State of the Lake

There are currently 727 homes on the market in Winnetka, Wilmette, Kenilworth and Glencoe, 41 of which are pending or under contract.

The breakdown is as follows: (town name followed by # of active listings/pendings)

Winnetka:242/16
Wilmette: 275/12
Kenilworth: 64/4
Glencoe: 146/10

From Jan-May 15, 2009, a total of 121 units were sold in these communities. The average days on market (DOM) was 258. During the same time period of 2008 (Jan.1/May15), there were 163 units closed with an average DOM of 177. This data points to a slow down in the sales of properties here on the North Shore. Fewer homes were sold and they took two and a half months longer to sell. The median price also declined over the past year, but this statistic is misleading, since one or two large sales can shift the median. The best news is that during the first 5 months of 2009, homes sold for an average 91% of their list price!


If you are thinking of selling your home now, you can expect to list it for less than you would have a year ago. It may also take longer to sell, given the competition, stricter credit requirements and reluctance of people to buy.

More on this tomorrow.

If you want to talk privately about what your home is presently worth, drop me an email and we can talk!

Here's an interesting report: Certain Chicago developers and builders have taken to suing buyers who walk away from their contract to purchase before close. Damages are sought for expenditures for upgrades and the earnest money.

This is another ugly side of the burst real estate bubble. Buyers who put down payments on units during pre-construction now find out that their purchase is worth less than they had bargained for even though they got a discount for agreeing to purchase at an early stage in the the construction. In addition, some are finding that they can't get financing due to the stricter credit standards and the diminished value of their purchase. With sales slowing and inventory increasing, it's hard to convince "new to the development" buyers that all of the units in that particular development will be sold.

So, the original buyers (some might call them speculators) opt for cutting their losses and walk away. Some do this on the advice of their attorneys. Now, they may end up having to pay for more than they expected.

What do you think of this strategy?

The "F" Word

Today, we begin a series of blogs about the "F" word. I'm talking about foreclosures, of course! What did you think I meant?

According to RealtyTrac.com, a website that follows foreclosures, and, for a fee, allows you access to that information, there was an 81% increase in foreclosure notices from December, 2007 to December, 2008. That is an incredible statistic, isn't it? An 81% increase in anything is enormous number. Think about it, an 81% increase in your grocery bill or time spent commuting or (heaven forbid) your weight is mind boggling!

But what does this statistic really mean? We are going to examine that, along with other issues relating to the effects of foreclosure in our hometown. There is no way we will avoid the scourge of foreclosure in our neighborhoods, but how are our Villages and school districts are planning for it will determine how we will handle the inevitable. We intend to explore this in future blogs.

But, for now, let's take a look at the actual foreclosures in Wilmette, Kenilworth, Winnetka, Glencoe and Northfield.

When we use the term foreclosure, it can mean one of three processes. There is preforeclosure: during this period a homeowner fails to make timely mortgage payments and is sent a notice of the lender's intention to foreclose. A Lis Pendis, a written notice is often filed in the Cook County Tax Assessor's Office, alerting those who may be interested in purchasing the home that they will have to obtain the Bank's approval as well as the seller's in any offer to purchase. The homeowner usually stays in possession of their home during this time, and will often attempt to modify the terms of the loan.

If the loan is not modified, then there will be an Auction or Sheriff's Sale of the property. This is the next phase of what we commonly think of as foreclosure. While anyone can buy the property, usually for the value of the outstanding lien (or mortgage), most often, the lender will buy its' own asset. During this time period, the homeowner is usually required, by law to move out of the home.

Finally, there is REO (real estate owned) or Bank owned property. The lender owns the property outright, and is responsible for upkeep, management and payment of taxes on it.

The different phases of foreclosure make a difference when we evaluate their effect on our hometowns. But, for the purposes of the following, foreclosure will mean all three phases.
At the present time, the following homes are in foreclosure: Wilmette, 36; Kenilworth, 2; Winnetka, 17; Glencoe, 20 and Northfield, 6. (source: Trulia.com, Zillow.com) These numbers, while unfortunate do not connote the same sense of catastrophe as the 81% statistic used by Realtytrac.com. Again, it pays to look closer at the statistics, rather than rely on the headlines.

It is a tragedy to be foreclosed upon, there is no doubt about it. In these situations, individuals lose much more than their homes. No one willingly wants to paticipate in this process. Many times there are life altering events, such as illness, death or divorce that precipitates the loss of a home. But, our community also suffers a loss when our friends and neighbors have their homes foreclosed. We intend to explore this in future blogs and help identify sources of assistance if you find yourself in this situiation. Stay tuned.

Make My Day Moment: for those of you who know this chick and my "second" son, Dan, I am proud to report that he was made squad leader of his Marine Boot Camp Platoon. He is the top shot expert on the rifle range, 1st class physical fitness and swim qualification 2 (the highest levels attainable in Boot Camp. The few, the proud, the marines!

As much as we love Kermit the frog, it's actually...

.....easy being green!

In one our recent blogs, the chicks discussed the real opportunities to "go green" on the North Shore. See our dispatch entitled "Up with downsizing", published January 12, 2009. In it, we discussed the benefits of "true downsizing", that is, moving to a smaller home and why, in this real estate market, we think that this is realistic and environmentally responsible.

We like the idea so much, that we did further research and think we are really onto something here. While it has been suggested that the initial costs of building a "green" home can be as high as 30% higher than traditionally built homes, a closer examination of the costs may only be in the 2-4% range.

There is a great website to check out if you are interested in this idea: www.nahbgreen.org. It is operated by the National Association of Homebuilders and in it they discuss the "hows" and "whys" of building a green home. They define green living as encompassing three main components: energy and water efficiency, energy and water conservation and indoor air quality. From the layout of a home that provides the most natural sunlight to purchasing salvaged pieces to adorn your home, there are countless ways to achieve a sustainable lifestyle. Installing appliances and HVAC with higher energy efficiency ratings, while more expensive initially, actually cost less to operate, thus resulting in less energy comsumed and less money spent. An idea as simple as building a compost pile rather than installing or using your garbage disposal saves energy, money and as well as providing your plants with a tasty treat.

Another reason that we like the "true downsizing" idea here on the North Shore is many of the neighborhoods that lend themselves to this type of lifestyle are located within walking distance to the downtown areas and trains. The obvious advantages to leaving your car at home include less gas consumed, money saved, less pollution and a healthier you! Check out this website:www.walkscore.com. You can enter your address and find out how your house rates as far as your ability to walk to places in your town. Or better yet, if you find a place you might like to build your own green home, enter that address. It's fun, easy and informative.

This chick would like to publicly thank the Pittsburg Steeler and Phoenix Cardinals for yesterday's Super Bowl. This game had excitement (99 yard interception touchdown by Steelers James Harrison, 65 yard pass to Cardinal's Larry Fitzgerald), drama (Steelers win in the last 2 minutes) and the Boss playing at half time. What a fitting end to football for another year. Oh, yeah, let's not forget ads. My vote for the best are the Budweiser clydesdale in love with Daisy the circus horse and the E*Trade baby on the golf course (shankopotamus!)!!

I'd love to hear from you. Feel free to email or post a comment.

Just the stats....

It's been awhile since the chicks have posted. We've been too busy shoveling!

Today, we present the facts: nothing fancy, just basic information about the current real estate market.

There are 199 active listings in Wilmette: 10 pending sales and 15 closed sales for a 30 day period ending in mid-January. Of the closed sales, four were for more than $1,000,000.

There are 36 active listings in Kenilworth and 2 pending sales. There were no closed sales during this time period.

There are 175 active listings in Winnetka: 5 pending sales and 8 closed sales for the 30 day period ending in mid-January. Of the closed sales, four were for more than $1,000,000. Of the 175 active listings, 109 are listed for $1,000,000 or higher.

There are 122 active listings in Glencoe: 2 pending sales and 8 closed sales for the 30 day period ending in mid-January.

All these stats really tell us is that there are plenty of homes for sale on the North Shore. Even during the holiday season, a traditionally slow time for home sales, people were buying and selling real estate. We can't determine the seller's or buyer's motivations from this information, nor can we decipher the days on market (DOM), if the seller reduced his price or if the buyer paid cash or got a mortgage. We don't know if these are new homes or homes in need or rehabbing. In short, we cannot tell very much from this set of statistics.

We should not let what we hear or read in the news cloud our ability to evaluate information. We are inundated with bad news and shocking statistics about the housing situation in this country If we operate with that frame of reference when evaluating the stats I provided, things look bleak. If we evaluate the information objectively, we can see that more information is needed in order to determine what is going on here on the North Shore.

More importantly, if you are selling or buying property, these questions and answers can determine your strategy. As some of you know, this chick has been looking at property in beautiful Naples, Florida for the past year. Having recently found a place that makes my heart sing, I was prepared to make an offer. Then I discovered that the place had actually been on the market 9 months longer than I had been originally told. This piece of information changed my approach and initial offer. I didn't end up purchasing this home for reasons that I will share in a later dispatch. The point here is that each property has to be evaluated on its' own unique set of factors. The general market conditions are relevant, only if taken in conjunction with the unique situation of the property you are interested in selling or buying.

Up with downsizing!

       Mary Umbergers column  (Chicago Tribune, Sunday, Jan. 11, 2009) noted a discernible trend among baby boomers and empty nesters.  That is, the stated desire to downsize their homes.  But this time, they actually mean a move to a smaller dwelling, rather than making a lateral or upsize move to more spacious accommodations once the kids have left home.  What people had been referring to as "downsizing", was, in reality, (and illogically), often a move to a bigger, more expensive home.  

      But that seems to be changing.  The economic roller coaster ride that we have all been on for the past year is certainly one of the driving forces behind this desire for "true" downsizing. .   The cost of maintaining a huge home with an equally huge mortgage may not make sense if there is college tuition to pay. 

       Another factor in this shift in thinking might be the   "shame of affluence".  Much of  the current economic crisis (i.e subprime mortgage mess)  is  attributable to greed.  People are reticent to flaunt their wealth for fear of being lumped in with those guys from Wall Street.  Since, our homes are the most obvious symbol of our material worth, a more modest presentation seems appropriate.

     But the chicks think there's another reason for the change.  One that is driven by positive beliefs, rather than negativity.   We think that people are becoming more aware of their use of our earth's precious resources.  The green movement, once equated with a once a year observance, Earth Day has now permeated into our daily lives.  

There is a deliberate consciousness about using less  resources.  We see it in the increased use of recycling, paper over plastic at the grocery store, or better yet, bring your own reusable bag, and bicycling or walking whenever possible.  There are recognized health benefits associated with a move towards green.  Less air pollution and toxins means that we feel better and have fewer allergies.  Finally, the trend towards purchasing our food from local growers and organically grown if possible is one more way that people are adopting a greener lifestyle.

There is no more dramatic way to reduce your carbon footprint than by true downsizing.  Less electricity, gas and water will be consumed in a smaller home.  You will have less garbage to contribute to our landfills. We believe that people in our hometown are looking for ways to use sustainable materials in their homes too.   

With the price of builder's lots declining in value, it is now possible to purchase and build your own green home on the North Shore.  There are several neighborhoods that come to mind that are particularly suited to this end.  In particular, the presidential streets in Glencoe, the tree named streets in Winnetka and many neighborhoods in west Wilmette.  Instead of 6 bedrooms with 6 plus baths, you build a home that has 3  bedrooms and 2 plus baths.  And you can use bamboo flooring, install solar panels or tankless water heaters or any other of sustainable products that you desire. 

The advantages of building a green home in one of these neighborhoods are plenty.  You can have new construction, you will actually use all of the rooms in your home, rather than the fraction that you presently use.  There are builders willing to build green homes on the North Shore. You'll likely be within walking distance of public transportation (to Chicago or Ravinia) and the wonderful farmer's markets.  Your home will fit in perfectly to these charming neighborhoods.  The best part of this plan is that you will be able to truly downsize and remain on the beautiful North Shore!

What to you think?  I'd love to hear from you.  Post a comment or send me an email. 

Is refinancing the patriotic thing to do?

This week, national mortgage rates dropped again, with 30 year fixed rates averaging 5.13%, down from 5.26% last week.  15 year fixed rates also dropped from 5.01% to 4.79%.  While the ARM's and jumbos also declined, they are in the 6% range. (source: Bankrate.com).  Along with the infusion of megacash (yours and mine) into our financial institutions, it appears that the Feds are making it quite attractive to borrow money again, whether it be a mortgage or  refinancing your existing mortgage. 

It's more than that though.  These deliberate actions by our Government (lowering the interest rates and providing liquidity to banks and other lenders) were done for the specific purpose of getting the economy moving again.  The belief is that if you lower your monthly mortgage payments, you will have more money to spend in other parts of the economy (shoes anyone?).  Or in the worse case scenario, you can avoid foreclosure.  

Refinancing your existing mortgage then, can be viewed as your patriotic duty, right?  Not so fast though.  

Here's our anecdotal tale of one person's attempt to refinance.  We have this friend, Pete.  He lives in our hometown, owns his own home with mortgage, own business and has savings. He wants to do his bit to support our country.  Pete talked to several banks and mortgage brokers in our area.  In order to even be considered for a refinance loan, Pete will have to provide all of the following:

1.   an income stream:  this means a job or other provable source of income,

2.  net worth:  this means more than the existing equity in your home.  It means an investment portfolio or savings account! 

3.  a great credit score:  just like the math portion of the SAT's, anything 720 or higher, and,

4.   your home has to be worth more than what you are looking to borrow!

These seem simple enough to provide on paper, but a closer examination of each will show how difficult it may be to actually refinance.  

If you have recently lost your job or have a job that is dependent on commissions (like real estate for instance) or have even started your own business, you may have an actual need to lower your monthly mortgage payments in order to pay your other bills.  Yet, you won't be able to provide your lender with  an established income stream, thus, preventing you from refinancing.  We have been told that you will have to show two years of income in order to qualify.

If you have your money in the stock market, you have probably seen your portfolio plummet in the past several months.  Is there enough to satisfy your lender?

If you haven't done so recently, check your credit reports.  You are entitled to examine your credit report annually, at no charge.  Go to www.annualcreditreport.com or contact the reporting agencies directly to obtain your reports.  These agencies are Transunion, Equifax and Experion.

Finally, it is possible your home might not be worth what you paid for it, especially if you purchased in the past few years.   Ask your realtor to recommend a reputable appraiser evaluate your home.  If you can afford it, it's a good idea to have this done before you begin your refinancing application process.  Then you will have something to compare with the lender's appraisal.  As a caveat, we have been told that in order to qualify for a refinance loan, you will have to have at least twenty percent (20%) equity in your home.  While you are talking with your realtor, ask her for a list of what homes have sold in your neighborhood in the past month.  This is the same list that the appraiser will be working from when determining your home's value.  Recent appraisals only look at sold properties in the past month as opposed to the 3/6 month time frame used a few years ago.

In order to figure out if refinancing is your best move, it is essential that you talk personally with your lender in order to get the exact figures you will need in order to refinance.

Don't forget to find out about the closing costs too.  We have been told that these charges can total in the thousands.  If you are planning on selling your home in the next couple of years, you will have to determine whether you will be saving money after paying the closing costs.  Ideally, the lender that currently have your mortgage with may have a lending program that offers lower closing costs.  It might be in your best interest to inquire.

As for our friend Pete, he was able to successfully refinance!  God Bless America!