Archive for the 'For Buyers' Category
Housing Sales Are Up, But Prices Still Affordable In Chicago
April 27th, 2010 categories: Chicago Info/News, Economic Recovery, For Buyers, For Sellers, Housing Market
If you’ve bought a home in Chicago during the last 18 months, consider yourself lucky. You’ve purchased your condominium, townhome or single-family home during one of the best times to buy residential real estate in the city.
Look at all the factors that have been in buyers’ favor in the last year and a half: Because they bought during the long national housing slump, they dealt with sellers who were often desperate to move their condos or single-family homes. They bought at a time in which sales prices were falling. And, even better, they had plenty of high-quality homes on the market from which to choose; they rarely had to worry about getting into bidding wars with other buyers.
But what about today? Is Chicago still in the middle of a strong buyers’ market?
Yes, it most certainly is. You only have to look at the median sales prices of Chicago homes to prove this.
According to the latest sales data released by the Illinois Association of REALTORS®, the median sales price of existing homes in Chicago stood at $209,000 in March. That’s a solid figure, but it’s down 4.6 percent from the $219,000 median sales price of March of 2009.
For January through March of this year, the median sales price hit $196,000. That’s down 8.8 percent from the $215,000 median sales price the city saw for the first three months of 2009.
This means that buyers shopping for homes in Lincoln Park, Lakeview, Lincoln Square, Ravenswood and other top Chicago neighborhoods can buy more home for their dollar this year than last. And they can certainly afford more home for the same amount of money than they could even 2 years ago.
To me, that’s the definition of a buyers’ market. And while home sales in Chicago have increased for seven consecutive months, there is still a lot of inventory in the city for buyers to choose from.
If you want to buy a home in Chicago, then, don’t put it off. This is a still a great buyers’ market, and it’s still possible to get a terrific city home for a solid price.
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Even Warren Buffet Likes Chicago
April 14th, 2010 categories: Chicago Real Estate News, Economic Recovery, For Buyers, For Homeowners, For Sellers, Real Estate News
When making decisions on where to invest money, it always pays to look at what the wealthiest people do. After all, they’ve already made a fortune. You could do worse than follow their lead.
By this logic, people should be investing their money in Chicago real estate.
Bloomberg News reported that the property brokerage of Berkshire Hathaway Inc. – the company owned by investing guru Warren Buffett – in April bought a local Chicago real estate brokerage. This isn’t the first foray into Chicago housing for Buffett, either. Berkshire Hathaway purchased another Chicago brokerage last year.
The move makes sense for Buffett. Chicago housing sales have risen for six straight months, according to the latest sales data from the Illinois Association of REALTORS®. And top neighborhoods in the city, places like Lincoln Park, Lincoln Square, Ravenswood and Lakeview, have survived the housing slump in solid condition. These neighborhoods are still highly desired by buyers.
Yes, housing prices here have fallen since their peak in 2006. But the market is still strong in these top neighborhoods. Buffett obviously realizes the strength of Chicago’s housing market, and isn’t afraid to put his money on the line.
Buffett’s buy actually supports my contention that this is a great time to buy property in Chicago. Any good investor knows how important it is to buy low. In Chicago, housing prices have dropped since the start of the recession. Today, buyers can purchase more Chicago home for their dollars. For some buyers, this means the opportunity to buy into a top city neighborhood that might have been out of their financial reach just two or three years ago.
So if you’ve been considering buying a Chicago home, this is the time to make a move. Follow the example of Berkshire Hathaway and invest your money in Chicago residential real estate. After all, it makes sense to Warren Buffett, and he knows a thing or two about investing.
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Will Generation Y Lead Us Out Of Our Housing Doldrums?
April 12th, 2010 categories: Chicago Real Estate News, Economic Recovery, For Buyers, For Homeowners, For Sellers
Once in a while, I’ll stumble across a newspaper story that reminds me of the importance of in-depth, analytical reporting. I came across one of these April 2 in the Chicago Tribune, an analysis of the home-buying needs of Generation Y buyers by writer John Handley.
Handley’s story focused on the importance of this group of buyers. It quoted Chicago-area real estate experts who predicted that Gen Y buyers will lead Chicago and the nation out of their long housing slumps.
There are several reasons that the experts cited for this. First, there are simply a lot of Gen Y buyers. According to the Tribune story, there were 75 million people born between 1982 and 1995. These are the members of the Gen Y generation, and they are now in their 20s. They’re entering, or are already in, their home-buying years. Simply put, this means that there are more potential buyers now entering the market, which should lead to an increase in housing sales.
The story also mentions that Gen Y buyers purchase homes at earlier ages, and that they tend to spend more money on these first residences.
And once Gen Y buyers purchase their first homes, they become future buyers of larger, more expensive residences. Like other generations before them, they’ll buy first homes, live in them for a certain number of years and then upgrade. This should all equal a significant number of future home sales.
What impact have the Generation Y buyers had on the housing market today? Builders are creating homes designed to appeal to these younger buyers. This means smaller, more-efficient homes. It also means more home that are high-tech, homes that are wired for high-speed Internet connections.
If the Generation Y buyers behave as the housing-market experts predict, it will mean good things for the future of both the residential real estate industry in Chicago and across the nation.
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Demand For Mortgages Rises: Is This A Good Sign?
April 9th, 2010 categories: Economic Recovery, For Buyers, For Homeowners, For Sellers
As a REALTOR®, I’m constantly scanning the financial news looking for indications of the health of the local and national real estate markets. Starting with the last half of 2009, it’s been far easier to find studies and statistics that point to an improving residential real estate market.
For instance, there was this news from the Mortgage Bankers Association: Mortgage applications in the United States rose in late March for the first time in three weeks. In fact, demand for home-purchase loans reached their highest levels since October, according to a story on the Web site of Fox Business.
This is definitely a good sign for both the national and local housing markets. As the Fox Business story rightly points out, if this figure continues to rise, it will indicate good things for the busy spring home-selling season.
According to the Bankers’ numbers, the seasonally adjusted index of mortgage applications – a figure that includes both purchase and refinance mortgage loans – jumped 1.3 percent for the week that ended on March 26. The trade group also reported that the four-week moving average of mortgage applications was up 2.2 percent.
Again, this is good news for spring. As the weather warms, especially in cities like Chicago that experience harsh winters, home sales tend to rise. If homebuyers are preparing for spring by getting pre-approved for mortgage loans, it’s a good sign that they are serious about buying homes during this season. And as more homes sell, the odds increase that sale prices will stabilize, too. This, of course, would be great news for sellers.
Of course, the Mortgage Bankers study is just one indicator. But the more I search for news from the real estate industry, the more I find that there are plenty of encouraging signs out there. It’s a nice change of pace from the days of real estate gloom-and-doom. We’re certainly not back to a thriving housing market, yet. But there are signs that we’re heading in the right direction.
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The Cost of Waiting
April 7th, 2010 categories: Economic Recovery, FSBO's, For Buyers, For Homeowners, For Sellers, Housing Market, Mortgage Info, Taxes
This article was written by and provided courtesy of Michael Wallace, a Mortgage Banker from Chicago Bancorp.
First-time home buyers and move-up buyers must be under contract by April 30th in order to receive their respective $8000 and $6500 tax credits. A lot of people are taking advantage of this and it has stirred up a lot of activity, particularly in the first-time buyer category. Prices have dropped over the last few years, rates are at historic lows and the government wants to give buyers a big check. It’s a perfect scenario for buyers right? But there are still some people out there sitting on the fence and wondering if buying in the current economy and real estate market is a good idea. I’ve crunched the numbers on what I consider to be 6 likely scenarios.
The Cost of Waiting
Let’s look a pretty typical first-time buyer scenario. $250,000 condo purchase using the popular 3.5% down payment FHA 30 year fixed mortgage at 5.125%. The monthly mortgage payment would be $1314 per month, the down payment would be $8750 and Uncle Sam would be sending a check for $8000. Let’s also assume that the buyer remains in the home for 5 years.
What if #1 - 1 year from now real estate prices remain the same and mortgage rates remain the same
Cost of waiting = $8,000…no check from Uncle Sam.
What if #2 - 1 year from now real estate prices remain the same but mortgage rates are 1% higher
Cost of waiting = $17,120. The mortgage payment would be $1466 per month. Over 5 years this is an additional $9120 in payments and the $8000 check is missing.
What if #3 - 1 year from now real estate prices are 5% lower and mortgage rates are the same
Cost of waiting = $3603. The mortgage payment would be $1248. Over 5 years this saves $3960 in payments. The down payment is $438 less. But the missing $8000 still makes the cost of waiting an expensive decision.
What if #4 - 1 year from now real estate prices are 5% lower and mortgage rates are 1% higher
Cost of waiting = $12,302. Even with a smaller loan amount, the increase in rate would increase the monthly mortgage to $1393. Over 5 years this adds up to $4740 more in payments. The down payment would be reduced, but only by $438. Add in the loss of the $8000 and again the cost of waiting is not good.
What if #5 - 1 year from now real estate prices are 5% higher and mortgage rates are the same
Cost of waiting = $12,338. The loan amount would be larger resulting in a monthly payment of $1379. Over 5 years this adds to $3900 more in payments. The down payment is $438 higher and the $8000 is not in the picture.
What if #6 – 1 year from now real estate prices are 5% higher and mortgage rates are 1% higher
Cost of waiting = $21,938. The higher loan amount and higher interest rate result in a monthly payment of $1539. Over 5 years this adds up to $13,500 more in payments. Add the missing $8000 and the $438 more in down payment and this becomes quite costly.
Written by Michael Wallace 03/27/2010
Contact Michael Wallace
(312)738-6051
michaelw@chicagobancorp.com
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