Daily Real Estate News December 7, 2006
A weakening U.S. economy is setting the stage for lower interest rates, according to a UCLA Anderson Forecast released today.
The forecast predicts real gross domestic product will rise no more than 2.7 percent next year, reflecting the weak housing market.
As a result, the Federal Reserve Board will cut interest rates to stimulate business, says Edward Leamer, director of the UCLA Anderson Forecast. Leamer says he sees the Federal Funds rate falling to 4.5 percent by the fourth quarter of next year.
Leamer also thinks housing starts will bottom out at an annual rate of 1.4 million in the second quarter of next year. As builders seek to sell inventory, new-home prices will fall to a low in the third quarter of 2007, down 10 percent from current levels, he says.
Prices for existing homes also will "nudge down a bit," he adds, noting the housing market downturn will hurt home builders, construction workers, real estate practitioners, and bankers, but will not be so severe as to force a recession.
Source: Reuters News, Jim Christie (12/07/06)
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Monday, December 11, 2006
$300 parking permit OKd for realty agents, others
November 16, 2006
BY FRAN SPIELMAN
City Hall Reporter Chicago aldermen held their noses Wednesday and expanded a residential permit parking program that has spread like wildfire -- creating a $300-a-year parking permit for real estate agents, social workers and home health care providers.
Mayor Daley tried to satisfy critics by limiting the hours of the new permit -- from 9:30 a.m. to 6 p.m., instead of 9 a.m. to 9 p.m. as originally planned. He even delayed the effective date until March 1 and included a one-year sunset.
But the changes were not enough to satisfy a parade of aldermen who say Chicago "created a monster" when it established residential permit parking 27 years ago -- and that the new permit will make it worse.
The 44-4 vote came only after Finance Committee Chairman Edward M. Burke (14th) informed aldermen they had no choice. If they failed to approve the new permit, it would blow a $2.4 million hole in Daley's 2007 budget.
"I don't want to institute an elitist system that gives real estate brokers or any other business people [who] make lots of money [the right] to park anywhere. I don't want anybody having their windows broken -- because that's what's going to happen with their fancy cars being parked in my ward," said Ald. George Cardenas (12th).
Ald. Richard Mell (33rd) said it's time a parking-starved city that has become addicted to residential permit parking go cold turkey.
Daley tried to reduce the number of residential permit parking zones in 1998, only to back off after a City Council rebellion. That's why he had little sympathy for the aldermanic complaints.
"Residential permit parking came in through the aldermen -- not through the executive branch. We had nothing to do with this," the mayor said. Over the years, residential permit parking has become the catchall solution to Chicago's parking crunch.
From June 2005 until May 2006, the city issued 101,713 permits. The annual fee is $25.
The zones got their start in 1979 on the streets surrounding Northeastern Illinois University. There are now 1,302 residential permit parking zones in the city.
© Copyright 2006 Sun-Times News Group
BY FRAN SPIELMAN
City Hall Reporter Chicago aldermen held their noses Wednesday and expanded a residential permit parking program that has spread like wildfire -- creating a $300-a-year parking permit for real estate agents, social workers and home health care providers.
Mayor Daley tried to satisfy critics by limiting the hours of the new permit -- from 9:30 a.m. to 6 p.m., instead of 9 a.m. to 9 p.m. as originally planned. He even delayed the effective date until March 1 and included a one-year sunset.
But the changes were not enough to satisfy a parade of aldermen who say Chicago "created a monster" when it established residential permit parking 27 years ago -- and that the new permit will make it worse.
The 44-4 vote came only after Finance Committee Chairman Edward M. Burke (14th) informed aldermen they had no choice. If they failed to approve the new permit, it would blow a $2.4 million hole in Daley's 2007 budget.
"I don't want to institute an elitist system that gives real estate brokers or any other business people [who] make lots of money [the right] to park anywhere. I don't want anybody having their windows broken -- because that's what's going to happen with their fancy cars being parked in my ward," said Ald. George Cardenas (12th).
Ald. Richard Mell (33rd) said it's time a parking-starved city that has become addicted to residential permit parking go cold turkey.
Daley tried to reduce the number of residential permit parking zones in 1998, only to back off after a City Council rebellion. That's why he had little sympathy for the aldermanic complaints.
"Residential permit parking came in through the aldermen -- not through the executive branch. We had nothing to do with this," the mayor said. Over the years, residential permit parking has become the catchall solution to Chicago's parking crunch.
From June 2005 until May 2006, the city issued 101,713 permits. The annual fee is $25.
The zones got their start in 1979 on the streets surrounding Northeastern Illinois University. There are now 1,302 residential permit parking zones in the city.
© Copyright 2006 Sun-Times News Group
Tuesday, December 5, 2006
Wednesday, November 29, 2006
October Existing-Home Sales Show Modest Gain
Daily Real Estate News November 28, 2006
Sales of existing homes held steady with a modest gain last month, another indication the housing market is transitioning into a more normal market in contrast with unsustainable activity last year, according to the NATIONAL ASSOCIATION OF REALTORS®.
Total existing-home sales — including single-family, townhomes, condominiums and co-ops — rose 0.5 percent to a seasonally adjusted annual rate of 6.24 million units in October from an upwardly revised pace of 6.21 million in September, but were 11.5 percent below the 7.05 million-unit level in October 2005.
“The present level of home sales demonstrates some confidence in the market, but sales are lower than sustainable due to psychological factors,” says David Lereah, NAR’s chief economist. “The demographics of our growing population, historically low and declining mortgage interest rates, and healthy job creation mean the wherewithal is there to buy homes in most of the country, but many buyers remain on the sidelines. After a period of price adjustment, we’ll see more confidence in the market and a lift to home sales should be apparent in the first quarter of 2007.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional fixed-rate mortgage was 6.36 percent in October, down from 6.4 percent in September but up from 6.07 percent in October 2005. Last week, Freddie Mac reported the 30-year rate dropped to 6.18 percent — the lowest since January of this year.
NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, says sellers in most of the country are doing what it takes to attract buyers. “With the exception of parts of the West, sellers are cutting their price enough to encourage sales,” she says. “It’s an especially good market for sellers in areas with rising jobs and a growing population where prices remain moderate — those are the areas now with the strongest price growth. On the opposite extremes, about 10 percent of the country is experiencing economic weakness, and a fourth of the nation — areas that had the biggest boom — is in a correction that will take longer to balance.”
The national median existing-home price for all housing types was $221,000 in October, which is down 3.5 percent from October 2005 when the median price spiked above adjacent months to $229,000. “The annual decline in the October median home price is skewed because there was an uncharacteristic spike in October 2005, but the trend for the fourth quarter will be prices remaining slightly below a year ago. Overall prices are projected to see modest appreciation around early spring,” Lereah says.
National NumbersTotal housing inventory levels increased 1.9 percent at the end of October to 3.85 million existing homes available for sale, which represents a 7.4-month supply at the current sales pace.Single-family home sales rose 1.3 percent to a seasonally adjusted annual rate of 5.5 million in October from a level of 5.43 million September, but were 11 percent below the 6.18 million-unit pace in October 2005. The median existing single-family home price was $221,300 in October, down 3.4 percent from a year earlier.Existing condominium and cooperative housing sales fell 4.8 percent to a seasonally adjusted annual rate of 741,000 units in October from an upwardly revised 778,000 in September, and were down 14.5 percent from the 867,000-unit level in October 2005. The median existing condo price was $214,300 in October, which is 5.3 percent lower than the previous year.
Regional ReportsExisting-home sales in the West rose 6.4 percent to an annual pace of 1.33 million in October, but were 18.9 percent lower than a year earlier. The median price in the West was $340,000, down 0.6 percent from October 2005.
In the Midwest, existing-home sales were unchanged in October, holding at a level of 1.41 million, but were down 10.2 percent from a year ago. The median price in the Midwest was $170,000, a drop of 1.2 percent from October 2005.
Existing-home sales in the South slipped 1.2 percent to an annual sales rate of 2.49 million in October, down 8.8 percent from the same period a year ago. The median price in the South was $185,000, down 7 percent from a spike in October 2005.
Existing-home sales in the Northeast declined 2.9 percent to a level of 1.01 million in October, and were down 9.8 percent from October 2005. The median existing-home price in the Northeast was $254,000, a drop of 5.2 percent from a year earlier.
— NAR
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Sales of existing homes held steady with a modest gain last month, another indication the housing market is transitioning into a more normal market in contrast with unsustainable activity last year, according to the NATIONAL ASSOCIATION OF REALTORS®.
Total existing-home sales — including single-family, townhomes, condominiums and co-ops — rose 0.5 percent to a seasonally adjusted annual rate of 6.24 million units in October from an upwardly revised pace of 6.21 million in September, but were 11.5 percent below the 7.05 million-unit level in October 2005.
“The present level of home sales demonstrates some confidence in the market, but sales are lower than sustainable due to psychological factors,” says David Lereah, NAR’s chief economist. “The demographics of our growing population, historically low and declining mortgage interest rates, and healthy job creation mean the wherewithal is there to buy homes in most of the country, but many buyers remain on the sidelines. After a period of price adjustment, we’ll see more confidence in the market and a lift to home sales should be apparent in the first quarter of 2007.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional fixed-rate mortgage was 6.36 percent in October, down from 6.4 percent in September but up from 6.07 percent in October 2005. Last week, Freddie Mac reported the 30-year rate dropped to 6.18 percent — the lowest since January of this year.
NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, says sellers in most of the country are doing what it takes to attract buyers. “With the exception of parts of the West, sellers are cutting their price enough to encourage sales,” she says. “It’s an especially good market for sellers in areas with rising jobs and a growing population where prices remain moderate — those are the areas now with the strongest price growth. On the opposite extremes, about 10 percent of the country is experiencing economic weakness, and a fourth of the nation — areas that had the biggest boom — is in a correction that will take longer to balance.”
The national median existing-home price for all housing types was $221,000 in October, which is down 3.5 percent from October 2005 when the median price spiked above adjacent months to $229,000. “The annual decline in the October median home price is skewed because there was an uncharacteristic spike in October 2005, but the trend for the fourth quarter will be prices remaining slightly below a year ago. Overall prices are projected to see modest appreciation around early spring,” Lereah says.
National NumbersTotal housing inventory levels increased 1.9 percent at the end of October to 3.85 million existing homes available for sale, which represents a 7.4-month supply at the current sales pace.Single-family home sales rose 1.3 percent to a seasonally adjusted annual rate of 5.5 million in October from a level of 5.43 million September, but were 11 percent below the 6.18 million-unit pace in October 2005. The median existing single-family home price was $221,300 in October, down 3.4 percent from a year earlier.Existing condominium and cooperative housing sales fell 4.8 percent to a seasonally adjusted annual rate of 741,000 units in October from an upwardly revised 778,000 in September, and were down 14.5 percent from the 867,000-unit level in October 2005. The median existing condo price was $214,300 in October, which is 5.3 percent lower than the previous year.
Regional ReportsExisting-home sales in the West rose 6.4 percent to an annual pace of 1.33 million in October, but were 18.9 percent lower than a year earlier. The median price in the West was $340,000, down 0.6 percent from October 2005.
In the Midwest, existing-home sales were unchanged in October, holding at a level of 1.41 million, but were down 10.2 percent from a year ago. The median price in the Midwest was $170,000, a drop of 1.2 percent from October 2005.
Existing-home sales in the South slipped 1.2 percent to an annual sales rate of 2.49 million in October, down 8.8 percent from the same period a year ago. The median price in the South was $185,000, down 7 percent from a spike in October 2005.
Existing-home sales in the Northeast declined 2.9 percent to a level of 1.01 million in October, and were down 9.8 percent from October 2005. The median existing-home price in the Northeast was $254,000, a drop of 5.2 percent from a year earlier.
— NAR
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Generation X May BoostSagging Real-Estate Market
By Kristen Gerencher From MarketWatch
The housing market may be in a slump, but the industry's long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver.
Rising affordability concerns in some home and rental markets remain a challenge, but the generations coming up behind the baby boomers are giving home builders a run for their money, experts said. With more immigration and people living alone, demographic shifts are pressing developers to reconsider what's worked in the past.
Generation X, typically defined as those born between 1965 and 1979, comprise a little more than half of the market for newly constructed homes, said James Chung, president of Reach Advisors, a Boston-based marketing strategy and research firm.
But that doesn't mean the homes that lured baby boomers, born between 1946 and 1964, are meeting the needs of the 30-somethings shopping now.
"Generation X is in the heart of their entry-level home-buying years and are just now entering their peak trade-up years," Chung said. "They haven't yet stolen the thunder of the boomers when it comes to trade-up homes. It's a big shift coming up for home builders and developers."
Partly because many Gen-Xers are buying into the market after the run-up in housing prices began about a decade ago, they tend not to be as moved by deluxe kitchens, huge square footage and "prestige addresses" as their older counterparts are, he said.
"It's the trade-off generation. It's no longer sort of the live-large mindset," Chung said. "They're living under different economic realities than their predecessors. They carry 70% more debt than the baby boomers did at that point in their lives because of the cost of housing.... Almost all of that is housing debt."
Many are forgoing master suites and separate wings for kids and adults and instead seeking smaller footprints with space designed for family usage rather than individual usage, Chung said.
The market has yet to catch up with their particular demands, he said. "What we're seeing is a fundamental mismatch between what these buyers are wanting and what the market is offering. They're settling for what's available vs. finding what they really want."
As for Generation Y, also know as the echo boomers who were born after 1980, it's premature to draw conclusions, Gadi Kaufmann, chief executive of Robert Charles Lesser and Co., a real estate advisory firm, said during a ULI panel discussion on what young consumers want.
"Gen Y is going to be in student housing and rentals for the next six years," he said. See how student housing has changed today.
More solo dwellers
Also affecting home builders and developers is the rise of nontraditional households, Kaufmann said.
The portion of people living without a spouse or roommate ballooned 23% since 1980, he said. Only 22% of households were made up of a single person living alone 26 years ago compared with 27% in 2005.
A 57% rise in single-parent households and a 26% decline in the percentage of married couples with kids -- 23% last year compared with 31% in 1980 -- has further changed the housing landscape, Kaufmann said.
There's also more migration from expensive cities to less costly areas, as well as people moving away from their hometowns, he said.
Southern states and those bordering pricey ones, such as Arizona and Nevada, are the beneficiaries of home buyers who can't afford or become disenchanted with higher-priced areas such as California and the Northeast, he said.
So-called second- and third-tier cities with populations of 300,000 to 1 million are attractive to the youth market and poised for growth, Kaufmann told the audience. "Some of the most exciting towns in America are those second-tier cities."
Young people also tend not to mind close living, he said. As more people live alone and wait longer to marry and start families, many in their 20s and 30s are drawn to compact apartment and condo units in urban areas where they can interact with their neighbors.
The growth of the Hispanic population also portends shifts, though what kind remains unclear, Chung said. Latinos currently have a homeownership rate in the high 40% range compared with about 72% for whites. "If they move up in homeownership at a faster rate, that's going to be very positive for the home market."
Love affair continues
Whether the housing market has hit a bottom or not remains controversial.
Last week, the U.S. Commerce Department reported that the nation's economy grew at a preliminary annual rate of 1.6% from July through September, its slowest pace since early 2003 due to cooling in the housing market.
In a survey done in October by Reach Advisors, 41% of 500 consumers looking to buy a house in the last 12 months or planning to look in the next year said their plans to move were affected by market conditions, compared with 27% of consumers who said so in July 2005, Chung told ULI attendees at a panel discussion on the risks and benefits of homeownership.
The portion anticipating a drop in home prices was 32% last month compared with 13% in July of last year, meaning that two-thirds still don't expect price drops, he said. What's more, 93% said owning a home remains a strong or acceptable long-term investment.
Though the housing market may be in the doldrums, Chung said he's confident Americans' love affair with homeownership will endure even after this recent extreme swing in demand. "From 2003 to 2005 it wasn't just a love affair with your primary home. It was a torrid affair with real estate. It was your home plus your home on the side."
Still, a balance of owners and renters is desirable because homeownership isn't for everyone, Ron Terwilliger, chief executive of Trammell Crow Residential, a builder and manager of multifamily housing based in Atlanta, said during the same ULI panel discussion.
"You're better off renting unless you're going to be in a home for at least five years because of the costs of getting in and out," he told attendees.
"The reason this cycle went up so high and flattened so quickly is more speculative buying than I've seen in my 35 years in the business," Terwilliger said. "It's unfortunate so many people bought intending to flip."
It will take time to regain equilibrium, he said. "There's a lot of pain going on in the investment community."
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved
-- November 07, 2006
The housing market may be in a slump, but the industry's long-term trends look promising as younger generations begin to buy and trade up. That was the consensus among a group of consultants, analysts and developers speaking at the recent annual meeting of the Urban Land Institute in Denver.
Rising affordability concerns in some home and rental markets remain a challenge, but the generations coming up behind the baby boomers are giving home builders a run for their money, experts said. With more immigration and people living alone, demographic shifts are pressing developers to reconsider what's worked in the past.
Generation X, typically defined as those born between 1965 and 1979, comprise a little more than half of the market for newly constructed homes, said James Chung, president of Reach Advisors, a Boston-based marketing strategy and research firm.
But that doesn't mean the homes that lured baby boomers, born between 1946 and 1964, are meeting the needs of the 30-somethings shopping now.
"Generation X is in the heart of their entry-level home-buying years and are just now entering their peak trade-up years," Chung said. "They haven't yet stolen the thunder of the boomers when it comes to trade-up homes. It's a big shift coming up for home builders and developers."
Partly because many Gen-Xers are buying into the market after the run-up in housing prices began about a decade ago, they tend not to be as moved by deluxe kitchens, huge square footage and "prestige addresses" as their older counterparts are, he said.
"It's the trade-off generation. It's no longer sort of the live-large mindset," Chung said. "They're living under different economic realities than their predecessors. They carry 70% more debt than the baby boomers did at that point in their lives because of the cost of housing.... Almost all of that is housing debt."
Many are forgoing master suites and separate wings for kids and adults and instead seeking smaller footprints with space designed for family usage rather than individual usage, Chung said.
The market has yet to catch up with their particular demands, he said. "What we're seeing is a fundamental mismatch between what these buyers are wanting and what the market is offering. They're settling for what's available vs. finding what they really want."
As for Generation Y, also know as the echo boomers who were born after 1980, it's premature to draw conclusions, Gadi Kaufmann, chief executive of Robert Charles Lesser and Co., a real estate advisory firm, said during a ULI panel discussion on what young consumers want.
"Gen Y is going to be in student housing and rentals for the next six years," he said. See how student housing has changed today.
More solo dwellers
Also affecting home builders and developers is the rise of nontraditional households, Kaufmann said.
The portion of people living without a spouse or roommate ballooned 23% since 1980, he said. Only 22% of households were made up of a single person living alone 26 years ago compared with 27% in 2005.
A 57% rise in single-parent households and a 26% decline in the percentage of married couples with kids -- 23% last year compared with 31% in 1980 -- has further changed the housing landscape, Kaufmann said.
There's also more migration from expensive cities to less costly areas, as well as people moving away from their hometowns, he said.
Southern states and those bordering pricey ones, such as Arizona and Nevada, are the beneficiaries of home buyers who can't afford or become disenchanted with higher-priced areas such as California and the Northeast, he said.
So-called second- and third-tier cities with populations of 300,000 to 1 million are attractive to the youth market and poised for growth, Kaufmann told the audience. "Some of the most exciting towns in America are those second-tier cities."
Young people also tend not to mind close living, he said. As more people live alone and wait longer to marry and start families, many in their 20s and 30s are drawn to compact apartment and condo units in urban areas where they can interact with their neighbors.
The growth of the Hispanic population also portends shifts, though what kind remains unclear, Chung said. Latinos currently have a homeownership rate in the high 40% range compared with about 72% for whites. "If they move up in homeownership at a faster rate, that's going to be very positive for the home market."
Love affair continues
Whether the housing market has hit a bottom or not remains controversial.
Last week, the U.S. Commerce Department reported that the nation's economy grew at a preliminary annual rate of 1.6% from July through September, its slowest pace since early 2003 due to cooling in the housing market.
In a survey done in October by Reach Advisors, 41% of 500 consumers looking to buy a house in the last 12 months or planning to look in the next year said their plans to move were affected by market conditions, compared with 27% of consumers who said so in July 2005, Chung told ULI attendees at a panel discussion on the risks and benefits of homeownership.
The portion anticipating a drop in home prices was 32% last month compared with 13% in July of last year, meaning that two-thirds still don't expect price drops, he said. What's more, 93% said owning a home remains a strong or acceptable long-term investment.
Though the housing market may be in the doldrums, Chung said he's confident Americans' love affair with homeownership will endure even after this recent extreme swing in demand. "From 2003 to 2005 it wasn't just a love affair with your primary home. It was a torrid affair with real estate. It was your home plus your home on the side."
Still, a balance of owners and renters is desirable because homeownership isn't for everyone, Ron Terwilliger, chief executive of Trammell Crow Residential, a builder and manager of multifamily housing based in Atlanta, said during the same ULI panel discussion.
"You're better off renting unless you're going to be in a home for at least five years because of the costs of getting in and out," he told attendees.
"The reason this cycle went up so high and flattened so quickly is more speculative buying than I've seen in my 35 years in the business," Terwilliger said. "It's unfortunate so many people bought intending to flip."
It will take time to regain equilibrium, he said. "There's a lot of pain going on in the investment community."
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved
-- November 07, 2006
Tuesday, November 7, 2006
NAR Bullish on Housing Market, Advises Consumers to Take Action Now While Conditions Remain Favorable
WASHINGTON, November 03, 2006 -
In a full-page newspaper advertisement running in six of the nation’s leading newspapers beginning today, the leadership of the National Association of Realtors® is launching a national campaign to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes.
NAR’s first-ever newspaper blitz features the headline, “It’s a great time to buy or sell a home.” 650k PDF" href="http://www.realtor.org/files/home_buyers___sellers/good_time_to_buy_ad.pdf">The advertisement (650k PDF) points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year.
“Homeownership is a safe, secure way to build long term wealth. The national median price of homes bought 10 years ago has increased 88 percent. The number of U.S. households is expected to increase 15 percent during the next decade, creating a continued high demand for housing,” the ad reads.
It quotes former Federal Reserve Chairman Alan Greenspan saying, “Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter.”
The advertisement appears today in the Wall Street Journal and USA Today, and will run Sunday in the New York Times, Washington Post, Los Angeles Times and Chicago Tribune. It will run in the same newspapers again on the weekend of November 12.
NAR President Thomas M. Stevens of Vienna, Va., said the newspaper ads are the beginning of an NAR campaign to urge buyers and sellers to take advantage of the favorable market conditions. Two new network television and radio ads directed at buyers and sellers will begin airing in second week of January. The new spots will be rotated into NAR’s $40 million network Public Awareness Campaign.
NAR’s 1.3 million members and state and local Realtor® associations are being encouraged to adopt the message in their own advertising and communications to consumers, Stevens said.
“The market is much better than you might hear or read. Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change,” Stevens said.
Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, according to NAR’s existing-home sales report. The national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005, when the median was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.40 percent in September, down from 6.52 percent in August.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
© Copyright NATIONAL ASSOCIATION of REALTORS® I Headquarters: 430 North Michigan Avenue, Chicago, IL 60611 DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
In a full-page newspaper advertisement running in six of the nation’s leading newspapers beginning today, the leadership of the National Association of Realtors® is launching a national campaign to urge home buyers who have been waiting to buy the home of their dreams to act now before the market changes.
NAR’s first-ever newspaper blitz features the headline, “It’s a great time to buy or sell a home.” 650k PDF" href="http://www.realtor.org/files/home_buyers___sellers/good_time_to_buy_ad.pdf">The advertisement (650k PDF) points out that interest rates have fallen seven months in a row and are near 40 year lows, inventories of existing homes are higher than they have been in decades and prices have stabilized. But the perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year.
“Homeownership is a safe, secure way to build long term wealth. The national median price of homes bought 10 years ago has increased 88 percent. The number of U.S. households is expected to increase 15 percent during the next decade, creating a continued high demand for housing,” the ad reads.
It quotes former Federal Reserve Chairman Alan Greenspan saying, “Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter.”
The advertisement appears today in the Wall Street Journal and USA Today, and will run Sunday in the New York Times, Washington Post, Los Angeles Times and Chicago Tribune. It will run in the same newspapers again on the weekend of November 12.
NAR President Thomas M. Stevens of Vienna, Va., said the newspaper ads are the beginning of an NAR campaign to urge buyers and sellers to take advantage of the favorable market conditions. Two new network television and radio ads directed at buyers and sellers will begin airing in second week of January. The new spots will be rotated into NAR’s $40 million network Public Awareness Campaign.
NAR’s 1.3 million members and state and local Realtor® associations are being encouraged to adopt the message in their own advertising and communications to consumers, Stevens said.
“The market is much better than you might hear or read. Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change,” Stevens said.
Total housing inventory levels fell 2.4 percent at the end of September to 3.75 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace, according to NAR’s existing-home sales report. The national median existing-home price for all housing types was $220,000 in September, which is 2.2 percent below September 2005, when the median was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.40 percent in September, down from 6.52 percent in August.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
© Copyright NATIONAL ASSOCIATION of REALTORS® I Headquarters: 430 North Michigan Avenue, Chicago, IL 60611 DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
Thursday, October 26, 2006
The Hottest Markets For Housing This Decade
By Amy Hoak From The Wall Street Journal Online
Median home values rose 32% from 2000 to 2005, but homes in San Diego fared a lot better than the national estimate, according to U.S. Census Bureau data released Tuesday.
The median home value for San Diego homes, adjusted for inflation, rose 127% to $567,000 from $249,000, during the period. It was the largest increase among the country's biggest cities, according to the Bureau's American Community Survey. The survey covered 7,000 areas with a population of 65,000 or more.
Of the 15 largest cities surveyed, Los Angeles came in behind San Diego, with a median home-value increase of 110%, adjusted for inflation, followed by New York, with a rise of 79%.
Related Links The Census Bureau's American Community Survey
Of the 15 smallest cities surveyed, Boynton Beach, Fla., reigned with a real median home-value increase of 120%, followed by Folsom, Calif., where the median home value rose 100%, and Redondo Beach, Calif., with a 92% gain.
Although the survey quantifies some of the home-value gains seen in recent years, the findings aren't especially surprising. "Just about anyone who owns a home or has been in the market for one in the past few years knows first-hand how home values jumped from 2000 to 2005," said Census Bureau Director Louis Kincannon in a news release.
Perspective on recent declines
But the data put recent headlines about home price declines into perspective, said Charles Jolly, president of the San Diego Association of Realtors and a Realtor for more than 30 years.
Real estate reports that focus on recent losses are "comparing everything to last year," Jolly said. He said he's seen his share of ups and downs in the market; the current state of affairs is just another part of a cycle.
He gave an example of a particular San Diego property that sold in 2000 for $345,000 and would have sold for $745,000 in 2005. Today, it would probably sell for less than $700,000, he said.
Costs rise
The monthly cost of owning a home also rose during the first half of the decade, according to the survey. Homeowners' median monthly cost -- including mortgage payment and certain other costs, adjusted for inflation -- rose 5%, the survey found.
Among the largest cities, Detroit, Chicago and San Francisco experienced some of the greatest increases. The median monthly cost rose 24% in Detroit, 22% in Chicago and 20% in San Francisco.
Some smaller cities, such as Bryan, Texas, and Greenville, N.C., saw cost decreases of about 10%.
Rents on the rise
The median cost of renting a home also increased, jumping an inflation-adjusted 6.7% nationally between 2000 and 2005.
Large cities that experienced high jumps in the median cost of renting include San Diego, where costs rose 27%; Detroit, up 27%; and Los Angeles, up 16%.
Among the smallest cities surveyed, Redondo Beach, Calif., saw the median cost of renting increase 22%.
Real median rent cost decreased in some large cities, including San Jose, where rent costs fell 9%, and Dallas, where they dropped 3%.
Also, the survey found that more than two-thirds of the country's total occupied housing units were owner-occupied in 2005. That is, 74.3 million housing units were owner-occupied in 2005, up 4.5 million from 69.8 million owner-occupied units reported in the 2000 Census.
Largest 15 cities
Here's how home prices have fared, adjusted for inflation, in the biggest U.S. cities:
City 2000 home value 2005 home value Percent change
New York $250,746 $449,000 79%
Los Angeles 244,398 513,800 110%
Chicago 163,575 245,000 50%
Houston 87, 852 112,800 28%
Philadelphia 69,148 100,200 45%
Phoenix 121,292 184,300 52%
San Diego 249,386 566,700 127%
San Antonio, Texas 76,516 89,800 17%
Dallas 99,074 120,900 22%
San Jose, Calif. 425,657 625,40047%
Detroit 71,188 88,300 24%
Jacksonville, Fla. 95,333 144,600 52%
Indianapolis 109,503 117,900 7.7%
San Francisco 479,161 726,700 52%
Columbus, Ohio 112,337 132,100 18%
Source: U.S. Census Bureau's American Community Survey
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved
Median home values rose 32% from 2000 to 2005, but homes in San Diego fared a lot better than the national estimate, according to U.S. Census Bureau data released Tuesday.
The median home value for San Diego homes, adjusted for inflation, rose 127% to $567,000 from $249,000, during the period. It was the largest increase among the country's biggest cities, according to the Bureau's American Community Survey. The survey covered 7,000 areas with a population of 65,000 or more.
Of the 15 largest cities surveyed, Los Angeles came in behind San Diego, with a median home-value increase of 110%, adjusted for inflation, followed by New York, with a rise of 79%.
Related Links The Census Bureau's American Community Survey
Of the 15 smallest cities surveyed, Boynton Beach, Fla., reigned with a real median home-value increase of 120%, followed by Folsom, Calif., where the median home value rose 100%, and Redondo Beach, Calif., with a 92% gain.
Although the survey quantifies some of the home-value gains seen in recent years, the findings aren't especially surprising. "Just about anyone who owns a home or has been in the market for one in the past few years knows first-hand how home values jumped from 2000 to 2005," said Census Bureau Director Louis Kincannon in a news release.
Perspective on recent declines
But the data put recent headlines about home price declines into perspective, said Charles Jolly, president of the San Diego Association of Realtors and a Realtor for more than 30 years.
Real estate reports that focus on recent losses are "comparing everything to last year," Jolly said. He said he's seen his share of ups and downs in the market; the current state of affairs is just another part of a cycle.
He gave an example of a particular San Diego property that sold in 2000 for $345,000 and would have sold for $745,000 in 2005. Today, it would probably sell for less than $700,000, he said.
Costs rise
The monthly cost of owning a home also rose during the first half of the decade, according to the survey. Homeowners' median monthly cost -- including mortgage payment and certain other costs, adjusted for inflation -- rose 5%, the survey found.
Among the largest cities, Detroit, Chicago and San Francisco experienced some of the greatest increases. The median monthly cost rose 24% in Detroit, 22% in Chicago and 20% in San Francisco.
Some smaller cities, such as Bryan, Texas, and Greenville, N.C., saw cost decreases of about 10%.
Rents on the rise
The median cost of renting a home also increased, jumping an inflation-adjusted 6.7% nationally between 2000 and 2005.
Large cities that experienced high jumps in the median cost of renting include San Diego, where costs rose 27%; Detroit, up 27%; and Los Angeles, up 16%.
Among the smallest cities surveyed, Redondo Beach, Calif., saw the median cost of renting increase 22%.
Real median rent cost decreased in some large cities, including San Jose, where rent costs fell 9%, and Dallas, where they dropped 3%.
Also, the survey found that more than two-thirds of the country's total occupied housing units were owner-occupied in 2005. That is, 74.3 million housing units were owner-occupied in 2005, up 4.5 million from 69.8 million owner-occupied units reported in the 2000 Census.
Largest 15 cities
Here's how home prices have fared, adjusted for inflation, in the biggest U.S. cities:
City 2000 home value 2005 home value Percent change
New York $250,746 $449,000 79%
Los Angeles 244,398 513,800 110%
Chicago 163,575 245,000 50%
Houston 87, 852 112,800 28%
Philadelphia 69,148 100,200 45%
Phoenix 121,292 184,300 52%
San Diego 249,386 566,700 127%
San Antonio, Texas 76,516 89,800 17%
Dallas 99,074 120,900 22%
San Jose, Calif. 425,657 625,40047%
Detroit 71,188 88,300 24%
Jacksonville, Fla. 95,333 144,600 52%
Indianapolis 109,503 117,900 7.7%
San Francisco 479,161 726,700 52%
Columbus, Ohio 112,337 132,100 18%
Source: U.S. Census Bureau's American Community Survey
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved
Friday, October 13, 2006
Condo market: Hanging tough?
Worry, sure, but sales remain healthy; builders 'still bullish'
"Very good": At Metropolis, 8 W. Monroe St., 90% of the 170 units have been pre-sold, says developer Keith Giles.
What if they build it — condominiums in and around Chicago, that is — and nobody comes?
Amid a continuing binge in local condo construction, developers ponder this question as the residential real estate market — in the face of rising mortgage interest rates — begins to show signs of slowing.In white-hot cities such as Miami and Las Vegas, condo construction has gotten so far ahead of actual demand in recent months that bankers have stepped in and called a halt to high-profile projects before ground could be broken. With slowing appreciation rates and waning interest by speculators, some observers predict that a condo "correction" is on tap for Chicago next.Yet sales remain healthy so far, and there is no evidence of financial turmoil among builders. In fact, they are betting big that fears about the market are overblown.
"We're still bullish on condos. We think metro Chicago is a solid marketplace," says Christopher Huecksteadt, a director with Metrostudy in Hoffman Estates, a research firm that tracks real estate trends in big cities around the country. "If we were adding new condo units to the market and they weren't selling, that would be cause for concern. But that's not happening here."
ndeed, developers appear to be flourishing. Keith Giles, co-owner of Frankel & Giles in Chicago, won't finish up work on Metropolis, his 16-story, 170-unit condo tower at 8 W. Monroe St., until late summer. But already more than 90% of the units, priced as high as $1.5 million, are sold.
"I think we'll be completely sold out by summer," Mr. Giles says. "
Last year was the best year for condo sales in the history of Chicago, and the market appears to still be very, very good."Some critics remain unconvinced, however. Cook County's population actually dropped by 73,000 people between 2000 and 2005, new Census Bureau data show. Freddie Mac, the nation's second-largest mortgage company, based in McLean, Va., predicts that overall U.S. home sales will drop 8% this year. In many cities, condo developers are facing critical overbuilding scenarios.In Miami, 25,000 condos are under construction and another 25,000 planned — in a market where about 2,500 units sold annually over the past decade.
"Chicago has been a fairly steady and stable market compared to Miami, but if home sales turn down this year at all, that could change," warns Jack McCabe, a residential real estate consultant based in Deerfield Beach, Fla. "I don't think there are enough high-income households in Chicago to support all the expensive condos being built. There is a good chance that Chicago is going to undergo some correction."
Other observers doubt that conclusion. In downtown Chicago, there were 8,162 new condo sales in 2005, according to Appraisal Research Counselors, up from 6,298 the year before. Gail L. Lissner, a vice-president at the research firm, estimates there are currently 8,400 more condos under construction, with 6,700 of those are pre-sold.
"Some of the condo units that don't have buyers yet won't be finished until 2007 and even 2008," Ms. Lissner says. "There is still plenty of time to get them sold."
After that, she has been able to identify another 4,150 condos planned but not under construction yet; more than half have been sold.Conclusion: Chicago has 12,500 condo units either under construction or proposed, reasonable considering last year's sales total and the long lead times on high-rise towers.
"We've had increasing sales and a low inventory of unsold condos," Ms. Lissner says. "That tells you supply and demand are in reasonably good balance."
New construction sales only tell part of the story, though. Has the supply of new product hurt resales of existing condos? There is, after all, now a pool of some 60,000 units downtown overall. But again, no danger signs: In January, condo resale prices in metro Chicago were up 9.1% over the year-earlier January, according to Metrostudy.
"The metro area added 50,000 new jobs last year, and we should add another 50,000 jobs this year," says Mr. Huecksteadt of Metrostudy. "That's keeping the housing market strong."
A few years ago the local condo market, as it was elsewhere, was propped up, in part, by "flippers."
Speculation, by some accounts, represented close to 20% of condo sales here at one time. Most experts figure the ratio is now below 12%. But the speculators haven't disappeared.Tim Duquette, a sales representative with Rubloff Residential Properties, recently put down a deposit on a $284,000 one-bedroom condo soon to break ground at 847 W. Jackson Blvd. Mr. Duquette figures he may rent out the unit for a while before he sells it.
"Monthly rental rates on condos are up 18% in the past 18 months," he says. "There is still great demand for condo living, and they do make a good investment."
Such talk is enough to encourage developers to forge ahead. Jameson Realty Group of Chicago is spending $80 million to build a 39-story, 34-unit condo tower at 50 E. Chestnut St.President Charles Huzenis had just eight units sold — prices range from $2.3 million to $3.1 million — before he broke ground early in March, but he figures to sell at least 15 or 20 more before the building is finished in late 2007. That will more than cover the cost of his construction loan.
"We've looked at the demographics, and the fact is, there are 160,000 people in Cook County with net worths of $1 million or more," he says. "There is enough wealth here to support this kind of condo construction. The demand is so good this spring that it's surprising even us."
Still, some developers worry about competition in hotbeds such as the South Loop. Russland Capital Group Inc. is hoping to break ground soon on a 28-story, 268-unit tower at 1400 S. Michigan Ave. So far, some 60% of the condos are sold.
"We'd like to get to 80% before we start construction," says Alexander Vaisman, a general partner in Russland. "The problem is, there are six or eight other condo buildings going up in the neighborhood. Sales are still good, but we're feeling some pressure from the competition."
©2006 by Crain Communications Inc.
Tuesday, September 19, 2006
Glut reaction?
Sellers acknowledge that market has slowed, but buyers see opportunity in the 'G' word
By Mary Umberger Tribune staff writer
Published September 17, 2006
In the condo market, "glut" is becoming a four-letter word--at least for sellers.The once-exuberant market isn't dead--drowsy, maybe, but not dead--and it's a brilliant time to be a buyer, real estate experts say."Buyers are expecting more. They know it's a buyer's market," according to Deerfield agent Honore Frumentino. "The sellers who are willing to play ball are getting their homes sold."The ones who still think Santa Claus is going to come down the chimney--their homes are going to still be sitting there."What she, along with many other Chicago-area agents, means is that the eager seller needs to spruce up and price right to get the deal done, because there are a ton of condos on the market.To be precise, there are about 12,000 condos in a "ton," that being the number of units for sale (excluding townhouses) throughout metropolitan Chicago at the end of August, according to the Headrick-Wagner Appraisal Group of Naperville.That doesn't, however, count those for-sale-by-owner and some new units whose builders don't market through agents, according to Chip Wagner, president of Headrick-Wagner."There are large developments coming on the market that aren't being reflected on the MLS," Wagner says.Whether that's a "glut" is debatable: Some consider the market "balanced" if there's a four-month supply of homes for sale. That is, it would take four months to sell the inventory if no other properties were to come on the market. Others see it "balanced" with a six-month supply. Headrick-Wagner estimates a 6.1-month supply of condos in the overall Chicago market, just outside the more generous definition."Overall, we're almost double what we were last year in Naperville," agent Gail Niermeyersays of inventory. "And market time is probably double what it used to be--four to five months."But by the same token, I just sold one luxury condo and one so-called regular condo," she says. "People just have to be patient."And realistic, the agents say. Homeowners must pay close attention to sales prices of comparable units, and they may have to throw in some incentives--offering to pay the buyer's condo association dues or closing costs, for example."I tell sellers to watch the market to see what the last [comp] sold for and get yourself down to that sale price so you can be the next one," Niermeyer says.Such price adjustments tend to be easier said than done."People get used to things selling at a certain price level," says Palos Park broker Doug Blount. "They're reluctant to give up what they think they've gained."Frumentino says it's generational. "The younger sellers are listening more [to suggested price changes] than older sellers," she says. "Older sellers are still banking on making a killing without doing that much."Overall, though, Blount says, sellers appear to be adapting.For example, since the beginning of the year, asking prices for condos and townhouses in his southwest suburban marketplace--Orland Park, Palos Hills, Palos Park and Palos Heights--have gone up 6.2 percent, he says.But between June and the end of August, those asking prices inched up 2.8 percent, indicating that sellers are being more aggressive to get buyers' attention, Blount says.Sales prices, though, didn't dip commensurately: The average for the long period and the more recent one were essentially the same, he says."There's more negotiation," he says. "Buyers are coming in a little lower, but sellers are negotiating pretty tough, hanging on to their [lowered] price."That equilibrium may change, though, if inventories continue to pile up while would-be buyers wait and see, a phenomenon that even the National Association of Realtors acknowledges."Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy," said David Lereah, NAR's chief economist, as he announced Sept. 1 that contracts to buy all types of homes in July were down 16 percent from a year earlier.Craig LeMoyne knows it's a buyer's market, so he took his time this summer looking for a condo after a job transfer to Chicago from suburban Detroit. He traipsed through an estimated 60 units before settling in early September on a two-bedroom place on the North Side. But the deal fell through, and now he's thinking about becoming a renter again."Some of these units are just ridiculously priced," LeMoyne said. "They don't realize the market has changed."He had good reason to be deliberative in his search: He lost about $20,000 when he sold his home in Dearborn."I bought four years ago, and it was a hot market then," he said. "The market tanked. I'm very gun-shy. I don't want to make the same mistake."Though his new job is on the South Side, LeMoyne shunned the South Loop because he worried that it's overbuilt.He's hardly the first to wonder aloud about the condo-filled neighborhood, where sales outshone all other downtown areas in 2005 and through the first quarter of this year, and then dropped off, according to a report from Appraisal Research Counselors, which specializes in tracking development in downtown Chicago.In the second quarter of this year, about 2,000 units were completed, being marketed or proposed by developers there, accounting for almost half of all such condos in the broadly defined downtown area, said Appraisal Research vice president Gail Lissner.And there's more South Loop construction on the way. Nonetheless, Lissner predicted the neighborhood would continue to command a "solid market share," with demand driven by the major retail development underway along Roosevelt Road.Downtown housing, in general, has exploded to more than 80,000 units currently from 48,000 in 1990. It may top 100,000 by 2010. Sales are tending to keep up, according to her company's report.Investors have played a significant role in those sales throughout the housing boom, and Lissner and the report's co-author, Ron DeVries, worry about how much "flippers"--investors who attempt to resell units right away--will weigh on an overall slowing market. So far, they say, concerns about investors who just walk away, leaving their purchase deposits on the table, haven't played out, they said.Flippers are impossible to quantify because sales contracts and property-transfer data don't spell out the intentions of a buyer, analysts say. But industry studies of quick-turnaround sales and other indicators suggest flippers may have been involved with as much as 30 percent of sales in some of the nation's "superheated" markets, according to David Berson, chief economist for Fannie Mae. Anecdotally, flippers were very active in some parts of Chicago at the height of the boom, though they're not a significant presence in the condo market now, according to local agents."The investors have disappeared," said Arlington Heights agent Mary Zentz. "Now, with the market slowed down, there is just no opportunity to have the easy sale. They can't find the fast turnaround."Baby Boomers also are credited with fueling the condo market, and industry experts expect that to continue.Frumentino, for one, expects Boomers to continue to downsize from single-family homes as their nests empty and they approach retirement. "We'll still have a lot of Baby Boomers who want to make lifestyle changes, and it won't matter [for them] what's happening with the economy."She says that sales of condos and townhouses throughout the North Shore are down about 10 percent down from last year, with 202 going under contract last month, down from 226 in August 2005. About 1,600 North Shore condos and townhouses are for sale now, though comparable MLSNI inventory data for last year aren't available, she said."We have about an eight-month supply, and that's not bad," she says. "Until recently, until the boom, it took four or five months to sell anything," she said. "The market is price-sensitive, but it is not dead. If people see value in a home, they're going for it."But "this is not a market that has any forgiveness," Frumentino said. "Everything has to look good, show well, price well."She said the current wave of incentives from sellers may be short-lived."Once we get into 2007, I think they won't be such an issue. In the last part of the year, you always have sellers who don't want to carry [their units] into the next year and are willing to get closed by the first of the year."Such a change would be expected as the market "normalizes," she says."We've just had the longest abnormal market since the '70s. This was a run that nobody could predict and we enjoyed it for a long time, and now we're back to normal."Blount says he's expecting next month to indicate where the market is heading. "I think October will tell us what's really happening. August is typically a slower market, and I'm thinking this year is a more typical year than we've seen for a while."I'm not too concerned at this point," he says. "The market was very strong for a couple of years, and it can't go on forever."Frumentino said the game has shifted to buyers. "It's been a long time coming for them. They had to wait, but now they're flexing their muscles."We're all taking note."
----------mumberger@tribune.com E-mail this story
Copyright © 2006, Chicago Tribune
By Mary Umberger Tribune staff writer
Published September 17, 2006
In the condo market, "glut" is becoming a four-letter word--at least for sellers.The once-exuberant market isn't dead--drowsy, maybe, but not dead--and it's a brilliant time to be a buyer, real estate experts say."Buyers are expecting more. They know it's a buyer's market," according to Deerfield agent Honore Frumentino. "The sellers who are willing to play ball are getting their homes sold."The ones who still think Santa Claus is going to come down the chimney--their homes are going to still be sitting there."What she, along with many other Chicago-area agents, means is that the eager seller needs to spruce up and price right to get the deal done, because there are a ton of condos on the market.To be precise, there are about 12,000 condos in a "ton," that being the number of units for sale (excluding townhouses) throughout metropolitan Chicago at the end of August, according to the Headrick-Wagner Appraisal Group of Naperville.That doesn't, however, count those for-sale-by-owner and some new units whose builders don't market through agents, according to Chip Wagner, president of Headrick-Wagner."There are large developments coming on the market that aren't being reflected on the MLS," Wagner says.Whether that's a "glut" is debatable: Some consider the market "balanced" if there's a four-month supply of homes for sale. That is, it would take four months to sell the inventory if no other properties were to come on the market. Others see it "balanced" with a six-month supply. Headrick-Wagner estimates a 6.1-month supply of condos in the overall Chicago market, just outside the more generous definition."Overall, we're almost double what we were last year in Naperville," agent Gail Niermeyersays of inventory. "And market time is probably double what it used to be--four to five months."But by the same token, I just sold one luxury condo and one so-called regular condo," she says. "People just have to be patient."And realistic, the agents say. Homeowners must pay close attention to sales prices of comparable units, and they may have to throw in some incentives--offering to pay the buyer's condo association dues or closing costs, for example."I tell sellers to watch the market to see what the last [comp] sold for and get yourself down to that sale price so you can be the next one," Niermeyer says.Such price adjustments tend to be easier said than done."People get used to things selling at a certain price level," says Palos Park broker Doug Blount. "They're reluctant to give up what they think they've gained."Frumentino says it's generational. "The younger sellers are listening more [to suggested price changes] than older sellers," she says. "Older sellers are still banking on making a killing without doing that much."Overall, though, Blount says, sellers appear to be adapting.For example, since the beginning of the year, asking prices for condos and townhouses in his southwest suburban marketplace--Orland Park, Palos Hills, Palos Park and Palos Heights--have gone up 6.2 percent, he says.But between June and the end of August, those asking prices inched up 2.8 percent, indicating that sellers are being more aggressive to get buyers' attention, Blount says.Sales prices, though, didn't dip commensurately: The average for the long period and the more recent one were essentially the same, he says."There's more negotiation," he says. "Buyers are coming in a little lower, but sellers are negotiating pretty tough, hanging on to their [lowered] price."That equilibrium may change, though, if inventories continue to pile up while would-be buyers wait and see, a phenomenon that even the National Association of Realtors acknowledges."Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy," said David Lereah, NAR's chief economist, as he announced Sept. 1 that contracts to buy all types of homes in July were down 16 percent from a year earlier.Craig LeMoyne knows it's a buyer's market, so he took his time this summer looking for a condo after a job transfer to Chicago from suburban Detroit. He traipsed through an estimated 60 units before settling in early September on a two-bedroom place on the North Side. But the deal fell through, and now he's thinking about becoming a renter again."Some of these units are just ridiculously priced," LeMoyne said. "They don't realize the market has changed."He had good reason to be deliberative in his search: He lost about $20,000 when he sold his home in Dearborn."I bought four years ago, and it was a hot market then," he said. "The market tanked. I'm very gun-shy. I don't want to make the same mistake."Though his new job is on the South Side, LeMoyne shunned the South Loop because he worried that it's overbuilt.He's hardly the first to wonder aloud about the condo-filled neighborhood, where sales outshone all other downtown areas in 2005 and through the first quarter of this year, and then dropped off, according to a report from Appraisal Research Counselors, which specializes in tracking development in downtown Chicago.In the second quarter of this year, about 2,000 units were completed, being marketed or proposed by developers there, accounting for almost half of all such condos in the broadly defined downtown area, said Appraisal Research vice president Gail Lissner.And there's more South Loop construction on the way. Nonetheless, Lissner predicted the neighborhood would continue to command a "solid market share," with demand driven by the major retail development underway along Roosevelt Road.Downtown housing, in general, has exploded to more than 80,000 units currently from 48,000 in 1990. It may top 100,000 by 2010. Sales are tending to keep up, according to her company's report.Investors have played a significant role in those sales throughout the housing boom, and Lissner and the report's co-author, Ron DeVries, worry about how much "flippers"--investors who attempt to resell units right away--will weigh on an overall slowing market. So far, they say, concerns about investors who just walk away, leaving their purchase deposits on the table, haven't played out, they said.Flippers are impossible to quantify because sales contracts and property-transfer data don't spell out the intentions of a buyer, analysts say. But industry studies of quick-turnaround sales and other indicators suggest flippers may have been involved with as much as 30 percent of sales in some of the nation's "superheated" markets, according to David Berson, chief economist for Fannie Mae. Anecdotally, flippers were very active in some parts of Chicago at the height of the boom, though they're not a significant presence in the condo market now, according to local agents."The investors have disappeared," said Arlington Heights agent Mary Zentz. "Now, with the market slowed down, there is just no opportunity to have the easy sale. They can't find the fast turnaround."Baby Boomers also are credited with fueling the condo market, and industry experts expect that to continue.Frumentino, for one, expects Boomers to continue to downsize from single-family homes as their nests empty and they approach retirement. "We'll still have a lot of Baby Boomers who want to make lifestyle changes, and it won't matter [for them] what's happening with the economy."She says that sales of condos and townhouses throughout the North Shore are down about 10 percent down from last year, with 202 going under contract last month, down from 226 in August 2005. About 1,600 North Shore condos and townhouses are for sale now, though comparable MLSNI inventory data for last year aren't available, she said."We have about an eight-month supply, and that's not bad," she says. "Until recently, until the boom, it took four or five months to sell anything," she said. "The market is price-sensitive, but it is not dead. If people see value in a home, they're going for it."But "this is not a market that has any forgiveness," Frumentino said. "Everything has to look good, show well, price well."She said the current wave of incentives from sellers may be short-lived."Once we get into 2007, I think they won't be such an issue. In the last part of the year, you always have sellers who don't want to carry [their units] into the next year and are willing to get closed by the first of the year."Such a change would be expected as the market "normalizes," she says."We've just had the longest abnormal market since the '70s. This was a run that nobody could predict and we enjoyed it for a long time, and now we're back to normal."Blount says he's expecting next month to indicate where the market is heading. "I think October will tell us what's really happening. August is typically a slower market, and I'm thinking this year is a more typical year than we've seen for a while."I'm not too concerned at this point," he says. "The market was very strong for a couple of years, and it can't go on forever."Frumentino said the game has shifted to buyers. "It's been a long time coming for them. They had to wait, but now they're flexing their muscles."We're all taking note."
----------mumberger@tribune.com E-mail this story
Copyright © 2006, Chicago Tribune
Monday, August 28, 2006
Which States Have the Highest Closing Fees?
Thursday, August 10, 2006 -
NEW YORK, NY -Bankrate, Inc. announced that it has released its 2006 National Closing Cost Survey. The survey provides a comparison of lender, title and settlement fees in 51 geographic locations, which includes cities in all 50 states and the District of Columbia. Each state listing includes their current ranking, compared to their 2005 position, a detailed breakdown of average closing fees for that state, and a printable worksheet for consumers to compare average costs to their lender's fees.
In conjunction with the Closing Cost Survey, Bankrate commissioned a national poll conducted by Roper asking 1,005 consumers about their closing cost fees. Of the homeowners surveyed, 13 percent said that they paid more on their closing costs than what they were told by their lender. Those who found their lender's estimates to come in lower than expected totaled 8%. However, the majority of homeowners (60%) found that their closing costs were about the same as the estimate they received from their lender.
"No matter where you live, it pays to shop around," said Daniel P. Ray, editor in chief of Bankrate.com. "Our closing cost estimates, teamed with our mortgage rate table data, provide consumers the knowledge and confidence needed during the home purchasing process," Mr. Ray added.
Bankrate's Closing Cost Survey was conducted by obtaining eight to 10 good faith estimates in each state from the Web sites of online lenders. Researchers picked a ZIP code in some of the largest cities in each state and requested information on the closing costs for at $200,000 loan there. They requested fees on a 30-year, fixed-rate mortgage for a borrower with a 20 percent down payment and good credit to buy a single-family house. Average Closing Fees by State:
1. New York $3,887
2. Texas $3,578
3. Hawaii $3,407
4. Ohio $3,354
5. Florida $3,349
6. Connecticut $3,284
7. Alaska $3,265
8. New Mexico $3,239
9. Kentucky $3,206
10. Alabama $3,189
11. Oklahoma $3,181
12. Pennsylvania $3,175
13. New Jersey $3,158
14. Massachusetts $3,143
15. Oregon $3,137
16. Mississippi $3,102
17. California $3,097
18. Louisiana $3,056
19. Idaho $3,049
20. Georgia $3,046
21. Tennessee $3,016
22. Nevada $2,993
23. Colorado $2,988
23. South Carolina $2,988
25. Delaware $2,984
26. Wisconsin $2,972
27. Maine $2,961
27. Rhode Island $2,961
29. Vermont $2,950
30. Minnesota $2,919
31. Illinois $2,918
32. Utah $2,913
32. Virginia $2,913
34. North Carolina $2,905
35. Arkansas $2,904
36. North Dakota $2,895
37. Washington $2,887
38. Maryland $2,876
39. Nebraska $2,874
40. Iowa $2,841
41. West Virginia $2,823
42. South Dakota $2,817
43. Indiana $2,793
44. Kansas $2,787
45. Arizona $2,784
46. Washington, D.C. $2,772
46. Wyoming $2,772
48. Montana $2,737
49. New Hampshire $2,734
40. Michigan $2,714
51. Missouri $2,713
The study does not include taxes, other governmental fees and escrow fees.The Closing Cost Poll was conducted July 21-23 by Roper Public Affaires and Media, a part of GfK NOP. A total of 1,005 adults aged 18+ were interviewed across the United States. The margin of error for results based on the total sample is plus or minus 3 percentage points. The margin of error for subgroups may be higher.
Copyright © 2006 BEXT Inc.
Tuesday, August 22, 2006
Apartment wave forms on Chicago's horizon From the Crain's Chicago Business Newsroom As condos cool, rental construction heats up
August 20 08:28:00, 2006 By Alby Gallun
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Amid rising occupancies and rents, the downtown apartment market is on the verge of its biggest construction boom in nearly 20 years.
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Amid rising occupancies and rents, the downtown apartment market is on the verge of its biggest construction boom in nearly 20 years.
Developers will add more than 1,250 apartments to the downtown market this year and are working on plans to build as many as 8,000 units over the next four years, according to a report by Appraisal Research Counselors, a Chicago real estate consultancy. That would increase the total 44% to roughly 30,250 units.
Condominiums have been the property type of choice for many downtown developers, but some now are turning to apartments as the condo market slows.
The rental market, meanwhile, is surging after a long slump, as an improved job market boosts demand for apartments and thousands of units are converted into condos, shrinking supply. The number of units fell 25% since 1991.
"Supply has gone way down and with the rise in rents and occupancies, a lot of these projects are feasible right now," says Appraisal Research Vice-president Ron DeVries.
After bottoming out at 89.7% in 2002, the downtown rental occupancy rate hit 97.2% at the end of the second quarter, according to Appraisal Research.
With the upper hand over tenants, downtown landlords have nixed concessions like free rent, fueling a 13% increase in effective rents at luxury buildings over the past year.
The timing couldn't be better for a few developers who are close to completing projects, including Chicago-based Golub & Co., which is leasing units at the Streeter, a 481-unit tower at 345 E. Ohio St., and Fifield Cos. of Chicago, which is wrapping up the 450-unit Residences at Left Bank at 300 N. Canal St.
Yet the party is about to get more crowded. Five new buildings accounting for 1,976 units are expected to open in 2008. Dallas-based Lincoln Property Co. and Amli Residential of Chicago each have South Loop projects in the works, and Chicago's Magellan Development Group LLC is working on two East Loop towers with a combined 1,083 units.
On top of that, Appraisal Research is tracking projects that could add about 5,562 apartments to the market over the next four years. With a slowing condo market, some condo developers are thinking about selling their sites to firms that build apartments, or even doing it themselves.
The question is whether the exuberance of developers will come back to haunt them when the supply of apartments exceeds demand. Appraisal Research's Mr. DeVries says he's not overly concerned, noting that condo conversions have removed so many apartments from the market that there are actually fewer rental units downtown now than there were 15 years ago.
"I think the market is there to absorb" extra supply, says Matthew Lawton, who sells apartment buildings and lines up financing as senior managing director in the Chicago office of Holliday Fenoglio Fowler L.P. "Will it put a governor on . . . rent growth? Absolutely."
copyright 2006 by Crain Communications Inc.
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Monday, August 21, 2006
In It for Long Haul? Might as Well Buy
Though Rising, Rates Are Still a Bargain
By Amy Hoak
MarketWatchSaturday, August 19, 2006; Page F25
MarketWatchSaturday, August 19, 2006; Page F25
CHICAGO -- Residential real estate has hit a speed bump.
Nationally, home price appreciation is slowing down from the rapid pace experienced by many markets over the past few years. Is this any time to be thinking about investing in a home? Of course it is -- if you're buying it for a place to live, not as a speculative investment, and can afford to take the leap.
"Owning a home is still financially not a bad deal, as long as you have the income to support the cost of homeownership," said Jim Gaines, research economist for the Real Estate Center at Texas A&M University. Another caveat: "You better figure on living there five or six years to make any kind of profit on the thing."
Investors who hope to profit quickly on home sales, known as property flippers, for the most part have come and gone from the market, said Raymond Sierka Jr., vice president and regional sales manager with Harris Private Bank.
At the height of the real estate boom, people would buy houses before they were built at preconstruction rates only to sell the homes for a profit a short time later, often before construction was even complete. Speculators in some markets often could sell the property for a 20 percent to 30 percent yield, he said.
A normalized real estate landscape boots out those speculators, said Anthony Hsieh, president of online lender LendingTree.com. "It's just too risky to speculate now," he said.
People now are "buying for the right reasons," said Diana Bull, a Realtor in Santa Barbara, Calif., and a regional vice president for the National Association of Realtors. Sellers no longer hold all the cards, she said, which is creating a more balanced market.
Below are several benefits of home shopping in a cooling real estate market -- the silver lining to news predicting the residential real estate party is over.
In a growing number of local markets, buyers have more time to think about a home before they make a decision on whether to purchase it. Last year, that often wasn't a likely luxury.
"Once you as a potential buyer found a house that met your needs, you had to jump on it right away," said Frank Nothaft, chief economist for Freddie Mac. "One thing that we're seeing nowadays -- compared to six or 12 months ago -- is many markets where homes are staying on the market longer."
Home sales are expected to decline in 2006, yet the year should finish as the third-strongest on record, according to a midyear report given by Nothaft last month. With fewer sales, more housing inventory is sitting on the market.
It's a change of pace for agents who not long ago didn't have many properties to show their clients, said David Drinkwater, a Realtor in Scituate, Mass., and regional vice president for the National Association of Realtors.
"Two or three years ago, there was a great deal of reacting in the marketplace because we had a smaller inventory pool to work with," Drinkwater said. That's not to say that a well-priced property won't move quickly in this environment, he said, but buyers need to educate themselves so they can recognize a housing gem when they see it.
Current conditions in many markets also afford consumers a better opportunity to negotiate.
"This market is forcing everybody to slow down and take their time," Bull said. And buyers have more of a say at the bargaining table.
In fact, getting a fair deal is even more of a priority for homeowners who can no longer bank on high appreciation rates to save them if they pay too much, Drinkwater said. If you slightly overpaid in a bidding war at the height of the real estate boom, high appreciation rates helped correct the error, he said. In many markets, no such safety net exists anymore.
Average home value appreciation nationwide should be around 7 percent for the year, and is predicted to slow even further to 6.2 percent in 2007, according to Freddie Mac. Local markets vary, however, and even as some markets are cooling, others are still on an upward climb.
Even if you, as a buyer, have the benefit of being more of a haggler than you could have been last year, still remember to look for a place that meets your needs and your budget, Nothaft said. Do the calculations and lay the groundwork before your house hunt begins.
It's easy to get caught up in the upward scooting of mortgage interest rates. But take the northward movement with a grain of salt.
Some people act like Chicken Little and feel as if the sky is falling when interest rates go up a quarter of a point, said Gaines of the Real Estate Center in Texas. Instead, keep it in perspective.
Interest rates are still way below what they were five or six years ago, he said. Even if the 30-year hits 7 percent by the end of the year, investors should keep in mind the double-digit rates of yesteryear.
The annual average for a 30-year fixed-rate mortgage was 16.63 percent in 1981, and worked its way down to 9.25 percent in 1991, according to Freddie Mac records. Homeowners may not get rates quite as low as what they could secure in 2004, when the annual average for the 30-year fixed was 5.84 percent. But relatively speaking, it's still a deal.
If you're in it for the long haul -- that is, buying a home with the intention to live in it for years -- a home is still a decent investment.
Consider this piece of information from the National Association of Realtors: Since record-keeping began in 1968, the national median home price has risen every year. In a balanced market, home values typically rise at the general rate of inflation plus 1.5 percentage points.
That's to say nothing of the tax benefits that come with owning your own home.
A look at the volatility of the stock market also proves the benefits of real estate as an investment, said Sierka, of Harris. "The downside of real estate is better than the downside on just about anything else," he said.
© 2006 The Washington Post Company
Friday, August 4, 2006
10 Simple Tips for Helping First-Time Buyers
Daily Real Estate News August 1, 2006
Here’s some basic information that can help clients who are purchasing their first home.
These tips come from Cindy Chandler, president of the North Carolina Association of REALTORS®; syndicated columnist Ilyce Glink, author of "100 Questions Every First-Time Home Buyer Should Ask"; the book "1,001 Tips for Buying and Selling a Home," by Mark Nash; and the U.S. Department of Housing and Urban Development website.
Know what you can afford to spend. Calculators on calculations include Bankrate.com and E-Loan.com can help.
Find out if you qualify for home-buying help. The U.S. Department of Housing and Urban Development, for example, has programs to help teachers, firefighters and others buy affordable homes. Federal Housing Administration loan programs offer lower down payments to help first-time buyers. Go to HUD's Web Site for details.
Get pre-qualified for a loan. First, get a copy of your credit history (free copies are available through AnnualCreditReport.com), then find a reputable lender.
Make a list of must-haves in a new home and another of would-like-to-haves. Prioritize both lists and be realistic.
Don’t spend a lot of time looking at homes you can’t afford. This reduces the temptation to overextend your budget.
Realize the neighborhood you choose is at least as important as the house. Make sure you are comfortable there. You can fix a house; a neighborhood is what it is.
Think about resale value. When you spot a home you like, consider how it will look to future buyers. For instance, proximity to a busy street can turn off some buyers.
Find out and calculate on-going maintenance costs and other factors like taxes, insurance and utilities.
Have the house inspected and carefully review the report. Come up with a negotiation strategy, remembering that the seller is obligated to fix a leaking roof but not a hole in the carpet.
Examine the preclosing statement provided by your agent or lender and ensure that you have enough cash to swing the deal when you go to settlement.
Source: Charlotte Observer, Kathy Height (07/31/2006)
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
How to Get the Most from a Cooling Market
Daily Real Estate News August 2, 2006
A drop-off in buyer demand and rising home inventories has made putting a house on the market trickier for home owners whose properties appreciated during the boom and who hope to retain their gains, says a new report on RealEstateJournal.com, The Wall Street Journal's guide to property.
RealEstateJournal.com offers these tips for selling a home in a cooling market:
1. Size up the playing field. Study your local market and investigate other homes for sale, local asking prices and what buyers are paying.
2. Price competitively. If a home is overpriced, a buyer will dismiss it and move on to the next one. Price a residence just below what the market will bear.
3. Do your legwork. Use the Internet and networking to locate a buyer.
4. Don't delay. Point out to a seller that even if an offer isn’t all he had hoped, taking it instead of waiting for a better deal can save money in the long run.
5. Negotiate. Offer concessions to potential buyers, such as making minor fixes.
Small expenditures speed a sale and, ultimately, preserve price gains.6. Play up a home's assets.
Impress buyers with a repainted interior, clean closets, nice landscaping and an orderly garage.
Source: RealEstateJournal.com (08/01/2006)
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
A drop-off in buyer demand and rising home inventories has made putting a house on the market trickier for home owners whose properties appreciated during the boom and who hope to retain their gains, says a new report on RealEstateJournal.com, The Wall Street Journal's guide to property.
RealEstateJournal.com offers these tips for selling a home in a cooling market:
1. Size up the playing field. Study your local market and investigate other homes for sale, local asking prices and what buyers are paying.
2. Price competitively. If a home is overpriced, a buyer will dismiss it and move on to the next one. Price a residence just below what the market will bear.
3. Do your legwork. Use the Internet and networking to locate a buyer.
4. Don't delay. Point out to a seller that even if an offer isn’t all he had hoped, taking it instead of waiting for a better deal can save money in the long run.
5. Negotiate. Offer concessions to potential buyers, such as making minor fixes.
Small expenditures speed a sale and, ultimately, preserve price gains.6. Play up a home's assets.
Impress buyers with a repainted interior, clean closets, nice landscaping and an orderly garage.
Source: RealEstateJournal.com (08/01/2006)
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Remodeling: Home Owners' Seven Deadly Sins
Daily Real Estate News July 31, 2006
Remodeling isn’t always a good idea, says Holly Slaughter, brand manager and consumer-experience expert for RealEstate.com.Here are what she calls the seven deadly home-improvement sins to consider before committing to projects that may work against you and lessen your resale value.
Over expanding. Outdoing all the homes on the block is never a good idea because it makes the house more expensive than the others and therefore harder to sell.
Making your home into something it’s not. Changing the style or the architecture is usually a big mistake.
Making your home into something it’s not. Changing the style or the architecture is usually a big mistake.
Changing the purpose of a room. Keep kitchens as kitchen and baths as baths. They were built that way for a reason.
Under budgeting. People routinely under budget 20 or 30 percent fewer dollars and underestimate even more in guessing the time the job will take.
Doing the job yourself. Unless you have first-rate skills, hire somebody who does.
If it’s not broke, don’t fix it. Don’t waste money on renovations that won’t pay off. Buyers won’t necessarily pay for what makes a seller happy. Siding, windows, kitchens and bathrooms are the home improvement winners, according to Remodeling magazine.
If it’s not broke, don’t fix it. Don’t waste money on renovations that won’t pay off. Buyers won’t necessarily pay for what makes a seller happy. Siding, windows, kitchens and bathrooms are the home improvement winners, according to Remodeling magazine.
Neglecting regular upkeep. They may seem boring, but cleaning the gutters, keeping the house painted and trimming the shrubs are the most valuable home improvements.
Source: Marketwatch, Amy Hoak (07/30/2006)
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Pending Home Sales Index Rises Slightly
Daily Real Estate News August 1, 2006
Pending home sales, a leading indicator for the housing sector, have risen for the last two months, according to the NATIONAL ASSOCIATION OF REALTORS®.
The Pending Home Sales Index, based on contracts signed in June, increased 0.4 percent to a reading of 113.9 from an upwardly revised level of 113.5 in June, but is 9.6 percent below June 2005.
The index is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.Market Strives for BalanceDavid Lereah, NAR’s chief economist, says the small rise in the index is good news, indicating that the trend is stabilizing.
“Once again, we have various housing indicators moving in different directions, which itself is an indicator of a market in transition,” he says. “The housing market is striving for balance – a process that will take several months.
"A quieting in the movement of indicators should restore confidence to home buyers who’ve been on the sidelines, waiting for the right time to get into the market, and now is the best time we’ve seen since the 1990s in terms of housing choices and flexible terms.”
Regional FluctuationsRegionally, pending home sales in the South rose 2.5 percent in June to 130.7 but was 4.8 percent below June 2005. The index in the Midwest increased 1.9 percent to 103.3 in June but was 11.9 percent below a year ago. The index in the West was unchanged, holding at 110.1 in June, and was 14.2 percent lower than June 2005. In the Northeast, the index dropped 6.3 percent in June to 99.4 and was 11.6 percent below a year ago.
— NAREditor's
Note: For more housing market statistics and research reports,visit NAR's Research Department at REALTOR.org.
© Copyright, 2006, by the NATIONAL ASSOCIATION OF REALTORS®
Thursday, August 3, 2006
Daley urges extension of property tax cap
From the Crain's Chicago Business Newsroom
Mayor to send letter to Springfield urging action
August 02 16:56:00, 2006
By Lorene Yue
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(Crain’s) — Mayor Richard M. Daley is pressing the Illinois General Assembly for quick action to extend a cap on annual property tax increases.
Mayor to send letter to Springfield urging action
August 02 16:56:00, 2006
By Lorene Yue
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(Crain’s) — Mayor Richard M. Daley is pressing the Illinois General Assembly for quick action to extend a cap on annual property tax increases.
At a Wednesday press conference, Mr. Daley said he will send a letter to Governor Rod Blagojevich and state legislative leaders asking the lawmakers to craft a solution to Cook County’s property tax issue and put it to a vote during the fall session.
"I believe it will be unacceptable to the homeowners and taxpayers of Chicago if Springfield stands by and does nothing while residents feel the burden of higher taxes which could have been controlled by the legislature," Mr. Daley said, in a statement.
Senate President Emil Jones Jr. (D-14th District) has not received Mr. Daley’s letter, said Cindy Davidsmeyer, spokeswoman for Mr. Jones.
"The Senate voted for it," she said. "The [Senate] president supports it."
Mr. Daley and Cook County Asssessor James Houlihan, who pushed for the original cap, were able to get the extension pass the Illinois Senate, but not the House.
House Speaker Michael Madigan (D-22nd District) was not available for comment.
Three years ago, state lawmakers authorized a 7% annual cap on increases to the equalized assessed valuation, which is used to calculate property tax bills.
Related story: The 7% solution
That law is set to expire this year and proponents have tried to extend the cap for another three years. Cap supporters have said that homeowners, who saved an estimated $200 million to $300 million, could see their property taxes double without the extension.
But their efforts have been stymied in part by Mr. Madigan, who has said that the cap shifts the tax burden to businesses.
The election for city mayor is next year.My Scalar==1
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Monday, July 10, 2006
A Castle of One's Own
The very top of the housing market is still swelling. Nationwide, nearly 200 dwellings are listed for sale for more than $20 million, experts estimate, and brokers say that the pace of these homes selling has remained relatively brisk. Donald Trump is asking $125 million for his oceanfront compound in Palm Beach. At the moment, that's believed to be the most expensive listing in America. The run-up in mortgage rates has little effect on mansion buyers, partly because many pay cash.
http://online.barrons.com/article_print/SB115232143619501399.html
Monday, July 10, 2006
By ROBIN GOLDWYN BLUMENTHAL
IT MAY BE OF LITTLE CONSOLATION to Joe Home Owner, but at least one segment of the housing market is holding up just fine: the realm of the über mansion. These sprawling estates, many costing $20 million and up, are finding plenty of buyers among the swelling ranks of the superrich.
"So far, the very top of the housing market is defying the housing trend," says William Zeckendorf, a developer and co-chairman of the New York real-estate brokerage Brown Harris Stevens. In fact, he and others say, the market for these modern-day castles is, in some locations, actually stronger than last year.
Make no mistake, these aren't $2 million McMansions or even $10 million trophy homes. In those price ranges, realty brokers report, some clear signs of softness have been turning up. And in the overall residential market, price increases have slowed dramatically.
America's truly grand mansions, from Greenwich, Conn., to Bel-Air, Calif., are in a market of their own, subject to their own forces of supply and demand. Right now the demand side could scarcely be healthier: The number of super-wealthy individuals, or those with financial assets of more than $30 million, last year increased by more than 10% worldwide, to 85,400, according to a survey by Merrill Lynch and consulting firm Capgemini.
And there's no shortage of spectacular homes to choose from. Nationwide, nearly 200 dwellings are listed for sale for more than $20 million, experts estimate. While not all will be snapped up right away, brokers describe the current sales pace as generally brisk.
In fact, the market is so strong that some have come to view it as a good place to park money amid the uncertainties of the global economy. How else to explain why one person with 10 homes decided to buy a $42 million apartment in New York? "He's hoping to spend three weeks out of the year there," says Dolly Lenz, vice chairman of Prudential Douglas Elliman in New York, who recently sold the apartment, located in the Time Warner Center. "That's the goal."
This 26,000-square-foot home is being marketed as a piece of Tuscany in Greenwich, Conn. It comes with 30 acres of land, "walk-in" fireplaces and a hand-crafted elevator in the atrium. The asking price: $31 million.
This 26,000-square-foot home is being marketed as a piece of Tuscany in Greenwich, Conn. It comes with 30 acres of land, "walk-in" fireplaces and a hand-crafted elevator in the atrium. The asking price: $31 million.
In Manhattan, that kind of money buys 360-degree views of the city and basement storage bins worth $100,000. Just outside the city, in Greenwich -- the land of hedge funds -- $31 million would be enough for a "European compound" now on the market. With its winding drive and vast lawns, the nearly 30-acre property is meant to put one in mind of Tuscany.
The delicious fragrance of wide-pine antique floors pervades the 26,000-square-foot home, which has everything from a 3,500-bottle wine cellar and "walk-in fireplaces" to a lower-level powder-room shower with Dutch-style doors for easy bathing of the hounds. In the kitchen, there's a pizza oven, a fireplace and a butcher's meat locker. Then there's the atrium, with 60-foot ceilings made of antique beams and an elevator made of hand-forged wrought iron.
For all it's old-world touches, the current owners started building it only three years ago and haven't quite finished it (the 12-seat entertainment room, for instance, isn't quite ready). So why would they want to sell?
"I think it overwhelmed them," says Julianne C. Ward, of Prudential Connecticut Realty, the listing agent for the property. And by the time the house was finally built, the couple's three children had grown up, leaving a monstrous empty nest and annual taxes north of $80,000.
In Beverly Hills, the $20-billion-plus market continues to gather steam, says Jeff Hyland, president of Hilton & Hyland Christie's Great Estates, a top broker in Los Angeles. "Trying to find something for $10 million has become extremely difficult, but it's easier to do than $20 million," he says.
This summer retreat on Boston's North Shore, in Manchester by the Sea, has 10-plus bedrooms, rare Russian walnut paneling -- and a $19.8 million price tag. So far this year, the Beverly Hills area has seen six sales of $20 million and above, compared to only two in all of last year.
THE BUYERS AND SELLERS of such properties, not surprisingly, often have boldface names. On the island of Palm Beach, Fla., financier Henry Kravis recently bought a $50 million property on the Intercoastal Waterway, and Bruce Toll of Toll Brothers paid just shy of $27 million for a lakefront house, according to Ava Van de Water, a broker at the Brown Harris Stevens office there. Ron Perelman recently sold a property for $22 million, and Donald Trump is asking $125 million for his oceanfront compound in Palm Beach. At the moment, that's believed to be the most expensive listing in America.
"We have people bidding $90 million, but I don't think he'll take anything less than $110 million," says Lenz of Prudential Douglas Elliman, the listing agent.
Though sellers of mainstream homes are seeing buyers pull back because of rising mortgage interest rates, that's not something Trump has to worry about in attracting takers.
"People who have money have money," avers Hall Wilkie, president of Brown Harris Stevens' residential sales. The ultra-high end is "a market that interest rates don't affect that much," he says, not least because many purchases are in cash. "It's a market that nothing affects as much."
Adds Patricia Lou Martin, co-owner of Kramer & Martin, a realty broker in Rancho Santa Fe, Calif.: "The big buyers of $10, $20 and $30 million dollar properties are not counting their pennies."
I'll Take Manhattan: Exclusive apartments are selling briskly in New York, providing a good clue about the strength of the market nationwide.
None of which is to say the luxury housing market doesn't have its stress points. Some brokers are reporting early signs of softness -- but that is mostly in lower price tiers, such as $5 million homes. In Manhattan, the middle-tier luxury market -- between $5 million and $15 million -- is slightly off, some say.
But at the nosebleed level, Manhattan and most other major markets look strong. In the first quarter, a total of 20 apartments ranging in price from $20 million to $32 million were sold in Manhattan, according to Prudential Douglas Elliman. Maintenance and taxes on the $32 million property, a 15-room place on the 79th floor of the Time Warner Center, come to $80,000 a month. There were 11 active listings of single-family homes, as of the end of March.
In the Hamptons, there are now a whopping 30-35 listings in the $20 million-plus range, along with eight to 10 other listings elsewhere on Long Island. And numbers like that don't even count the many so-called pocket listings -- private sales that never make it on to the multiple-listing service.
While homes of this ilk can easily take a year or longer to sell, that isn't always the case these days. "We recently listed a $25 million house that sold in the first week like it was a million-dollar house," says Gary Gold of Hilton & Hyland. He reckons there are now 21 homes with asking prices above $20 million in the "Platinum Triangle" of Bel-Air, Beverly Hills and Holmby Hills.
He attributes some of the strength in the market to "real-estate addicts," people who just can't stop buying or selling, remodeling or redecorating. There are many such people in show biz, he adds.
The Bottom Line
The run-up in mortgage rates has little effect on mansion buyers, partly because many pay cash. With demand booming, some sprawling estates are sold in just a week.
Cher, he notes, has had "at least a dozen homes around town," and Sylvestor Stallone and Eddie Murphy are also what Gold calls serious real-estate people. "The same houses keep coming on the market again and again," says Gold, who has sold some homes several times in a year.
GOLD SEES PEOPLE going to greater and greater lengths to assemble the perfect mansion. He tells of one client who built his house of Venetian plaster, complete with roof tiles imported from an 1850 villa in Tuscany and European tiles that are probably a couple of hundred years old. "He didn't want anything fake," says Gold. "Most people have a stockbroker. This guy had a beam broker."
The beams, incidentally, were from Canada and hewn before there was electricity.
There's probably a potential buyer for every type of mansion imaginable. "Our client base will tend to be quite opportunistic about real estate," says Anton Pil, head of fixed income at JP Morgan Private Bank. The ultra-high market "looks OK," he adds, because the consumer base is less sensitive to economic cycles, and "oftentimes, when you pay that kind of money for a home, there's something unique about it that tends to add value."
He says that more foreigners, whose currencies have appreciated against the dollar, are buying in the U.S. But it is also going the opposite way, with some American buyers heading overseas. These days, there's no telling where you might find the fortress of your dreams.
Wednesday, June 28, 2006
Illinois Housing Statistics
May Illinois Home Sales Second Highest on Record for May; Statewide Median Price at $206,000...Illinois Home Sales Solid in the First Quarter; Statewide Median Price at $197,381
Statewide total home sales came in ahead of last year’s record pace in the first quarter and the median home price increased 5.6 percent to $197,381. Total home sales, which include single-family homes and condominiums, were up 2.1 percent in Illinois during January through March. A total of 34,030 single-family homes and condominiums were sold across the state in the first quarter, compared to 33,318 sales in the same period in 2005.
“The unusually mild winter months helped boost home sales in the first part of the year while REALTORS expect a more moderate pace later in the year as mortgage rates slowly rise,” said Stan Sieron, CRS, GRI, president of the Illinois Association of REALTORS. “Following four consecutive record-breaking years for housing in Illinois, the fundamentals for a solid 2006 are in place. Inventory levels are up, mortgage rates are still historically low; and first-quarter indicators show continued economic growth in our region.”
First Quarter 2006 release
First Quarter 2006 charts (pdf file)
Quarterly and Year-End Charts and Releases 1Q06 Chart 1Q06 Release 2005 Chart
Monthly Releases
May 06 April 06 March 06 February 06 January 06
● Monthly Stats At A Glance
Resources
Local Association Contacts / Counties Served (pdf)
Stats Release Schedule
Interest Rates
Illinois Homebuyer / Homeseller Profile
NAR market-by-market anti-bubble reports on REALTOR.org
NOTE: Starting with January 2005, single-family and condo sales and median price figures are reported by county. Prior to 2005, single-family home and condo sales and media price figures were reported by local association.
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REALTOR® is a registered trademark of the National Association of REALTORS®
Monday, June 19, 2006
Friday, June 16, 2006
Price Your Home RightTo Help Speed a Sale
By Marshall Loeb From Marketwatch
With home sales slumping and inventories on the rise, experts say getting your home sold depends a lot on pricing it correctly. One tool sellers can fall back on when the market is shifting is a home appraisal.
You can have an appraisal done before you contact a broker or if you're just curious what your home would be worth. They cost, on average, from $250 to $400 for a single-family home, slightly more for multiple-family dwellings.
An appraiser will physically inspect your house for shoddy workmanship or needed repairs, measure its dimensions and takes notes on the floor plan, utilities and other factors that affect pricing.
He or she should also look at three or four "comps" -- comparable homes in your neighborhood that have sold within the past six months -- and analyze how homes currently on the market are faring, says William J. Doka, owner and president of Erickson Appraisal Company in Fair Lawn, NJ.
That's a more comprehensive assessment of market conditions than the free comparative market analysis, or CMA, that a broker will give you, says Doka.
He cautions that brokers want to earn your listing and can be tempted to paint an overly rosy picture of how your home will sell while appraisers, although sometimes subject to similar pressure from mortgage brokers, strive to be objective.
The results of the appraisal will be presented to you in a report that can run from five pages, for a simple summary that suits most lenders and homeowners, to 50 pages or more for a "narrative" that banks might demand before financing the purchase of a multimillion-dollar home.
Homes are typically listed for sale at a price several percent above the appraised value.
Predictably, most of Doka's business comes from lenders, who typically require an outside appraisal before making a loan. But homeowners are also hiring him before contacting a broker. He charges from $350 to $400 to appraise a single-family home.
Some things to remember when looking for an appraiser:
Make sure the appraiser is licensed by your state.
Ask how long the business has been around, what professional education the appraiser has had and what organizations -- like the Appraisal Institute or the American Society of Appraisers -- the appraiser belongs to.
Copyright © 2005 Dow Jones & Company, Inc.
Wednesday, March 22, 2006
5 Simple Kitchen Remodels
Along with getting a great return on your investment, making the space work for your needs is important when considering a kitchen remodel. The most beautiful kitchen will only create stress for a homeowner if it isn't designed properly. Consider these tips for a kitcehn remodel that will simplify your daily routines.
Kitchens
Probably the busiest room in the house, a kitchen can serve a multitude of functions these days: cooking, eating, entertaining, and family gathering place.
1. Remodel by the work triangle. Designers have been using the kitchen work triangle to create efficient kitchens for many decades. The work triangle refers to the arrangement of the three basic work areas: the refrigerator, sink, and stove. You don't want these to be too far apart or you will spend a good deal of time running back and forth. Click this link to read more about work triangles.
2. Consolidate kitchen contents with a pantry. Walk-in pantries have become very popular as they allow a homeowner to quickly take in the kitchen's contents without having to search through the cupboards. If you're tight on space a pull-out pantry can be installed into areas as small as a few inches wide. A kitchen pantry is a great way to keep the kitchen traffic localized to one area, so that you can cook without interruption.
3. Don't waste space. Install cabinets that go all the way up to the ceiling add baskets and shelving inside to maximize storage space. Add a hanging rack for pots and pans to free up some cabinet space.
4. Let appliances do some of the dirty work. A dishwasher with a third rack can cut down on the number of times you have to load that dishwasher. Self-cleaning ovens are everywhere today. If you are in the market for energy efficient appliances, consider a dishwasher or even a refrigerator with the Energy Star rating. Click this link to read more about Energy Star Appliances.
5. Create areas for your kids. A couple of stools at the kitchen counter create an easy, informal place for kids to eat. Also, consider keeping your kids' snacks and beverages on lower shelves where they can easily access them.
1. Remodel by the work triangle. Designers have been using the kitchen work triangle to create efficient kitchens for many decades. The work triangle refers to the arrangement of the three basic work areas: the refrigerator, sink, and stove. You don't want these to be too far apart or you will spend a good deal of time running back and forth. Click this link to read more about work triangles.
2. Consolidate kitchen contents with a pantry. Walk-in pantries have become very popular as they allow a homeowner to quickly take in the kitchen's contents without having to search through the cupboards. If you're tight on space a pull-out pantry can be installed into areas as small as a few inches wide. A kitchen pantry is a great way to keep the kitchen traffic localized to one area, so that you can cook without interruption.
3. Don't waste space. Install cabinets that go all the way up to the ceiling add baskets and shelving inside to maximize storage space. Add a hanging rack for pots and pans to free up some cabinet space.
4. Let appliances do some of the dirty work. A dishwasher with a third rack can cut down on the number of times you have to load that dishwasher. Self-cleaning ovens are everywhere today. If you are in the market for energy efficient appliances, consider a dishwasher or even a refrigerator with the Energy Star rating. Click this link to read more about Energy Star Appliances.
5. Create areas for your kids. A couple of stools at the kitchen counter create an easy, informal place for kids to eat. Also, consider keeping your kids' snacks and beverages on lower shelves where they can easily access them.
Most everyone knows that kitchens have the best return on investment for remodeling projects. However, many homeowners get caught up thinking about granite counters, solid wood cabinets, and hardwood flooring trends and forget to consider how a kitchen lives, its flow, and whether or not it is energy efficient. Don't overlook these simple solutions to when choosing your kitchen remodel.
© Copyright 1999-2006, ServiceMagic, Inc. All Rights Reserved.
Monday, March 20, 2006
Sellers who skip brokers may be losing their edge
Lew Sichelman, United Feature SyndicatePublished March 5, 2006
This is "The Case of the Missing 10 Percent." It's a tale of lost millions, and it stars a cast of thousands--the thousands of owners who sell their houses without professional help.It seems that in their desire to save the 5 to 7 percent fee that agents charge for their services, FSBOs--as in for sale by owners--get 16 percent less than owners of comparable houses who put the transaction into the hands of an experienced agent, according to a survey by the National Association of Realtors.
Colby Sambrotto of ForSaleByOwner.com, an online marketplace where do-it-yourselfers list their properties and pick up valuable tips on going it alone, disputes that figure.
"It just doesn't jibe with our experience," he said."We haven't put together a big study like [NAR's]," Sambrotto conceded. "But we ask all our sellers if they were successful, and 65 percent say they were. And we ask if they sold at or near their selling price, and 85 percent say they do."
But the 1.2 million-member NAR says it has the research to back up its claim. In what it calls the "largest and most authoritative" survey about how people buy and sell houses, a poll of 7,813 recent buyers and sellers through county deed records found that the median price achieved by sellers with agents was $230,000 versus $198,200 for sellers without agents.That's a difference of nearly $32,000, or 16 percent, with no significant differences between the types of homes sold.
NAR isn't alone when it says the desire to save the commission can backfire on sellers. Research by two University of Texas instructors found sellers realize little net gain when they turn to limited-service agents to perform some--but not all--the tasks needed to bring a contract to closing.The study found limited-service listings sold for 1.7 percent less than full-service listings and took 17.1 percent longer to sell.
Additional research may be warranted, said James Ford, a lecturer in the College of Business at the University of Texas at San Antonio, and Ron Rutherford, a professor of finance. But for now, they say, it seems that limited-service brokerage offers "no dollar advantage."Of course, not everyone does worse in the attempt to go it alone. At the top of the market, where even fixer-uppers are selling within hours, it's tough for sellers to make a mistake.
But forget for a moment that NAR's findings might be seen as self-serving. For argument's sake, let's say the Realtors are right, that in the effort to save 6 percent--the reason cited most frequently by what NAR calls "unrepresented sellers" for selling their homes themselves--sellers lose 16 percent.The mystery here is this: If you figure that would-be buyers automatically knock 6 percent off their offers to FSBOs because they know there's at least that much fat in their asking price, where goes the remaining 10 percent?One glaring clue appears to be the inability of FSBOs to market their houses as widely or as professionally as, well, the professionals.
Nearly two-thirds of the unrepresented sellers in the Realtors' study used yard sales to alert would-be buyers that their homes were on the market. And almost half used word-of-mouth. Some also advertised in their newspapers or for-sale-by-owner magazines. A third held open houses, and a small number used direct mail.These are all good tools. But fewer than one in five listed his or her home on the Internet, either with its own Web site or on one such as ForSaleByOwner.com. Yet, the NAR study found that three of four buyers--77 percent--went house hunting on the Web.
So go-it-alone house peddlers are missing a big part of the market.Virtually everyone who uses the Internet to house hunt is in the game, the survey found. They're not tire kickers; they're actively looking for properties for sale. And they want photos, detailed property information, virtual tours, interactive maps and neighborhood information before they make that first phone call or hop in the car.Internet users in the survey visited more houses than nonusers--a median of 11 versus 6, with 1 in 10 touring at least 25 properties before making a decision. And once they jumped behind the wheel, three of four went to see something that caught their attention while online.
Interestingly, the sites used most frequently by home searchers are controlled by brokers. Realtor.com, NAR's official site, was visited most often, followed by the sites operated by local multiple-listing services, real-estate companies and real-estate agents. Of course, to list a property on these sites, a seller must sign up with a broker, a full-service office at full commission or a discount firm that charges a smaller fee.
FSBOs in the NAR survey also said they had more difficulty in completing the necessary paperwork, preparing their homes for the market and setting the price than they did in attracting buyers.It's hard to see how handling the paperwork affects the selling price, but staging the house so prospects see it in its best light and determining the correct asking price can have a profound effect.
Face it, many folks don't know how to make their homes show well. They fail to remove the clutter, for example, or put away all those personal items that distract visitors. Mostly, though, they cannot view their places as the commodities they become once they are on the market. To them, the house is wonderful as it is, so they don't look at it through a buyer's eyes.
If there is a fatal mistake, though, it's probably that FSBOs don't price their properties correctly. Sambrotto contends they tend to price their houses too high. But too high or too low, do-it-yourselfers simply don't have the resources to determine a fair asking price.While there are a number of Internet sites--Sambrotto's is one--with valuation tools to help owners determine what their homes are worth, most agents have the best tool of all--the multiple-listing service.
Agents aren't always right. Indeed, they can misread the market too. But they have a sense of the market that nonprofessionals can't match.
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Write to Lew Sichelman c/o Chicago Tribune, Real Estate, 435 N. Michigan Ave., 4th floor, Chicago, IL 60611.
Monday, January 16, 2006
Housing Market to 'Normalize' in 2006
(January 10, 2006) --
The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the NATIONAL ASSOCIATION OF REALTORS®.David Lereah, NAR’s chief economist, says current trends in the housing sector are healthy.
"We don’t need to break a record every year for the housing market to be good—in fact, cooling sales are necessary for the long-term health of this vital sector,” Lereah says. “A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong.”
After setting a fifth consecutive annual record, projected to be 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006—that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units—the highest since setting a record 1972—with a 6.6 percent slowing to 1.94 million this year.
“A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year,” Lereah says. The 30-year fixed-rate mortgage is likely to increase gradually to 6.7 percent during the second half of the year.
“This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace.”
NAR President Thomas M. Stevens from Vienna, Va., says price appreciation should be at more normal levels across most of the country. “Buyers are no longer competing for a tight supply,” says Stevens, senior vice president of NRT Inc. “That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of home ownership for sellers.”
The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.
Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.
Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year.
The unemployment rate is expected to drop to 4.8 percent by the end of the year.—NAR
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