Archive for the 'Chicago Real Estate News' Category
Are You Ready to Buy Your First Home?
December 23rd, 2008 categories: Chicago Real Estate News
There are certain milestones in life that stand out. Buying a first home is one of the bigger ones.
It’s not always easy to tell, though, when you’re ready to make the jump from renting to buying your own home. When the housing market is struggling, as it is now both nationally and in Chicago, it’s an even more difficult decision.
But there are some key factors that you can consider to make the decision an easier one.
First, take a look at your credit score, a numerical figure that acts as a summary of how you’ve paid your bills and handled revolving debt. Kept by the three credit bureaus, Experian, Equifax and TransUnion, a credit score is the biggest clue mortgage lenders have on whether you’ll pay your mortgage bill on time. A credit score of 700 or higher is considered excellent, and can help you qualify for the best interest rates and mortgage loan programs.
If your credit score is low, though, you might want to wait before purchasing a home. For one thing, a low credit score means you’ve struggled to pay your bills on time. You don’t want to miss any mortgage payments. Maybe it’s best to wait until you’re more financially responsible before purchasing a home. Also, a low credit score will keep you from the better loan programs. Again, it might be wiser to wait until you can rebuild your poor credit.
Next, consider your income and debt levels. If you have a high income and a low amount of debt, you’re in good financial shape to buy a house. If, on the other hand, you’re saddled with large amounts of debt, you might think twice before taking on the additional burden of a mortgage loan.
Another important factor to consider: Can you scrape up enough money for a down payment? There once was a time when you could qualify for a mortgage loan with as little as 3 percent down. Those days are largely gone. Many lenders are requiring down payments as high as 20 percent. It’s not easy coming up with that kind of money with the high median sales price of homes in Chicago’s top neighborhoods. You might consider talking with a qualified mortgage lender about special programs. You may qualify for first-time buyer programs that allow buyers to obtain mortgage loans with lower down payments.
There is hope, though, if you are struggling to come up with a down payment. The Department of Housing and Urban Development’s FHA loans can require a down payment of as little as 3 percent. Talk to your mortgage loan officer about this program and the opportunities you may have to take out an FHA loan.
Finally, there’s one question that many forget: Are you ready to settle down and make one neighborhood your home for several years? When you rent, you’re largely transient. It’s easier to hop from neighborhood to neighborhood. When you buy, though, you’re making a commitment, whether you purchase a condo in Lincoln Park or a two-flat in Ravenswood. You are choosing a neighborhood to call home, possibly for several years.
Making the decision to buy your first home is never an easy one. But if you ask yourself the right questions, and if you make sure your finances are sound, you can make this decision with confidence, no matter which way you go.
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Chicago and the Olympics: A Recipe for a Housing Boom?
December 19th, 2008 categories: Chicago Real Estate News
One of the questions that came up following the recent arrest of Illinois Gov. Rod Blagojevich concerned the possibility of the scandal costing the city of Chicago its chance to hose the summer Olympic Games in 2016. Thankfully, it seems that the Blagojevich arrest, and whatever additional arrests follow, won’t have much of an impact one way or the other on the International Olympic Committee.
Chicago, of course, is getting closer than ever to being the host of the summer Olympic Games eight years from now. As a REALTOR®, this has caused me to wonder: If our city does get the games, will it have any impact on the local housing market?
The answer I’ve come up with, and the one supported by everything I’ve read? Maybe.
I know that’s not the most satisfying answer. But here’s the evidence supporting it:
First, Jones, Lang LaSalle last summer released a report focusing on this issue. Called “Reaching Beyond the Gold: The Impact of the Olympic Games on Real Estate Markets,” the report looks at how the Olympics have benefited recent host cities. The report says that the Olympics often bring with them the improvement of urban infrastructure in host cities. This can have a major impact on long-term housing values in these areas. Consider the new airport that the city of Athens built just east of the city when it hosted the games. The airport has significantly boosted land and property prices in the region.
The impact on the Chicago real estate market, though, is less clear. We’re far from a developing city. Our infrastructure is already in place. But according to Chicago 2016, the official Web site of Chicago’s bid for the 2016 Olympics, hosting the games will provide some significant long-term benefits to the area’s housing market.
The games, if hosted here, will feature a temporary stadium in Washington Park. City officials say this will help revitalize the neighborhood around the park. The Athletes’ Village will add a mixed-use community on the city’s lakefront, which, organizers say, will serve as a catalyst to improving an entire neighborhood on the South Side of the city. The games will also showcase the city neighborhoods in the Loop and its immediate neighboring areas, causing more people to move to these parts of the city, organizers add.
As an added benefit, having the Olympics in Chicago will fast-track important capital projects, say supporters of Chicago’s 2016 bid. If Chicago does get the Olympics, city officials will want to make sure, for instance, that all transportation projects are completed to coincide with the games. Improved transportation can only help boost housing values.
After studying all this evidence, I say, “Bring on the games.” Anything that brings more exposure, both nationally and internationally, to our great city can’t hurt.
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Interest Rates Have Hit 4.75% and it Could Not Be a Better Time to Purchase a Home
December 18th, 2008 categories: Chicago Real Estate News
I hope that all of you are having a great holiday season despite the weather and gloomy economy. As many of you may know because the media is actually reporting it, interest rates on 30-yr FIXED conforming (loan amount of $417,000 or less) loans hit a low of 4.75% yesterday and are continuing to hover under 5% today. I am not a big proponent of pushing my buyers to think about buying before they’re absolutely comfortable so I am sending this email after some deliberation as many of you have signed leases into 09 and ‘10 and others are waiting to put more aside to buy a bigger or more long-term place. However, I just wanted to urge you to think about the opportunity at hand since rates are at their lowest since 1960 and prices are back to 2005 levels - a rare confluence of cheap money and cheap property prices.
What this means in your world is that compared to 3 weeks ago, interest rates have dropped to a point where the $400,000 property of 12/1/08 is now effectively priced at $356,000 when the new lower monthly payment is calculated. Or to put it another way, with the same monthly payment you’d be making at 12/1/08’s rates, you’d be able to buy a $444,000 place and keep the monthly payment the same as it was at the old higher (but still historically really low) interest rate.
Again, I am not telling you to scrap well-laid plans and to breach leases, etc. but it might make sense to call a/your mortgage person to see where you stand. It might make sense to break your lease (rental rate MULTIPLIED BY months left on your lease = $) if the cost of doing so is offset by the benefit of buying at these interest rates and prices. Thought of another way, if it would cost you $10,000 to break your lease or if you have to sell for $10,000 less than you’d like AND you intend to buy and stay in a place for at least 2 years, the savings on the theoretical $400,000 property may outweigh that cost when one adds up the monthly interest savings AND the very real potential that the $400,000 property will be worth more than $400,000 in 24 months.
I hope this helps and doesn’t confuse or scare anyone. I am not advocating that you do anything that makes you uncomfortable and good deals will still be there in early 2009 but I did want to make sure you at least thought about the situation.
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Get Your House Showing Ready: Clean-Up the Clutter
December 17th, 2008 categories: Chicago Real Estate News, FSBO's, For Homeowners, For Sellers
I’m sure we REALTORS® sometimes sound like broken records to our clients. But there are some things that bear repeating, no matter how many times you have to say them. “Make sure your home is ready for every showing,” is one of those things.
In today’s slower housing market, your home will not get nearly as many showings as it did just two or three years ago. Even in Chicago’s top neighborhoods, places like Lakeview, Lincoln Square, Bucktown, the Gold Coast and Lincoln Park, the number of potential buyers is down from the years of the housing boom. This means that sellers must always present their residences in the best possible light. There just aren’t as many people interested in buying any home right now. You need to give your residence every chance to shine.
Getting a home ready for a showing involves some fairly simple steps. I know no one enjoys housework. And after several showings, rushing around your home to get it into prime viewing condition can be a pain. But you never know when that right buyer will be touring your home. You want to make sure that your home looks its best when that buyer does show up.
The first step should happen before you even put your home on the market: Remove as much furniture, toys, televisions, knick-knacks and electronics as possible. The more clutter you have, the less attractive and the smaller your residence seems.
Secondly, there should be no personal photos of adults in the house and only limited memorabilia. Also, there should be no photos or memorabilia of your former college, nothing that clearly states your political views, no religious items and nothing that celebrates your sexual orientation. It may sound silly, but a buyer may see your University of Illinois banner and immediately get a negative feeling about your home because she attended Northwestern University. If you have a wedding shrine dedicated to photos of the big day, make sure to remove that, too. Buyers want to envision themselves in your home. It’s hard to do that if all they can see are photos of you and your spouse.
Next, never leave a mess behind before a showing. Make your beds. Wash your dishes. Clean the bathrooms and the kitchen floors. Vacuum the rugs. Again, I know this is a pain, but selling your house is a huge step. Do everything you can to make the sale happen.
Pets are tricky. Buyers don’t appreciate listening to a barking dog in the basement. And the sight of a litter box doesn’t generate happy feelings about a home. Before a showing, take your pets out, and don’t bring them back until the showing is over. Remove all evidence of them, too. Don’t leave chew toys on the couches or bags of dog food in the kitchen corner.
Finally, don’t forget your home’s exterior. Your home’s outside will make the first impression on buyers. You don’t want them to see an overgrown lawn or a front walk that hasn’t been shoveled. Keep everything on the outside neat and tidy. Buyers will then have a positive feeling as they open your front door.
Remember, the housing boom is long over. Gone are the days when even homes in less-than-sparkling condition would attract multiple offers. Take the extra time to prepare your home for every showing. It will pay off in the long run.
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Why You Should Always Work With a Buyer’s Agent
December 15th, 2008 categories: Chicago Real Estate News
Purchasing a home is a huge investment. For most people, it is the biggest they’ll ever make. That’s why it’s crucial to hire a licensed buyer’s agent to work as your REALTOR®. A buyer’s agent, as the name suggests, works only in the best interests of the buyer. As a buyer, this is what you want. You do not want a REALTOR® who might represent both you and the seller in a transaction. As a buyer, it’s hard to get the best deal if your REALTOR® is as concerned about getting a good price for the seller as he or she is about getting a fair one for you.
Not only does a buyer’s agent look out for your interests, such a REALTOR® costs you nothing. The commission for a buyer’s agent comes directly from the REALTOR® representing the seller. This means that the seller’s REALTOR® pays the fees that your buyer’s agent charges. Why wouldn’t you, then, work with one?
I consider a buyer’s agent to be like insurance for the buyer. Skilled buyer’s agents will know the housing markets that interest you. They know a fair asking price when they see one. If there’s a condo in Lincoln Square that’s highly overpriced, they’ll know, and they’ll lead you away from it. If there’s one in Lakeview, on the other hand, that’s priced to move, they’ll know that, too.
In addition, buyer’s agents will know when what looks like a great deal is really a bad one. A good buyer’s agent can shed light on the history of a house, and let you know if it has a reputation of having been poorly built. The same buyer’s agent can let you know if the association governing a condominium unit you are considering has a history of legal woes. These pieces of information are good to know before you make an offer.
And whatever you do, don’t be tempted to go it alone in your home search. Some buyers will work without an agent in the hope that the seller’s agent will reduce his or her commission of 5 percent to 6 percent by 2.5 percent, and then pass those savings onto the buyer. This is a foolish move. Remember, when you buy a house without a buyer’s agent, you have no one looking out for your interests. It’s a bit like refusing to spend an extra $10 to make sure that your $400 computer runs as well as it can. It’s even more ridiculous to take such a big risk to save 2.5 percent when you’re purchasing a home that costs $400,000 or more.
A good buyer’s agent can mean the difference between finding your dream home or ending up with a lemon. Buyer’s agents bring knowledge and negotiating skills to the transaction. You wouldn’t benefit from these if you make the unwise decision to go it alone.
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