Archive for the 'Real Estate News' Category
Do Housing Woes Increase Odds of Double-Dip Recession?
September 2nd, 2010 categories: Chicago Real Estate News
July, it turns out, was one bad month for housing sales. According to the latest numbers from the National Association of REALTORS®, housing sales in the month fell to a 15-year low.
As if that wasn’t bad enough, the 27-percent drop in housing sales from June to July represents the biggest one-month housing drop ever.
Now comes the news that several economists are worried that the economy, fueled in part by the struggling housing market, is headed for a double-dip recession. The Wall Street Journal recently covered this issue, quoting economist Robert Shiller, a professor of economics at Yale University, as saying that a second economic dip may be imminent.
Shiller told the Journal that he thought the odds of a double-dip recession were at 50 percent. He said that the third quarter of 2010 might historically be viewed as the time when the second dip hit.
What will a double-dip recession mean? For one thing, it could bring more job losses. You can also expect housing sales in Chicago and across the nation to fall again, along, perhaps, with housing prices.
Of course, there’s no guarantee that Shiller is right. There might not be any second dip in our recession. If that’s the case, then the slow recovery we’ve been seeing might actually pick up some momentum. That would be a welcome sight.
Shiller pointed to high unemployment – the national unemployment rate remained above 9 percent at the end of August – as the biggest problem of the economy right now. He suggested an interesting idea: He wants the federal government to create new jobs. He specifically mentioned the creation of teachers’ aides in every classroom in the country. This, Shiller said, would add millions of jobs while helping children.
These are trying times in the country. No one’s happy that home sales fell so steeply in July. No one’s happy either that the unemployment rate refuses to budge. The only glimmer of good news is that Chicago, despite its financial problems, remains a strong city and housing market. Yes, housing sales are down here. Unemployment is up here, as it is across most of the country. But Chicago is a vibrant city, one powered by diverse industries and neighborhoods that still remain destination points for home buyers. I believe that Chicago is one of those cities that will benefit the most once the economy’s recovery takes full root.
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Be Wary of the Lowest of the Low: Home Loan Modification Scammers
August 25th, 2010 categories: Chicago Real Estate News
There’s always one group of people that thrives when the economy is suffering: scam artists. And today, unfortunately, many of these scammers are targeting homeowners who are struggling to pay their mortgage bills each month.
Chicago Mayor Richard Daley recently warned city residents of so-called loan modification companies that are actually in business to rip people off rather than help them nab a more affordable monthly mortgage payment.
According to the mayor’s statement, there are plenty of legitimate, ethical companies out there to help homeowners modify their loans. Many of them are non-profit agencies that are working with the city. Unfortunately, there are many companies out there, too, who entered the loan-modification business as a way to make some quick bucks. These companies often have little to no experience with the mortgage-lending industry.
Daley warns Chicago homeowners not to work with any company that asks for an upfront fee. That’s the surest sign of a scam artist. You always want to work a loan-modification company that only accepts its payment after it has secured a lower mortgage payment for you.
Daley also says that homeowners shouldn’t work with loan-modification companies that promise or guarantee success. There’s a good reason for this: There are no guarantees when it comes to modifying a mortgage loan to a lower monthly amount. Mortgage lenders and banks aren’t required to modify any of their clients’ mortgage loans. A company that guarantees success is not telling you the truth.
Finally, Daley says that Chicago homeowners should never work with modification firms that advise them to stop making their mortgage payments. Homeowners who do this will seriously damage their credit scores. Missing home loan payments can also make it more difficult for homeowners to modify their mortgage loans.
The best way to seek a loan modification is actually to do it yourself. Call your mortgage lender if you are struggling to make your payments each month. Most lenders today are participating in the federal government’s Home Affordable Modification Program. It doesn’t cost a thing to call your mortgage lender. And if your lender approves your request for a modification, it won’t cost you a thing to move to a lower loan payment, either.
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Second Quarter Brings News of Stabilizing Chicago Housing Prices, Sales
August 20th, 2010 categories: Chicago Real Estate News
Chicago home sellers looking for good news received some from the Illinois Association of REALTORS®. According to the association, Chicago condominium and single-family home prices stabilized while sales rose in the second quarter of the year.
The news on home prices is especially encouraging. Chicago home sellers have been waiting for median home values in the city to stop falling. The second-quarter numbers show that they may have.
According to the association, the city of Chicago’s median home price in the second quarter stood at $230,000. That’s the same median value that the city saw in the second quarter of 2009. That may not seem like news worth celebrating. After all, home values overall haven’t risen in the city of Chicago. But they didn’t fall, either. In today’s dismal economy, it counts as good news when home values don’t fall.
The news was good, too, when it came to the sale of Chicago condominiums and single-family homes. According to the association’s numbers, the sales of condominiums and single-family homes rose 32.8 percent in the second quarter when compared to the same period one year earlier. The city saw 6,567 home sales in the second quarter this year, compared to 4,945 in the second quarter of 2009.
This, too, is obvious good news. Chicago is a strong housing market. But it did suffer during the Great Recession, as did the residential markets of most major cities. My hope is that the second-quarter numbers are a sign of a positive housing trend in the city.
And why not? Despite the economic slump, Chicago is still a great city in which to buy a home. There’s plenty to do here, for buyers of all ages, whether they’re empty nesters or young married couples or single buyers.
What will the next set of housing statistics from the REALTORS® association bring? That’s impossible to predict. Here’s hoping, though, that the second-quarter numbers are more than just a blip.
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Underwater Mortgages Still a Problem in Chicago
August 18th, 2010 categories: Chicago Real Estate News
Today’s residential housing market is a mix of good and bad news. Chicago condo and single-family home sales are on the rise, and prices finally seem to be stabilizing. At the same time, the number of housing foreclosures in Chicago remains too high. And far too many homeowners here are underwater on their home loans.
Being underwater is as negative as it sounds. It means you owe more on your mortgage loan than what your residence is worth. A lot of buyers who purchased at the height of the residential real estate boom, 2004 and 2005, for example, are underwater today. That’s because they paid top dollar for their homes, only to see their residences’ values drop steadily ever since.
In the Chicago area, nearly 29 percent of all home mortgage loans were underwater in the second quarter of the year, according to a feature story on ChicagoBreakingBusiness.com.
That’s a high number, but it actually represents a slight improvement from the first quarter of the year. In that quarter, according to real estate Web site Zillow.com, 31.8 percent of mortgage loans in the Chicago area were underwater.
No homeowner wants to be underwater. We all view housing as a type of investment. We expect the value of our homes to grow after we purchase them. We’ve all heard about what a great investment residential real estate is.
Being underwater, though, isn’t a terrible thing if you aren’t planning on selling your Chicago condo or single-family home in the near future. If you don’t have to sell for seven to 10 years, the odds are good, though not guaranteed, that your home’s value will have risen again. Historically, residential real estate has always appreciated over long periods of time.
If you do have to sell your house now, though, and you are underwater? In today’s housing market, you will have to take a loss. By working with a skilled REALTOR® who knows your neighborhood, though, you can at least minimize that loss. A good REALTOR® will help you nab the best possible asking price for your home.
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Rent vs. Buy Question Still Favors Purchasing
August 16th, 2010 categories: Chicago Real Estate News
During the housing boom, no one debated much whether it was better to rent or buy. Because home values were increasing so steadily in Chicago, buying seemed like a great financial move.
Today, though, as housing values fall, the rent vs. buy question has popped up again.
It’s not difficult to understand why. The median value of a home in Chicago stood at $230,000 in the second quarter of 2010, according to the latest numbers from the National Association of REALTORS®. That’s even with the median sales price of the second quarter of 2009, but still a big drop-off from where housing values stood in 2004 and 2005 in the residential boom years.
Today, in fact, home values have fallen so far that many homeowners owe more on their mortgage loans than what their homes are worth. This condition, known as being underwater, is now impacting about 25 percent of homeowners.
Still, even with these troubling numbers, I believe that it makes more sense financially to buy than it does to rent.
And here’s why: Today’s real estate market is an anomaly. It’s a correction from the days in which housing values rose too high too quickly. Historically, homes have appreciated at steady rates over longer periods of time. This means that if you buy a house today, 10 years from now it should be worth significantly more than what you paid for it.
The key to buying a home is to remember that residential real estate was never meant as a way to make quick money. There have been very few markets over the years in which buyers have been able to purchase a home one month, renovate it and then sell It six months later for twice the price.
To make money off residential real estate today, you’ll have to be patient. But history shows that patience pays off when it comes to investing in residential real estate.
Don’t forget, too, that now is a great time to buy a Chicago condominium or single-family home. Homes in even the best Chicago neighborhoods, places like Lakeview, Lincoln Park, Wicker Park and Lincoln Square, can be found at great prices. Buyers can purchase more home today for their dollars. They’ll be in good shape once housing prices start rising again.
Renting does make sense for some people: Those who only plan on living in an area for five years or less, for instance, would do well to rent. People with low credit scores should rent while they take steps to repair their credit.
For people who plan to stay in one place for a long time, though, buying, in my opinion, is still the way to go.
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