2009 will be a good time to buy

Many consumers are wondering when will the real estate market hit the bottom and when should I consider purchasing...well I think we are about there. Many agents are actually experiencing an increase in showing activity and contracts since the beginning of the year. A recent forecast from Moody's Economy.com suggested that the Chicago region will be hit less than other markets. They have estimated that the three year drop for single family homes which should begin recovering in 2010, should hit 17.1% before recovery begins. The average decrease in rthe area has been 13.3% since mid-2008 compared to a national decline of 21.3%. Check out a recent article from Crain's that includes a nice graph comparing major metro areas.

So we may be getting close afterall.

New Sales Data...Sales down but Median Prices Up

It's a mixed bag of news: Statistics for 2008 show a slowdown in the Chicago area market compared with the same data in 2007. Sales volumes are down and market times have increased. The good news is that the median price for condos has once again gone up.

According to 2008 city condo sales data from Midwest Real Estate Data (MRED) the dollar volume of condo sales in the city of Chicago decreased in 2008, by 27% from $6.4 billion to $4.7 billion.The number of units sold in the city dropped by 30%, from 18,061 to 12,596. The average market time increased by 22%, from 117 days on the market to 143 days. Unlike in many other cities in the nation, the median sales price of city condos continued to rise, by 5%, from $295,400 to $310,032.

Local experts, including Dave Hanna, president of the Chicago Association of Realtors (CAR), attribute the increase in median sales price to the hundreds of new-construction units that we sold (contracted for) in the three years before the market declined, but that closed in 2008.
By comparison, MRED data released by CAR show that all single-family attached (Type 2) housing, a broader category that includes condos, decreased by 29% in unit sales, and median sales price was up by 8%.

In the city, 2008 condo sales made up 53% of all residential transactions (including multi-unit), compared to 58% in 2007. Based on the database maintained by ChicagoCondosOnline.com, there are an estimated 260,000 condo units in more than 12,000 buildings in the city, with several thousand units added annually. Based on the 260,000-unit estimate and 2008 sales of 12,600 units, the turnover of units in 2008 was 4.8%.

According to MRED figures, the citywide median sales price of condos sold in 2008 was $312,032, or $284 per square foot.

For more details on Chicago's condo market, visit Market Overview on ChicagoCondosOnline.com.

Revised Tax Credits For First Time Homebuyers

It looks as if the stimulus package has finally been signed. So what does it mean to home buyers now?

There have been many revisions on this issue and the end result is very close to the homebuyer tax credit that is in place now. Click here for a side by side comparison chart.

The final bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

The bill also reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750. For the few areas where the 2009 limits were higher, the higher limits will apply. In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e.an area smaller than a county. The Secretary's discretion is again limited by the $729,750 cap. These 2009 limits will expire December 31, 2009.

The inclusion of these loan limit provisions in the final bill is a victory for homeowners, buyers and Realtors. While these new limits were included in version of the original stimulus bill approved by the House, the bill first approved by the Senate did not. NAR's Call for Action to both the House and the Senate prior to the final vote advocated strongly for the provisions which were then included in the final bill approved by both Chambers.

Parking Meters Rate Increase In Effect

Be prepared with quarters...and a lot more of them.

Beginning this weekend, rates have already gone up in the loop and the near north, near west and near south sides. According to the Chicago Tribune, the loop is now up to $3.50 an hour beginning Friday, February 13 and the near north, west and south sides go up to $2.00 an hour beginning February 16th.

The rest of the city is as follows:

• Lincoln Park to $1.00 an hour February 16-18
• North Side to $1.00 an hour February 20-28
• West Side to $1.00 an hour March 1-2
• South Side to $1.00 an hour March 5-9

Although the meter rates in many parts of the city have gone unchanged for years, the city has decided to sell of its vaulable income streams for over $1 billion dollars. Revenues are near $20 million per year but the lump sum injection will help pay for much needed public works projects now and put some money in the coffers for short falls in the coming years. But then what? That can only last so long and a $200 million annual budget shortfall can only be sustained for so long.

Stimulus Package Getting Closer

The stimulus bill has made it out of the senate and is in the house. Hopefully it will be on President Obama's desk to sign on President's Day. The real estate conncection is mostly the increase in the $15,000 tax credit that would go into effect once the bill is signed. This could be great news for people under contract now. “The enhanced $15,000 tax credit offers a powerful incentive for home buyers to get off the sidelines and represents the best opportunity for economic recovery,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

Even better, the tax credit would b e available to all buyers of their principle residence and won't have to be repaid. NAHB estimates that the $15,000 tax credit would boost home sales by almost 500,000, create more than 255,000 jobs, generate $12.3 billion in wages and salaries and increase federal, state and local tax revenue by $8.7 billion.

Good news in the new stimulus package

There has been much talk about the stimulus package and some recent changes have caught the eyes of people in the real estate industry as well as home buyers and sellers. On Wednesday the Senate passed an amendment that will include a $15,000 home purchasing tax credit in the American Recovery & Reinvestment Act of 2009 for anyone buying a primary residence within the one year period from the time this bill is passed. US News and World Report outline the details.

It is important to note that this bill has not passed yet but many potential buyers are asking questions in regards to this tax break. Ken Dickerson of RWF Mortgage in Chicago summarizes the important details:

• The tax credit is the lesser of 10% of the home price or $15,000 and can be spread equally over 2 tax years.


• The housing tax credit can be used for purchases of primary residences only…no investment properties or second homes.


• The home purchase can be an existing home, a newly constructed home, or a bank foreclosure home…but the purchase must be completed within 1 year of the passage of the American Recovery and Reinvestment Tax Act of 2009.


• The home buyer does NOT have to be a “first time home buyer” to qualify for this housing tax credit, unlike housing stimulus based tax credits from last year.


• This 2009 housing tax credit does NOT have to be repaid to the government unlike the $7,500 first time home buyer tax credit from last year UNLESS you cease to make it your primary residence within the first 24 months (i.e.. sell within 2 years).

This is great news for home buyers, if it passes, and can go a long way towards stimulating demand for new home purchases.

Unique Open House Opportunity at one of Chicago's premier coops

3500 N. Lake Shore Drive #8D

$600,000

Several units will be open Sunday, February 8th, from 2:00-4:00pm. Sign in with the doorman and enjoy this opportunity to view some of Chicago's premier coop units. Most are spacious and are in a variety of conditions depending on price and location. Many have stunning views of lake Michigan, Belmont Harbor, Lincoln Park and the city.

My unit featured here is on the 8th floor facing east and is 2400 sqft for $600,000. The unit is three bedrooms, two and one half baths includes hardwood floors, working fireplace and beautiful east views of the harbor, lake and park.

Hope to see you Sunday!

Pending Home Sales Show Healthy Gain

Yes, it's true. The National Association of Realtors has reported that the Pending Home Sales Index, a forward-looking indicator based on contracts signed, reported modest gains in December with an increase of 6.3% to 87.7. Additionally, NAR's housing affordability index (HAI), which shows the relationship between home prices, mortgage interest rates, and family income, rose 10.9% in December to 158.8 which is the most favorable number since 1970.

According to Lawrence Yun, NAR chief economist, “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month.” He continues, however, that "significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers."

Several projects adjacent to Michigan Ave offer status details

There is concern that your view may be blocked, questions whether the place you bought will ever be built and what is happening with that half built building. Well, three projects have offered updates. A recent article in the New York Times discusses what the developers of both the Spire and Waterview Tower have been dealing with. As the economy has shifted and slowed, both projects are on hold. The questions is what are they planning moving forward. Additionally, there was a lot of talk of a building going up behind The Fourth Presbyterian Church of Chicago on Michigan Avenue. This morning, Crian's Chicago wrote that the church has scrapped controversial plans with a developer in the works for almost six years.

Fannie Mae does it again

Apparently FannieMae is grumpy these days...

...as if it weren't tough enough, FannieMae has changed its lending guidleines on condos. These new guidelines will mostly impact loans on new construction projects. The ammended rules will require a much higher percentage of sold units in order for the loan to qualify under the new guidelines. The percentage is jumping from a reasonable 51% to an extraordinary 70%. Either lenders are going to have to figure out how this will impact buyers and come up with creative loan programs or FannieMae is going to have to re-evaluate.


Read the attached article for details as well as additional changes such as maximum allowed retail and percentages allowed by a single owner.

Let me know your thoughts on this.

Chicago area home prices and most affordable level in years!

A recent article in Crains Chicago reported that area home prices have not fallen as much as other markets and many communities are experience affordability levels equivalent to prices in 1993. With prices retracting and interest rates at record low levels, with inflation, home prices are affordable....believe it or not. You may have noticed that house down the street or that condo down the hall seems much more affordable than before. Well, buyers seem to be agreeing and showing activity has increased markedly over the past few months.

Some markets are predicted to experience further price adjustments downward of an additional 10-15% before inventory levels and price balance out. If interest rates remain low however, then pricing may level off sooner.