Residential Realty

Fed Action:Is It A Bailout...Or An Investment?

 

Earlier in the week the Federal Reserve Bank indicated that they will back Fannie Mae and Freddie Mac with a line of credit and buy stock in the companies as needed.  The aim is to help the only functioning secondary market for mortgage backed securities.

 

Many people are concerned that the taxpayer will be on the hook for billions of dollars.  So the question that begs asking, how much more will the average tax payer pay to stabilize the credit market?  And ultimately the housing market.  Also is this for the greater good?

 

While housing is a small part of the Gross National Product; we have seen how it can affect the rest of the economy.   A reduction in home sales has reduced the demand for consumer products such as appliances, furniture, and other stuff for new homes and home renovations.  Which also reduces state and local tax revenues.

 

Speaking of  taxes, what of the income tax, on job losses, people making products, people installing products, people making improvements. Unemployed tradesmen; carpenters, plumbers, and electricians.  Again tax revenues will decline.

 

So will tax payers be on the hook for billions of dollars?  Let me ask this; will all the loans that Fannie and Freddie have in their portfolio default?  I don’t think so.  In fact all this ‘chicken little mentality’ that the media hits us with, never ever mentions the fact that many mortgages are still performing.  And I believe that many bank stocks will improve because many of the mortgages they have in their portfolios are performing loans.

 

I believe that what the Fed is doing is really an investment, will it cost the taxpayer in the short run?  Possibly, but in the long run I believe that there will be a positive payoff.  Don’t forget that mortgages are backed up by real estate.  The demand for real estate never really goes down.  People have to live some where; and land…well land is finite.

 

Put me down for paying more taxes, because this is for the greater good.  Probably better spent than where some of my other tax dollars are going.

Best Buyers Market In Years!

Historically home values usually go up.  Home values will continue to rise as the demand for homes will continue to increase.  Demand will come from an increase of population.  We will continue to see people coming to this country from other countries.  And the 'Echo Baby Boom' is around 119 million, 56% larger than the 'Baby Boom Generation.'  Land is finite, so where are all these people going to live?  Basic economics: as the demand increases, supply decreases, and prices increase.

Commodities prices go through cycles and at various times become scarce and prices increase.  No one knows how long that will last.  Some economist feel that the current speculation in oil maybe nearing a bubble stage.

Consumer goods go on sale through out the year.  Automobiles, furniture, appliances, and electronics all go on sale.  Because of consumer demand, or to make way for the 'new, bigger, and better.'

But, homes are different, you can live in them, use and enjoy them now.  The current buyers market is probably the best market in the last 40 years.  This is really a once in a life time opportunity.  And if your going to be in your home for five to 10 years, you will very likely see appreciation in your home.  Interest rates tend to cycle every five years, so while you are living in your home, you may also have an opportunity to refinance at a lower rate.

People with money are not concerned with the current housing market, instead they are buying low and will sell high.  One day this market will change, prices will increase, inventories will decrease, and interest rates will go up.

Deerfield Illinois Real Estate Market April May 2008

Active listings continue to increase, except for  Highland Park where inventory fell.  Most of that inventory has been sold, and check out the closing prices for Highland Park;  almost $50,000 lower between April and May.

Riverwoods and Northbrook had about a $75,000  price decline.  With a $40,000 drop in Lincolnshire.  Deerfield remained steady with median close of $675K, but prices were hard won with an increase of almost an additional month of market time.

Also look at under contract, prices seem to be falling for Deerfield, Riverwoods, and Lincolshire, while Northbrook and  Highland Park seem to be on the increase.

 

                                                    What does all this mean?

Increase in active listings, more inventory will continue to create a downward pressure on prices.  In a hot market we might see prices at three percent below asking price, in todays market we are seeing sales prices five, seven, even 10% below asking price.

While we still do not know where the bottom is in the market, great opportunities exist for buyers, especially first time buyers.  Buyers that expect to be in their new home for several years will  be in homes that will experience appreciation, and  they will  have lower interest rates.

The opportunity for buyers:  Excellent selection of homes at all price points with attractive financing .  Sellers are making offers of lease to purchase, and  seller financing and buy down rates.

                                                          

                                                            DEERFIELD

 

                                                April                                       May

• Active Listings           207                                          218
• Median Price              $657,500                                 $653,750
• Ave Mkt Time                        189                                          190
• Under Contract           25                                            23
• Med Cont Price          $599,900                                 $539,900
• Ave Mkt Time                        189                                          112
• Closed                         29                                            35
• Med Close Price         $675,000                                 $675,000
• Ave Mkt Time                        209                                          244

                                                            RIVERWOODS

• Active Listings           57                                            60
• Median Price              $889,000                                 $997,000
• Ave Mkt Time                        218                                          226
• Under Contract           6                                              7
• Med Cont Price          $1,014,500                              $885,000
• Ave Mkt Time                        110                                          140
• Closed                         8                                              10
• Med Close Price         $1,014,313                              $938,813
• Ave Mkt Time                        222                                          208

                                                            

                                                        HIGHLAND PARK

• Active Listings           366                                          361
• Median Price              $869,000                                 $835,000
• Ave Mkt Time                        262                                          261
• Under Contract           45                                            48
• Med Cont Price          $675,000                                 $757,000
• Ave Mkt Time                        194                                          270
• Closed                         76                                            86
• Med Close Price         $647,500                                 $599,000
• Ave Mkt Time                        228                                          203

                                                            

                                                        NORTHBROOK

• Active Listings           325                                          340
• Median Price              $699,000                                 $694,400
• Ave Mkt Time                        201                                          196
• Under Contract           53                                            57
• Med Cont Price          $600,000                                 $679,500
• Ave Mkt Time                        196                                          177
• Closed                         62                                            67
• Med Close Price         $586,250                                 $510,000
• Ave Mkt Time                        184                                          201

                                                            

                                                        LINCOLNSHIRE

• Active Listings           83                                            94
• Median Price              $719,900                                 $775,500
• Ave Mkt Time                        192                                          186
• Under Contract           5                                              9
• Med Cont Price          $699,000                                 $539,000
• Ave Mkt Time                        245                                          199
• Closed                         13                                            13
• Med Close Price         $620,000                                 $579,000
• Ave Mkt Time                        258                                          240

NOTE: Information based in whole or in part on property data supplied by the Midwest Real Estate Data.  MRED is not responsible for its accuracy and data maintained by MRED may not reflect all real estate activity in the marketplace.

Lake County Property Tax Due Today... I'm Such A Slacker

Property taxes due in Lake County Illinois today.  "What!"  "Oh no!"  Usually I am pretty good about paying my property tax on time, I generally pay my property taxes on time, my remittance is usually in the mail several days before due date.  This year I saw the warnings...my  Quicken and Outlook software all told me that the first installment is due soon.  Since I was busy, I put it off.

So I quickly grabbed the bill, envelope, stamp, and a check, and started to write a check to the Lake County Collector.  Then I ran down to my local post office.  I did not put it in the outside post box, but went in to use the inside depository, foolishly thinking that the check would get there faster.  Maybe even on time!

I was starting to think less of my self, I mean the taxes are for my good, indeed the public good.  I was a slacker, a complete disgrace to the community.  Most of the bill goes towards education, and while my family no lounger needs the benefits of a fine educational system, I still feel that it is my duty to support education.

As I was leaving I saw many other rushing in to the post office with the familiar light green envelope that the country collector provides for tax remittances.  I at least feel that I am not the only one, all the other people that were late in mailing their property tax.  The other slackers looked like fine upstanding citizens.  So maybe I am a slacker, but, I'm not the only one.  I'll pay my tax on time when the second installment is due, I need to to remove the slacker stigma.

Some Buyers Will Miss Out In Current Buyers Market

Over the last few Sunday's we have seen an increase in open house activity.  While we continue to see the "just looking buyers", many are beginning to talk about the possibility of offers.  Many are talking about  the possibility of  a commitment to move.  I hear, "We are moving this summer."  So I have been busy talking to future buyers, and I have come to the conclusion, that we as agents do a lousy job of educating the consumer.

They don't know about agency, dual agency, the benefits of working with a local agent.  They don't know that they should be pre-approved for a mortgage in our area.  They don't know that the really great deals are to be found now, and if they sit on the fence too long they will lose out on the current buyers market.

Lots of buyers, seem to begin the conversation with, "Oh! We have an agent."  Like some one told them that is the Golden Phrase to use, then  you won't be bothered by the sitting agent at the open house.  I  usually follow them around anyway, and  talk to them anyway.  After all, they are there, often with out their agent.  I provide them with information about the area, and they take my hand outs and some times that is it.  Did they really have an agent?  Did they tell the agent that they saw a certain place?  Are they looking for decorating ideas?  Will I see then at another open house next week with out their agent?  Who knows.

But, some times, some one calls back.  Some one that has figured out that they do not have all the pieces of the puzzle.  They really want to buy a home but to reach that goal they need help.  I love it when I can help to provide information, I really feel like I'm in my element, that I can provide useful, and valuable information.

Buyers...don't go it alone.  Find a local agent.  Better yet find an agent that will go to open house with you.  It's a great way to learn about an area, but a good agent will be able to see what you really like, and what you do not like.  Work with that agent to find your new home.  You' ll feel more confident in your purchase, and you'll find your new place sooner with less hassle.

Hows The Market Deerfield Illinois Mar Apr 2008

 

Thought I'd share with you some facts and figures as to the real estate market in Deerfield and surrounding market area.  But other than the market is alive and not too bad.  But, what can one expect after a number of years of a hot market.

                                                    What does all this mean?

Increase in active listings, more inventory will create a downward pressure on prices.  In a hot market we might see prices at three percent below asking price, in todays market we are seeing sales prices five, seven, even 10% below asking price.

While we still do not know where the bottom is in the market, great opportunities exist for buyers, especially first time buyers.  Buyers that expect to be in their new home for several years will  be in homes that will experience appreciation, and  they will  have lower interest rates.

The opportunity for buyers:  Excellent selection of homes at all price points with attractive financing .  Sellers are making offers of lease to purchase, and  seller financing and buy down rates.

                                                        

                                                              DEERFIELD

                                                March                                       April

• Active Listings                190                                                           207
• Median Price               $679,000                                                   $657,500
• Ave Mkt Time                 189                                                           189
• Under Contract                 22                                                              25
• Med Cont Price            $598,950                                               $599,900
• Ave Mkt Time                 199                                                            189
• Closed                             30                                                              29
• Med Close Price           $662,005                                               $675,000
• Ave Mkt Time                 191                                                            209

                                                             RIVERWOODS

• Active Listings                 52                                                             57
• Median Price                $848,250                                                  $889,000
• Ave Mkt Time                 218                                                           222
• Under Contract                   4                                                             6
• Med Cont Price         $1,022,500                                                $1,014,500
• Ave Mkt Time                   86                                                           110
• Closed                               7                                                               8
• Med Close Price        $1,100,000                                                $1,014,313
• Ave Mkt Time                 239                                                           222

                                                        

                                                              HIGHLAND PARK

• Active Listings                 350                                                            366
• Median Price                $849,450                                                   $869,000
• Ave Mkt Time                   260                                                           262
• Under Contract                  48                                                              45
• Med Cont Price              $737,000                                                  $675,000
• Ave Mkt Time                  226                                                            194
• Closed                              69                                                               76
• Med Close Price            $560,000                                                   $647,500
• Ave Mkt Time                  203                                                             228

                                                        

                                                                NORTHBROOK

• Active Listings                 287                                                           325
• Median Price                $719,000                                                   $699,000
• Ave Mkt Time                  212                                                           201
• Under Contract                  49                                                             53
• Med Cont Price             $649,000                                                  $600,000
• Ave Mkt Time                  213                                                            196
• Closed                              62                                                              62
• Med Close Price           $607,500                                                   $586,250
• Ave Mkt Time                  170                                                             184

                                                         

                                                                LINCOLNSHIRE

• Active Listings                 73                                                              83
• Median Price                $699,000                                                   $719,900
• Ave Mkt Time                 217                                                             192
• Under Contract                   5                                                                5
• Med Cont Price            $550,000                                                     $699,000
• Ave Mkt Time                 170                                                              245
• Closed                             16                                                                13
• Med Close Price           $659,000                                                     $620,000
• Ave Mkt Time                 192                                                              258

NOTE: Information based in whole or in part on property data supplied by the Multiple Listing Service of
Northern Illinois. MLSNI is not responsible for its accuracy and data maintained by MLSNI may not reflect all real estate activity in the marketplace.

Judging A Home By Its Cover

Today I went on a tour of local homes. The manager broker insists that her agents go out and tour the neighborhood. She is right of course, how can you be the local real estate expert when you do not know the market? And we don’t just see OUR listings, but we see listing from OTHER real estate offices. So when you call me to inquire about one our listings; then find out that the house is missing a feature that you must have, well, maybe I have seen something else that has that feature. 

Sometime I tour by myself, and sometimes I tour with another agent. Today I toured with another agent. We pulled up to a home and the agent asked me, at what price did I think the home would sell. I blurted out a number, and she said, well lets go in to see the house. As I walked through the house, I sort of realized that I had fallen into a trap. 

The trap being to give a price, or make any assumption about a home without actually looking at it. The price I quoted was way too low. And many home improvements, such as, a nicely done bump out, updated kitchen, a very nice blend of old and new. So I should have known better. 

But I wonder how many other agents fall into this trap? I know for certain that a lot of agents do not tour on tour days. And yet many of these same agents have something on their business card or web site, or what ever, that proclaims that they know the market. 

Indeed, how many home buyers pass up a house because it looks small on the outside? Buyers looking without agent have got to hook up with a local agent. Many of you are passing up really nice desirable homes, but, don’t know it. The internet is great to start looking, lots of information…maybe too much to take in. But, an agent that knows the area, and your needs, will save you time and money, and find you a great home.

Hows The Market Deerfield Illinois Feb Mar 2008

Thought I'd share with you some facts and figures as to the real estate market in Deerfield and surrounding market area.  But other than the market is alive and not too bad.  What does all this mean?  First of all the increase in homes on the market; means that there is a downward pressure on prices, with no guarantee that price and interest rates will go lower.  We still do not know where the bottom is in the market, it might have already happened, or we might be close.

The opportunity for buyers:  Excellent selection of homes at all price points with attractive financing .

                                                           DEERFIELD 

                                        February                                           March

• Active Listings           160                                                 190
• Median Price           $699,450                                       $679,000
• Ave Mkt Time            196                                                 189
• Under Contract            22                                                   22
• Med Cont Price        $731,950                                      $598,950
• Ave Mkt Time            218                                                 199
• Closed                         36                                                  30
• Med Close Price       $493,750                                       $662,005
• Ave Mkt Time            174                                                  191

                                                            RIVERWOODS

• Active Listings            43                                                  52
• Median Price           $849,000                                       $848,250
• Ave Mkt Time            201                                                 218
• Under Contract             8                                                    4
• Med Cont Price      $1,072,500                                    $1,022,500
• Ave Mkt Time            193                                                  86
• Closed                          4                                                    7
• Med Close Price     $1,076,813                                     $1,100,000
• Ave Mkt Time            216                                                  239

                                                            HIGHLAND PARK

• Active Listings           336                                                 350
• Median Price           $829,450                                       $849,450
• Ave Mkt Time            275                                                 260
• Under Contract            42                                                   48
• Med Cont Price        $699,000                                      $737,000
• Ave Mkt Time            246                                                 226
• Closed                         77                                                  69
• Med Close Price       $540,000                                       $560,000
• Ave Mkt Time            159                                                  203

                                                            NORTHBROOK

• Active Listings           267                                                 287
• Median Price           $660,000                                       $719,000
• Ave Mkt Time            238                                                 212
• Under Contract            32                                                   49
• Med Cont Price        $653,250                                      $649,000
• Ave Mkt Time            180                                                 213
• Closed                         65                                                  62
• Med Close Price       $615,000                                       $607,500
• Ave Mkt Time            141                                                  170

                                                             LINCOLNSHIRE

• Active Listings            65                                                  73
• Median Price           $699,000                                       $699,000
• Ave Mkt Time            233                                                 217
• Under Contract             5                                                    5
• Med Cont Price        $674,900                                      $550,000
• Ave Mkt Time            300                                                 170
• Closed                         15                                                  16
• Med Close Price       $685,000                                       $659,000
• Ave Mkt Time            126                                                  192

NOTE: Information based in whole or in part on property data supplied by the Multiple Listing Service of Northern Illinois.  MLSNI is not responsible for its accuracy and data maintained by MLSNI may not reflect all real estate activity in the marketplace.

Praise For My Deerfield Office

We have a really great staff here at the Koenig & Strey Deerfield office.  These are the folks that help to keep things humming at our little office.  Sometimes it feels like do everything and do everything well.

As a matter of fact when I call other real estate offices, usually to talk to another agent; I find that the larger offices are better than the smaller operations.  When I call a smaller office can usually count on being directed to the voice mail...and then I just might get a call back before the end of the day, and sometimes it's not until the next morning.  But, I am sometimes disappointed by the response from the larger offices too.  I have been put on hold for long periods, directed to the wrong voice mail. and have had my call dropped.  Some times I think that voice mail will be the end of our civilization as we know it

If you call our direct line (847 945.8200) you will 98.9% of the time you will get a real voice.  Usually the voice at the other end is pleasant, and has been well trained to help you. My 98.9% is a bit unscientific, but, stems from the fact that the staff is busy answering phones, and making appointments.  Also the hits to our web-site has also increased.  What does this mean?  It's spring in the Chicago-land area, and people are starting to look for homes.

There is still an oversupply of inventory, and a downward pressure on prices.  Homes that will sell this spring will be perceived by buyers as a good value.  Smart buyers that can afford a home, have an excellent selection of homes, at reasonable interest rates.  Unsold homes will be unsold because, the owners are not truly motivated to sell, they had a lousy agent, or the had a good agent, but, decided that the agent's advice was wrong.

Are We There Yet?...Are We There Yet?...Are We There Yet?...

Are we there yet?  Has the market hit bottom yet?  Ah I dunno!  Truth of the matter is we won't know where the bottom is until prices start up again.  We will only know when it was the bottom of the market.  The problem is this, our data is old data, very old data.  Data that may be two or three months old.  So saying that we want to buy when the market is at the bottom is really an exercise of futility.  So as an investor, it might make a lot of sense to buy at the bottom.  Right?

So the question(s) that begs asking is this...are you purchasing a home for the investment opportunity?  Or are you looking for a place to live?

If your looking for an investment opportunity, then wait until the rehabbers and contractors come back into the market.  Because, these are the guys that are going to pick up good deals, and in 6 months to a year or so will improve the property, and sell the property at a much higher price.  So much for affordable housing, and that is what you really want, affordable housing.

If your looking for a home to live in for the next five or seven years, then what matter is it that you paid a little too much for your home?  In several years your home will certainly appreciate and off-set any perceived over payment you might have made.  At this point in time interest rates are low, there are a lot of homes to choose from, you also have less competition for any given home.  And there are sellers that are still looking for their first reasonable offer.

When the market starts rising, interest rates will go up, your choice in homes will be limited, and competition becomes more intense.

If your a first time buyer, have good credit, and a down payment, then you have some wonderful opportunities.  There are a lot of starter homes, Condos,and townhouses available at reasonable prices.  In several years, your first home could be sold, and you can move into a larger, nicer place.  Tell your agent that this is what you want to do.  If she or he is any good, they will help you make your first purchase, check in with you from time to time, and help you get your next home.

If you need to sell first before you buy, then you need to price your home at the right price.  If you have been in your current home and have some equity, then you have some flexibility on price.  You need to determine if you absolutely need to sell, or can you wait until the market improves.  But, as the market improves, the house you want will cost you more in the form of price, and interest.