Archive for the 'For Buyers' Category
Another Challenging Real Estate Year Ahead?
December 24th, 2009 categories: Chicago Info/News, Economic Recovery, For Buyers, For Homeowners, For Sellers, Housing Market
As 2009 comes to a close, the newspapers are filling their pages with “Top 10” lists, counting down the top movies, music, books, sporting events and news stories of the past year. These lists are always fun to read. But whenever a year ends, I prefer to look ahead to the next one, not back at the one that’s coming to a close.
Being a REALTOR®, I naturally focus on the prospects for the Chicago housing market. By skimming the newspapers and Web sites, I’ve found that many financial experts are warning us that 2010 will be another challenging year for residential real estate.
The financial Web site Bankrate.com recently ran a feature in which several of these experts looked ahead to 2010. The consensus was that home prices would continue to fall in the coming year.
Of course, no one wants to read this. But it looks as if the real estate market’s correction will continue. The story, for instance, quoted the financial pros at Economy.com who predicted that housing prices nationally would fall 5 percent to 10 percent in 2010.
What’s bad news for sellers, though, is good news for buyers. I know of many potential homebuyers who, inspired by the federal government’s move-up buyer and first-time homebuyer tax credits, are eager to purchase a home in 2010. They can be reassured that Chicago housing prices, even in top neighborhoods such as Lincoln Park, Lincoln Square, Ravenswood, Lakeview and Roscoe Village, will remain at affordable levels in the coming 12 months.
I don’t want to end the year on a negative note. So I’ll also mention that 2009, while a challenging year, saw the start of what I believe will be a long and steady housing market recovery in Chicago. We saw home sales rise throughout most of the last half of the year in the city. And I expect that we’ll see them continue to tick upward during 2010.
The next 12 months certainly won’t be easy for the nation as a whole. But I firmly believe that the seeds to an overall economic recovery were planted in 2009. And I’m looking forward to watching as the country and its housing markets rebound from their long slumps.
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A Disconnect Between Sellers and Buyers
December 23rd, 2009 categories: Economic Recovery, For Buyers, For Homeowners, For Sellers, Housing Market
One of the challenges for REALTORS® today is to reconcile what buyers want to pay for homes and what sellers want to sell them for. Unfortunately, it looks like this challenge isn’t going away any time soon.
The Realty Times Web site recently ran a story on a new survey by HomeGain.com that showed that a growing number of homeowners think their residences should be listed at prices 10 to 20 percent higher than what REALTORS® are recommending. At the same time, the survey found, 62 percent of buyers think homes are still priced too high.
This is the problem in a nutshell: Sellers think they’re not getting enough money for their homes, while buyers think they’re still paying too much for them.
The best way to resolve this dispute is for both buyers and sellers to have reasonable expectations. Buyers, for instance, need to know that while real estate prices have fallen significantly in the last two years, they still can’t “steal” a home. Yes, they can negotiate with sellers on price. They can ask them to pay for reasonable repairs. But there is a point at which every seller will no longer drop an asking price. Trying to push past this point is a waste of time.
Sellers, too, need to be realistic. Houses simply aren’t selling for what they were during the real estate boom. Sellers need to listen to their REALTORS® when they recommend an initial asking price. Setting a price too high rarely brings about positive results. What usually happens is that the buyers stay away, and sellers have to lower the price anyway. This just wastes more time.
No one is disputing that this is a tough residential market. But sales are improving. It’s just a matter of adjusting to the new real estate reality. The housing boom years are gone. Owners who try to sell their homes as if they aren’t will find that the offers simply won’t come in.
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Chicago Near The Top In Obama Loan Modifications
December 18th, 2009 categories: Chicago Info/News, Chicago Neighborhoods, Economic Recovery, For Buyers, For Homeowners, For Sellers, Foreclosures, Housing Market
Ever since taking office, Pres. Obama has made slowing the rate of housing foreclosures one of his top priorities. This makes sense: Housing foreclosures drag down housing prices. They become neighborhood eyesores. And until the number of foreclosures falls to normal levels, the housing market won’t truly rebound.
That’s why the president and his administration worked together to create the Making Home Affordable program. The program encourages mortgage lenders, through financial incentives, to work with homeowners to keep them from losing their residences to foreclosure. Lenders will often modify the mortgage loans of homeowners who are struggling to make their payments each month. Modification may entail lowering the loan’s interest rate, stretching out its term or simply lowering the amount of principal owed. In each case, the homeowner’s monthly mortgage payment would go down.
According to a story in the Chicago Tribune, about 36,000 local homeowners have received some type of permanent or temporary loan modification as of the end of November. This ranks the Chicago area as one of the busiest sites of Obama’s loan-modification program goes.
Not everyone’s happy with the Obama program, though. Many critics point out that the program hasn’t been helping homeowners as quickly as the government pointed out. Many banks participating in the program haven’t modified nearly as many loans as government officials were hoping.
This is to be expected with any new program as complex as the loan-modification plan. Hopefully, the kinks will be worked out and more homeowners, in Chicago and nationally, will modify their mortgage loans. This is far better than letting these homeowners lose their homes to foreclosure.
And if the government doesn’t step in, that’s what will happen. A new report from First American CoreLogic proves it: This report, issued earlier this month, said that 9.41 percent of mortgage loans in the Chicago area were 90 days or more delinquent in October. This same rate stood at 5.02 percent just one year earlier.
I know many of you aren’t happy that the government is helping struggling homeowners. Yes, some of these homeowners did stretch themselves financially to get into homes that they could not afford. But many more are facing foreclosure because they lost their jobs or suffered a serious illness. This economic slump has shown us how easy it is to have the financial rug pulled out from under you. Simply put, I support any measure that slows the rate of housing foreclosures and in turn, help the market recover. This recovery benefits everybody in much the same way that foreclosure are a detriment to everybody.
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Fannie Mae Gets Tough(er) On Borrowers. Again.
December 16th, 2009 categories: Economic Recovery, For Buyers, Housing Market, Mortgage Info
Fannie Mae raised the bar for mortgage applicants this past weekend. Getting approved for a home loan just got harder.
In its official announcement, Fannie Mae says the updates minimize long-term lending risks. If that’s the case, this won’t be the last guideline change Fannie Mae makes — especially with loans defaulting at an above-normal clip.
The immediate changes are major. The first pertains to credit scores.
Effective December 13, 2009, the bulk of Fannie Mae’s loans require a 620 credit score minimum. There are very few exceptions.
A second relates to loans with private mortgage insurance.
Homeowners whose loan-to-value exceeds 80 percent now have a choice:
- Pay higher mortgage insurance premiums month-after-month
- Pay a one-time fee paid at closing to compensate for higher risk
Both options result in higher consumer loan costs.
A third change concerns maximum debt-to-income ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores.
In no case whatsoever may debt-to-income exceed 50 percent.
There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for “expanded level” mortgage approvals. These updates affect just a small part of the population.
So, home prices are rebounding, mortgage rates are low, and — for 5 more months at least — there’s a federal tax credit for qualified buyers. You don’t have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.
The best “deal” won’t matter if you can’t get qualified on your mortgage.
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Reality TV Shows Love Chicago
December 7th, 2009 categories: Chicago Info/News, Chicago Neighborhoods, Chicago Real Estate News, For Buyers, For Sellers, Housing Market, Real Estate News, Real Estate Videos
If you watch enough episodes of House Hunters, Property Virgins, Sell This House and Property Ladder, you’re sure to see just about every hip neighborhood in Chicago. These shows, all “reality” house-hunting or –renovating shows on cable channels such as HGTV, TLC and A&E, frequently feature Chicagoans either searching for, selling or trying to transform their residences into a dream home.
How much, though, do these shows teach us about Chicago’s housing market? Not much. They may be called “reality” shows, but there isn’t much realistic about it.
Chicago Tribune columnist Mary Ellen Podmolik wrote about a local couple and real estate agent who will be featured on HGTV’s House Hunters on Dec. 10. In her column, Podmolik writes that both the agent and homebuyers soon discovered that there was precious little reality in the “reality” TV show.
The premise of House Hunters is that buyers look at three homes and then pick the one that they like best. There’s supposed to be some drama, too, in waiting to see if the couple actually qualifies for and gets the residence of their dreams.
Not surprisingly, as Podmolik writes, most of this drama is fake. For instance, in the episode airing this week, the couple looks at three residences in Chicago’s Lakeview neighborhood. But the buyers had made up their minds on what home they were going to buy before the episode filmed. Of the three homes they looked at, one was already under contract to another buyer.
In the story, the agent working with the couple said that House Hunters doesn’t really teach viewers anything about what buying a home is really all about. I can vouch for that. For one thing, most buyers will look at far more than three houses or condominiums before finding the residence that’s right for them.
There is one important lesson, though, that shows like House Hunters can teach viewers: These shows do a good job cluing viewers in on how much residential real estate typically costs in a given neighborhood. For the House Hunters show airing this week, the three homes that the buyers looked at in Lakeview cost from $355,000 to $415,000. It’s an accurate representation of what these types of attached, single-family housing cost in this neighborhood.
Next time you’re watching one of the cable home shows, remember that not everything you’re seeing is real. Remember, too, that this is a good thing: Do you want to watch buyers look at 15 to 20 houses before making a decision? Didn’t think so.
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