Yesterday's New York Times article on housing provides further evidence that the housing market it beginning to recover. You will recall that in my last posting, I also saw signs of recovery in my neighborhood.
Now there is some objective proof being offered: the Case-Schiller Price Index reports that 8 cities including Chicago have shown increases in the price of homes, while 20 major cities are flat-lined. Further, new home sales rose in June. The measure of recovery of the housing market has been established by actual increases in the prices of homes that have sold recently as compared with the prior month or quarter. In many areas of the country, the prices of homes have not declined in the past month or quarter, and this too, is offered as proof of recovery.
In order to keep the housing market market moving, banks and other mortgage lenders are offering loans under 5%! For instance, First Sterling Mortgage in Chicagoland has a 15 year fixed rate of 4.875%, 5/1 ARM's at 4/375% and 7/1 ARM's at 4.625%. $1,000,000 loans require 25% down and $1,500,000 require 30% down.
In addition, the NAR (National Association of Realtors) is lobbying Congress to extend the $8000 first time buyer credit past its' November expiration and also asking that the amount be increased to $15,000. The beginnings of the market recovery are attributed to this credit.
On an individual level, many sellers are offering closing bonuses to buyers and their agents if their home is under contract by a certain date. Many developers are providing upgrades at no extra charge and are underwriting the costs of association dues or closing costs. Motivated sellers are doing what they can to entice buyers to select their home for purchase.
This concerted effort by the Government, business and individuals appear to be working. The Case-Schiller report provides some objective proof that recovery is under way. This good news has been long anticipated. We can finally begin to exhale.
Wednesday, July 29, 2009
Tuesday, July 21, 2009
RE: Something's happening here.....
And what it is I'm not exactly sure....or so goes the song.
During a walk around my neighborhood recently, I noticed that some builders are back! There are two homes; on Birchwood and Washington in Wilmette that are going up. "For Sale" signs adorn the front of each lot.
A few years ago, I would have felt irritated and inconvenienced with the sights and especially noise associated with new construction. Now, I am filled with hope. It is possible that these builders have found a way to venture back into the home building business?
The house on Birchwood has 14 rooms;4 bedrooms; 6 baths. It is brick and stone on a 50 X 177 lot. It's listed for sale at $1,399M and if you buy now, you can select the finishes you like. The house on Washington has 15 rooms; 4 bedrooms; 4.1 baths. It is also listed for $1,399M, with the inducement of buyer choice on the finishes if purchased early enough.
Many builders prefer to select their own finishes. It's just easier and quicker. Often, the buyers may linger over their own personal choices, after all, they will be living with it. But, it often has the effect of slowing down the process of finishing the house on time. Occasionally there will be disagreements on how much the builder should allot for finishes, thus causing tension throughout the remainder of the project. Most builders would rather avoid the potential headaches, and do it themselves. This should be viewed as a concession on the builder's part.
Houses of this magnitude would have been listed for a least, $1.5M and up a few years ago. This too, is a sign of the times. More for you money mixed in with motivated builders......a great combination for a buyer looking to purchase new construction.
If you are interested in more information about these homes, send me an email.
During a walk around my neighborhood recently, I noticed that some builders are back! There are two homes; on Birchwood and Washington in Wilmette that are going up. "For Sale" signs adorn the front of each lot.
A few years ago, I would have felt irritated and inconvenienced with the sights and especially noise associated with new construction. Now, I am filled with hope. It is possible that these builders have found a way to venture back into the home building business?
The house on Birchwood has 14 rooms;4 bedrooms; 6 baths. It is brick and stone on a 50 X 177 lot. It's listed for sale at $1,399M and if you buy now, you can select the finishes you like. The house on Washington has 15 rooms; 4 bedrooms; 4.1 baths. It is also listed for $1,399M, with the inducement of buyer choice on the finishes if purchased early enough.
Many builders prefer to select their own finishes. It's just easier and quicker. Often, the buyers may linger over their own personal choices, after all, they will be living with it. But, it often has the effect of slowing down the process of finishing the house on time. Occasionally there will be disagreements on how much the builder should allot for finishes, thus causing tension throughout the remainder of the project. Most builders would rather avoid the potential headaches, and do it themselves. This should be viewed as a concession on the builder's part.
Houses of this magnitude would have been listed for a least, $1.5M and up a few years ago. This too, is a sign of the times. More for you money mixed in with motivated builders......a great combination for a buyer looking to purchase new construction.
If you are interested in more information about these homes, send me an email.
Tuesday, July 14, 2009
RE: State of the Lake
Here are the stats for the past 30 days:
WILMETTE:
actives: 274
pending: 5
closed: 22
WINNETKA:
actives: 241
pending: 3
closed: 19 (includes 4 at $2million or more)
KENILWORTH:
actives: 64
pending: 2
closed: 4
GLENCOE:
actives: 154
pending: 1
closed: 4
WILMETTE:
actives: 274
pending: 5
closed: 22
WINNETKA:
actives: 241
pending: 3
closed: 19 (includes 4 at $2million or more)
KENILWORTH:
actives: 64
pending: 2
closed: 4
GLENCOE:
actives: 154
pending: 1
closed: 4
Friday, July 10, 2009
to rent, perchance to own.....aye, that is the rub
Driving around the North Shore the other day, I noticed that many of the "For Sale" signs in front of homes also have the words "Rent" or "Lease" added. Several signs only state "For Rent".
While there have always been some homes to rent here, it consisted of homes that had been purchased by builders and were waiting for the wrecking ball. Renters were typically those folks who were building a new home or addition and need another place to live for several months. It was a cozy arrangement, until the housing market drastically changed.
According to Terese (Terry) Penza, CEO and President of NSBAR (North Shore Barrington Board of Realtors), currently, 5.7% of detached single family homes are available to rent or buy. In the past twelve months, 3.9% of homes were first rented then purchased. (Caveat: there are no stats that those renters became the purchasers).
It now appears that renting with or without an option to buy is one of the strategies being utilized by sellers in an effort to coax buyers into action. For homeowners who "must" sell because they have purchased another home or are relocating, renting their home is a short term alternative that allows them to cover the costs associated with their home while waiting for it to sell. Renters get to enjoy all the amenities of the North Shore, without its' attendant obligations.
Renting to own is a much more complicated proposition. Under this arrangment, the parties agree to rent the home at a certain price for a certain time. At the end of that time period, the renters will then purchase the home that they are presently renting. While this may sound like an ideal solution in a shaky market, it is full of pitfalls. For buyers, this may be attractive because they would like to use their rent (or some portion of it) as the down payment. So their money is allowing them to live someplace while they are "saving" to buy. This option may be attractive to those sellers because they have the security of knowing that their home "is" sold.
In reality, this option has not been met with much success. According to Anne Brahin, managing broker of Prudential Preferred Properties, in Winnetka, there have been approximately 35 rentals in our office this year and that appoximately 30% of our inventory is available for sale or rent. The "rent with an option to buy" is not happening.
Buyers and sellers have been unable to agree on how and if the rent should be used as part or all of the down payment. Additionally, the parties have had trouble at arriving at the fair market value of the home. If they attempt to set an amount at the start of the lease and, if, housing prices fall, then the buyer will have made a bad deal. Conversely, if prices rise, then the sellers will face a shortfall. Both sides have been unwilling to take that risk. So, while this concept appears to be a "win-win" situation, it has not been shown to be a realistic solution in today's market.
On the other hand, the "rent" only option, has been more successful. Anne Brahin indicates that, on average, once renting became an option for a listing, 1 -2 months later, the place was rented. One of my neighbors, whose home has been for sale for a while, reports that once they decided to offer it for rent, they had several showings and their home was rented immediately. Rents are typically for short term periods (6-9 months). Both sides to the transaction have adopted a "wait and see" attitude.
So, depending on your needs, offering your home for "Rent" may be a solution. Talk with a realtor about specifics. Or send me an email.
This weekend is the Wilmette Sidewalk Sale. Please attend and support our local businesses. Don't forget to visit the parking lot behind "The Wilmette Pet Shop", where there will be all sorts of activities for man's best friend, including a charity "dog wash".
While there have always been some homes to rent here, it consisted of homes that had been purchased by builders and were waiting for the wrecking ball. Renters were typically those folks who were building a new home or addition and need another place to live for several months. It was a cozy arrangement, until the housing market drastically changed.
According to Terese (Terry) Penza, CEO and President of NSBAR (North Shore Barrington Board of Realtors), currently, 5.7% of detached single family homes are available to rent or buy. In the past twelve months, 3.9% of homes were first rented then purchased. (Caveat: there are no stats that those renters became the purchasers).
It now appears that renting with or without an option to buy is one of the strategies being utilized by sellers in an effort to coax buyers into action. For homeowners who "must" sell because they have purchased another home or are relocating, renting their home is a short term alternative that allows them to cover the costs associated with their home while waiting for it to sell. Renters get to enjoy all the amenities of the North Shore, without its' attendant obligations.
Renting to own is a much more complicated proposition. Under this arrangment, the parties agree to rent the home at a certain price for a certain time. At the end of that time period, the renters will then purchase the home that they are presently renting. While this may sound like an ideal solution in a shaky market, it is full of pitfalls. For buyers, this may be attractive because they would like to use their rent (or some portion of it) as the down payment. So their money is allowing them to live someplace while they are "saving" to buy. This option may be attractive to those sellers because they have the security of knowing that their home "is" sold.
In reality, this option has not been met with much success. According to Anne Brahin, managing broker of Prudential Preferred Properties, in Winnetka, there have been approximately 35 rentals in our office this year and that appoximately 30% of our inventory is available for sale or rent. The "rent with an option to buy" is not happening.
Buyers and sellers have been unable to agree on how and if the rent should be used as part or all of the down payment. Additionally, the parties have had trouble at arriving at the fair market value of the home. If they attempt to set an amount at the start of the lease and, if, housing prices fall, then the buyer will have made a bad deal. Conversely, if prices rise, then the sellers will face a shortfall. Both sides have been unwilling to take that risk. So, while this concept appears to be a "win-win" situation, it has not been shown to be a realistic solution in today's market.
On the other hand, the "rent" only option, has been more successful. Anne Brahin indicates that, on average, once renting became an option for a listing, 1 -2 months later, the place was rented. One of my neighbors, whose home has been for sale for a while, reports that once they decided to offer it for rent, they had several showings and their home was rented immediately. Rents are typically for short term periods (6-9 months). Both sides to the transaction have adopted a "wait and see" attitude.
So, depending on your needs, offering your home for "Rent" may be a solution. Talk with a realtor about specifics. Or send me an email.
This weekend is the Wilmette Sidewalk Sale. Please attend and support our local businesses. Don't forget to visit the parking lot behind "The Wilmette Pet Shop", where there will be all sorts of activities for man's best friend, including a charity "dog wash".
Wednesday, July 1, 2009
RE: Bravo to the Brave Buyers
I've been off-line for a while. I've been mourning the loss of so many great and memorable celebrities: Ed McMahon.....heeeeeeeeere's Johnny; Farrah Fawcett, who proved to be so much more than a stunningly beautiful Charlie's Angel (RIP), Billy Mays, whose enthusiasm made me buy cleaning products I didn't want to, and the never to be forgotten, man-child Michael Jackson.
I could devote an entire column to the greatness of Michael, and the alternate reality in which he existed. Let others sort out what this means, my life has been enriched by each and every song that Michael wrote, sang and danced through....God Bless.
Here's a story that's all too rare for these times: Designer/Builder Diane Wilson from Wilmette sold her lovely new creation in East Wilmette during the construction stage. This beautiful cedar shake exterior home with front gazebo was originally listed for $1,679M. It closed yesterday for $1,597M.
Diane acknowledges that several changes were made to meet the Buyer's specifications. A first floor walk-in shower was added to what had previously been designated as a powder room. The center hall closet was sacrificed in the process. French doors were added to the living room entry, so that it could also be used as a guest room for an aging parent. The Buyers also made their own selections of color, lighting and granite.
During the housing boom, the house might not have been listed until all of these choices were in place...that is how quickly new construction sold. Now, Diane's house was listed shortly after the permits were issued. A longer market time, more concessions and possibly more negotiation on the price are also factors that have changed the dynamics of home buying in this economy. Fortunately, Diane was able to attract qualified buyers and work successfully with them.
On the other hand, kudos to these buyers and all others who are purchasing homes. Since they are relocating, renting is option this family could have chosen, but instead, they bought a home. In return, they were able to customize the home to the accomodate their lifestyle. Welcome to Wilmette!
I could devote an entire column to the greatness of Michael, and the alternate reality in which he existed. Let others sort out what this means, my life has been enriched by each and every song that Michael wrote, sang and danced through....God Bless.
Here's a story that's all too rare for these times: Designer/Builder Diane Wilson from Wilmette sold her lovely new creation in East Wilmette during the construction stage. This beautiful cedar shake exterior home with front gazebo was originally listed for $1,679M. It closed yesterday for $1,597M.
Diane acknowledges that several changes were made to meet the Buyer's specifications. A first floor walk-in shower was added to what had previously been designated as a powder room. The center hall closet was sacrificed in the process. French doors were added to the living room entry, so that it could also be used as a guest room for an aging parent. The Buyers also made their own selections of color, lighting and granite.
During the housing boom, the house might not have been listed until all of these choices were in place...that is how quickly new construction sold. Now, Diane's house was listed shortly after the permits were issued. A longer market time, more concessions and possibly more negotiation on the price are also factors that have changed the dynamics of home buying in this economy. Fortunately, Diane was able to attract qualified buyers and work successfully with them.
On the other hand, kudos to these buyers and all others who are purchasing homes. Since they are relocating, renting is option this family could have chosen, but instead, they bought a home. In return, they were able to customize the home to the accomodate their lifestyle. Welcome to Wilmette!
Thursday, June 18, 2009
Don't believe everything you read
As I thought about today's blog, I looked for something positive to write about in the real estate world. I didn't find anything. There were a few sensational items about the developer's default of a $41M loan on the Glen. I also found an article about the highest price foreclosure in the Chicagoland area. For those who are interested it's a $16M loan default on a 400 plus acre horse farm in the Barrington area.
These items and many more like them, paint a bleak portrait of the real estate landscape. All the news is bad: the large amount on some defaulted loans make individual foreclosures appear insignificant. The sheer volume of failed developments including many in our own area take away our ability to feel for the individual homeowners who are facing foreclosure. If you are looking to buy some property now, this type of news makes it easier to take on a "shark" mentality. It allows us to view all property for sale as distressed. Low balls offers are the norm, if you are lucky to receive one at all.
But the truth is that not all the news is bad. Bravo to the NAR for attempting to provide the media with another perspective on the housing market. Although, we can argue that this is self-serving, so what? If there is some good news on the horizon, or positive trends, then let the NAR say it. After all, they certainly contributed to the slump that we are in, with their convincing arguments that "your home is your piggybank", "real estate will continue to rise" and other messages that persuaded people to buy homes that they couldn't afford. I'm all for letting them lead us out of this current mindset.
Tomorrow: not all homes for sale are distressed!
Summer is creeping it ways towards us. Are you ready?
These items and many more like them, paint a bleak portrait of the real estate landscape. All the news is bad: the large amount on some defaulted loans make individual foreclosures appear insignificant. The sheer volume of failed developments including many in our own area take away our ability to feel for the individual homeowners who are facing foreclosure. If you are looking to buy some property now, this type of news makes it easier to take on a "shark" mentality. It allows us to view all property for sale as distressed. Low balls offers are the norm, if you are lucky to receive one at all.
But the truth is that not all the news is bad. Bravo to the NAR for attempting to provide the media with another perspective on the housing market. Although, we can argue that this is self-serving, so what? If there is some good news on the horizon, or positive trends, then let the NAR say it. After all, they certainly contributed to the slump that we are in, with their convincing arguments that "your home is your piggybank", "real estate will continue to rise" and other messages that persuaded people to buy homes that they couldn't afford. I'm all for letting them lead us out of this current mindset.
Tomorrow: not all homes for sale are distressed!
Summer is creeping it ways towards us. Are you ready?
Monday, June 8, 2009
NAR holds first ever summit
The NAR (National Association of Realtors) held their first summit in Washington DC for the purposes of sharing ideas, advocating for certain legislation that will help the housing situation and help the news media get "additional insight". Sounds like they would like to have a hand in spinning the "news".
Here is a summary of some of the more notable items coming out of this summit, which include the current president of the NAR, Charles McMillan, Robert Reich, former U.S. Secretary of Labor, Pat Buchanan, Harold Ford Jr (D-Tenn) and others.
There are currently twenty (20) million homes under water....from being behind on mortgage payments to foreclosure. This is 1 in 5 homes in the US. The "reforeclosure" rate is over 50%. Reforeclosures occur when there is refinancing allowed on a property so as to avoid foreclosure.
This problem has been aggravated by stricter requirements on small mortgage banks. The larger banks, such as Wells Fargo and Bank of America have raised the net worth requirements of these smaller mortgage bank/brokers. This makes it extremely difficult for the smaller entities to obtain capital, and lend money. This is a classic "Catch 22" situation.
The smaller financial institutions who had traditionally provided mortgages for home owners, have seen their net worth diminish through foreclosures and the declining value in the homes they have financed. With the increase in capital requirements from the larger banks, these smaller entities are unable to help their clients who are behind in their payments because they are unable to obtain more cash to help with refinancing.
Bank of America and Wells Fargo have received TARP money. Should we as taxpayers provide money to bail out these institutions, who then institute regulations that not only don't provide assistance to us, but have the potential to cause even more homeowners to face foreclosure? What do you think?
Here is a summary of some of the more notable items coming out of this summit, which include the current president of the NAR, Charles McMillan, Robert Reich, former U.S. Secretary of Labor, Pat Buchanan, Harold Ford Jr (D-Tenn) and others.
There are currently twenty (20) million homes under water....from being behind on mortgage payments to foreclosure. This is 1 in 5 homes in the US. The "reforeclosure" rate is over 50%. Reforeclosures occur when there is refinancing allowed on a property so as to avoid foreclosure.
This problem has been aggravated by stricter requirements on small mortgage banks. The larger banks, such as Wells Fargo and Bank of America have raised the net worth requirements of these smaller mortgage bank/brokers. This makes it extremely difficult for the smaller entities to obtain capital, and lend money. This is a classic "Catch 22" situation.
The smaller financial institutions who had traditionally provided mortgages for home owners, have seen their net worth diminish through foreclosures and the declining value in the homes they have financed. With the increase in capital requirements from the larger banks, these smaller entities are unable to help their clients who are behind in their payments because they are unable to obtain more cash to help with refinancing.
Bank of America and Wells Fargo have received TARP money. Should we as taxpayers provide money to bail out these institutions, who then institute regulations that not only don't provide assistance to us, but have the potential to cause even more homeowners to face foreclosure? What do you think?
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