Small Investors Find Opportunity In Chicago Housing Market
February 24th, 2012 categories: Chicago Real Estate News
USA Today recently ran an interesting feature story about the increasing involvement of small investors — which the paper refers to as “mom and pop” investors — in major housing markets across the country. Fittingly, the USA Today feature leads off with the story of 54-year-old twins who have, thanks to falling local housing prices, entered the Chicago housing market as investors.
According to the story, the twins had long considered becoming landlords in Chicago. Unfortunately for them, city housing prices were simply too high. Because of this, they could not afford to purchase condominiums or single-family homes in the city.
Today, though, that has changed. Since the housing fallout began in 2007, housing prices in Chicago have steadily fallen. This has opened up investing opportunities for the twins, who, in 2011, purchased two condominiums near downtown Chicago.
Because the city’s rental market is strong, the novice real estate investors found renters in less than a month’s time. And the rent they collect covers their monthly mortgage payments on the two condos.
As the USA Today story says, the twins’ story is not that unusual. In fact, a growing number of smaller investors are entering the housing market thanks to falling home prices across the country.
According to data by John Burns Real Estate Consulting, investors purchased more than 26 percent of single-family homes and condominiums sold during the first nine months of last year in 167 U.S. markets.
That percentage is up from 21 percent in 2007, according to Burns.
Most people are not happy that housing prices in Chicago and across the nation have tumbled. But the lower housing prices haven’t meant bad news to everyone. Investors, for one, can take advantage of lower sales prices to enter markets that had previously been out of their financial reach.
Investors, large or small, looking to invest in Chicago housing have to be happy today. Housing prices in the city remain affordable, and there are plenty of condos and single-family homes for sale from which investors can choose.
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Housing Foreclosures Still Rising In Illinois
February 22nd, 2012 categories: Chicago Real Estate News, Economic Recovery, For Buyers, For Homeowners, For Sellers, Foreclosures, Housing Market
In unfortunate news, the number of housing foreclosures throughout the state rose 14 percent last month. In fact, only six states had higher foreclosure rates during the month.
According to a report by RealtyTrac, the online foreclosure service, Illinois saw 14,349 foreclosure filings in January of this year, an increase of 14 percent when compared to December of 2011. This means that one in every 369 housing units in the state was in some point of the foreclosure process during the month, according to a feature story by the Associated Press.
It’s important to note that foreclosures as defined by RealtyTrac don’t mean that homeowners have already lost their residences. It just means that homes are at some point in the foreclosure process, a process that could include default notices being sent by banks, auction-sale notices being sent on properties and bank repossessions.
The January foreclosure rate in Illinois was also up 9 percent when compared to the same month one year earlier.
Illinois residents shouldn’t expect foreclosure numbers to fall any time soon, either. According to the Associated Press story, the number of housing foreclosures across the country is expected to rise now that attorneys general in 49 states have reached an historic settlement with five of the country’s biggest mortgage lenders. This settlement lays out foreclosure guidelines that could give banks the confidence to pursue foreclosures more aggressively.
About the only good news for Illinois homeowners was the fact that six other states had higher foreclosure rates in the month. Nevada in January continued to have the highest foreclosure rate in the country. Coming next were Arizona, California, Florida, Georgia and Michigan.
Illinois came next, to rank seventh in the country in the number of foreclosure notices filed in January.
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Successful Developers Keep Investing In Chicago
February 20th, 2012 categories: Chicago Info/News, Chicago Neighborhoods, Chicago Real Estate News, Economic Recovery
Plenty of successful developers still believe in the long-term strength of Chicago’s housing market.
And I don’t blame them. Despite the real estate slump — and despite the fact that the value of Chicago’s condominiums and single-family homes fell again last year — Chicago remains a strong housing market.
Just ask Antheus Capital. The Chicago Tribune recently ran a story on this developer’s efforts to purchase rental properties in Chicago’s Hyde Park and Kenwood neighborhoods.
According to the story, Antheus purchased a single apartment building in this area back in 2002. Since then, the developer has purchased 89 apartment buildings in Kenwood and Hyde Park. These buildings hold 4,500 units. This means that Antheus owns just under 20 percent of the rentals in Chicago’s Hyde Park neighborhood.
This is good news for the developer. Despite the Chicago housing market’s slowdown, Hyde Park remains a desirable city neighborhood. It’s located close to public transportation. It boasts walkable streets lined with restaurants, shops and entertainment options. And the prestigious University of Chicago anchors the neighborhood.
You could consider Hyde Park a microcosm of several top Chicago neighborhoods, places like Lincoln Park, Lincoln Square and Lakeview. These neighborhoods remain in demand by buyers and renters alike thanks to their thriving nightlife districts, eclectic mix of restaurants and local shopping options. In short, these neighborhoods are vibrant, fun places in which to live.
That also explains why I have high hopes for the long-term vitality of Chicago’s housing markets. Yes, even the top neighborhoods in the city have seen housing values fall since the residential crash. But these neighborhoods have so much going for them, it’s difficult not to picture them remaining as prime destinations for future home buyers.
Antheus Capital is wise to make such a large investment in Hyde Park. Good neighborhoods are treasures, and the neighborhoods of Chicago make our city one of the top metro areas in the country.
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Chicago Housing Prices Hit 2001 Levels
February 13th, 2012 categories: Chicago Info/News, Economic Recovery, FSBO's, For Buyers, For Homeowners, For Sellers
How far have Chicago home prices fallen? Far enough so that condominiums and single-family homes across the Chicago area are selling for prices last seen in spring of 2001.
That’s the news from a recent story in the Chicago Tribune.
The Tribune reported on the much-followed Standard & Poor’s/Case-Shiller home price index, an index that in November showed housing prices in the Chicago area falling 3.4 percent from the previous month. Chicago housing prices were also down 5.9 percent from a year earlier, the Tribune reported.
Chicago’s drop in housing prices was steeper than those suffered by each of the nation’s largest 20 housing markets save for Atlanta, Seattle, Tampa and Las Vegas, according to the Tribune story.
The Tribune quoted a source from Zillow who said that the problem in the Chicago area is a fundamental one: The supply of homes available in the region far exceeds the demand for these residences.
Until this changes, housing prices will not rise.
High unemployment — though unemployment has been falling — is another issue that negatively impacts home sales. People simply won’t invest in homes if they fear that they might lose their jobs. And when people aren’t buying, the housing supply remains high, forcing prices down.
This is frustrating for home sellers, especially those who bought during the Chicago housing boom, when prices hit their heights. These sellers can expect to sell their residences for less than what they paid for them.
My advice to sellers is simple: They need to price their homes according to what the market says their residences are worth. Buyers today don’t care what sellers paid for their homes four years ago. They only care about what similar homes are selling for today.
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Even Noted Housing Critic Agrees: This Is The Time To Buy A Home
February 10th, 2012 categories: Chicago Info/News, Chicago News, Chicago Real Estate News, Economic Recovery, For Buyers, For Homeowners, For Sellers, Housing Market
Economist Christopher Thornberg has long been considered a pessimist when it comes to the housing industry. He was, after all, one of the few voices during the nation’s housing boom who insisted that a housing bubble was not only real but about to burst.
It’s news, then, when a critic such as Thornberg tells consumers that now is a good time to buy a house.
And that’s just what Thornberg did in a recent interview with the Chicago Tribune’s real estate columnist Mary Umberger.
The founder of an independent research firm in Los Angeles, Thornberg told Umberger that now is a good time to buy a house, as long as buyers understand that a house is what he called a consumption good, not an investment.
Here’s what Thornberg means: Consumers should buy condominiums and single-family homes for the benefits they bring, stability, shelter, a place to escape to at the end of the day. They should not look at housing as a way to make a quick buck. That’s what happened during the housing boom, and it’s what led to housing prices getting way too high way too quickly.
In today’s housing market — including in Chicago — housing prices have fallen to solid, affordable levels, Thornberg said. At the same time, mortgage interest rates are at record lows, making the act of borrowing mortgage money as affordable as it’s ever been. Add to this the fact that home sellers are ready to negotiate on final sales prices, and you have an environment that’s more than beneficial to home buyers.
I’ve said this many times in this blog, but I’ll repeat myself: This remains a great time to buy a home. If you’ve been hesitating, consider Thornberg’s advice. If a noted housing critic says that this is a good buyer’s market, who are we to argue?
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