92 percent. The 5/1 adjustable-rate mortgage fell 3 basis points, to 6.05 percent."
Read more at Bankrate.com
Upward pressure continues on long-term rates: the 10-year T-note at 4.65 percent has jumped the March range, and mortgages are at risk to lose the 6.25 percent level.
The economy has slowed to growth near 2 percent, but shows no sign of serious impact from the housing recession. This morning, personal income and spending each rose by .6 percent in February. Construction spending, expected to drop, instead rose .3 percent.
Weekly applications for mortgages are holding in a steady band. If a mortgage credit crunch were beginning to bite, we would see a decline by now. Refinance apps are running stronger than would be explained by interest-rate-advantage models, indicating that large numbers of ARM borrowers are successfully escaping their upward resets.
The corporate sector is showing some stress: earnings are falling, many estimates calling for mid- to low-single-digit growth, a small fraction of performance in the last several years. Capital expenditures are unexpectedly weak, orders for durable goods in a sustained decline. However, balance sheets are strong, and after a long run the downshift could be no more than a cyclical wobble.
The consumer is king: If spending and job growth continue (the payroll numbers next Friday are crucial), then GDP growth will continue. At a subdued rate, but given the Fed's hope for gradually declining inflation, the ideal outcome.
If growth and inflation behave, fine. However, what if inflation does not "gradually decline," as in Fed forecasts since summer 2006? Will the Fed have the courage to choose inflation-fighting over GDP preservation?
The immediate answer is not so hot: long-term rates broke upward during Federal Reserve Chair Ben Bernanke's Wednesday testimony to Congress.
Read the entire Lou Barnes article at Citywide Services
Sunday, April 01, 2007
In addition I saw homes in Round Lake, North Riverside, Chicago Heights and Thornton.
Saturday, March 31, 2007
Whether you are a home buyer or seller during the peak 2007 spring home sales season of April through June, you will probably encounter the term "as-is" sale. Just as used-car dealers sell thousands of automobiles "as is" without any warranty or representations, houses and condominiums are sold using the same term.
But an "as is" home sale is different. Thanks to state laws and court decisions, a real estate "as is" sale is far more complicated than the sale of an "as is" used car.
An automobile "as is" sale means "buyer beware." However, the best way to describe a real estate "as is" sale means "trust, but verify," as the late President Reagan said many times when referring to political situations.
WHAT IS AN "AS IS" HOME SALE? Simply stated, an "as is" home sale means the seller must disclose to the buyer all known defects, but the seller will not pay for any repairs.
Does an "as is" home sale mean the seller doesn't have to disclose known defects and can conceal them, as the seller of a used car might do? The answer is "definitely not."
Although two or three states still seem to follow the old common-law rule of "caveat emptor" (let the buyer beware), the modern law today in most states has evolved to "Let the home seller beware of the buyer and the buyer's lawyer."
In other words, even "as is" home sellers must reveal to the buyer all material defects of which they are aware. But "as is" sellers do not have to make any warranties or representations, and need not pay for any repairs to correct material defects.
WHY MANY HOMES ARE SOLD "AS IS." The reason many older homes are sold "as is" is because the seller doesn't want to pay for any repairs.
For example, if I were selling my house "as is" today, I would have to disclose the wood garage door is slightly warped and doesn't close tightly. As an astute buyer, you would surely observe this 1-inch gap at one corner. But the automatic door opener functions well and does its job. I would leave it up to the buyer to decide if he or she wants to install an expensive new garage door, but I'm not going to waste money repairing or replacing the still-good existing door.
There are at least four major reasons some home sellers want to sell "as is": (1) the seller doesn't have the money to correct the disclosed defects and prefers to let the buyer fix the problems; (2) the buyer is likely to renovate an older "fix up" house so the seller would be wasting money on minor repairs; (3) the seller has owned the house many years and doesn't insist on earning top dollar; and (4) the seller doesn't want the hassle and inconvenience of fixing the problem.
Possible additional reasons for "as is" home sales include the seller (1) recently acquired the residence by inheritance or purchase and is reselling for a quick profit; (2) hasn't lived in the property and is not aware of its problems; and (3) doesn't want any responsibility for fixing problems that might occur after the sale closes.
HOME WARRANTY POLICIES OFFER LITTLE PROTECTION. When purchasing an "as is" house, buyers should not be lulled into a sense of security if the seller offers a one-year home warranty policy as a sales incentive. Such policies have many exclusions and offer little real protection against serious home defects.
Home warranty companies are "pros" at using the pre-existing-condition exclusion. Although they are eager to accept the seller's or realty agent's policy cost of $400 or more, these companies are notorious for refusing to repair or replace items by claiming the defect existed at the time of the home sale but was not yet manifest. Buyers who collect anything from a home warranty company should consider themselves very fortunate.
HOW "AS IS" HOME BUYERS CAN PROTECT THEMSELVES. Knowing the key reasons many home sellers elect to sell "as is," home buyers can benefit from such sales if they know how to protect themselves. Rather than reject such a home sale, usually advertised "as is" in the local MLS (multiple listing service), savvy buyers welcome such profit opportunities.
The best way for a buyer to protect against an unscrupulous seller who "forgot" to disclose a serious but known home defect is for the buyer to include a professional inspection contingency clause in the purchase offer.
Buyers of every house and condominium should include such an inspection clause making the purchase offer contingent on the buyer's approval of their professional home inspector's report. That means, after the home seller accepts the buyer's purchase offer, the buyer hires a professional inspector and then approves or disapproves their written report.
Home buyers should be wary of inspectors recommended by the real estate agent. Such an inspector might be known as "easy" and not a "deal killer." Ask such inspectors recommended by a realty agent about their experience, background and professional memberships.
An excellent credential is an experienced independent inspector who belongs to one of the professional home inspections organizations. Personally, I recommend members of the American Society of Home Inspectors (ASHI) because of their tough membership requirements. Local ASHI members can be found at http://www.ashi.com/ or 1-800-743-ASHI.
WHEN "AS IS" MEANS A BARGAIN PURCHASE. As explained, there are many legitimate reasons for selling a house or condo "as is" after all known defects are disclosed so the buyer can consider them when making a purchase offer.
Many home sellers are not fully aware of their home's defects. For example, years ago I bought a run-down, fixer-upper, "as is" house that obviously needed work. It had been listed for sale at least six months. The seller was an estate. Noticing many defects, I made a very "lowball" purchase offer, thinking it would be rejected. To my shock, it was accepted.
But my offer included a professional inspection contingency clause. I accompanied my professional inspector, as home buyers should always do. He discovered several problems of which I was not aware. We discussed them and he estimated the approximate repair costs (ethical home inspectors are not in the repair business but they usually know if a problem is expensive or inexpensive to fix).
When I received the complete written inspection report a few days later, I showed it to the listing agent. He asked me point blank "OK. How much of a repair credit do you want?" Based on my inspector's very rough estimate, I said $25,000. Later that day, the estate representative agreed to a $25,000 repair credit, which more than covered my fix-up costs.
"AS IS" HOME-BUYER ALTERNATIVES. Even when buying an "as is" home where the seller fully discloses all known defects, as in my home purchase explained above, a professional inspector will often discover unexpected serious defects. When that happens, the buyer has several alternatives.
One is to cancel the purchase and obtain an immediate full refund of the buyer's good faith deposit. But a better alternative is to use the professional home inspector's written report to re-open negotiations to obtain a repair credit for the estimated cost of correcting the unexpected problems.
Especially in a slow "buyer's market," many home sellers are so glad to receive any purchase offer they will gladly agree to credit the buyer with the estimated repair cost.
A repair credit is usually better than a price reduction because the mortgage amount is usually not affected. Another advantage of a repair credit is the buyer can shop around after the sale closes and often reduce the actual repair cost.
SUMMARY: Just because a house or condo is offered for sale "as is" does not mean it should automatically be rejected. But buyers should be very cautious of "as is" sales, realizing the seller might not have disclosed all known defects.
However, savvy buyers insist on a written disclosure of all known defects and a purchase offer contingency clause for the buyer's approval of a professional home inspector's written report. For more details on "as is" home sales, please contact a local real estate attorney.
Read more Bob Bruss Inman News at Citywide Services