Living in Lincoln Park Blog

I’ve been talking about this on & off over the past several months - the media’s fascination with bad news and making it sound like the bottom has fallen out of the housing market, and now the ecomomy in general. No doubt there is a lot of anxiety and uncertainity about the economy, the hjousing market, unemployment, etc, etc…and some parts of the country have been hard hit in multiple sectors. As quoted in the linked article,

“We’re over-reacting to the recession word,” Dow Chemical Chairman and CEO Andrew Liveris told CNBC. “Lots of people get together and talk to each other and people believe the psychology.”

“It feeds on itself,” says Jim Awad, chairman of JW Stewart Asset Management. “You can’t go home every night and hear this and then go out and hire someone or buy a car.”

“The economy is still sorting itself through,” Liveris told CNBC. “I wouldn’t do the ‘Chicken Little’ thing.”

As I discuss with my real estate clients, we might be bordering on some challenging times, but I also think there are some great signs for a turnaround, or at least a stabilization. Interest rates are low, housing prices in Chicago are stable to decreasing and there are a lot of people looking to buy a home.

Even the federal government is involved in trying to provide some help and relief. The Hope Now proposal is a work in progress that might help. Here’s how it would work:Under this proposal, the government would allocate as much as $20 billion up front. It would use those funds to buy up mortgages from investors in a reverse-auction process, at prices below the face value of the loans. In a reverse auction, sellers compete against one another, slashing prices until a buyer - in this case the government - says yes to a deal. Toread the full story, click here

 On this front, I’m curious, what do you think about the subprime debacle. Post your comments whether you’re for or against federal intervention and to what extent.

I look forward to seeing the responses… 

I, along with I’m sure many of you, am very frustrated with the current economy and lending issues. In Chicago, real estate taxes have gone up to keep the city building & growing. The sales tax was increased, again to keep the city building and growing. The city transfer tax on the puschase of real estate was increased to fund the CTA pensions, who is paying this last increase is yet to be determined. How far can a dollar stretch?

Now, with the failing of Bear Stearns (which has been wrestling with this problem for some time), we as a society are bailing them out. Are they failing due to greed?, bad judgement?, bad timing?, or poor management? I’m sure their failure would have a substantial domino affect on many other companies in many industries, but isn’t that the risk/reward of free enterprise?  It seems that financial institutions are able to do business in a no risk envirnoment!

The Fed is trying to help by cutting the rates, but so far it has helped the banks make investment purchases to help shore up their bottm line - important in the scheme of things. Eventually, I suppose, those lower interest rates will trickle over to the consumer that is on the verge of a short sale or foreclosure on their home.

I am hopeful that our government will come up with some plans that will actually help those individual homeowners in their time of need. There are real estate investors and second home owners that have found that their decisions may not have been so sound. As difficult as it may be, I hope the consumer bailout will be able to weed out the investor/second home owner and focus on those whose primary dwelling is at risk.

I suppose my hopes are a little too idealistic, but isn’t that where it starts…?

I thought this was already a done deal, but maybe this will help. It will take effect in November. Call the number below and voice your opinion…are you for or against the proposed new retail tax hike. Whether you live here or enjoy visiting, this will have an impact on your enjoyment of the city, but it will affect the retailers as well. 

CALL 1-312 -603-6400.  press1, then 2, then 2.   It only took about 15 SECONDS to punch in my vote. Who wants to pay 10.25% SALES TAX?  The county is planning the increase for November.  This will have a negative effect on the lives of consumers in Illinois and, obviously, on retail businesses as this will make ours the highest sales tax rate in the country.  Please call- and forward this to your friends. 

The city is attempting to raise the transfer tax a buyer pays at the time of closing on a residential real estate purchase. Currently, the buyer pays $7.50/$1000 of the purchase price and now they want to raise it to $10.50/$1000. it’s said that it will go to fund the CTA pensions.

An excerpt in a press release from the Chiacgo Association of Realtors states “Taxpayers in the Chicago region have been under siege in recent months, with more than $800 million in new taxes coming out of their pockets. This impacts people and businesses alike, and adds a level of uncertainty to the economic competitiveness and jobs climate of our region,” added Chicagoland Chamber of Commerce President and CEO Jerry Roper. “These elected officials are making the unfortunate choice to push through tax increases when our national economy is struggling and our local economy needs a boost.”

Let me know your thoughts…Is it the wrong tax at the wrong time?

We’ve all read and heard about how bad the real estate market is. some parts of the country are getting hit very hard. But the Chicago market, “While the national median price of a home sold in October was 5.1% lower than a year ago, Chicago-area homes experienced a 3.1% increase, to $250,000. Half of the Chicago-area homes sold in October were below $250,000 and half were above that amount. The median price last October was $242,500. The median home price throughout the state fell 1.5% to $195,000 from last October. Average sale prices for both the Chicago area and the state were up. The Chicago average rose 9% to $328,057 from last year and the state average rose 4.5% to $259,031 from last year.” Not bad amongst all the gloom & doom!

Personally, I find it to be not only a great time to be a buyer, but a seller as well. Interest rates dropped last week and there is a fair amount of inventory to choose from. Plus, sellers trying to sell their home this time of the year have a tendency to be more realistic and motivated then perhaps other times of the year.

From the sellers’ perspective, pricing their home correctly is critical. There are a lot of serious buyers looking for a fair deal on their new home and a correctly priced home increases the chances of find one, or more of them.

From either side of the equation, it’s a managing of expectations. Fair minded buyers and sellers tend to find one another and put together deals that work for everyone.

If you’re curious as to how Lincoln Park or any other Chicago neighborhood is fairing in this current real estate market, jus shoot me an email and I will be happy to provide you with a market snapshot.

The highs and lows of 2006 are expected to level out.

Home buyers and sellers receive good news as more experts are anticipating a leveling housing market for 2007. In addition to home sales and prices, it looks like interest rates may also be stabilizing. Freddie Mac released its weekly United States survey stating that 30-year mortgage rates have remained unchanged in more than a week. Other loans, such as the 15-year fixed-rate mortgage, only saw very slight increases.

In her recent MarketWatch article, Amy Hoak explains that the leveling out of the home market is primarily due to a “healthy correction”. In other words, the slow down we saw during much of 2006 was due to buyers continuing to wait to get the best home prices, even after a majority of investors, who many argue were somewhat responsible for the massive housing boom, tried to exit the market. This caused a slow down in overall home sales.

Will 2007 be a Buyers Market?
Sellers will see less monetary gain from home sales

Although a more stable housing market in 2007 is expected, some experts say that there are many months ahead before the housing market gets back to “normal”. Although home sale prices are expected to rise slightly, actual price gains on property will remain relatively smaller than most sellers would like.

According to National Association, median existing home prices are expected to rise 1.7 percent next year, while new home prices are expected to rise 1.3 percent.

For buyers and sellers alike, this means now is not the time to try to flip homes quickly to make a profit. Take your time, do your research and find a home that’s a good value and likely to resell well in the future. It’s also a good idea to start looking into getting approved for a mortgage now. Getting pre-approved helps you get more leverage in negotiating for the property you do want once you find it.

Courtesy of:
Mary Markis
Perl Mortgage
312.651.5357
Mary@MaryMarkis.com

In any given year, in any given housing market or geographic location, certain types of remodeling projects demonstrably return more of their installation costs at the time of resale.  A higher percentage of those installation costs can be recouped in a strong housing market, of course. But, you get the picture. 

Knowing what types of home improvements are most likely to return the highest amount in YOUR area, can help you make more informed choices about where to invest your remodeling dollars.

Call or email me and we can discuss how you may benefit from home improvements to your house.

While the data presented here can help set expectations for homeowners contemplating remodeling work, some figures will appear too high or too low simply due to the leveling effect of averaging. It’s also important to acknowledge a variety of factors that can affect both the cost of remodeling and the resale value of homes.