As Rates Hit Another Record Low, Chicago Housing Remains An Affordable Opportunity
January 27th, 2012 categories: Chicago Real Estate News
It’s becoming repetitive, but it’s still good news for home buyers: Mortgage interest rates hit yet another new low last week.
It once was rare for mortgage interest rates to fall to historic lows. Now it seems to happen every week. Last week was no exception. According to a feature story in the Washington Post, the average mortgage interest rate on a 30-year fixed-rate mortgage dropped to 3.88 percent last week.
Citing Freddie Mac numbers, the Post story reported that the average interest rate on a 15-year fixed-rate mortgage stood at 3.17 percent. That’s a pretty low number. Surprisingly, though, it’s not an all-time low. Just the week before, the average interest rate on a 15-year fixed-rate mortgage loan came in just a tick lower, 3.16 percent.
These low rates are important because it makes borrowing money to finance the purchase of a single-family home or condominium far more affordable. Consider this equation: If you took out a 30-year fixed-rate mortgage loan to buy a condo or single-family home in Chicago, you’d pay just more than $1,097 a month if the interest rate on that loan was 7 percent. But if the interest rate on that same loan fell to last week’s average — 3.88 percent — you’d pay just more than $776 a month.
You don’t have to be a mathematical genius to realize that this represents a significant amount of savings. The savings are especially dramatic in markets in which housing prices tend to be higher, like in Chicago neighborhoods such as Lincoln Park and Lincoln Square. When you spend more on a house, the lower your mortgage interest rate falls, the more savings you’ll realize each month.
I’ve said it before, but it bears repeating: This remains a tremendous time to buy a single-family home or condominium in Chicago. Housing prices here remain affordable, and with interest rates lower than ever, borrowing money for a mortgage loan is even more of a bargain.
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December Numbers Provide Strong Finish To Chicago Home Sales In 2011
January 25th, 2012 categories: Chicago Real Estate News, Economic Recovery, FSBO's, For Homeowners, For Sellers, Housing Market
Though 2011 wasn’t the strongest year for Chicago existing-home sales — they were actually down 7.2 percent from 2010 — December, at least, closed the year off strong.
According to the latest home sales numbers from the Illinois Association of REALTORS®, December, 2011, existing-home sales in Chicago hit 1,536, up 6.4 percent from the 1,444 homes sold in the same month one year earlier.
The news wasn’t as good when it came to the median sales prices of these homes. According to the association’s numbers, the median home sale price for Chicago stood at $156,000 in December of last year. That’s down 6.2 percent when compared to the same month in 2010. Back then, the median sales price of Chicago homes came in at $166,250.
Bob Floss, president of the Chicago Association of REALTORS®, was quoted in the press release accompanying the December numbers as saying that the December rally was a good sign for the future of Chicago housing sales. The numbers give hope that Chicago’s winter and spring home-selling seasons will be strong ones, he said.
Floss, though, expressed concerns about the median sales price of Chicago condominiums and single-family homes. This number shows no sign of rising, and, in fact, continues to fall. Floss pointed to the large number of distressed residential properties on the market: Foreclosures tend to drag down the median sales prices of homes near them.
Until the number of foreclosures falls, don’t expect the median sales price of Chicago residential properties to rise.
The association press release also quotes Loretta Alonzo, president of the Illinois Association of REALTORS®. She says that buyers in December simply found too many good housing deals to pass up.
That’s good news, of course, for sellers trying to move their properties. It’s not great news, though, for sellers trying to get top dollar for their homes. Buyers today simply expect to find bargains on the condos and single-family homes that they purchase.
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2011 far from the best year for Chicago home sales
January 23rd, 2012 categories: Chicago Real Estate News
The year-end numbers are in, and 2011 was officially a better year for Chicago-area home sales than was 2010. But just barely. And home sales in the actual city limits fell in 2011.
That’s the news from a recent Chicago Tribune story (RYAN: http://www.chicagotribune.com/business/ct-biz-0121-home-sales-20120121,0,2382184.story) on the final 2011 residential sales numbers, which were recently released by the Illinois Association of REALTORS®.
According to the numbers, existing-home sales in the Chicago area rose by 1.3 percent in 2011 when compared to 2010. The news wasn’t as good, though, for the city itself; home sales within the city of Chicago — which hit 17,715 in 2011 — fell 7.2 percent when compared to 2010.
The news was fairly gloomy when it came to housing prices, too. Median housing prices for the city of Chicago fell 13.8 percent in 2011, hitting $175,000. In 2010, the year-end median sales price of existing homes in Chicago stood at $203,000.
This news isn’t surprising to anyone who’s followed the Chicago housing market in 2011. Simply put, this market remains a challenging one for anyone trying to sell a condominium or single-family home. This means, of course, that it’s a good market for those trying to buy homes in the city. After all, mortgage interest rates have hit several all-time lows in the last year, including a new low for 30-year fixed-rate mortgages last week. With prices continuing to fall, it’s easy for buyers to find bargains on homes in even Chicago’s trendiest neighborhoods.
Sellers, though, need to set the right price for their condos or single-family homes if they hope to move their properties. Those who set asking prices that are too high will receive few serious offers.
That’s why I recommend that home sellers in Chicago and its suburbs work closely with a REALTOR® to help sell their residences. Those who don’t, run the risk of setting the wrong asking price for their homes. And that will almost certainly bring with it a long stay on the Multiple Listing Service.
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Chicago Tribune Column Reiterates It: Take Time To Find The Right Home Inspector
January 20th, 2012 categories: Chicago Real Estate News
If you’re buying a home, you’ve probably spent long hours searching for the right real estate agent. The odds are good that you’ve done the same when looking for a mortgage lender.
But what about when it’s time to hire a home inspector? This real estate professional is critically important, too. Hiring the right inspector can save you thousands of dollars, and might even prevent you from buying the wrong house. But far too many home buyers simply look for the home inspector that’ll charge them the least amount of money.
It’s a mistake that Chicago Tribune columnists Ilyce Glink and Samuel Tamkin cover in a recent column.
The columnists stress that hiring the right home inspector is an important decision. A home inspector will tour your house after you decide to buy it but before you reach the closing table. Inspectors look for serious problems such as sagging foundations, leaking roofs or aging furnaces. An inspector who does find serious problems can help you negotiate a lower price with home sellers, or can help you cancel a deal if the improvements needed to a home are far too costly.
To find the right inspector, you should interview several candidates. And you should ask the right questions. You should ask inspectors how long they’ve been in the business and whether they’ve had experience inspecting the kind of home you are hoping to buy. As the Tribune column says, you want to make sure that any inspector you hire will be able to spot potential warning signs regarding electricity, drywall and plumbing. You also want to work with an inspector who can find any potential health hazards in the home that you are considering.
Finally, ask your home inspector for references from past customers. And then call those customers. Ask the customers if the inspector found any serious problems in the homes they purchased. Ask, too, if the inspector charged these clients what he said he’d charge upfront. And don’t forget to ask if the inspector missed any important issues that eventually cost homeowners significant dollars.
I know the home-buying process can be a long one. But don’t make the mistake of skimping on the research when you’re searching for a home inspector. Finding the right inspector can spare you big costs and even bigger headaches in the future.
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Housing Foreclosures Fall, But Is The Dip A Real One?
January 18th, 2012 categories: Chicago Real Estate News
Housing foreclosures fall, but is the dip a real one?
Housing foreclosures dropped to a four-year low last year. But that doesn’t mean that the number of homeowners in danger of losing their condominiums and single-family homes is tapering off.
Rather, financial institutions and banks last year were holding off on many of the foreclosures on their books thanks to confusion over legal issues, according to a recent feature story by the Associated Press.
According to the story, about 1.9 million homes entered the foreclosure process in 2011. That’s the lowest number of foreclosure proceedings in a year since 2007, according to numbers from online foreclosure company RealtyTrac.com.
RealtyTrac was quick to point out, though, that the lower foreclosure numbers don’t necessarily mean that the housing market is improving. RealtyTrac instead credited much of the foreclosure slowdown to banks working through documentation and legal issues that slowed their pace of clearing the foreclosures on their books.
RealtyTrac officials told the Associated Press that because of this, they expect the number of housing foreclosures to rise again in 2012.
In a bit of good news, though, RealtyTrac officials did tell the Associated Press that they think the number of foreclosures in 2012, while higher than in 2011, will be lower then the peak the country experienced in 2010.
Everyone in the real estate business, and everyone trying to sell homes, is waiting for the foreclosure rate in the country to truly fall. That’s because foreclosures tend to lower the value of all real estate for sale. You can see this in Chicago. Just check out the housing prices in an area dotted with too many housing foreclosures. You’ll see that housing prices in the entire area will have taken a fall.
There’s a reason for this: Smart buyers won’t pay top dollar for a Chicago condo or single-family home if they can spend 10-20% less to buy a similar, but foreclosed, home just a block or two away.
If you are facing a foreclosure crisis of your own, be sure to call your mortgage lender as soon as possible. This isn’t an easy call to make, but a lender might be able to work out a payment plan that allows you to keep your home and preserve your credit score.
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