Mortgage Rates Inch Up

Mortgage rates up for first time in 7 weeks

10:18 12/14/2006, CNNMoney.com
Mortgage rates turned slightly higher from mixed economic signals after reaching near their lowest level of the year last week and rallying from a decline for six weeks in a row, a survey said Thursday.

Rates to (Possibly) Stay Put

This news release was sent from the Associated Press on the 'hint' (its always a hint) that the Fed would not be lowering their short term rates. Predictions were that they would either maintain current rates or possible reduce them next month. Looks like we're looking at steady as she goes for the moment...but don't hold your breath.

AP - Even with the economy in a slowdown mode, Federal Reserve Chairman Ben Bernanke made clear Tuesday that policymakers want to see inflation continue to recede, suggesting the Fed probably won't be cutting interest rates any time soon.

Carbon Monoxide Mandate

Carbon Monoxide Required in 2007

Illinois state legislation has just approved this mandate requiring Carbon Monoxide detectors in all Illinois residences beginning January 1. That goes for rental units as well.

Here is the IAR blurb on the topic with a few links as well. Tell your clients to get them in now (if they are not already installed).

Beginning Jan. 1, 2007, Illinois law (Public Act 94-741) mandates that every dwelling unit in Illinois must be equipped with at least one carbon monoxide alarm within 15 feet of every room used for sleeping purposes. A dwelling unit would include a single-family residence as well as each living unit of a multiple-family residence and each living unit in a mixed use building. Here are some resources developed via the IAR Advocacy Initiative to help you communicate this information to your clients:

Big Mortgage Rate Decline Last Night

CNN.com just published this market report on the 30 year rates which are now at 6.18% BELOW last years average (6.28%).

Long term rates hit lowest level since first of the year; 30 year fixed hits 6.18%.

November 22 2006: 12:09 PM EST

NEW YORK (CNNMoney.com) -- Mortgage rates continued its downward slide reaching its lowest since the first of the year on slower growth in the market, according to a survey released Wednesday.
The 30-year fixed-rate mortgage averaged 6.18 percent for the week ending Nov. 22, down from 6.24 percent, according to Freddie Mac's (Charts) Primary Mortgage Market Survey. A year ago, the 30-year averaged 6.28 percent

The 15-year fixed-rate mortgage averaged 5.91 percent this week, down from 5.94 percent last week. A year ago, it averaged 5.81 percent. This is the lowest the 15-year has been since the week ending March 2, 2006 when it averaged 5.89 percent.
Rates for five-year adjustable-rate mortgages (ARMs) came in at 5.99 percent this week, down from 6.04 percent last week. A year ago, they averaged 5.75 percent.
One-year ARMs averaged 5.49 percent, down from 5.54 percent last week. A year ago, the one-year ARM averaged 5.14 percent.

"Housing starts in October were down more than expected, which the market saw as an indication housing would be a bigger drag on the economy than had previously been thought," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Slower growth usually means less inflation and less inflation means lower interest rates. Hence, the drop in mortgage rates this week."

Economists 2 to 1 say BUST is over

The Wall Street Journal interviewed national economists whopredicted a slight (2.8%) increase in home prices this year. They also on average predicted a 0.5% fall in home prices next year. That is a sharp contrast to the double digit growth we've experienced for the past several years.

2005 showed a 13.5% growth.

Home price predictions varied widely depending upon region or city, from as much as a 7% average increase to a 10% decline for 2007. 20 economist predicted a rise in prices where 24 predicted a decline.

"We're starting to see inventories topping out and possible declining" the WSJ quoted economist Richard DeKaser of National City Corp.

Some are predicting that while the worst is over housing does remain a big risk to the national economy. The 3rd quarter housing slump subtracted 1.1 percentage points from the GDP according to the WSJ citing the Commerce Department .

Stable energy prices and jobs combined with the Feds control of inflation should help neutralize any negative impact the housing industry has on the economy.

Economists 2 to 1 say BUST is over

The Wall Street Journal interviewed national economists whopredicted a slight (2.8%) increase in home prices this year. They also on average predicted a 0.5% fall in home prices next year. That is a sharp contrast to the double digit growth we've experienced for the past several years.

2005 showed a 13.5% growth.

Home price predictions varied widely depending upon region or city, from as much as a 7% average increase to a 10% decline for 2007. 20 economist predicted a rise in prices where 24 predicted a decline.

"We're starting to see inventories topping out and possible declining" the WSJ quoted economist Richard DeKaser of National City Corp.

Some are predicting that while the worst is over housing does remain a big risk to the national economy. The 3rd quarter housing slump subtracted 1.1 percentage points from the GDP according to the WSJ citing the Commerce Department .

Stable energy prices and jobs combined with the Feds control of inflation should help neutralize any negative impact the housing industry has on the economy.

Condos Old and New Up and Down

New condo sales down again in 3QSales of new condos and townhouses downtown fell 35% to 1,324 in the third quarter compared to the year-earlier period. Sales dropped 11.5% from the second quarter, the second straight quarterly decline, according to a new report by Appraisal Research Counselors. Sales of condos newly converted from apartments or other types of space — a small slice of the market — rose 80%, but sales of new-construction condos dropped 38% from the second quarter. Appraisal Research predicts a record 6,500 new-construction condos will begin marketing this year, compared with 4,700 last year.

Free Cruise for Two on Me!

Buy a home through me or Sell your home through me! Cruise for two on me! Five days/Four nights to Mexico, the Bahamas or the Western Carribean on Carnival Cruises (and their subsidiaries). Click here for more cruise information on my website as well as my buyer and seller services page. Don't worry I won't be going with you!

Listen here to our free podcast on this offer: http://www.rememberjim.com/podcast/freecruise.m4v


Mexico

Bahamas

Western Caribbean

5 day/4 night Cruise for 2 adults

The fine print:

• Must close on a purchase or sale with me as your designated agent

• You pay for your transportation to port city.

• You pay port tax/charges of $198

• Travel blackout dates apply but there are over 50 cruise start dates

• Yes you can buy additional spots and yes you can upgrade your spots

Call Jim Gramata Broker Associate with Keller Williams Lincoln Park Realty at 773.252.HOME or toll free 866-251-2176 for your free home consultation on my services and to make sure we are comfortable working together.

This is not a solicitation if you are currently in an exclusive agreement with another brokerage

City Programs That Can Benefit You

Buying and Selling a Home in the City of Chicago:

Bill Pavala, Assistant Commissioner of the Department of Housing and Senior Housing Coordinator, will present "Buying and Selling a Home in the City of Chicago: City Programs That Benefit You"

When: Wednesday, November 15, 10:00am-11:00am
Where: 6700 S. Keating Avenue, Chicago

The event, sponsored by Senior Lifestyle Corporation, in conjuction with the City of Chicago, will cover four important programs offered by the City of Chicago that would benefit your clients:

- Bungalow Initiative
- Tax Smart Program
- City Mortgage Program
- Greystone Initiative

The presentation will be followed by a Q&A session. RSVP to Lydia Morris at RSVP by phone to 773-582-2888 or by email to lmorris@seniorlifestyle.com.

Condo Sales Down Again

Condo sales fall for 2nd straight quarter


By Eddie Baeb
Oct. 25, 2006

(Crain’s) — While the apartment market remains strong in Chicago and the suburbs, downtown condominium sales fell for a second straight quarter, raising concerns that a number of proposed high-rises may ultimately be scrapped.
Condo sales in new buildings fell to about 700 in the third quarter, down from about 1,200 in the second quarter and 1,600 in the first quarter. Sales this quarter also marked a 26% decline from the same period a year ago, according to a report to be released next month by Appraisal Research Counselors, a Chicago-based real estate consulting firm.

That’s bad news for developers, who generally need contracts for about half of their units to get financing required to begin construction.

“Some projects might not get built,” Gail Lissner, a vice-president at Appraisal Research, said during a presentation Wednesday at the Chicagoland Apartment Assn.’s industry outlook meeting.

However, Ms. Lissner noted that year-to-date condo sales have fallen only about 5% from last year’s record pace and still remain well above sales in the first nine months of 2004 and 2003.

The more stark figures: About 5,700 new condos are being marketed this year, most of which aren’t yet under construction, compared with just 4,700 that were marketed all of last year.

Of those 5,700 new condos, contracts have been signed on about 3,500 units through the third quarter, according to Appraisal Research data. “Sales aren’t keeping pace with new inventory,” Ms. Lissner said in an interview. Despite the decline in sales, Ms. Lissner said two condo developments that started this year are already under construction: CMK Co.’s 1720 S. Michigan Ave. and Mesa Development Co.’s The Legacy at Millennium Park. The third quarter provided more good news for apartment building owners, who are benefiting from job growth in the region along with tight supply because developers have been converting apartments into condominiums and not building many new apartment complexes.

Net apartment rents in the suburbs rose 5.9% in the third quarter from the year-earlier period, while rents downtown for “Class A” apartment buildings rose 8.9%.

Appraisal Research Vice-president Ron DeVries said he thinks the supply-demand trend will continue and cause rents in the suburbs and city to rise another 5% over the next 12 months.

Chicago Foreclosures Up 2x National Average

(Crain’s) — The number of Chicago-area homes entering some stage of the foreclosure process increased in September, keeping the metropolitan area’s rate at more than twice that of the nation.

A total of 6,177 homes in the eight-county metro area were in the foreclosure process last month, a nearly 5% increase from August, according to a report released by RealtyTrac Inc., which tracks foreclosures. The Chicago area represents the bulk of the 7,431 Illinois homes at some stage of foreclosure.

“Chicago foreclosure activity has increased more than 60% over the last months, boosting the foreclosure rate to an unexpectedly elevated level given the area’s low unemployment rate and above-average home price appreciation,” James Saccacio, CEO of RealtyTrac, said in a statement.

In the Chicago metro area, one household in every 471 are in some stage of foreclosure. That compares with one in 658 households for Illinois and one in 1,030 for the nation.

Americans Paying Less for Previously Owned Homes

Americans are paying less for previously owned homes than they were a year ago, but the number of such homes sold continues to fall.

The National Association of Realtors reported today that the average price of a previously owned home fell to $220,000 in September, down 2.2 percent from September 2005. At the same time, the pace of home sales slowed to a seasonally adjusted annual rate of 6.2 million, down 1.9 percent from August.

Sales fell even further when compared with September 2005. In the past year, existing home sales slid 14.2 percent, the realtors association said.

The new sales numbers suggest a housing market that is downshifting, but it remains unclear just how much further sales and prices will fall. Market experts are divided over whether housing is just beginning a deep and lengthy correction, or merely leveling off after several years of explosive growth.

The association said the latest statistics indicate that the market is starting to stabilize, but many economists said it is far too early to say that the worst has passed.

The association said that the inventory unsold homes on the market declined to 3.8 million in September from 3.9 million in August, a sign that it found encouraging.

“The good news is that fewer new listings are coming on line,” Thomas M. Stevens, president of the association, wrote in its statement. He predicted prices would pick back up within a few months: “A stable sales pace is expected to draw down the number of listings to a supply balance that will support positive price growth.”

The September report was the second in a row to show falling prices; the August report was the first in more than a decade to show a year-over-year decline in the median price of an existing home.

Despite a small decline in inventories last month, the number of homes for sale remains near historic highs. Many economists believe that with such a large surplus of homes unsold, prices are likely to weaken for some time. At September’s pace, it would take 7.3 months to sell all the existing homes now on the market, the association said.

“A year ago, this ratio was 4.6 months,” said Joshua Shapiro, chief United States economist with MFR, a consulting firm. “And the sharp rise over the spring and summer suggests that pricing will weaken further in the months ahead.”

The data showed that selling a condominium in September was more difficult than selling a single-family home. Condo sales fell by 3.2 percent from August, and inventories rose to an 8.6-month supply. By contrast, single-family home sales fell 1.6 percent while inventories rose to 7.1 months.

Overall existing home sales and prices fell the fastest in the Northeast, by 3.7 percent from August, and median prices there slipped 5.1 percent from a year earlier, to $259,000. In the West, sales volume fell 3.1 percent from August, and prices dropped 4.3 percent from a year earlier, to $332,000. In the Midwest sales decreased 2.8 percent from August; prices dropped 2.3 percent from last year, to $208,000.

The South was the only region where sales picked up, rising 0.4 percent in September. Prices there, however, were 1.6 percent lower than a year ago.


By JEREMY W. PETERS
Published: October 25, 2006
New York Times.com

Fed Holds Rates Steady

Key rate unchanged at 5.25 percent but with the economy slowing and inflation looming, what's the central bank's next move?
By Paul R. La Monica, CNNMoney.com editor at large
October 25 2006: 3:04 PM EDT


NEW YORK (CNNMoney.com) -- The Fed held interest rates steady Wednesday and noted again that the economy was slowing, but the central bank also indicated it's still wary of inflation - a sign the Fed may not cut rates in coming months as many investors had hoped.

Federal Reserve policy-makers held their target for the federal funds rate, an overnight bank lending rate that helps determine the interest consumers pay on auto and other loans, at 5.25 percent.

The move, widely expected on Wall Street, marked the third straight time the Fed left rates alone after raising them 17 consecutive times through June of this year. But now many economists and market strategists think Fed Chairman Ben Bernanke & Co. face tougher decisions ahead.

Some argue the Fed should consider rate cuts next year in a bid to make sure the economy doesn't tumble into recession. Others who fear inflation is a more pressing threat say the Fed should start raising short-term rates again.

Again, there was dissension within the Fed on this matter.

For the third consecutive meeting, Federal Reserve Bank of Richmond President Jeffrey Lacker voted against a pause and for a quarter-point rate hike. The other 10 members of the Fed's policy-making committee voted to leave rates unchanged.

Read the Fed statement
The Fed did, however, appear to indicate it may be more worried about a slowdown. In its statement, the Fed said "economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market."

That differs slightly from the language on the economy in the last statement when the central bank said that "moderation in economic growth appears to be continuing."

But the Fed added that the economy "seems likely to expand at a moderate pace" going forward.

It also kept its language about the threat of inflation, saying that "readings on core inflation have been elevated" and that "some inflation risks remain." The Fed did remove a phrase about energy prices and other commodity prices having "the potential to sustain inflation pressures."

David Kelly, an economic advisor at Putnam Investments in Boston, said the changes to the statement show the Fed is fairly satisfied with the prospects for economic growth next year as well as the inflation picture.

"This statement is an expression of increased confidence in the economic outlook," Kelly said.

As such, Kelly said he thinks the Fed will probably start cutting interest rates sometime in 2007. He does not expect the Fed to change rates at its next meeting on December 12, however.

Stop Paying PMI

Millions of homeowners were required to get private mortgage insurance (PMI) at the time they purchased their homes, due to having made downpaments of less than 20 percent. The monthly mortgage payment includes as much as $150 that represents the PMI premium.

You can get so accustomed to making that identical mortgage payment every month, some people stay on auto-pilot and continue paying for a policy they’re entitled to cancel.

Typically, if you’ve reached the 20% equity level, you’re eligible. If your mortgage is less than 5 years old, it’s 25%. You also need to have a good track record for making mortgage payments. That means having had no more than one late-payment penalty in the past year; no payments over 30 days late in that same time frame; nor, any notice of default recorded against the property.

If that sounds like you, and if you haven’t gone through the process, there are user-friendly resources to help you get the cancellation process started.

First, you’ll need to confirm your eligibility. The Mortgage Insurance Companies of America (MICA), the trade association for mortgage insurers, sponsors an excellent website (http://www.privatemi.com/cancel/index.cfm) that offers an eligibility calculator, as well as sample letters to send to mortgage servicers that will help you jump start the cancellation process.

If you are eligible to cancel your PMI, your servicer might require an updated appraisal of your home. Don’t rush out and have an appraisal done yourself, though. Mortgage servicers use their own sources to select an appraiser for the job.

If you don’t want to handle the cancellation personally, you can hire someone else to do it for you. PMI cancellation services take over all of the correspondence, escrow account analyses and any disputes with servicers. Figure on spending about $500, including the appraisal. An Internet search for “Cancel PMI” will help you locate a local company.

You’ve worked hard to have accumulated 20% equity in your home. Don’t pay for something you no longer need!

Even if you know you’re not eligible yet, use the eligibility calculator to figure out when you WILL be and keep that date posted prominently somewhere in your records. Or even, for instance, on the refrigerator. It’ll remind you daily of something positive you’re working toward that’ll be worth celebrating when the time comes.

There is another strategy buyers are using these days and that is the second line of credit. By getting a 80/20 or 80/10/10 loan, lenders will waive the PMI but then you will of course have the second line of credit payment until that is paid off. But the benefits may be worth it in some cases.

Bridging the International Gap

Join me at the International Real Estate Expo - November 3 at Navy Pier. The real estate industry is changing every day and that includes expanding markets. It used to be Florida was THE destination of choice for second home buyers or retirees, but now you can be in the Carribean or Mexico in another hour by plane and those destinations can make real sense to some.

The market is changing and I plan on becoming as educated as possible on this growth. Panama is another area of potential investment where you can get a 6000SF condo for under 500K!

But I do not recommend buying without an expert and I can put you in touch with those.

Here is more about the expo:


The Chicago International Real Estate Council of the Chicago Association of REALTORS(r) will host its Second Annual International Real Estate Expo at Navy Pier on Friday, November 3.

Why you should attend:

Get connected with expert conducting international real estate transactions
Stay ahead of the competition with the most current market information
Understand what will influence this expanding niche
And much more

What you will learn:

Solid advice for becoming an international real estate investor/REALTOR®
Opportunities in the international real estate market
Best emerging real estate markets globally
Strategies employed in building a global real estate portfolio
Managing risks in international real estate
Market opportunities as REITs expand around the world
Which classes of funds make best use of emerging opportunities

Email me if you need more info and I hope to see you there.

20/20 Vision

Many real estate prognosticators have been worrying about the slowing of the appreciation rates across real estate markets nationwide, scaring many buyers out of the market. The Office of Federal Housing Enterprise Oversite released its 2nd quarter figures on average housing prices this month and many market watchers jumped on the "dropping prices" bandwagon.

The astute buyer, however, watches the prices and the interest rates adjustments together and then makes an offer at the optimal time to get the best house for the best price and terms.

Headlined "House Price Appreciation Slows," the OFHEO report showed that prices nationally are not dropping, rather the rate of growth has slowed. On average, the houses in the 2nd quarter were 10 percent more valuable over the same period last year. So consumers and economists have on their worry hats about the future. Understandably, none of us like to see an investment stop growing; however, for the buyers, this slow in appreciation is good news.

I've always held on to the belief that there's not a lot you can do about the future, so you have to live and make decisions based on the facts you have today. The reality about real estate, is that sometimes you have to buy when your life situation dictates it, not when the "price is right." However, for buyers who have been on the sidelines, the time may be right to hit the iron of making an offer, so to speak.

Have you been watching the interest rates lately? Bankrate.com has its average 30-year fixed rate at 6.4 percent -- a drop of 3 basis points in one week and the lowest level all year. In addition, for those willing to pay more points, you could get a rate under the 6 percent threshold. Meanwhile, if the prices in your area are about to flatten before beginning their next cycle upward, and you MUST buy now, your waiting may have paid off -- if you jump over the fence of indecision and get a contract written now.

Earlier this year, rates were standing at 6.8 percent. The drop of 4 basis points since then could save a shopper hundreds or thousands of dollars per year on a home mortgage, depending on the loan amount.

At 6.4 percent, the principal/interest payment on each $100,000 borrowed is $625.51 -- that's about $25 less per month than when the interest rate was at 6.8 percent a couple months ago.

Thus on a $400,000 loan amount, your payment would now be $100 less per month -- that's a savings of $1,200 per year (more than $6,000 over the next five years) if, and this is the big IF, you get off the fence, lock in your loan and make an offer on that house you've been waiting on.

Watching the interest rates as well as housing prices in your market is the 20/20 Vision of the real estate market. Look to the future. Buy when prices are stable with a low interest rate and then hold on for the ride. According to some forecasters, this month may be the month buyers should get off the dime.

The Financial Forecast Center, a market research group in Houston that monitors and forecasts indexes, interest rates and various other market data, predicts the average national interest rate will climb beyond the highest rate this year to 6.97 percent by January 2007.

If that's the case, that money mentioned above will then cost a buyer $663.29 per month for every $100,000 borrowed. For a $400,000 mortgage, that would then be over $1,800 per year more in monthly payments for the same amount of money (assuming your favorite house is still available and that the price hasn't gone up again).

If you're waiting for prices to hit bottom, it could happen while you wait or you could create your own "bottom" price by making an offer now before interest rates start their upward climb once again. Get the house you want for the price you want at today's interest rate.

By M. Anthony Carr
Realty Times

Chicago Market Facts 2006

Click below to see some great market statistics for the Chicago region.

Be sure to click on the Real Estate link to see some interesting market statistics for the various neighborhoods in Chicago. I am a bit skeptical on some of the areas based on my experience, but in general the data looks good.

I hope everyone is well.


Chicago Market Facts 2006

How Will Growth Be Affected in Our Region?

In this article from Lacey Rise of Forbes.com, she talks about the effect the slowing market will have on various groups from buyers, and sellers to investors and speculators. My favorite quote is where ever the party was the loudest that's where the hangover will be the worst...referring to the "hot" recent markets like Florida, Nevada and of course California.

Click on the title or here for a link to the full article


Get used to it--the seller's market is closing up shop. The days of fat, fast home value increases are gone. Pack away those flipping fantasies.

"The boom is definitely over, there's no debate about that," said Mark Zandi, chief economist of West Chester, Pa.-based research firm Moody's Economy.com. "Now the question is more how hard is it going to land, if it lands at all."

The answer? Depends who you ask--and what location you're talking about. How to feel about it? Depends which side of the market you're on--and what location you're talking about.

Video: How Busted Is Housing?
In Pictures: How Low Real Estate Will Go In 15 Metro Areas
Few, if any, economists are enthusiastic about current market conditions, thanks to a host of bleak figures recently released by home builders, federal agencies and the National Association of Realtors (NAR).

On Aug. 22, luxury home builder Toll Bros. announced that its net income fell 19% in the quarter ending July 31 from a year prior. Earlier in the month, the company said new orders had fallen 47%. According to NAR, the number of existing home sales plunged 4.1% in July to a seasonally adjusted annual rate of 6.3 million, the lowest since January 2004. Nationwide, the median sales price for an existing single-family home inched up a painfully small 0.9% compared to double-digits in 2005.

But that's just today's pain. What about six months from now? A year? Five years? Opinions about the future range from hopeful outlooks to doomsday predictions.

"One possibility is that you get a quick return to normal, which is what the economists for the realtor groups tend to hope for," said Edward Leamer, director of the UCLA Anderson Forecast. "But there's nothing in the historical record that suggests that we're going to get a return to normal anytime soon."

"It is a question of whether it is deep and quick or not so deep and much longer," Leamer added. His prediction: "Not so deep and rather long."

The way Zandi sees it, the market is going to weaken considerably more. "It has been correcting for about a year, and it's got another year to go," he said.

Not surprisingly, Lawrence Yun, a senior economist for NAR, is more optimistic. He claims that the market has returned to more earthly figures after a period of unsustainable growth. "Any decline will be very short-lived," he said. "By the spring of 2007, the market will begin to see increased sales and strengthening in home prices."

Others are less willing to prognosticate an end date for the slowdown, due to a host of unknowns, including future interest rates and job markets.

Whatever the future holds, the present doesn't look good. The number of unsold homes on the market rose another 3.2% in July to 3.9 million, a 13-year high, according to NAR. If the current selling rate held steady, it would take 7.3 months for all of those houses to move.

One reason for the holdup is a disconnect between buyers and sellers, said Anderson's Leamer.

Many property owners are reluctant to cut their prices. Unlike builders, who are so desperate to sell their properties that some are throwing in extras like upgraded countertops and one-week vacations, many sellers are willing to wait. Their logic is simple, Leamer explained: "A lot of owners figure, 'My idiot neighbor sold his home for $1 million, and I'm not taking a penny less.' "

On the other side of the equation are the buyers, equally strong-willed. Unwilling to fork over those sums in a wavering market, they are watching from the sidelines, waiting for prices to drop.

"Buyers are holding back currently to see how long and far this cooling will go," said NAR's Yun.

What's more, two key sources of housing demand are locked out of the market, explained Moody's Zandi. One is first-time home buyers, who can't afford to buy given the mix of rising interest rates and still-high home prices. The other is speculators, who can no longer benefit from dramatic appreciation by flipping real estate.

Of course, real estate is a highly fragmented market--what happens in Palm Beach, Fla., may be completely different from what is taking place in Cleveland or Phoenix. Not everyone benefited equally from the boom, and not everyone will suffer the same in a bust.

Areas that were once epicenters of the boom, like Phoenix, San Diego and Las Vegas, will be among the hardest hit, Leamer said. "Regions where a lot of the economic growth came directly from the real estate sector and where that was a huge plus, that's going to turn into a huge negative," he explained. "Wherever the party was the loudest, that's where the hangover is going to be the greatest."

To get a sense of how home prices will perform in various parts of the U.S., we turned to Moody's Economy.com for historic and predicted median home prices in 15 major metropolitan areas. We looked back ten years and forward another ten. The results show several cities, including Boston, New York and Washington, D.C., experiencing ups and downs (more precisely, downs and ups) in coming years--a boon for buyers, perhaps, but not for current owners. Other places, such as Houston and Minneapolis-St. Paul, may just keep chugging along.

The company bases its forecasts on an econometric model that looks at the relationship between prices and various factors that have historically driven supply and demand in these markets. The intricate formula was proved to work when compared with actual house-price performance through the early 1990s, a period when home prices rose and then fell sharply.

Video: How Busted Is Housing?

Still Asking: Smooth or Crash?

While a slowdown in economic growth, contained inflation and a feather-pillow "soft landing" is what the Fed had in mind for the economy - history shows that economic "soft landings" are exceedingly rare, and that the Fed almost always hikes rates too far in their tightening cycles. Last week's news sure raised some eyebrows on this account - so let's take a closer look.

First the Producer Price Index - which shows if costs are increasing for those producing the goods we buy - came in showing costs had not increased last month, but actually decreased! Quite a surprise, although some of the decline was due to lower oil prices...but still good news, as producers have fewer reason to pass on higher costs to us consumers.

Next, the Fed for the second straight meeting, opted to stay in a "paused" position, and commented that while economic growth is moderating, some inflation risks remain. Fine - no real surprises there, as the Fed tends to not want to shock or upset the market via their prepared commentary. But then along came Friday's somewhat dramatic Philly Fed manufacturing report, showing a very major slowdown in the manufacturing sector. Many economists are wondering, "Did the steam leave the economy?" The cool financial news of the week helped Bond prices improve, and brought about .125% of improvement to home loan rates.

And now while a nice orderly slowdown that feels like a cool breeze is what the Fed desired with their string of seventeen rate hikes, concerns are now mounting about the severity of the slowdown. The Fed has had a history of always going too far, not being patient enough and sending the economy into recession. It will be interesting to see how things play out going forward, and next weeks reports will be especially important...

My business is seeing an increase in sales and new clients since September 1st. Some of the other seasoned agents are seeing this as well in my office. I still feel if the investment is for more than a few years, now is a great time to be buying in the city.

Soft Landing or Crash?

Jessica Holzer of Forbes asks whether the red hot real estate market is heading for a crash. In general she says it seems to be heading for a soft (rather than crash) landing. Here is an excerpt from her article. For a full view of the article click on this blog title (or here).

Pessimists argue that a housing bust will dampen consumer spirits and spending power, raising the risk of recession.

There are several reasons to reject this gloomy view. For starters, the economy is in good shape to absorb a slump in housing. Businesses are spending briskly on capital goods, and exports are strong. Despite the U.S. Federal Reserve's recent rate-tightening, interest rates remain low by historical standards. In short, as housing cools, other booming sectors are likely to offset the effects of the slowdown.

"The economy's a lot more dynamic that people make it out to be," says Mark Vitner, a senior economist at Wachovia Securities in Charlotte.

There is also an upside to a slowdown in the housing market: It will make it far easier for the Fed to rein in rising inflation without further rate hikes, argues Steven Wieting, the leading economist for U.S. equities at Citigroup.

And unlike the tech bust of the late 1990s, which caught investors and business off-guard, a slump in housing has long been predicted.

"It's the channel in which you should expect the slowing in the economy to take place," Wieting says.

In any case, the housing market isn't in the dire straits that it might seem. While overheated markets on the coasts are cooling, home sales are picking up in places like Texas, Georgia and North Carolina. Meanwhile, investment is pouring into non-residential construction, which will help mitigate the slowdown in housing by soaking up workers in construction, architecture and other fields.

So far, consumer spending is holding up. "It is decelerating, but it's not falling out of bed," says Nariman Behravesh, the chief economist at Global Insight, an economic forecasting firm in Lexington, Mass.

Partly, this is because households have accumulated wealth that will support their spending as equity withdrawals slow. According to the Federal Reserve, household net worth excluding housing wealth or liabilities ballooned by $3.5 trillion in the past year.

"The consumer balance sheet is big and getting bigger in both directions, with both assets and liabilities going up," Wieting says.

No Buyers in this Buyers Market?

August 24, 2006

Ironically, I have not had a better month in terms of getting buyer clients in a while, but the general news is that the buyers are not taking advantage of the pricing and homes available in the Chicago region. Rates are low. Lots of homes to choose from makes this a great time to buy as long as you are planning on staying in the home for a minimum of two to three years.

Here is an AP article on the latest housing news for Chicago:

House hunters shied away from buying in July, driving down sales of previously owned homes to a 2-1/2-year low. The inventory of unsold homes climbed to a record high.

The new figures, released Wednesday, provided fresh evidence of how much the once-sizzling housing market has cooled.

Existing-home sales dropped 4.1 percent in July from the previous month to a seasonally adjusted annual rate of 6.33 million units, the National Association of Realtors reported. That was the lowest level since January 2004.

Sales were weaker than expected, with economists forecasting 6.55 million units.
Investors, believing that housing sales might be dropping more rapidly than anticipated, sent stocks down for a third straight session. The Dow Jones industrial average lost 41.94, or 0.37 percent, closing at 11,297.90. The Standard & Poor's 500 index fell 5.83, or 0.45 percent, to 1,292.99, and the Nasdaq composite index dropped 15.36, or 0.71 percent, to 2,134.66.
The data comes after a Federal Reserve official hinted Tuesday that higher interest rates may still be needed to tame inflation, a move that could curtail consumer spending. Retailers and home builders, which have the most exposure to consumers, led major indexes lower.
''The focus now is on housing as the market shifts away from inflation and toward growth,'' said John Caldwell, chief investment strategist for McDonald Investments. ''The question is has the Fed done too much, and is housing going to lead us down.''

Although sales prices for homes are no longer bounding ahead, some prospective buyers are still waiting for better deals -- another factor in the weak showing, economists said.

''Many potential home buyers have been on the sidelines, some kicking the tires but mostly waiting for sellers to compromise on prices and terms,'' said David Lereah, the NAR's chief economist.

The median nationwide price of a home sold last month was $230,000, up just 0.9 percent from the same month last year. The median price is the middle point, where half sell for more and half sell for less.

Meanwhile, the inventory of unsold homes in July rose to a record high of 3.86 million. At the current sales pace, it would take 7.3 months to exhaust that overhang. That is the longest period to exhaust the supply of homes since the spring of 1993.
The Illinois Association of Realtors said July home sales were down 11.7 percent to 15,973 homes sold, compared to 18,089 sales in July 2005. The state's median home sale price in July was $214,000, up 2.4 percent from a year earlier.

AP

Our One Year Blog-iversary

A short post to celebrate our one year of our Chicago HomeBUZZ blog and posting real estate information is here! Let me know how we can make the site better. Feedback is always welcome.

Thanks to our loyal subscribers.

Jim

Live Chat is Here

In an attempt to break down the walls of blogging and posting (and timidity about calling a 'stranger') I have introduced LIVE CHAT on my Chicago HomeBUZZ blog.

If you have any questions or would like to chat live about any real estate topic, if you see my picture on this site in the right column it means I am available to talk.

Questions about the market? Let's chat.

Questions about investing in real estate? Let's chat.

Our chat will be between us only and will not be posted (although I believe there is a feature I can get if it becomes popular) where we can all chat together live in a virtual conversation.

Pretty cool.

Whenever I am at my office making calls or catching up on paperwork, I will have the feature on so give it a try.

And thanks for all my loyal subscribers. After one year of blogging, we are up to 10 subscribers!

If there is a topic you'd like me to discuss let me know.

Gas Prices Drain Local Economy

Crains Chicago Business's Paul Merrion wrote a great column in Crains this week about the effect the raising gas prices are having on our local (and national economy).

They conducted a study which shows that for every dollar a gallon of gas goes up job losses almost double!

36,260 jobless when gas was $2/gallon
61,000 jobless at $3/gallon
and a projected
102,420 at $4/gallon.

It broke down to over $5 billion removed from our local economy and spent on gas instead. The powerful impact of microeconomics has always fascinated me, but these numbers are staggering.

Customize your ChicagoHOMEBUZZ

I wanted to let you know you can customize your feedblitz account which is used to manage this blog. You can change your account to receive posts once they are made (default setting) or weekly or at whatever rate you request. Email me if you are interested in this option and thanks for subscribing. Our subscription list is growing each day.

Forward the link to help spread the Chicago home buzz....

Thanks for your interest

Jim

Rate Hikes Pauses: Who Cares?

Yes in an historic move (not done in the last 18 months anyways) the Federal Reserve Board has decided to halt their consecutive increase in interest rates at their meeting yesterday.

What does this mean for mortgages?

Not much.

What does this mean if you have a home equity loan or any other adjustable short term interest loan?

It means your monthly adjustable payment did not go up as it may have the past 18 months. I have a home equity loan that has gone from $300 a month to almost $700 a month. Yikes. I'd say I am quite interested in the Feds policy decisions.

But what about how this is affecting my business?

People are asking if I am waiting anxiously for good news from the Fed and I try to explain the Fed only affects a small (yet important) fraction of my business population. The larger proportion of my business is driven by the bond market as I've posted in the past. The graph as shown in the Chicago Tribune yesterday was very telling.

It showed the monthly rate increase after 9/11/01 stepping its way up to today's current level. Then it showed mortgage rates, the backbone of my business. Over that same period of time it is quite steady (actually went down to 6 3/8% last week but had a short uptick last night). Rates are incredibly low now. Now they will most likely not return to the level we saw just following the fall of 2001 unless we see another national catastrophe, but we are still experiencing an excellent time to lock in to a long term (30 year) mortgage depending of course on your goals.

The rates rise and fall like the tide but are not showing a steady increase like short term rates (Fed related).

Finally, and I will post a longer blog on this topic later, I think now is a great time to buy (now you smile and say "of course you do, its your business to want people to buy (or sell).

But I am seeing this slowdown in the economy as real opportunity. There are millions of home on the market nationally that are sitting longer and longer since there are less and less buyers. This means prices are dropping and competition is shifting away from a sellers market and towards a buyers market.

This means opportunity for buyers.

In our area, I am hearing it again and again: "The seller is DEFINITELY willing to negotiate" or "Just make us an offer". The desperate pleas are really comical at times and in my opinion strengthen my argument that its a good time to buy. Of course, in some areas in the country you will need to ask if you have reached or are approaching the bottom of that flattening. If pricing still needs to drop then now is not a good time. But in Chicago I am giving a strong BUY recommendation for many parts of the city.

But for now it is good news from the Fed, but not really HUGE news for the mortgage part of our residential real estate business.

Cow a Bung-a-low

I know. That's a lame title...But the program the city is offering isn't.

It's called the Green Bungalow Initiative.

The Green Bungalow Initiative is a pilot program sponsored by the City of Chicago to determine whether green building principles could be applied affordably to existing homes. The following groups worked together to guide the initiative:

* City of Chicago Department of Environment
* City of Chicago Department of Housing
* U.S. Department of Housing and Urban Development
* Neighborhood Housing Services – Chicago Lawn
* Neighborhood Housing Services Redevelopment Corporation
* Southwest Home Equity Assurance Program
* Greater Southwest Development corporation
* American Institute of Architects, Chicago Chapter
* Historic Chicago Bungalow Initiative

The Green Bungalow Initiative renovated four Chicago bungalows to determine if green building benefits of improved indoor air quality, energy efficiency and resource conservation could be achieved in this distinctive architectural style. Each bungalow was renovated with a different modern lifestyle theme: a handicapped adaptable home, a home office, a young professional loft-style home and a classically restored bungalow. Features included double-paned windows, energy-efficient furnaces and water heaters, and extra insulation, including insulation made of recycled newspapers and phonebooks. Renovation of the homes was completed in June 2002, and all homes were sold and occupied by November of that year. A subsequent comparison of energy bills for a "control" bungalow on the same block with the rehabbed bungalows demonstrated that energy savings in the Green Bungalows ranged from 15 percent to 49 percent.

The "Green Bungalow Initiative" report attached below describes the transformation from plain bungalows to "green" bungalows and includes a discussion of sustainable design features and post-renovation energy savings.

Let me know if you'd like more info or go to www.cityofchicago.org for more

June Housing Stats Flat

Sales continue to slow as more real estate news was released yesterday confirming the predictions. Home buyers are reaping the benefits as prices continue to fall and market times continue to lengthen giving the savvy home buyer the edge when it comes to negotiating on a purchase.

Here is a full article written on Inman News:


Condo and single-family sales continued to slow last month in Chicago, and across Illinois and Ohio.

Home sales in Ohio and Illinois continued to fall in June from their year-ago levels, while prices eked out modest gains, according to Realtor associations in both states.

In Ohio, sales of new and existing homes last month dipped to 15,217, a 0.9 percent decrease from the 15,359 sales posted during the month last year, the Ohio Association of Realtors reported.

The average Ohio sales price of $169,925 is a 2.9 percent increase from last year's $165,151, according to the association.

In Illinois, total homes sales (which include single-family and condominiums) were down 8.2 percent to 18,779 homes sold in June, compared with 20,457 sales in June 2005, the Illinois Association of Realtors reported.

The Illinois median home sale price in June was $214,900, up 1.4 percent from $212,000 a year earlier. The median is a typical market price where half the homes sold for more, half sold for less.

Statewide, single-family home sales totaled 13,058 in June, down 8.9 percent from 14,334 single-family homes sold in June 2005. The median single-family home price in June was $213,400, off 0.7 percent from $215,000 a year earlier.

Some 5,721 condominium sales were reported across Illinois in June, down 6.6 percent from 6,123 condo sales in June 2005. The condo median price for June was $215,000, up 4.4 percent from $206,000 one year ago.

In the Chicagoland Primary Metropolitan Statistical Area (PMSA), single-family home sales totaled 7,709 in June, down 15.1 percent from 9,085 home sales in the same month last year. The median single-family home price for the Chicagoland PMSA was $289,000, up 3.6 percent from $279,000 in June 2005.

Condominium sales in the Chicagoland PMSA were off 7 percent in June to 5,464 units sold, and the condo median sales price increased 4.3 percent to $220,000. June 2005 condo sales for the Chicagoland PMSA totaled 5,874; the median price was $211,000.

Bad News Bonds: Good for Rates

Remember, when the bond news is bad that is good for our mortgage rates. Overnight real estate rates tumble for a 30-year fixed rate at 6.31%; 10-year Treasury yield at 5.06%

Now more than ever (because these rates won't stay down for a long time), it is a buyers market. I put together another buyer program yesterday where we sat down and set my clients real estate goals for her first condo purchase. My client was quite surprised how easy it was to make a purchase with the little money she (thought) she had available. She was especially amazed to learn how much she would save when we factored in the tax benefits of owning (versus renting).

Call me anytime to discuss your real estate goals.

Chicago HOMEBUZZ Summer Podcast

Here is a link to our latest podcast at iTunes or you can try this link (feed site) and click on "Play Now". If you'd like to download the unenclosed file directly go here (12mB).

Here is a link to our RSS feed for this blog if you're interested in getting instant updates on your computer or handheld (careful, it's addiciting). Simply copy the url to your feed software (e.g. feedreader) and set the category for real estate (or whereever you choose).

This podcast is a national and local real estate market report with quarterly sales data for various neighborhoods.

Visit our website for more specific property data at www.CHICAGOHOMEBUZZ.com.

Chicago HOMEBUZZ: News, information, podcasts, movies, featured property listings & market statistics for buyers, sellers, developers and investors of real estate in the Chicago area.

Chicago Home Buzz Quarterly Reports

Just a quick note to remind you we are working on our 2nd Quarter Market Report which we mail out quarterly to anyone who would like a copy.

If you're interested in receiving this mailing which has news articles and market data for your zip code and neighborhood, please send us your mailing address (with your name or without if you'd like---we won't call you!) and we'll put you (and your neighborhood) on our list (and in our report). Here is a link to our Chicago Home BUZZ site which has a sample report you can see as well as many other downloadable forms and information.

Should be mailed out after the Fourth of July weekend.

May Up on New Homes

There will be lots of news coming out this week, but it looks like we're starting the week off on a positive note with home sales increasing in May. I believe we will see some negative news as the week progresses, however, including the expected rate increase from the Fed which will push short term interest rates a bit higher.

Remember, the Feds rate increase does not directly affect mortgage rates, but rather short term rates like car loans, home equity lines, etc. The mortgage rates are more closely tied with the Bond market.

Bad bond news is good mortgage rate news (and visa versa). Here's a short article from CNN on the May housing news:

Latest reading shows pickup in new home sales, despite rising mortgage
rates and other signs of a cooling real estate market.

June 26 2006: 10:11 AM EDT
NEW YORK (CNNMoney.com) -- The pace of new home sales showed an unexpected increase in May, as the latest reading of real estate market strength bucked rising mortgage rates and other signs of a cooling housing market New homes sold at an annual pace of 1.23 million homes in the month, up 4.6 percent from the revised 1.18 million annual sales pace in April. Economists surveyed by Briefing.com had forecast that sales would slow to a 1.15 million rate in May. The report showed a decline in new home prices in May when compared to April, though price measures were still above year-earlier price levels.

Starts Up, Permits Down

Stocks smile on mixed housing news

Starts rise, but building permits fall more than expected; futures move higher as news offers no major shock to inflation-weary markets.

NEW YORK (CNNMoney.com) - Stocks looked set for a slightly higher open Tuesday after the latest housing numbers came in mixed and failed to scare a market already rattled with the inflation jitters.

Stock futures are higher, indicating a higher opening for stocks.

The latest read on the housing market showed housing starts coming in stronger than expected, but a building permits number slightly below estimates.
The Commerce Department said May housing starts registered 1.96 million units at an annualized pace. That's a 5 percent increase from the revised 1.86 million annual rate for April and higher than the 1.87 million rate predicted by economists, according to Briefing.com.
But building permits fell 2 percent to an annualized 1.93 million unit pace, a bigger drop than expected. Economists were looking for a fall to 1.95 million units from April's revised 1.97 million figure.

A number far above estimates could have stoked inflation fears, which have been weighing on stocks since mid May.

"It doesn't have to be below, but it can't be significantly above," said Art Hogan, chief market analyst at Jefferies & Co, prior to the report's release. "It's not at the forefront of the Fed's radar screen, but it's certainly something we'll be watching."

Shop for a Loan

I came across this very informative link from the Federal Reserve on shopping for a loan:

Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage--whether it’s a home purchase, a refinancing, or a home equity loan--is a product, just like a car, so the price and terms may be negotiable. You’ll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of dollars.

Here is the full link

Magnolia Glen Edgewater: Two Bedroom Condo

Welcome to quality living in the Edgewater community.


Chicago's newest development to be offered for sale in the Edgewater neighborhood.




This spacious renovated Edgewater four-unit condo development has integrated contemporary features while maintaining the original vintage charm. Building features three, 3 bedroom 2 bathroom condos and one, 2 bedroom 2 bathroom residence.




The two bedroom garden residence has been completely renovated top to bottom. It includes a spacious floor plan with a sunny living room and sunroom adjacent to the beautifully appointed kitchen which includes all new stainless steel appliances, granite countertops, undermount stainless steel sinks and 42” maple cabinets. There is also an eat-in island that features a built-in wine rack.

The large master suite includes a walk-in closet and large master bathroom with nicely appointed fixtures including a whirlpool tub, granite tops and a Grohe shower head. This unit has its own new heating and air conditioning system, full-size laundry in-unit, wired security system, a limited 3 year warranty and a large secured storage room.

Located only two blocks from the red line el and four blocks to the lake and close to restaurants and shops in Edgewater and Andersonville and much more. We welcome you to view the Magnolia Glen Condominiums and see if they meet or exceed your requirements. We believe they will.


2BR 2 BA Starting at $269,000


3BR 2BA Starting at $349,000




Go here for development intro page (dsl) or visit our website at http://www.REMEMBERJIM.com and click on the featured property or download a pdf of the 3BR floor plan




These properties are being exclusively marketed by Jim Gramata, a licensed broker associate with Keller Williams Lincoln Park Realty. If you would like to make an appointment to see a residence in this development call us at 888-877-8705 ext 2035.

Magnolia Glen Edgewater Three Bedroom Condos

Welcome to quality living in the Edgewater community.


Chicago's newest development to be offered for sale in the Edgewater neighborhood.




This spacious renovated Edgewater four-unit condo development has integrated contemporary features while maintaining the original vintage charm. Building features three, 3 bedroom 2 bathroom condos and one, 2 bedroom 2 bathroom residence.




The three bedroom condominiums includes a spacious, open floor plan with a large living room and adjoining sunroom with excellent exposure to western sunlight. The Great Room includes a family room and dining area that are adjacent to the beautifully appointed kitchen which includes all new stainless steel appliances, granite countertops and undermount stainless steel sinks with 42” maple cabinets. There is also an eat-in island that features a built-in wine rack. As if that weren’t enough, the design includes a separate breakfast area off of the kitchen for informal meals or an office area.




Some interior features include restored stained glass windows, built in vintage cabinetry, crown moulding, recessed lighting and hardwood flooring. In addition to the three generously sized bedrooms are two completely updated full bathrooms with nicely appointed fixtures and finishes including Grohe shower heads. Each unit has its own new heating and air conditioning system, a security system and a limited 3 year warranty. Units also include a large secured storage room. Deeded parking is available.




Only two blocks from the red line el and four blocks to the lake and close to restaurants & shops in Edgewater & Andersonville. We welcome you to view the Magnolia Glen Condominiums and see if they meet or exceed your requirements.




We believe they will.


2BR 2 BA Starting at $269,000


3BR 2BA Starting at $349,000




Go here for development intro page (dsl) or visit our website at http://www.REMEMBERJIM.com and click on the featured property or download a pdf of the 3BR floor plan




These properties are being exclusively marketed by Jim Gramata, a licensed broker associate with Keller Williams Lincoln Park Realty. If you would like to make an appointment to see a residence in this development call us at 888-877-8705 ext 2035.

Edgewater BUZZ: New Condo Development

Chicago HomeBUZZ: Magnolia Glen Condos about to hit the market.

There is a four unit development I am about to exclusively market that has not even been made public (except for here on the BUZZ!).

Read the description below taken from the flyers we are preparing or call 888-877-8705 ext 2029 (2BR) or ext 2039 (3BR) for a free recorded description of the property (beware I will get your phone number!) Or simpy visit our website at http://www.REMEMBERJIM.com and click on the photo on the left. There are downloads of floor plans and lots more coming soon!!

Video podcasts, flyers, photo gallery, etc

These are going to be some really nice reidences in a great neighborhood. Call me for to make an appointment or pass this post along to your friends (they'll love that you knew the BUZZ FIRST!)


Welcome to quality living in the Edgewater community.

This spacious renovated Edgewater four-unit condo development has integrated contemporary features while maintaining the original vintage charm. Building features three, 3 bedroom 2 bathroom condos and one, 2 bedroom 2 bathroom residence.

The three bedroom condominiums includes a spacious, open floor plan with a large living room and adjoining sunroom with excellent exposure to western sunlight. The Great Room includes a family room and dining area that are adjacent to the beautifully appointed kitchen which includes all new stainless steel appliances, granite countertops and undermount stainless steel sinks with 42” maple cabinets. There is also an eat-in island that features a built-in wine rack. As if that weren’t enough, the design includes a separate breakfast area off of the kitchen for informal meals or an office area.
Some interior features include restored stained glass windows, built in vintage cabinetry, crown moulding, recessed lighting and hardwood flooring. In addition to the three generously sized bedrooms are two completely updated full bathrooms with nicely appointed fixtures and finishes including Grohe shower heads. Each unit has its own new heating and air conditioning system, a security system and a limited 3 year warranty. Units also include a large secured storage room. Deeded parking is available.

Only two blocks from the red line el and four blocks to the lake and close to restaurants & shops in Edgewater & Andersonville. We welcome you to view the Magnolia Glen Condominiums and see if they meet or exceed your requirements. We believe they will.

Starting at $349,000
Property characteristics
3 Bedrooms, 2 Bathrooms
Large, Sunny Living & Sun Rooms
Renovated eat-in Kitchen
Large, open Great Room
Stainless Steel appliances
Built-in Wine Rack
Hardwood flooring throughout
In-unit oversized laundry
Restored stained glass windows
Large secured storage room
Deeded parking available for $25,000
Red line “El” Stop two blocks
Four blocks to Lake Michigan
Close to downtown Andersonville
3 Year Home Warranty
Security system

Visit http://www.REMEMBERJIM.com and click on featured property.

Economy Grows in First Quarter

Emerging from a year-end rut, the economy dashed ahead in the opening quarter of this year at a 5.3 percent pace, the fastest in 2 1/2 years.

The new snapshot showed gross domestic product was even stronger during the January-to-March period than the 4.8 percent annual rate first estimated a month ago, the Commerce Department reported Thursday.

Gross domestic product measures the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness.

The upgraded reading on GDP, based on more complete information, mostly reflected stronger U.S. exports and better inventory building by businesses.

Economists, however, were predicting an even bigger upgrade to the first-quarter reading. Before the release of the report they were forecasting economic growth to clock in at a 5.8 percent pace. Even though the revised figure fell short of that, it nonetheless made clear that the economy had snapped out of its end-of-year lull.

In the final quarter of 2005, the economy grew at a feeble 1.7 percent pace. Fallout from the Gulf Coast hurricanes, including high energy prices, prompted people and companies to tighten their belts.

Consumers and businesses regained their appetite for spending and investing in the first quarter, a major factor underpinning the brisk pace of growth logged for the overall economy.

Their appetite, though, was a tad less hearty than initially estimated.

For a full look at this article click here

Economy Dashes Ahead at 5.3 Percent Pace

By JEANNINE AVERSA
AP Economics Writer
Published May 25, 2006, 7:38 AM CDT

Appraising the True Market Value

Q: I tried to sell a house for the appraised price and was unable to sell at that price. I understand that property will not sell when it is priced too high but the offers I received were $5,000 to $8,000 less than the appraisal.

I was under the impression that if I advertised the property for the appraised price, it would move quickly. I told one real estate agent when she made me an offer from a client that I was going to have the house appraised again and that I would provide the appraised price to the potential buyer so he could adjust his bid.

The agent didn't go for that at all. Can you give me some suggestions as to what I did wrong? When I couldn't sell the house, I finally rented it.

A: I think you made a few basic mistakes. First, the appraised value is not necessarily the same thing as the market value.

The appraised value of the home is what an appraiser thinks the home is worth based on the sales of other similar homes in the area. The market value is what someone will actually pay for the house.

In your case, either because of the condition or location of the home, the market is telling you that your home isn't worth what the appraiser thinks it should be worth--it's worth $5,000 to $8,000 less.

Getting a new appraisal doesn't change what someone will pay for the home. You'd be better off buying some cans of white paint and repainting the interior of the property. Then, you might get more money for it.

Renting the house is fine. Eventually, prices will rise in your neighborhood and you'll get your price, but not today. And only you can decide if waiting for prices to rise in order to get the extra $5,000 to $8,000 is worthwhile.

Stream of low offers confuses home seller
Thursday, May 25, 2006

By Ilyce R. Glink
Inman News

Just Breathe

NAR: housing market to experience its third best year in 2006. NAR Chief Economist David Lereah says: "Coming off a prolonged period of record sales, housing is taking something of a breather this year. Even so, interest rates remain historically low, we've added about 2 million jobs over the last 12 months, and the economy continues to grow. That will sustain healthy levels of home sales in 2006, but they'll stay below the peaks experienced during the last two years."

For the full article click here

Good Cop, Bad Cop

The long boom in the real estate market appears to be over. Higher interest rates and soaring prices have begun to bring some local markets to a halt. In places like Illinois, where prices haven’t risen dramatically, the adjustment will be mild. The real uncertainty is what happens next. Will the economy begin to steam along, or will the combination of international tensions and oil prices cause it to stall as well? Closer to home, what will the next revolution of the real estate world bring for brokers and agents? Read on for answers to these and other penetrating questions.

The good news and bad news about the economy

Economic forecasting is a less than exact science. In fact, it's downright primitive. When you hear a pundit giving you a numerical forecast in grave tones, understand that it is wrong. Not intentionally wrong, but rather as mistake made by someone who thinks he knows more than he actually does. It's better for you to understand the forces that will shape the future of the economy and then apply those forces to your own business and your own market. So, here goes.

Good news

First, and foremost, the demographic structure of the United States is ideal for preserving a steadily growing economy and a strong real estate market. The baby boom, which has caused so much of the economic and social history of the United States over the past half century, is still in place and still productive. The largest single age group of the boomers is 49. This means that the 75 million or so people born between 1946 and 1964 are clustered in a time of life when they are at their career peaks—and when they are moving into the best home they will ever inhabit. Their productivity keeps a high floor under the economy, ensuring that what recessions occur are most likely to be mild and short.

Second, the Federal Reserve has managed the economy in an effective fashion. While former Fed Chairman Mr. Greenspan was not right all the time, he was right about where monetary policy should be far more often than he was wrong. The result has been a low interest rate climate that has fostered economic activity and reduced the cost of homeownership.

Finally, the world is flat. The term used heavily by columnist and author Thomas Friedman capsulizes the integration of the world's economy. The labor force available to American manufacturers is worldwide as is their market. The result is a greater availability of goods at lower prices than has ever before faced the American consumer.

Bad news

With the good, there come some wild cards. Some of this is bad, but much is just a yellow flag that needs to be watched to see if it turns red. First, we have a new Fed chairman. Ben Bernanke comes to the job with the confidence of the financial community, just about the only requirement in the job description. But he's not Alan Greenspan, and we don't know yet whether his models have the same sure touch and feel for what's needed that Mr. Greenspan's street smarts had. This will develop over the next year or so, so keep watching the Fed.

Second, we are borrowing a trillion dollars a year to cover our trade and budget deficits. So far, it hasn't hurt us much as the rest of the world seems to want our debt at pretty reasonable rates. But it leaves us vulnerable to a long-term rate hike, and to being hamstrung in dealing with issues that concern our creditors. We need to get the federal budget under control at the least, even if we can erase the trade deficit.

Finally, our addiction to oil puts us at the mercy of an unsavory bunch of characters. It seems that every country that has significant oil reserves is either untrustworthy (Russia, Saudi Arabia), unstable (Nigeria, Iraq) or is ruled by a tin horn dictator who hates us (Venezuela, Iran). The more we rely on foreign oil (now more than 50 percent of what we use), the more vulnerable we become. It's more than price, although that could have a draining effect on this economy. It's international politics as well.

That said, my opinion is that the good news prevails and this economy proceeds decently (although far below potential) through 2006 and 2007. Growth should be around three percent with inflation edging up. Long-term interest rates will be up about three-quarters of a point by year's end, and the employment picture good, but mixed.

The real estate market

We've had a decade of strong real estate sales. Now rising prices and interest rates will slow down in 2006. Even if the pessimists are right, though, and sales fall by 10 percent, this will still be better than any year of the 20th Century. The question facing the market, however, is whether this is the pause that refreshes or the fall of a skyrocket.

The answer will differ for different markets. The key will be employment. In those markets where the underlying economy is sound and growing with the national economy, the housing market will revive just as soon as prices adjust to the level of income. For others, the real estate market will stagnate and the price corrections will be harsh.

The issue facing agents and brokers is how to transition from an “order taker” market to one where actual work has to be done. With the rapid expansion of the number of REALTORS® over the past five years, most of the industry has little to no experience of anything but a growing market. Brokers need to invest more heavily in the tools and training their agents need to understand how to operate in a down market. Agents have to realize that it's not the end of the world.



By John Tuccillo, Ph.D. (Economist)
Illinois Association of Realtors

For-Sale-By-Tribune.com

(Crain's) Tribune Co. made good on plans to add to its Internet stable Monday and announced the purchase of a real estate Web site company.

Its Tribune Interactive subsidiary acquired ForSaleByOwner.com, a nine-year-old Internet company that caters to people selling their houses without the aid of a real estate agent.

The purchase comes as TribuneÂ’s Web sites bolster lackluster ad sales seen in the companyÂ’s publishing division. Internet revenues climbed 30% in the first quarter of the year thanks in large part to online help wanted and auto advertising. ForSaleByOwner could strengthen TribuneÂ’s online real estate business.

For a complete article: http://chicagobusiness.com/cgi-bin/news.pl?id=20707&bt=forsalebyowner&arc=n&searchType=all

Move.com

Move Inc., formerly Homestore, today officially launched Move.com, giving home buyers and renters access to homes for sale and houses and apartments for rent, as well as home-buying and moving resources.

Move.com is billing itself as a real estate search engine and has more than 3 million existing homes for sale from Realtor.com and millions more newly built homes and rentals from hundreds of sites all over the Web.

In addition to property listings, Move.com features tutorials on home buying and selling, home value reports, an affordability calculator, a neighborhood finder, school reports, and information on senior housing communities, among other things.

Move Inc. operates Move.com, Realtor.com, Moving.com, SeniorHousingNet, FactorBuiltHousing.com, Homeplans, Welcome Wagon, and Top Producer Systems.

Move shares (NASDAQ: MOVE) traded around $5.42 per share this morning, down 3.9 percent from Monday's closing price of $5.64.

City of Chicago "City Mortgage" Program

"City Mortgage" is back, aimed at Chicago buyers on a budget.Every tick up in
interest rates holds more families back from affording a home. Because of recent rate rises, the Chicago housing department is again sponsoring City Mortgage. A fixed-rate, 30-year loan at a competitive rate, the City Mortgage also provides up to 4 percent in closing costs for eligible borrowers.You'll have to fall under certain income levels, and buy a one- to four-unit home in Chicago under a certain price to qualify for the loan. The limits increase slightly for properties in "target" areas where the city wants to promote development.To get a City Mortgage, you have to apply through one of the participating lenders to be posted on the city Web site, http://www.cityofchicago.org/. (Click on Home & Property; next, click on For HomeBuyers; then Housing; and Financial Assistance on upper-left side.)

Lenders should start offering the City Mortgage this month (May '06), says Molly Sullivan, housing department spokeswoman.- Advantage: New research shows Chicago's dominance over the regional housing market is growing. Not only is the city attracting more buyers, but fewer owners are losing their homes to foreclosure.

For a complete look at this article written in the Chicago Tribune go here

Shifting Strategy

As we been posting for some time now, the market is shifting away from the seller's market we have been experiencing for several years and moving towards a buyers market. This balancing act does have a major impact on establishing a strategy whether you are buying or selling real estate.

Homeowners in recent history have taken the strategy to find their new home first and negotiate that contract THEN market and sell their home. IN the fast and frenzied market we are coming out of it usually meant a quick sale if marketing, price and condition were all good.

One drawback of that scenario was the uncertainty of final sale price, however, since it was such a strong market, the final price was usually close to the original asking price.

Well, times are changing (and as I've said I believe it will be beneficial to the real estata market). Homes are sitting on the market longer and it is more difficult to predict the market time.

Marketing and sales strategies become even more critical in this market when selling a home. The balancing act require more strategizing and patience when dealing with a shifting market.

In a seller's market, buyers usually face a lot of competition. They often need to bid over the asking price and waive contingencies to get an offer accepted. In a buyer's market, there are more sellers than buyers. Listings take longer to sell; buyers can afford to be choosy.

A balanced market is somewhere in between a seller's and a buyer's market. However, even in a balanced market, you'll find pockets of variability depending on supply and demand.

For example, in desirable neighborhoods where inventory is low, a balanced market might exhibit characteristics of a seller's market. However, this will only be the case for well-priced listings that are in prime condition, or priced-to-sell fixer-uppers that have a lot of upside potential.

In a hot seller's market, virtually everything sells. This is not the case in a more balanced market. Keep this in mind if you're thinking about selling your current home and buying a new one.

HOUSE HUNTING TIP: It's a great time to make this kind of move because interest rates are relatively low. However, if you intend to buy before selling, be aware that this is a riskier strategy for some homeowners than it was a year ago.

In a strong seller's market, the challenge is finding your next home. But, selling your existing home is often relatively easy. In a balanced market you will have an easier time finding a home, but it could take longer to sell. The other factor to consider is that it may be more difficult to predict ultimate sale price.

The real estate market is not static. Particularly in a transitional market, it can be stronger one month than it is the next. Unless you have ample funds at your disposal, you should factor this in to your home buying strategy.

One homeowner learned this lesson the hard way when they bought a new home in San Francisco before selling their existing Oakland, Calif., home. They made the move in 1994 when the real estate market was in transition. They bought their new San Francisco home when market activity was brisk.

Two months later when their Oakland home went on the market, the market softened enough to delay the sale a few months. The sellers reduced the asking price in order to hasten the sale. They ended up selling for less than they had budgeted for and had to sell stock in order to complete the transaction

If your funds are limited, a safer strategy is to put your home on the market before you buy your new home. You should be actively looking for your new home while you're waiting for your home to sell.

In markets where there are a lot of houses on the market, an offer that is made contingent on the sale of your existing home may be a workable. However, if you're trying to buy into a pocket of the market that is in high demand and where there aren't a lot of homes for sale, like the Upper Rockridge neighborhood in Oakland, a contingent sale offer may stand little chance of being successful even in a more balanced market.

Keep an open mind about your options. If you sell your current home before buying the new one, you'll know exactly how much money you have to work with. You don't have risk of coming up short of the funds you will need to make a financially prudent move.

THE CLOSING: You may have to make a move to an interim rental. But, that's better than racing to buy a home that may not work for you in a couple of years.

Trib Reports Old News

As I wrote in this Chicago HomeBUZZ blog back in November, December and again here in January, the market is shifting towards a buyers market.

It seems the Tribune posted an article on this topic today in the Sunday paper. As I said before, this is a good thing all around for the economy for the real estate market and to thin the field of real estate agents are were able to ride the wave of a hot market without having to have services strategies and market plans.

Here is a link to the Trib article if you're interested.

50 Years (Ways) to Lose Your Money

50 years to pay off a house? What do your instincts tell you about that? Oh, sure your monthly payment will be less, which means you can afford more house, but please! Fifty years!

Here is an article from Yahoo Finance on the subject and how some Californians are riding the wave...For the complete story click here

The Methuselah of mortgages has arrived: the 50-year home loan.
Think of it as a mortgage that has been supersized. Like that other supersizer, McDonald's, the massive mortgage was born in Southern California's San Bernardino County. Statewide Bancorp of Rancho Cucamonga began offering the loan in late March, to California residents. Advertisements have yielded a lot of phone calls and "quite a few applications," says Alex Diaz Jr., vice president of Statewide.

Half of first-time home buyers are 32 or older, according to the National Association of Realtors. If those buyers get 50-year mortgages and never refinance or make extra payments, they won't pay off their loans until they're well into their 80s. Would they be crazy to get loans that amortize or pay off the balance over 50 years instead of the standard 30 years? Not at all, Diaz says.

Getting a 50-year loan is a perfectly rational way to avoid an interest-only or payment-option adjustable-rate mortgage, he says. With an interest-only mortgage, the minimum monthly payment doesn't put any money toward principal. A payment-option ARM goes a step beyond that: In some circumstances, the minimum monthly payment doesn't even cover the interest accrued that month. You make a minimum payment at the beginning of the month, and four weeks later, you owe more than you owed before the payment. This condition is called negative amortization, or "going negative."

River North, South, East or West?

What's in a name? A lot! It's about public perception and the branding a developer wants to evoke when marketing a new development. Here is an article on the push to "create" a new neighborhood in the area just south of Congress to 18th street and from Canal to Clark. This "hot new neighborhood" --very hot but not so new-- has thousands of units in the works in the coming years and they are pushing to get a name that sticks and makes its image one which the developers can market around:

Here is a partial copy of the article written in Crain's magazine. For the full story go here

Realtors will tell you south Uptown is Buena Park and east Logan Square is actually West Bucktown. Now if some developers succeed, part of the South Loop could become River South.

Developers in one of the city's fastest-growing areas want to rename a large swath of the South Loop. It's an age-old exercise in real estate brand-building: slap a new name on a neighborhood to make it more appealing to buyers. Yet it often fails, even in a place like the South Loop, where an attempt to call the area SoLo in the 1990s drew mostly ridicule.

Just remeember, Bucktown is part of Logan Square, Andersonville is really in Edgewater and Ravenswood is really a part of Uptown....all according to National Census data (which is how the MLS is organized). So, it all depends upon who you're talking to and where you are talking.

Looking Ahead: Two Views

The debate continues. Who is right? That’s for you to decide. Below is a link to an article posted on the Business Week Online site which features two heavyweight real estate giants in the industry (Sam Zell and Barry Sternlicht) and their contrasting views on the future of the real estate market.

In my (pipsqueak) opinion, Zell is a bit disconnected with the overextension of many buyers today. He claims it’s a 20% of income debt, but I know a lot of homeowners who are using the adjustable rate mortgages and I would estimate one in four of those are in a interest-only program many of which adjust monthly! With rates rising monthly, and homeowners already overextended on their mortgages this poses a potential problem in the future as rates rise, mortgages rise and incomes stay steady or slight growth.

Also, another industry concern is that so many of the adjustable mortgages will be coming due and adjusting in the next three to five years. They will of course be adjusting up and this too will mean less disposable income for those homeowners or investors. This may mean an increase in foreclosures but it will also mean there will be opportunities for investments as people begin liquidating their real estate assets to reduce their risk.

So, I am instructing all of my clients to get locked into a 30 year mortgage and resist the temptation of the adjustable mortgages unless the investment is less than a year or two (at most). For example, if a buyer is going to purchase a property do minor rehab and resell or flip it, then an adjustable or interest-only loan is a good option. But look at how close the ARM rates are to the 30 year rates and you will see the best investment for the majority of people will be the fixed mortgages.

Here are a few paragraphs on the article referenced above and a link to the full article here



Two Views of the Real Estate Boom
By Christopher Palmeri
Business Week OnlineApril 28, 2006

Any time you get two market heavyweights to predict the future of the real estate boom, you're going to attract a lot of investor interest. And when they hold views as divergent as those of Sam Zell, the Chicago investor who early in his career earned the nickname "The Grave Dancer" for his skill in picking up distressed properties, and former Starwood Hotels & Resorts Worldwide (HOT) chief Barry Sternlicht, sparks are bound to fly. The venue for the Apr. 26 faceoff was the annual Milken Institute Global Conference in Los Angeles. Zell immediately dismissed inflation figures showing relatively benign 2% to 3% growth. "If you're trying to build, you're looking at 30% increases in construction costs in the past 24 months," he said. The financier believes inflation will continue to hold real estate prices up. "I don't think there's bubble or any area with oversupply," he said, before hedging by naming a few markets -- Las Vegas, San Diego, and Phoenix -- where he thought high-end condos were overbuilt.Zell quickly shot down the notion that Americans have overextended themselves by paying too large a share of their income for mortgage payments. "In Europe, it's more like 50%. Here, people think they're pressed if its 20%," Zell said. And if buyers get strapped, they'll cut down on discretionary spending before they stop paying their mortgage. "We're still the cheapest housing in the world," he said.ON THE CHASE.  Zell, who controls two large real estate investment trusts -- Equity Office Properties (EOP) and Equity Residential Properties Trust (EQR), an apartment owner -- said that while there are still some markets with relatively unfettered opportunity to build new homes, many cities and states are increasing zoning restrictions and other artificial barriers to construction. "The whole country is going the route of California," he said.Sternlicht took the opposite view. "This is too bullish," he said. "One thing I learned on Wall Street is that the flow of funds overwhelms fundamentals. There are so many funds chasing the real estate game -- oil sheiks, Hong Kong billionaires, hedge funds. This is a totally different market than even a year before."