Chicago Real Estate

Chicago Real Estate News: Townhome for sale in Wicker Park Chicago

2010-02-06T14:06:00.004-06:00

Newly listed Townhome in the heart of Wicker Park Chicago. Extra large 2 bedrooms + office, 2 full and 2 half bathrooms, 2 decks, attached garage. All this and no assessments to pay. Want more information check out http://www,MyChicagoRealEstateAgent.com for more details.

Another Chicago Neighborhood You May Not Be Familiar with - Ravenswood Manor

2009-12-04T22:28:00.004-06:00

Ravenswood Manor is one of those neighborhoods in chicago that you could drive into and think some how you crossed the borderr from city to suburb. Ah, but you didn't! You are still in the city but all the streets are tree lined with old 50-100 year old trees. The houses are large and the lawns are well manicured.

Raveswood Manor can be accessed by the Chicago Brown Line train. The stop you would get off at is Francisco. The boundaries for this community are not very big. In fact, the boundaries could vary depending on who you talk to but for all intensive purposes Montrose borders it to the South, Lawrence to the north, the Chicago River to the East and Sacramento to the West.

If you get a chance to a drive to through this area you will be amazed that this community exists in the hustle and bustle of Chicago.

By the way, Ravesnwood Gardens sits to the east of Ravenswood Manor where there is a few more shops and restaraunts. And just to the east of that is Lincoln Square.

Want more information on how the real estate market is selling in one of the above mentioned Chicago Neighborhoods. Sign up for your FREE chicago neighborhoods market report.

Chicago and National Home Sales

2009-12-01T12:05:00.002-06:00

Some more good news on the housing market...according to the National Association of Realtors pending home sales across the country rose for the 9th straight month. October had the highest pending home sales since March of 2006. October was a 32% increase compared to October 2008. Making it the biggest annual increase in history!!

Much this has to do with the tax credits available to first-time homebuyers and buyers that have lived in their current property for 5 years or more. First-time homebuyers could be eligible for as much $8000 and buyers that are contemplating selling their current residence and have lived there for 5 years or more could qualify or $6500.

Considering selling or buying a Chicago home? Want to know real estate is doing in your favorite Chicago neighborhood. Sign up for your free Chicago Neighborhoods market report. Go to: http://www.MyChicagoRealEstateAgent.com

New Chicago Area Code

2009-11-07T10:25:00.002-06:00

Chicago has a new area code of 872 and anyone that is getting a new phone number will get that as their area code. Since that person could be living among those that have 773 or 312 now everyone in the city of Chicago no matter what area code you have will have to dail 1 and then the 10 digit number. This starts as of today, Saturday, November 7th.

Need the latest real estatate new me contact me Ramona DeMille.

Chicago Condo and Chicago Homes News - $8000 Tax Credit

2009-11-05T11:00:00.005-06:00

Senate votes to renew $8000 tax credit. Now it is off to the House Floor and should be up for a vote sometime today, Thursday. If and when the House passes it, it will then be off to the President's desk for signing.

For those of you on the fence about whether to sell your Chicago Home. If this passes, now might be a good time to do so. In the past, the holiday season meant that the housing market would slow down. If this tax credit passes this may not be the case this holiday season. To give you more of an incentive, not only will the first-time buyer of $8000 maybe extended but $6500 will also be available to other buyers who have lived in their current property for 5 years or more.

Looking for a Chicago property whether it be a Chicago condo or a Chicago house contact me for your consultation. Let me help you determine whether now is a good time to buy or sell a Chicago property.

Contact me Ramona DeMille or call 773-572-7574

Chicago Condo and Real Estate News

2009-11-02T16:42:00.003-06:00

Another milestone has been reached in getting the homebuyer tax credit extended and expanded. Senate has reached a compromise to extend the $8000 tax credit to first-time homebuyers and $6500 to current homeowners who have to lived in their residence for 5 years or more.

The passage is still not clear but this is a positive step in the right direction.

Get more real estate info. Contact me. Bringing Your Dreams Home!

Chicago Real Estate Breaking News

2009-10-29T18:13:00.002-05:00

Seneate Plans to Extend and Expand Homebuyer Tax Credit. Contact me for more information.

Ramona DeMille
Prudential Rubloff
773-572-7574
www.MyChicagoRealEstateAgent.com

Chicago Real Estate and Mortgage News

2009-10-26T20:38:00.002-05:00

Interest rates rose slightly last week, as last week's economic news, that would typically have been good for mortgage rates, was offset by the announcement of a record setting treasury bond auction and positive earnings news in the stock market. But was that news really positive? Additionally, this week there was some positive movements on extending the first time homebuyer tax credit and on the HVCC (Home Valuation Code of Conduct). The week ahead will be chock full of economic news covering the full gamut* from consumer confidence to housing to 3rd Quarter economic growth to inflation. Could be an interesting week for mortgage rates!

*(what's a gamut, anyway? - see the answer at the bottom of the update!)

Last Week's Economic News - Tuesday brought good news on inflation, as the Producer Price Index showed a decrease of 0.6% in September, well below the 0.0% increase that was expected and much lower than the +1.7% increase from August. Also, the "core" Producer Price Index, excluding food and energy costs, came in at -0.1%, lower than in August and lower than expected. Housing Starts also were a negative surprise for the markets. There were 590,000 new homes started in September. This was up slightly from August's number of 587,000, but the markets were expecting 610,000. At the same time, building permits for new homes came in at 573,000, lower than the anticipated 590,000 and the 587,000 from the week before. Thursday brought a surprise in the employment picture, as it was reported that 531,000 people filed first time claims for unemployment last week. That was higher than the week before, and much higher than what the markets were anticipating. One tidbit of good news on Thursday was that the Index of Leading Economic Indicators showed an increase for the sixth month in a row. The LEI is an indicator of future economic growth. Finally, Friday's news on existing home sales was very exciting for us in the real estate industry, as there were 5.57 Million home sales reported, higher than the 5.35 Million that were expected and the 5.10 Million that were sold the previous month. However, included in the report was the fact that last month's sales were made up of 45% First Time Homebuyers, as they rushed to take advantage of the $8,000 tax credit. More on that later!

Treasury Bond Auction Announcement - Weighing heavily on the treasury and mortgage bond markets last week was the announcement that $123 Billion in U.S. Treasury Securities will be auctioned off this week. That's a record amount, and comes at a time that the government is winding down its purchase of treasury and mortgage bonds. What does this mean? With the government decreasing the amount that they are purchasing, interest rates may have to rise to attract investors into those bonds. Possibly worse than the amount of bonds being sold is the fact that this will only tide us over for two weeks, before there will be another large auction. We will be watching the results of this week's auctions to see what kind of demand there is in the marketplace. Strong demand would lead to lower rates, while weak demand would certainly push rates higher.

First Time Homebuyer Tax Credit - There is more and more talk out of Washington that the first time homebuyer tax credit is going to be extended in some form, prior to its expiration on November 30. Three of the most talked about option are - 1) a 9 - 12 month extension of the current program, 2) an increase of the credit, for first time homebuyers only, or 3) increasing the credit, the income limits or making it for ALL home buyers, not just first timers. This past week, the Senate Banking Committee Chairman - Chris Dodd endorsed the idea of extending and expanding the tax credit this week. This came even in the wake of news released by the IRS of some fairly widespread abuse of the tax credit from taxpayers that claimed the credit when they really didn't have it coming. More than 19,000 people have claimed the credit despite not purchasing anything. 70,000 claimed it, although they didn't meet the definition of first time buyer. And 582 individuals under 18 claimed it, including some 4 year olds! All told, there have been 1.4 million taxpayers claiming nearly $10 Billion in credits.

Stock market news - We are in the middle of earnings season in the stock market. This is the quarterly period where companies report their earnings or losses for the quarter that just ended. In this current round, there have been a lot of companies reporting earnings that are better than expected. These positive reports have helped the stock market to continue its upward climb. When money flows into the stock market, it often is at the expense of the bond market, which pushes rates up. The problem with this scenario is that some of those stocks that are improving on better than expected earnings numbers are earning more by laying off employees, so these so called positive improvements are being gained at the expense of jobs, and not real improvement in the economy. Realistically - you can only cut so many jobs and so many costs so far. While Wall Street and stocks appear to be doing well, and the media starts to get on the band wagon, we have to proceed with caution. You can't simultaneously grow the ranks of unemployment and then grow your business hoping for increased sales to those same people who are without jobs. Sorry for the editorial!

Is the end of the HVCC near? The Home Valuation Code of Conduct that has been blamed for some of the decrease in home prices since its inception in March could be meeting an untimely death, as there is an amendment to H.R. 3126 - "The Consumer Financial Protection Act of 2009" that will allow originators to once again order their own appraisals on mortgage transactions. This amendment has been voted on and passed in committee and is now a part of a bill that is widely expected to pass into law.

Now, what's a gamut? A gamut is easily defined as "the complete range of something". The term gamut originally referred to the lowest note in the musical scale used in medieval times, and then to the entirety of the medieval musical scale. From this notion of a complete range, the term came to be applied to other fields, including as a completely general term. Now you know!

Chicago Real Estate and Mortgage News for week of October 12, 2009

2009-10-12T14:39:00.002-05:00

After reaching the lowest level that we have seen since May, mortgage rates finished the week higher than where they started as the result of some positive news on the economy and some inflation fears caused by Federal Reserve Chairman Bernanke in a speech on Capitol Hill last Thursday night. The better than expected news came in the service industry, first time unemployment claims and the U.S. Trade Balance. The Fed Chairman said that the low interest rate environment will likely be needed for awhile. However, he went on to say that as the economy improves, the Fed will hike rates quickly to ward off inflation. While inflation is not a problem now, it certainly could be down the road, and the ending may not be pretty for rates. There is little doubt that rates will eventually head higher, and the rates that we have seen over the last week or so could be the best we see, dare I say it, ever again in our lifetimes. The week ahead brings a semi-full calendar of economic news, starting on Wednesday.

In news regarding the first time homebuyer credit, there are several bills floating through Congress right now to extend and/or change the first time homebuyer credit. Remember, the last day to close and take advantage of the credit is currently November 30, 2009. Locally, the Illinois Housing Development Authority (IHDA) announced at the end of last week that the last day to register a buyer for the Tax Credit Advance loan is October 15. The Tax Credit Advance loan is the second mortgage that allows a first time homebuyer to borrow up to $6,000 of their tax credit and use it towards their downpayment. They are stopping registrations for the program, because they think that it will be difficult to get transactions that come together after that date through the approval process and close them by the November 30th deadline. They did say in their announcement that the program would most likely be extended if the first time homebuyer tax credit gets extended.

Let's take a look at last weeks economic news:

On Monday, the Industrial Supply Manager's Services (ISM) Index showed an increase to 50.6. The markets had been expecting a reading of 50. This reading is significant because a number above 50 shows an economy that is growing, while a number below 50 shows an economy that is shrinking. The latest report says we're headed in the right direction. On Thursday we learned that First Time Unemployment Claims dropped to their lowest level since January, while a much smaller decrease was anticipated. Although this looks like good news on the surface, 521,000 people would beg to differ with that opinion, even if it wasn't the 540,000 that was expected. Finally, on Friday, the U.S. Trade Deficit with the rest of the world was reported to have shrunk to $30.7 Billion. This number was great, considering the market was looking for an increase to $32.9 Billion from the month befores $32 Billion. In addition to these reports, and Chairman Bernanke's not-so-kind words, the markets also had to digest a three day treasury bond auction that did not go so well. It will now worry about future bond auctions to come. When treasury bond auctions do not go well, the rates on those bonds have to increase in order to attract interest (pardon the pun) and sell the bonds. As treasury bond rates go up, so do mortgage bonds rates and mortgage rates in general.

In the week ahead, the bond market is closed on Monday for the Columbus Day holiday, and economic news will only be released on Wednesday, Thursday and Friday. However, the reports due that week include some market movers, like Retail Sales, the Federal Reserve Open Market Committee minutes, the Philadelphia Fed Index and the Consumer Price Index (CPI), which is a measure of inflation at the consumer level. After what the Fed Chairman said last week, the markets will watch all inflation numbers carefully to see if any will be the catalyst for future Fed rate increases.

I'll keep you posted on any updates!

Chicago Job and Real Estate News

2009-10-08T13:19:00.002-05:00

Jobless claims fall to 9-month low
Number of initial filers drops by 33,000 to 521,000 last week, the lowest level since January.

By Julianne Pepitone, CNNMoney.com staff reporter
Last Updated: October 8, 2009: 10:07 AM ET

NEW YORK (CNNMoney.com) -- The number of first-time filers for unemployment insurance fell last week to the lowest level since January, according to a government report issued Thursday.
There were 521,000 initial jobless claims filed in the week ended Oct. 3, down 33,000 from an upwardly-revised 554,000 the previous week, the Labor Department said in a weekly report.
A consensus estimate of economists surveyed by Briefing.com expected 540,000 new claims.
"Looks like a healthy trend to us," said Ian Shepherdson, analyst at High Frequency Economics, in a research note. "The level of claims is still far too high, for sure ... but it is heading in the right direction."
The 4-week moving average of initial claims was 539,750, down 9,000 from the previous week's revised average of 548,750.
"We have been looking very keenly for the kind of thing we saw today," said David Resler, chief economist at Nomura Global Economics.
"It's part of what looks to be a somewhat better trend in recent weeks, and it's an encouraging sign that deterioration has slowed considerably from earlier this year," Resler added.
Continuing claims: The government said 6,040,000 people filed continuing claims in the week ended Sept. 26, the most recent data available. That was down 72,000 from the preceding week's ongoing claims.
The 4-week moving average for ongoing claims fell by 15,750 to 6,144,250, from the prior week's revised average of 6,160,000.
But the slide in continuing claims may not be a positive sign, Resler said, as it may signal that more filers are falling off that count and into extended benefits.
Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, nor people who have exhausted their benefits.
"When we add in the number of people on the extensions, we see that figure is rising and has been doing so consistently," Resler said, adding that comparison is difficult because extension data lag continuing claims by a further week.
State-by-state data: Three states reported a decline in initial claims of more than 1,000 for the week ended Sept. 26, the most recent data available. Claims in New York fell by 2,253; North Carolina's slipped by 1,609; and South Carolina's declined by 1,159.
Five states said that claims increased by more than 1,000. California reported the most new claims at 4,467, which a state-supplied comment attributed to layoffs in the construction, trade and service sectors.
Outlook: High Frequency Economics' Shepherdson said he does not expect claims "to keep falling this fast," and that the decline will slow through the year-end and into 2010 although the downward trend will continue.
But Nomura's Resler said he thinks initial claims could fall below the 500,000 mark by the end of October.
"We keep seeing more evidence that fewer workers are being laid off, and enough of the economic data is more positive," Resler said. "That, plus today's decline, tells me that hope isn't just a pipe dream."
While no "absolute threshold" of claims exists, Resler said, he thinks payrolls will increase when initial filings hit 475,000 or 450,000.
"I don't think we're there at this point, and the durability of today's bounce remains in doubt," Resler said. "We're not dancing in the streets, but we're not abandoning hope yet."
First Published: October 8, 2009: 8:37 AM ET

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2009-09-24T15:23:00.001-05:00

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Chicago Real Estate and Mortgage News September 8

2009-09-08T11:41:00.007-05:00

Interest rates fell slightly last week, as mixed news on the economy failed to push interest rates significantly in either direction. The shortened week ahead is light on news, which should bode well for mortgage rates.

Here's a look at the economic reports released last week:

The week started with a bang, as the Chicago Purchasing Manager's Index, a widely watched measure of the economy in the Midwest, showed an increase to a reading of 50.0. A reading below 50.0 is a sign that the economy is slowing, a reading above 50.0 is a sign that the economy is picking up. This was the first time the reading was at 50.0 in quite some time. Then, on Tuesday, the Industrial Supply Manager's index showed a reading of a much higher than expected 52.9, a sign that the nation's economy as a whole is growing. This was also a very good sign. Wednesday's news on the service side of the economy - the Industrial Supply Manager's Service index also came in higher than last month, and higher than expected. Productivity in the nation's factories showed an increase in the second quarter - a sign that factories are becoming more productive, albeit with a smaller workforce. Thursday's first time Unemployment Claims came in higher than expected, although lower than the previous week's. Continuing unemployment claims increased, meaning that those people that are unemployed are staying on unemployment longer. Finally, Friday brought news on employment, and the markets received a mixed report from the U.S. Labor Department. The report showed that fewer people lost jobs last month - 216,000 vs. an expected 230,000. Although 216,000 jobs were lost, the markets still considered that good news, because they were expecting more. Go figure! The more reliable unemployment rate rose to a 26 year high of 9.8%. This was much worse than expected, and should have caused a sell-off in the stock market, but the market remained focused for much of the day Friday on the fewer jobs lost figure.

The week ahead will be slow in the news department, with only a handful of reports set for release:

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of September 07 - September 11

Wed. September 09 - Crude Inventories Moderate
Wed. September 09 -Beige Book Moderate
Thu. September 10 - Jobless Claims (Initial) Moderate
Thu. September 10 -Balance of Trade Moderate
Fri. September 11 -Consumer Sentiment Index (UoM) Moderate

In addition to this news, there will be another large auction of U.S. Treasury Bonds for the markets to digest.

Contact Ramona DeMille for all your real estate needs

First-Time Home Buyer Tax Credit to Buy Chicago Properties

2009-08-13T15:57:00.004-05:00

Everyone wants to get in on the action today in distressed properties and pick up incredible bargains. And first time homebuyers can sweeten the deal by applying for an $8,000 tax credit. Even better, you don't have to wait until April 15, 2010 to receive the credit. By filing an amended tax return, you can receive the money within a matter of a few weeks!

There is one detail that can derail your whole plan: you must CLOSE your transaction prior to Dec 1, 2009. In other words, you need to make finding a property a high priority.

Purchasing A Short Sale:
When the consumer uses the term "foreclosure", it is a categorization that includes 2 separate and distinctly different scenarios. The first is a "Short Sale" situation. In a short sale, the owner still owns the property but they are selling it for less than what they owe. The bank must agree to accept less than what is owed them, which is not an easy task - even in this environment. It is not unusual for the bank to take 90-120 days to even respond - and sometimes they may choose to just reject your offer. It's OK to submit an offer - but in the meantime, you will want to continue to look for another property.

Purchasing An REO:
You may do better to look at "REO's" - which stands for "Real Estate Owned". An REO is a property where the bank has already gone through the foreclosure process and now owns the property. The problem with an REO, however, is that once a property sits vacant - sometimes for over a year - there is major damage to the property. Typically, an experienced contractor or investor is a more suitable buyer for an REO.

If you are looking for distressed properties to use the $8,000 tax credit, keep these points in mind:
- If you submit an offer on a "short sale", don't stop looking at other properties.
-Other forms of distressed property, other than foreclosures, are estate sales (where the owner has passed away) or where the owner must sell due to an urgent personal situation (e.g. a job transfer or a divorce).
-Remember, you must CLOSE prior to Dec 1, 2009! The time you submit a contract until you close can easily take 60 days - and more if the financing is complicated (such as FHA 203k loan). In other words, you need to find something NOW!
-Let your real estate agent know your goals so she can assist you in finding a suitable property quickly.

Don't let the illusion of buying an incredible property at a bargain price cloud your judgment. The economy has affected all sellers - not just sellers that are in trouble. You may discover that your best deal is the "normal" one - the one with a realistic seller.

Rarely has there been a better time to be a first-time homebuyer. Let me help you, or someone you know, take advantage of the opportunities available in today's market! Contact Ramona DeMille - Chicago Realtor for more information on how to utilize this once in a life time opportunity.

$8000 Tax Credit - Buy Your Chicago Condo or Chicago House Soon or Loose Out

2009-06-23T10:59:00.003-05:00

If you are still on the fence about wanting to buy your first home maybe this will motivate you. First-time buyers need to close by Nov. 30 under current guidelines to get the $8,000 tax credit. After that the option will no longer be available unless Congress decides to extend it.

Contact me at rdemille@prupref.com to schedule a meeting to discuss your options.

Where Are the Chicago Mortgages & How Can I Qualify for A Mortgage Loan

2009-06-16T14:51:00.007-05:00

The sub-prime mortgage debacle has had a devastating ripple effect throughout the entire financial services industry. The lending environment has gotten very tight. Lenders sometimes look three or four times – adding more and more conditions, requesting more and more documentation - before agreeing to make a loan. And while all of that is true, that does not mean that there are no mortgages to be found. So what can you, as a homebuyer, do to increase your chances of getting a mortgage? There are several factors that need to be taken into consideration when looking for a mortgage:

1) Your FICO® scores Being pre-approved for a loan is almost a necessity in today’s tough lending environment. Before spending a lot of time looking at homes, you will want to sit down with your mortgage broker or lender, have them pull your credit reports and verify your FICO® scores. They will also be able to counsel you on any red flags that may appear.

The free credit report that you are entitled to receive each year is primarily used for monitoring errors and identity theft. Those reports will not give you your FICO® scores. You must pay for that information.

The term “FICO®” is derived from the name of the company that originated the credit scoring system – the Fair Isaac Corporation. Begun in 1958 as a way to provide banks with a guideline to creditworthiness, today it has become the primary indicator that lenders use. If your FICO® score is 700 or above, you are generally considered to be a good credit risk. There are steps you can take to improve your score – and some of them may surprise you. Feel free to contact me for further details.

2) Your Income With unemployment numbers rising, lenders are extremely nervous about over-extending your ability to pay. Be prepared to document any income that you receive. Stated income loans are gone – a thing of the past. The order of the day is paperwork, paperwork and more paperwork.

3) Your Down Payment As recently as a year ago, it was still possible to buy a home with virtually no money down - particularly if you had excellent credit. Those days are gone. The best you can do now is to apply for an FHA loan that allows you to put as little as 3.5% down. FHA also allows you to use the $8000 first time homebuyer tax credit towards closing costs or towards your down payment over and above the 3.5%. However, the details are still being worked out.

There may be some special programs available through individual lenders, but generally expect to have at least 10% of your purchase price saved. If you put less than 20% down, the lender will require you to buy mortgage insurance. Mortgage insurance does not insure you – it insures the lender in the event that you default on your loan.

Besides your down payment, you will need additional funds to cover closing costs. Closing costs include a home inspection, title insurance, termite inspection, transfer stamps, loan application fee etc… All of the lender’s fees are estimated on the Truth-In-Lending Statement that you receive at the time you make your loan application.

4) The Appraisal Once you, the borrower, have passed the lender’s litmus test for paying back the loan, you have one more hurdle to cross. The property itself must also pass muster. In the event that you quit making your payments and the lender must take the property back, they need to be assured that the property is worth at least what you are paying for it.

It may seem to the consumer that lenders are using the appraisal as an excuse not to make the loan. However, in the event of a foreclosure, lenders will lose tens of thousands of dollars. And the Federal Government has just added one more layer of complexity: lenders are required to order their appraisals from an outside vendor. The object is to prevent the lender from having any influence on the appraiser’s findings.

If you are able to navigate through all these major obstacles in obtaining a mortgage, you will be clear to close on your home purchase.

When it comes to mortgages, every individual situation is unique and requires the guidance of an expert. Let me help you navigate the home-buying process. Please contact me with any questions you may have or to schedule an appointment. Learn more about your FICO® scores – how they are compiled and what you can do to improve them. Contact me now for a free in-depth report, “Your Credit Scores”.

Chicago Real Estate and Mortgage News for this week

2009-06-08T10:17:00.007-05:00

Interest rates rose sharply this past week, as the sunny signs of an economic recovery continued to peek out from behind the dark clouds that have been overhead. This makes three weeks in a row that we have seen mortgage rates rise. The mortgage market is now in an oversold position, and may be ripe for some improvement in the week ahead. However, first we have to get through an auction of U.S. Treasury Bonds again this week. The government has to auction off treasury bonds to help pay for the national debt, including the massive stimulus package that is helping to get the economy moving again. In order to attract interest in the bond auctions, interest rates often rise ahead of the auction, only to decrease if the auction goes well. If there are not a lot of foreign buyers of the treasury bonds, then rates have to go even higher in order to get them sold. This week there are not a lot of economic reports for the markets to worry about, but they will be watching the auction results and also watching to see if the stock market continues its bullish ways. A strong stock market is also a drag on interest rates, as investors pull their money out of the safety of government bonds and put it into the stock market. It could be a wild, quiet week!

Economic news out this week:
The week started out with news that Personal Income rose by 0.5%, when it was expected to decline. The markets assume that when income increases, so will spending, and this will lead to an improving economy. However, that was not the case in April, as we saw Personal Spending decline by 0.1%, although that was less than the 0.2% decline that was anticipated. The Federal Reserves favorite inflation barometer - the Personal Consumption Expenditures (PCE) index rose slightly from March to April, as rising gas prices began to take a hold of our wallets. The Industrial Supply Manager's (ISM) goods producing index showed a rise to 42.8, above the 42.0 that was expected and the 40.1 from a month earlier. A number under 50 is a sign of a contracting economy, but since the number appears to be rising, the markets think of it as "contracting, but not as much", and rally on the news. Wednesday brought news that crude oil inventories in the U.S. increased by a large amount, which the markets were not expecting. The ISM Services Index, which measures the services side of the economy, came in worse than expected, opposite the goods producing index. This was a little piece of good news for the markets to digest. Also on Wednesday, the ADP National Employment Report was released showing that the economy lost 532,000 jobs in May. This report is often used as a predictor of how the employment report will be when it is released later in the same week. More on that later! On Thursday, we learned that first time Unemployment Claims for last week were 621,000, about in line with expectations and a slight decrease from the prior week. U.S. Factory Productivity rose in the first quarter of 2009 by 1.6%, from a reading of 0.8% in the final quarter of 2008. The economic news event of the week/month was, as per usual, the labor department's release of the employment report for May. The markets were quite surprised by some of the numbers. The report showed that 345,000 jobs were lost in May, lower than the 504,000 lost in April, and much lower than the 520,000 jobs that the markets were expecting to have been lost. Hourly earnings remained steady from April to May, while the average work week dropped slightly. Finally, the Unemployment Rate increased from 8.9% to 9.4%, higher than the 9.2% that the markets were anticipating. The markets initially rallied on the news, as it focused in on the fact that fewer jobs were lost, even though 345,000 jobs lost in one month is a huge number. As the day wore on, more emphasis was placed on the unemployment rate itself. The unemployment rate is derived by a poll of households throughout the country, and is actually considered more relevant than the jobs gained or lost number.

Economic news in the week ahead:

Wednesday - U. S. Balance of Trade - did we increase the amount of goods that we export more than we import?
Wednesday - Crude Oil Inventories - did we use more or less oil during the week? If we used more, that causes the cost to go up, which is inflationary.
Thursday - Retail Sales for May - did the U.S. consumer spend more in May than they did in April? The experts are predicting that retail sales will show an increase of 0.3% from a decrease of 0.4% in April. That would be a sign of an economic recovery.
Thursday - Retail Sales, excluding auto sales. Same as above, only without auto sales included in the numbers.
Thursday - First Time Unemployment Claims - has the number of people losing their jobs finally started to bottom out? Friday - Univ of Michigan Consumer Sentiment Index - this number is expected to show a slight decline from the previous report.

First-Time Home Buyers Have Many Options To Buy a Home

2009-06-02T12:23:00.005-05:00

Although the newspapers and the media like to scare us with news of the economy, first time homebuyers have an advantage unlike any that has been seen in recent history. Home prices have not fallen any further for the past 4 months – indicating that prices are bottoming out. Interest rates are at their lowest level in over 50 years – with 30 year fixed rate mortgages coming in at under 5%. The combination of low prices and low interest rates is unusual and not likely to be duplicated again in our lifetimes.

In addition, the government has created some terrific programs available only to first-time homebuyers.

The First-Time Homebuyer $8,000 Tax Credit: The First-Time Homebuyer $8,000 Tax Credit:

The Housing and Economic Recovery Act was passed in late 2008. However, Congress expanded the provisions of it the first few weeks of 2009. Whereas money originally needed to be repaid, now it does not – and the credit was increased from $7500 to $8000. If you don’t have an $8000 tax liability, not to worry – you get the difference back in the form of a refund! Here is how it works:
- You must be a first-time homebuyer (defined as not having owned a principal residence within 3 years prior to the date of purchase).
- The home must be purchased between April 8, 2008 and before Dec 1, 2009.
- The credit is 10% of the purchase price up to a maximum of $8,000.
- To receive the full credit, your adjusted gross income must be $75,000 or less if you file singly or $150,000 for a married couple filing jointly. The credit is phased out for AGI’s between $75,000 to $95,000 (filing singly) or between $150,000 to $170,000 (filing jointly).
- If your tax liability is less than the credit, you will receive a refund for the difference!
- You must live in the property as your primary residence for 36 months or you will be required to repay the credit.
- You must purchase the home from an unrelated third party.

FHA Loans:

Although FHA loans are not restricted to first-time buyers, their low down payment requirement and easier underwriting standards make them ideal for most first-time homebuyers – particularly in today’s stringent lending environment. And the interest rates are very competitive. FHA does not make the loan; they insure the lender against default. Therefore, many lenders make it easier for you to qualify.

And FHA is an excellent loan product for a first-time homebuyer. The program is not limited only to first-time buyers, but it is limited to buyers purchasing their primary residence. Investors are not able to take advantage of the favorable terms of an FHA loan. What are those terms?

- You only need put 3.5% of the purchase price as a down payment – and the money can come from a family member.
- It is easier to qualify for the loan. You may still be able to qualify for a loan, even if you have had credit problems or a bankruptcy.
- Interest rates are competitive with conventional mortgages. (However, you should compare interest rates from different FHA-approved lenders to make sure you’re getting a good deal.)
- A buyer with credit problems can take advantage of much lower interest rates than a traditional sub-prime loan.
- You will be required to pay for mortgage insurance which is charged as an upfront premium of 1.5% - 1.75% of the loan amount and then as a monthly fee included in your monthly mortgage payment.
- Some allowed closing costs or credits can be added to the loan amount.
- You must occupy the property as your primary residence – however, there is no time restriction as with the Tax Credit.
- Approved condos and 1-4 unit properties qualify.
- The condition of the property must meet FHA guidelines.
- FHA loan limits apply. These will vary from region to region but have been increased recently to make the loans more widely practical.

FHA 203(k) Loans:

For properties in less than perfect condition, FHA offers a Rehab Program known as a 203(k) loan. This program provides all the benefits to buyers of an FHA loan as outlined above while also funding the cost to repair and rehab a property.

It’s a nice program especially for first-time buyers because you are able to borrow the money you need for any repairs right up-front. And, since you are required to use FHA approved contractors and an FHA approved inspector, you know that the work will be done correctly.

- The property must be an FHA approved condo development or a 1-4 unit property.
- You must occupy one of the units as your primary residence. These loans are not available to investors or rehabbers.
- You only need a down payment of 3.5% of the final loan amount. For example, if your purchase price is $100,000 and your rehab costs are $50,000, you will need a down payment equal to 3.5% of $150,000 – or $5,250. Don’t forget, this money can come from an immediate family member! (FHA loan limits apply.)

Eligible Improvements

As a rule, luxury items are not eligible. However, the homeowner can use the program to paint, add rooms or decks even if the home does not need any other improvements! All health, safety and energy conservation items must be addressed prior to completing any other general home improvements.

The 203(k) program has been around a long time. Many agents and lenders have steered away from it because of the complicated paperwork involved in the program. However, FHA has streamlined the process considerably and it is possible to close a loan in a normal time frame – often in less than 60 days.

Although there is additional paperwork and added inspection fees, many of those can be rolled into the loan. And it provides a tool so that a typical homebuyer can take advantage of the bargains available in foreclosed properties.

Rarely has there been a better time to be a first-time homebuyer. Let me help you - or someone you know - take advantage of the opportunities available in today’s market!

For a free report “Why Rent When You Can Buy?” call or email me today!

Chicago Mortgage Update

2009-05-26T12:14:00.006-05:00

Interest rate rose a bit last week mostly as a result of an announcement by the U.S. Treasury that it would auction off $162 Billion worth of bonds this coming week. This is an enormous amount of bonds, and rates had to go up in order to attract investors in these bonds. The government has to issue all of this debt (and much more) to help pay for the huge stimulus programs. Other economic news released last week was favorable for mortgage rates, but it wasn't good enough to overcome the Treasury's announcement.

Last weeks news:

New housing starts fell to 458,000 in April, down from 525,000 in March, and well below expectations of 527,000. Also during April, permits for new homes came in at 494,000, down from 511,000 in March, and also well below the 530,000 that were expected. Although on the surface this looks like bad news, the fact that less houses are being built means that the excess inventory is being used up and this bodes well for the future of both the new home and resale markets. On Wednesday, the minutes from the Federal Reserve Open Markets Committee's most recent meeting were released, and the markets learned that the Fed is considering buying more mortgage backed securities. This caused a small rally in mortgage bonds, until the markets realized that the Fed still has a long way to go in its original plan to purchase $1.25 Trillion in mortgage backed securities, which will probably carry us through the balance of this year. The Fed also revised it's forecast for the U.S. Gross Domestic Product downward and it's forecast for unemployment upward. This was timely, since Thursday brought news that first time unemployment claims increased by 631,000 the week before, down from 643,000 the week before that, and lower than expectations of 640,000. Although any decrease is good, 631,000 is still a huge number, and continuing claims (those people going more than one week) is running at 6.7 Million - a huge number of people out of work. Also on Thursday, the Index of Leading Economic Indicators showed an increase of 1%, much better than March's decrease of 0.3% and anticipations of a 0.6% increase. The Philadelphia Fed's index showed an unexpected decrease of -22.6. Even though it was better than March's -24, it was still worse than expected.

This week's news:

The market will have a fair amount of news to digest this week, and one less day to do so, with the markets closed on Monday for Memorial Day.

This week brings:

Tuesday - Consumer Confidence
Wednesday - Existing Home Sales are expected to show an increase to 4.63 Million, from 4.57 Million in March
Wednesday - Crude oil inventories will be watched in hopes that an increase in supply will help stem the recent rise in crude oil and gasoline prices
Thursday - Weekly first time unemployment claims are usually one of the most important news releases of the week
Thursday - New Home Sales figures are expected to have remained steady from March to April Thursday - Durable Goods Orders are anticipated to increase from a reading of -0.8% in March Friday - Gross Domestic Product - the first of three revisions to the first quarter GDP number is expected to show a rise from -6.1% to -5.5%
Friday - The Chicago Purchasing Managers Index for May is expected to come in at a reading of 42, up from 40.1. Any number below 50 is considered bad for the economy.
Friday - Consumer Sentiment for May should show a slight increase from last month.

The markets will have a lot of economic news to get through this month. In addition, the markets will really be watching how the Treasuries bond auctions go. Good treasury auction results coupled with some bond friendly economic news could bring a retreat in mortgage rates back to where they started last week. I will keep you posted with any big movements one way or the other!

By the way, if you are looking to sell your home I have put together a set of strategies and specific tips that can help you sell your home in this market and avoid all the pains of doing this yourself. If you are still contemplating selling your property, even in this market, then download my Free Report now, “7 Selling Mistakes You DON”T want to make or YOU Won’t Get Top Dollar In A Down Market”

Sell Your Chicago Property in Any Neighborhood? 5 Must Dos To Survive And Sell!

2009-05-19T12:54:00.003-05:00

If you have been trying to sell your property, no one need tell you what it means when the media says, “This is a buyer’s market”. A buyer’s market is to real estate as a bear market is to stocks. Even when prices are so low that it just makes sense to buy, there are no buyers to be found! No matter how bleak things may be, however, there are still plenty of people that have excellent credit and real money saved for a down payment. The question is, then, how does a seller FIND these buyers?

1. Tic-Tac-Toe or “Thermonuclear War” I will probably upset you with what I have to say next. My very best advice to you as a seller in this market is: if you do not have to sell, stay out of the market! Some games are only won by not playing them at all! This is not the time to “dip your toe into the water” just to see what your property will bring. If you are not prepared for the brutal beating you will take from buyers, then STAY AWAY!

2. Price is King What you owe on the home, what you feel you must get, what you think is FAIR – none of these factors come into play in the mind of the buyer. If you must sell your home in this market, the #1 determining factor is the price. “Fair market value” is what defined as what a ready, willing and able buyer is prepared to pay for you home today. In a market where prices are falling, this means you must actually price your property BELOW recent sales – that is, BELOW ascertainable “fair market value”. Reducing the price later as prices fall will not get your property sold because you are STILL priced above market!

3. When In Doubt, Price It Even Lower This is not a market to “speculate”. Of course you want to get as much as you can for the property. No one wants to feel as if they have left money on the table. It is counter-intuitive, but the BEST way to get the most money for your property is to ask LESS, not more! The reason is that if you have priced the property too low, buyers will recognize that and bid the price up. Even in THIS market!

4.You Have A Narrow Window To Maximize Your Dollars Your best chance to get the most money for your property is when it first hits the market. The reason is that your BEST buyers are the ones that are already in the market, have already done their homework and are just waiting for the right deal. Once you lose that pool of buyers, they are gone – forever!

5. You Have One Chance To Make A Good Impression Yes, staging your home is important - without question. But please notice that this is the LAST item on the list. Yes, buyers will pay a premium for a property that is in move-in condition. However, buyers determine a RANGE they are willing to pay based on condition and they do not generally exceed that range. The primary purpose of staging your property is to compete favorably compared to the other properties they are looking at in their price RANGE.

So clean up, tidy up, de-clutter, throw away or pack away those things you don’t use on a daily basis. However, do NOT spend money on making big capital improvements. You may want to do some paint touch ups or replace unsalvageable carpeting or tile. But leave the new appliances or central a/c for the next owner to install.

If you are looking to sell your home I have put together a set of strategies and specific tips that can help you sell your home in this market and avoid all the pains of doing this yourself. If you are still contemplating selling your property, even in this market, then download my FREE report now, “7 Selling Mistakes You DON”T want to make or YOU Won’t Get Top Dollar In A Down Market”

Chicago Home Buyers - $8000 first-time homebuyer tax credit

2009-05-12T14:51:00.002-05:00

U.S. Dept. of Housing and Urban Development to allow FHA consumers to use $8,000 first-time homebuyer tax credit for down payment. FHA approved lenders will be allowed to "monetize" tax credit with a short-term bridge loan, making funds available at closing.

Has Chicago Real Estate Hit Bottom?

2009-03-23T19:01:00.009-05:00

Here is a great article from the New York Times

Under 5%, Mortgages May Be Near The Bottom
By JAMES R. HAGERTY

The Federal Reserve is going to extraordinary lengths to push down long-term interest rates, including home-mortgage rates. But those hoping mortgage rates will fall sharply from current levels, already historically low, may be disappointed.

Mortgage firms Thursday were quoting rates averaging 4.75% on 30-year fixed-rate mortgages, according to Zillow.com, a real-estate information service. That is down from more than 5% two days ago and about 6% in mid-November. But further big declines will be hard to achieve, partly because the mortgage-lending market has grown less competitive in the past year as hundreds of small banks and independent mortgage lenders have collapsed. The big banks that dominate the market are eager to boost their profits margins, not give deeper bargains to consumers.

Rates for borrowers with the strongest credit are likely to be in a range of roughly 4.5% to 4.75% for the rest of this year, says Mahesh Swaminathan, a mortgage strategist at Credit Suisse in New York.

Others say that is too optimistic. Assuming no big change in government policy, Walter Schmidt, an analyst at FTN Financial Capital Markets, sees a range of 4.75% to 5.5% for most of this year.
The Fed began driving mortgage rates down in late November when it announced plans to buy as much as $500 billion of mortgage securities this year. On Wednesday, the Fed expanded that program, saying it will spend as much as $1.25 trillion on such securities in 2009. That is enough to provide funding for more than half of all home-mortgage loans likely to be made in the U.S. this year.

The Fed also is buying long-term Treasury bonds to drive down rates on those securities, whose pricing affects mortgage rates.

By historical standards, rates look incredibly low. Until recently, 30-year fixed-rate mortgages hadn't been below 5% since the 1950s. For the past couple of months, rates have been bobbing between about 5% and 5.25%. The 30-year rate averaged 4.98% in the week ended March 19, down from 5.03% the prior week, according to Freddie Mac's survey. Fifteen-year fixed-rate mortgages averaged 4.61%, down from 4.64%.

One reason mortgage rates often tick back up after a decline is that a rush of people seeking to refinance quickly causes backlogs at lenders, which frequently don't have enough employees to process all of the applications.

"If lenders are working people overtime to close loans, they don't have an incentive to compete too hard on price," says Arthur Frank, who heads research on mortgage securities at Deutsche Bank in New York.

The situation highlights a conundrum for the government. It wants low rates to spur the housing market, but also wants the banks to make profits on loans so they can return to financial health.

Many of the small mortgage banks that remain are struggling. Mortgage banks, often small, family-owned companies, aren't licensed to take deposits and so lack that source of money for their loans. Instead, they typically borrow money for short periods from so-called warehouse lenders. They use this short-term credit to make loans to their customers and then pay back the warehouse lenders after selling the loans to bigger banks or to government-backed mortgage investors Fannie Mae and Freddie Mac.

But this warehouse credit is much harder to obtain than it was a year or two ago because many of the big banks and Wall Street firms that used to provide it have exited that business.

Despite these constraints, the Fed's action is "going to be a plus" for the housing market, says Thomas Lawler, an economist in Leesburg, Va. Lower rates make it more likely that home prices will hit bottom in many parts of the country later this year, Mr. Lawler says. The recovery, though, is likely to be gradual, partly because rising unemployment reduces housing demand.

Christopher J. Mayer, a real-estate professor at Columbia Business School in New York, says the Fed's moves to cut rates are "helping to put a floor under the housing market." But he worries that the Fed could face huge losses on the mortgage securities if inflation fears eventually push interest rates much higher.

Still, the consumers who need these low rates the most aren't likely to get much help. Many people can't qualify for these low rates because their credit scores aren't high enough or they can't afford a down payment of 20% or more on a home purchase. Such people will be socked with fees that can drive up their housing costs considerably. Banks also have become far pickier about appraisals and are nixing many purchases as a result.

Others can't qualify for a refinancing because they owe far more on their homes than the estimated current market values. Fannie Mae and Freddie Mac have new refinancing programs that will let some borrowers refinance into lower rates even if they owe as much as 105% of the home value, but only for current loans owned or guaranteed by Fannie or Freddie.

Find out what home prices are in the Chicago Neighborhoods you are considering. Get your free weekly market watch report and see what pricing trends are and how much supply and demand there is before you buy or sell your next Chicago house or Chicago condo.

Avoid Choosing The Wrong Chicago Neighborhood

2009-03-18T19:47:00.009-05:00

If you are buying a Chicago home, one of the first things your Chicago real estate agent will do before taking you on home tours is interview you to determine the type of Chicago house you want and any specific criteria the Chicago home needs to meet. But just as important is the type of community you want to live in. Knowing what your requirements are will help narrow your home search and save time.

To expedite the house-hunting process, start by making a list of the dream home factors that are most important to you and best meet your family's lifestyle. Consider style, location, proximity to work and schools, yard size, children in the community, and of course, price.

Price and location generally are the key factors you'll use to identify the Chicago Neighborhoods that best suit you. If you are moving within the city limits, you may want to start your Chicago neighborhood search by getting in your car and exploring. There are also resources on the Internet that let you compare Chicago neighborhoods.

You'll want to ask yourself critical questions, such as:
Do you dream of something quaint and charming that can only be found in an older area?
Or, do you prefer everything new?
Are you willing to sacrifice size and space for architectural detailing?
What about drive and commute time to the office and schools?
Will you forgo the number of bedrooms and a big yard for proximity to a lake or other recreational areas?

Whether you have children or not, buying a home in a community with good schools is important. It not only adds value to your Chicago property, but also is an attractive feature when and if you decide to sell. There are plenty of resources available to get information about schools within the Chicago neighborhoods you are considering. Various Internet sites offer school reports and profiles. They provide statistical data such as graduation rates, college-bound percentages, and standardized test scores. You can also learn about special programs the schools offer. In addition to these reports, many schools have their own websites you can peruse. And of course you can always talk to people in the area or take a tour of the school.

Additional factors you'll want to consider during your Chicago neighborhood search are crime, recreational activities, proximity to shopping and restaurants, and other specific family needs.

Once you've narrowed your search to two or three neighborhoods that fit your price range and lifestyle, make comparisons of price and sales activity. Your real estate professional can help you determine which communities are most sales-worthy at present, and which are more likely to continue to be.

There are many factors involved in selecting the right Chicago community for you and your family. Discuss your options with your Chicago real estate agent. This will provide the information he or she needs to help you find property listings to tour.

Remember, a targeted approach to house hunting is less time consuming, less expensive and more efficient.

Find out what home prices are in the Chicago neighborhood you are considering. Get your free weekly market watch report and see what pricing trends are and how much supply and demand there is before you buy or sell your next Chicago house or Chicago condo.

Your Chicago Real Estate and Mortgage News for March 9th

2009-03-09T15:11:00.006-05:00

Interest rates fell slightly last week on some rather dismal news on employment and the economy as a whole. In addition, the bond markets were helped by the stock market, which continued its free-fall into territories we haven't seen in over 12 years. This week is a "slow news" week on the economy, so the bond market will mainly be watching the stock markets for direction. Keep in mind that as the stock market falls, that is usually good news for interest rates, as investors pull their money out of the stock market and put it into bonds, which are considered to be a safe haven.

Here's a look at the news that came out last week:
On Monday, Personal Income and Spending both came in better than expected, while the Fed's favorite inflation gauge - the Personal Consumption Expenditures index came in as expected. The Industrial Supply Manager's (ISM) Manufacturing Index came in better than expected, but still "not so good". Wednesday brought us the ADP employment report, that estimated 697,000 jobs were lost in February, compared to the street estimate of 630,000. The ISM Services Index came in slightly better than expected. We also heard more of the details of the "Making Home Affordable" housing plan that was announced a couple of weeks ago. If you or your past clients have tried refinancing recently, but were unable to due to the changes in the mortgage industry, please call us to see if the "Making Home Affordable" plan will help with your situation. Thursday we learned that first time Unemployment Claims came in slightly better than expected, but still at 639,000 new claims. Also, Productivity at the nation's factories fell in the 4th quarter of 2008 more than anticipated. Friday was the big day of the week and month, as the U.S. Labor Department released employment numbers for February. We learned that the we lost 651,000 jobs, close to expectations, but the unemployment rate jumped to 8.1% - the largest number in over 25 years. December and January's employment numbers were revised to show an additional 161,000 jobs lost, giving December the largest number of jobs lost in the post war (WWII) era. When it was all said and done for the week, bad news prevailed, and interest rates declined.

The week ahead will bring us the following:

Thursday - First Time Unemployment claims are expected to remain steady from last week. Thursday - Retail Sales are expected to show a large decrease from January to February.
Friday - The U.S. Trade Balance is anticipated to show an improvement
Friday - Consumer Sentiment will probably show a decrease from the last reported, considering all of the dismal news released lately.

Homeowner Affordability and Stability Plan

2009-03-03T10:54:00.002-06:00

President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes. The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. Many of the plan's details are still being worked out and will not be announced until March 4.

Here is an overview of the plan's main components.

Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.

According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

As with the rest of the plan, details about this initiative will be released at a future date--including what, if any, credit score requirements will be included.

Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.

The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31% of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.

Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.

This initiative also includes a number of additional elements and incentives, including an extra incentive for borrowers to keep paying on time. The initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

Tax Credit for Homebuyers - Stimulus Plan

2009-02-24T19:03:00.004-06:00

The $787 Billion stimulus bill is made up of tax cuts and spending programs aimed at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. One of the major benefits of the plan is a tax credit for new homebuyers. According to the plan, first-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit.

It's important to remember that the $8,000 tax credit is just that... a tax credit. The benefit of a tax credit is that it's a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if you were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, you would owe nothing.

Better still, the tax credit is refundable, which means you can receive a check for the credit even if you have little income tax liability. For example, if you're liable for $4,000 in income tax, you can offset that $4,000 with half of the tax credit... and still receive a check for the remaining $4,000!

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying "homes" include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify. Buyers will have to repay the credit if they sell their homes within three years.

Income Tax Change and Mortgage Rate Changes

2009-02-05T13:26:00.002-06:00

Hello Everybody!

As many of you know, the U.S. Senate passed a revised homebuyer tax credit yesterday. I want to be sure that you realize that this move is not final. This is part of President Obama's $900 (or so) Billion stimulus package. The rest of the stimulus package has to be decided upon, and then the bill goes to the House for its vote on the measure. There is hope that the Senate can hammer out the rest of the plan by tomorrow, and it can head to the house next week. Then it's on to President Obama's desk for his signature. Few details of the plan have been released. It looks like it will not be repayable, is not limited to first time homebuyers and may include some purchases from 2008. I will give you more details when they become available!

Bank of England -

Today, the Bank of England dropped it's overnight rate to 1% - its lowest level since 1694 (315 years ago). This was also the year that the Bank of England was formed, and the year that Queen Mary II died of smallpox at age 32. Surely we all remember how bad the economy was back then, and how things really turned around after rates hit the 1% level!

Mind the Gap -

While the Bank of England is across the pond, this could prove to be beneficial for our rates, as it lessens the gap between rates abroad and our own rates here!

Have a great day!

FIVE TIPS TO HELP YOU SELL YOUR HOME FAST

2009-02-02T22:25:00.002-06:00

There is no question that houses are taking longer to sell in today's market. As a seller, this slow-down means there is more competition for a limited pool of potential buyers. Consider the following five tips to place your home on the fast track to sale:
Price It Right - The first 30 days are the most critical. If your home is priced too high, interested buyers may never even tour your listing. The longer the property is on the market, the fewer the prospects. Deciding the value of a home isn't an exact science. Yet, there is data to help you determine a fair asking price that is right on target. You may want to hire a real estate appraiser for an objective, unbiased estimate. Then consult with a real estate professional who can help you determine true market value based on a comparable market analysis, which will include recent home sale transactions as well as homes currently on the market. From your analysis, you may want to price your home conservatively to give it a competitive edge.
Make Your Home Irresistible - Unless they are looking for a fixer-upper, most home buyers are more likely to make a bid on a home that they can enjoy immediately. Therefore, you need to create an environment the buyer can't resist. In other words, do everything you can to make the home so attractive, charming, cozy, inviting, comfortable and exciting that a buyer will want to buy that lifestyle for himself. Evaluate the home from a buyer's point of view. An experienced real estate professional will be able to offer an objective view and will also know what buyers are asking for. Get your home in tip-top shape by making repairs and cosmetic improvements, and removing clutter. This may mean investing in a few upgrades to modernize your home's look such as installing newer carpet and light fixtures and painting the walls a neutral shade.
Create Traffic - If you want buyers to see your home, you must first find the buyers. Work with your real estate professional to design a marketing plan that is flexible and capitalizes on your property's most desirable features. Your strategy should include ways to reach buyers online and offline – such as word of mouth, the Internet, yard signs, open houses and so on.
Go with a Professional - Selling a home is more than just putting a sign in your yard and having a listing on the Internet. In a competitive market, you don't really want to take the chance of making novice mistakes that can slow the selling of your home. By hiring a real estate professional, you get the benefit of an experienced marketer and negotiator who is familiar with real estate issues in your community. A real estate professional can offer worthy advice on pricing and staging your home based on their vast experience. Plus, there's the added value of the peer-to-peer networking among real estate professionals, which can bring buyers and sellers together – sometimes even before the property goes on the market.
Offer Incentives - Offering incentives can be just the impetus a potential buyer needs to select your property over others. You may want to consider offering a professional home inspection, home warranty, or allowance for paint or carpet. Don't be discouraged if there are competing homes for sale in your neighborhood. With just a few smart moves, you can turn a buyers' market in your favor.

General Financing Options - Part 1

2008-10-16T13:56:00.001-05:00

With so much talk about mortgages lately I thought it would be beneficial to review the basics of a mortgage and how you can qualify for one. This is part 1 of a 3 part series.

1. WHAT IS A MORTGAGE?
Generally speaking, a mortgage is a loan obtained to purchase real estate. The "mortgage" itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt. All mortgages have two features in common: principal and interest.
2. WHAT IS A LOAN TO VALUE (LTV)? HOW DOES IT DETERMINE THE SIZE OF MY LOAN?
The loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing. Each loan has a specific LTV limit. For example: With a 95% LTV loan on a home priced at $50,000, you could borrow up to $47,500 (95% of $50,000), and would have to pay, $2,500 as a down payment. The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds. So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policy.
3. WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE ADVANTAGES
OF EACH?
Fixed Rate Mortgages: Payments remain the same for the life of the loan
TYPES
§ 15-year
§ 30-year
ADVANTAGES
§ Predictable
§ Housing cost remains unaffected by interest rate changes and inflation
Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits
TYPES
§ Balloon Mortgage: Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is due or refinanced (though not automatically).
§ Two-Step Mortgage: Interest rate adjusts only once and remains the same for the life of the loan.
§ ARMS linked to a specific index or margin.
ADVANTAGES
§ Generally offer lower initial interest rates.
§ Monthly payments can be lower.
§ May allow borrower to qualify for a larger loan amount.
4. WHEN DO ARMS MAKE SENSE?
An ARM may make sense, if you are confident that your income will increase steadily over the years or if you anticipate a move in the near future and aren't concerned about potential increases in interest rates.
5. WHAT ARE THE ADVANTAGES OF 15- AND 30-YEAR LOAN TERMS?
30-Year:
In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions.
As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses.
15-year:
Loan is usually made at a lower interest rate.
Equity is built faster because early payments pay more principal.
6. CAN I PAY OFF MY LOAN AHEAD OF SCHEDULE?
Yes. By sending in extra money each month or making an extra payment at the end of the year, you can accelerate the process of paying off the loan. When you send extra money, be sure to indicate that the excess payment is to be applied to the principal. Most lenders allow loan prepayment, though you may have to pay a prepayment penalty to do so. Ask your lender for details.
7. ARE THERE SPECIAL MORTGAGES FOR FIRST-TIME HOMEBUYERS?
Yes. Lenders now offer several affordable mortgage options, which can help first-time
homebuyers overcome obstacles that made purchasing a home difficult in the past. Lenders may now be able to help borrowers who don't have a lot of money saved for the down payment and closing costs, have no or a poor credit history, have quite a bit of long-term debt, or have experienced income irregularities.
8. HOW LARGE OF A DOWN PAYMENT DO I NEED?
There are mortgage options now available that only require a down payment of 5% or
less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you'll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan. When considering the size of your down payment, consider that you'll also need money for closing costs, moving expenses, and possibly repairs and decorating.

Should Buyers Use a Real Estate Professional?

2008-10-10T09:24:00.000-05:00

With just the stroke of a few keys, you can find myriad resources on the Internet to help you in your search for a new home. Besides property listings, you can find out about specific communities, schools and mortgage options. Prudential Real Estate has made three great resources – Environmental Profile, Property Profile and Value Range Estimate – available on prudential.com/realestate that provide detailed real estate information just by keying in a U.S. property address.

With this wealth of information at your disposal, do you really need a real estate professional to represent you? Absolutely.

Think of it this way, when you go to an unfamiliar place, sure you could do a self-guided tour. However, your tour is much more rewarding and enriching when you have someone who is familiar with the location to guide you along because he or she has inside knowledge on the history, culture and stories that you may not have otherwise received.

The same can be said about sales professionals. Their role is more than someone to drive you around from property to property. They can be a great resource, especially to homebuyers relocating from other communities. He or she knows the local area including home values, taxes, utility costs, and school data, and may even be knowledgeable about resources pertaining to your special interests or needs. For instance, should you require help relocating an aging parent with you, your real estate professional may be able to direct you to local services or organizations for the elderly.

A sales professional can familiarize you with the processes involved in buying a home, alert you to potential risks, help you determine how much house you can afford, explain alternative financing strategies, as well as provide tremendous moral support.

Another benefit is having a strong advocate during the negotiating process. Sales professionals can help you objectively evaluate an offer then work to negotiate a favorable contract. During the process, he or she will review the contract and obligations before you sign, explain how contingencies and release clauses work, and so on.

And something easy to overlook is our familiarity with the complexity and risks inherent in the process. In the years I have been practicing I have been continually amazed at how quickly a seemingly simple transaction can grow legally complex and risky. When complex questions arise, a sales professional can help you quickly locate an attorney or other licensed professionals whose services you may require, such as home inspectors, engineers, surveyors and lenders.
As your single point of contact, a sales professional can manage the entire transaction including coordinating inspections, keeping in touch with the other real estate professionals, managing the documentation for the loan process, monitoring deadlines associated with contingencies, providing applicable paperwork, estimating closing costs, and helping prepare for a smooth and uneventful closing.

If you’re about to begin the process of buying or selling a home, consider involving a real estate professional. When the stakes are high, it’s comforting to have a specialist by your side.

Your Chicago Mortgage Minute or Two

2008-08-12T16:05:00.001-05:00

Interest rates rose slightly last week, but it could have been a lot worse! Good economic news released early in the week was offset by negative news at the end of the week. This coupled with a large decline in the price of oil caused mortgage rates to end the week very close to where they began.

First a recap on the news that was:
On Monday, Personal Income for July were reported at +.1%, which was higher than expected, but much lower than the +1.8% that was reported for June. The difference from month to month was a reflection of most of the stimulus package checks going out in June. At the same time, Personal Spending for July came in at +.6%, slightly better than the market was expecting. Also included in this report was the Federal Reserve's favorite inflation gauge - the Personal Consumption Expenditure (PCE) index, and the PCE core index (excluding food and energy). Both of these numbers came in at the high end of expectations, and showing a yearly rate of inflation that is higher than the Fed likes to see. These reports got the mortgage bond market off to a bad start for the week. Tuesday brought the Industrial Supply Manager's Services index, which came in much stronger than expected and much stronger than the month before. The Fed announce in the afternoon that they were leaving short term interest rates unchanged, signaling that the danger of a slowing economy was worse than the obvious increase in inflation. They also announced that they expected inflation to abate towards the end of the year. The recent 20%+ decrease in oil prices may help this prediction to come true, barring a turnaround. The market took this as a hint that the Fed will not raise interest rates anytime soon. The stock market rallied on this news, closing up over 300 points. The fear that the Fed will not be vigilant against inflation and the rally in stocks caused a sell-off in mortgage bonds, and rates jumped. On Wednesday, the only economic news reported was an increase in U.S. Crude oil inventories. The mortgage bond market continued it's sell-off, but then reversed course during the day and rallied into the close, probably on oversold conditions. Thursday brought word that first time unemployment claims, which had spiked the week before, continued their increase and jumped to 455,000 claims. This caused the four week moving average of this number to spike to its highest level since July, 2003. The labor market is still experiencing some pain. Mortgage bonds continued the rally they started on Wednesday on this news. Finally on Friday, it was reported that productivity in the U.S. rose at a 2.2% annual rate, slightly lower than anticipated. Although it was lower than expected, it was still a good number for an economy that has given up 165,000 jobs in the last quarter. It shows that productivity is up even though the number of workers is down. This was good news for the economy and on the inflation front. In the week ahead, some important news will be released that will give us an idea whether the recent rise in inflation is starting to slow down or reverse course.

This could be a volatile week for mortgage rates, depending on where the numbers come in. Here's what to expect:
Wednesday - Retail Sales are expected to have increased by .5% in July, up from +.1% in June. (HIGH impact report)
Wednesday - Retail Sales, excluding auto sales, are expected to have increased by .6%, down from +.8% in June. (HIGH impact report)
Wednesday - Crude Oil inventories are to be released (typically a moderate impact on rates, but an increase in inventories would be very positive)
Thursday - First time unemployment claims will be released (typically a moderate impact, but last week this negative number sparked a rally in bonds)
Thursday - The Consumer Price Index (CPI) is expected to show a +.2% increase, vs. a +.3% increase in June. (HIGH impact report)
Thursday - Core CPI (excluding volatile food and energy costs) is expected at +.4%, down from a whopping +1.1% in June (HIGH impact report)
Friday - Empire State Index (NY area economy) is expected to show a decrease from its June number (Moderate impact report)
Friday - Capacity Utilization and Industrial Production will be reported (Moderate impact reports)
Friday - University of Michigan Consumer Sentiment Index is expected to show a slight increase over its last report (Moderate impact report)

Although I indicate "moderate" or "high" impact report, any number that comes in a lot different than expected can have a "high" impact on mortgage rates. Also, any events, whether they are political or economic reports, that have a big impact on the stock market can have a big impact on mortgage bonds. For instance, the war that erupted over the weekend between Russia and Georgia could cause havoc with worldwide markets until it is resolved.

Chicago Mortgage Minute or Two for Week of 8/4

2008-08-07T14:29:00.000-05:00

Good Afternoon Everyone!

Mortgage rates finished their second straight week with a slight improvement in rates.

The biggest newsmaker of the week was President Bush signing into law HR 3221 - "the Housing and Economic Recovery Act of 2008", which is a sweeping $300 Billion plan to help struggling homeowners avoid foreclosure and to boost confidence in the sluggish housing market. The bill is several hundred pages long, and there have already been hundreds, if not thousands, of articles, summaries and analyses of the bill from the media and other mortgage "experts", many with inconsistent and conflicting data.

In addition to the housing bill being signed last week, there was a slew of economic reports that had an impact on mortgage rates. Remembering that negative news on the economy is typically good for mortgage rates, several of the reports last week helped progress mortgage rates towards better levels.

Some bad economic data out of Europe, negative comments by one of the Federal Reserve Presidents and a weaker than expected Gross Domestic Product number helped to offset some good news last week on lower oil prices, some higher than expected consumer confidence numbers and a lower than anticipated loss of jobs for the U.S. economy.

Here's a recap of what we saw last week:
Consumer Confidence unexpectedly rose last week to 51.9 from a reading of 51.0 last week. A drop to 50 was expected.
U.S. Crude Oil Inventories dropped, which was also unexpected. Remember rising inventories have been helping to bring down the cost of oil.
The Gross Domestic Product for the 2nd Quarter of 2007 rose less than expected to up 1.9%. The market was expecting the economy to have grown by 2.3%. Other parts of this report showed employment costs coming in in-line with expectations for the quarter, while the GDP inflation gauge actually was a little tamer than the market anticipated.
First Time Unemployment claims surged to 448,000, although the government blamed part of the increase on a statistical anomaly!
Friday's employment report brought some surprises as well, as the unemployment rate increased to 5.7% from 5.5% the previous month. The economy lost only 51,000 jobs in June, less than expected, but still a lot of job losses. The average work week was a little shorter than expected, while average hourly earnings came in as targeted.
The Chicago Purchasing Manager's Index (PMI) and the Industrial Supply Manager's Index both came in higher than expected, with numbers that showed the economy either expanding, or at least not contracting.

All in all, the good news in the employment report (less jobs lost than expected) was offset by bad news in the other reports, and we saw rates decrease slightly over the week.

This week brings another round of economic reports that may prove to be market moving, including:
Monday - Personal Income and Personal Spending (Moderate Impact on mortgage rates) (Note - these numbers have been announced already this morning. Personal Income and Spending both came in slightly higher than expected, reflecting the balance of stimulus checks being received.)
Monday - Personal Consumption Expenditures (PCE) and core PCE (less food and energy) - HIGH (This is the Fed's favorite inflation gauge) (Note, these numbers have also been released, and the numbers came in pretty much in line with expectations, albeit higher than the Fed's target rates. These numbers have caused a small sell off in mortgage rates, which could cause rates to go up today.)
Tuesday - Industrial Supply Managers' (ISM) Service Index (Moderate)
Tuesday - 1:15pm C.D.T - The Federal Reserve will announce their latest decision on interest rates (HIGH). The market is not anticipating a change.
Wednesday - U.S. Crude Oil Inventories (Moderate)
Thursday - First time Unemployment Claims (Moderate)

Mortgage Minute or Two

2008-07-30T11:32:00.000-05:00

Mortgage rates improved slightly last week, with bad news on the economy helping the mortgage bond market more than good news hurt it! Here's a brief recap of economic releases from last week:

Crude Oil Inventories were reported lower than expected, although this was offset by a decrease in the cost of oil and a decrease at the pump.
Existing Home Sales came in lower than expected, but then New Home Sales came in a bit stronger than expected.
First Time Unemployment Claims jumped back over the "recessionary" 400,000 level, which was much worse than the markets were anticipating.
Consumer Sentiment figures were much better than expected, which was a very positive sign.
Finally, Durable Goods Orders for June were reported much better than expected.

So, with some news coming in good, and some news coming in bad, mortgage bonds took their cue from stocks, oil prices and the latest Fedspeak, and finished slightly better on the week. The cost of oil dropped to around $123 per barrel, and a dip in the price of gasoline is expected to follow.

The markets seemed to ignore warnings on inflation by a couple of Federal Reserve Bank Presidents. The Fed's way of combatting inflation is to raise short term interest rates. While they are unlikely to do so at their next meeting on Tuesday, August 5th, they may have to in subsequent meetings. The problem that they face is that if the economy is not showing enough signs of strength, an increase in short term interest rates may stifle any growth that there is.

Here's what's due to be released this week (shown with it's typical impact on mortgage rates):

Tuesday - Consumer Confidence (Moderate)
Wednesday - Crude Oil Inventories (Moderate)
Thursday - Gross Domestic Product (GDP) for 2nd Quarter of 2008 - (Moderate)
Thursday - GDP Chain Deflator, a measure of inflation (HIGH)
Thursday - First Time Jobless Claims (Moderate)
Thursday - Chicago PMI (HIGH)
Friday - The "big" report of each month - the monthly employment report, including Jobs Created or Lost (HIGH), Average Work Week (HIGH), Unemployment Rate (HIGH), Hourly Earnings (HIGH).
Friday - Industrial Supply Manager's Index (HIGH)

Hopefully mortgage bonds will be able to continue the rally that they started last week, and we can see some further improvement in mortgage rates. I will keep you posted on any major developments or movements in rates.

New Listing - 1612 Pierce Ave., unit C, Chicago, IL 60622

2008-06-27T09:51:00.005-05:00

Extra Large Townhome in the Heart of Wicker Park
1612 W. Pierce Ave., Unit C

2 bedrooms + office
2 full baths and 2 half baths all in marble
Rooftop Deck with skyline views
2nd deck off kitchen/dining room for all your grilling needs
All new stainless steel appliances
New Washer\Dryer
Hardwood floors throughout
New Carpeting in bedrooms
Garage Parking included in price
Lots of closet space
Multiple storage areas

$515,000

NO ASSESSMENTS!!!

Contact Ramona Sivulich, Real Estate Consultant with Prudential Preferred Properties for more information at 773-572-7574.

What’s the Role of a Title Company?

2008-06-17T13:05:00.000-05:00

Title companies provide title insurance services to buyers, sellers, lenders and developers, essentially anyone who has an interest in real estate. Services vary throughout the country, depending on local practices and laws. In many states, title companies handle escrow as well as perform and insure title searches. A title search involves searching public records to ascertain if the seller has the legal right to sell the property. In other states, attorneys conduct title searches.
Title companies conduct a chain of title, which is a review of the owner history of the property, checking for who purchased the property, who sold it, and when. They perform judgment searches to determine whether there are any general liens against the property, as well as tax searches to verify the present status of taxes.
Some title companies conduct on-site inspections to verify lot size, the location of improvements, and evidence of unrecorded easements.
They issue a “Commitment of Title Insurance” to lenders after completion of the title search and they receive instructions and documents for the closing. Title companies also prepare a final Settlement Statement.
If it acts as the escrow holder, the title company receives a buyer’s earnest money, which is deposited in an escrow account until the closing, or final settlement.
As a neutral third party agent of the principals—buyer, seller, lender, and borrower—the title company helps with the transfer of ownership by ensuring that the terms of the transaction are completed. This includes safeguarding all funds (including the buyer’s deposit) and documents. Once all the details have been settled, the escrow holder disburses the funds and documents to the appropriate parties.
Another important role of the title company is to issue title insurance. Although a title search is conducted, it’s nearly impossible to guarantee a title is clear of hidden defects, such as mistakes in interpretation of wills and other legal documents, impersonation of the real owner, forgery, missing heirs, falsification of records and confusion stemming from similar names. Title insurance guarantees the title as reported.
Should hidden defects surface at any time challenging an owner’s rights, the title company will defend the title, in court, if necessary, and cover the owner’s losses up to the full value of the policy.
Indeed, a title company can be crucial to the process of buying a home, so select a company that’s known for service. If you need a recommendation, talk to your real estate professional.

Now Is A Great Time To Buy A Home

2008-06-12T14:22:00.000-05:00

If you’re ready to buy a home and can afford it, now is a great time to buy. Mortgage interest rates remain very low. In many areas, buyers have a lot of inventory from which to choose and long-term homeownership continues to be one of the best ways for the typical American to build wealth.
Don’t let all of the negative media attention about the “mortgage meltdown” keep you from pursuing your homeownership dream. Mortgage industry woes are primarily limited to subprime loans and other types of creative and comparatively risky financing products. While the mortgage industry stalled briefly to reconsider its more exotic loans, there is plenty of conventional financing available for qualified homebuyers. Interest rates remain at historically low levels – still less than 7% for the typical, 30-year fixed-rate mortgage.
Indeed, the market has changed. It’s gone from a frenzied seller’s market to calmer buyer’s market. In fact, buyers haven’t seen a market this strong in years. When the national median home price dropped for the first time on record, the decline made huge albeit misleading headlines. For starters, there is no such thing as a national real estate market. All real estate markets are local and driven by local factors that include the local economy, housing supply and demand factors and other attributes like geography.
The slight decline followed years of unprecedented steep home price appreciation and the reality is that only a handful of markets experienced price declines. Corrections in markets that experienced exorbitant home price appreciation were expected and signal good news for buyers. According to 2007 third-quarter National Association of REALTORS® (NAR) statistics, the vast majority of the nation’s metropolitan areas showed rising or stable home prices with most areas experiencing modest gains.
Right now there are many homes from which to choose and in most areas buyers don’t have to deal with the harried and hurried competition of multiple bids. The changing market has also changed the inventory landscape to include fewer speculative sellers and a larger share of serious and motivated sellers.
Prospective homebuyers have some time to shop inventory and thoroughly compare home types and prices, amenities, neighborhoods, commutes and other important real estate-related features. And buyers have stronger price negotiation power as sellers compete for their attention by offering concessions or other incentives.
While all real estate markets have ups and downs, Americans continue to consistently build wealth through homeownership. According to the NAR:
· One average, the value of a home doubles every 10 years. During the past three decades, home values have increased an average of 6.6% per year.
· The average homeowner today has 36 times the wealth of the average renter. Homeowners are essentially paying themselves when they pay their mortgages and this means they’re building equity. Homeowners also benefit from some real estate-related tax write-offs like mortgage interest.
· Sixty percent of the average homeowner’s wealth is their home’s equity. For homeowners who’re in their homes for the long-term, home equity typically is their single largest source of wealth.
Because every market is different, it’s a good idea for potential homebuyers to contact a local real estate specialist to learn more about what’s happening in his or her community and real estate market. The bottom line in real estate doesn’t change – if you’re ready to buy and can afford to make a long-term homeownership commitment, it’s always a good time to buy!

Tips for First-Time Buyers

2008-06-04T12:46:00.000-05:00

Home-price adjustments in markets around the country have opened doors of opportunity for many renters. If you are transitioning from renter to homeowner, the prospect of making such a large investment may be exciting, while at the same time overwhelming. But it doesn’t have to be. Here are six common mistakes to avoid.
1. Not understanding the homebuying process. Educate yourself. Find a homebuyer seminar that you can attend or research online. The U.S. Department of Housing and Urban Development Web site (http://www.hud.gov/) has an entire section devoted to homebuyers with common questions of first-time homebuyers, mortgage and home-buying programs information, downloadable tools such as a wish list and home-shopping checklist, tips on selecting a real estate professional, etc. Likewise, Prudential Real Estate’s popular Web site, prudential.com/realestate, offers consumers brand-new tools for the homebuying process, such as free home environmental reports, Value Range Estimates and Property Profiles, among other resources.
2. Not asking questions. There are many facets and intricacies to the homebuying process, so although you may gain a basic knowledge, you will still have questions. Don’t hesitate to let your real estate professional know that you are new to the process. Make sure you choose a sales professional who is willing to spend time with you and walk you through the entire process. He or she will expect you to have questions at each step—from house hunting, to making an offer to the closing. Remember, this is one of the largest financial transactions of your life, so you want to have a clear understanding of what’s going on.
3. Buying on impulse. Don't feel pressured into making an offer on the first home you see. Buyers, especially first-timers, may be impressed by the first two or three homes they view. Look at a good selection. List the positives and negatives about each home. Narrow the prospects to three or four and then return for a closer look. When you decide to make a bid on a property, work with your real estate professional to get all of your questions answered before making an offer. But don't wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.
4. Looking outside your price range. Before beginning your home search, consider getting pre-qualified to so get an idea of how much you may be able to borrow. Use this information as a starting point in determining your price range. Then take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, homeowners insurance, utilities, private mortgage insurance (PMI) and maintenance.
5. Not planning ahead. Think about personal changes you are planning in the next five to seven years. For instance, are you starting a family, and if so, is the home large enough and will it continue to be? If this will be a starter home or if you think you’ll be relocating in a few year, you’ll probably want to pay closer attention to appreciation and resale value. If a double-income is necessary to qualify for financing and to make your payments, do your plans foresee an income sufficient to continue making payments?
6. Failure to focus on location. Don’t just focus on the house. Examine the community. Does it suit your lifestyle? Is the area safe, well-maintained, close to work, stores and schools? Find out about zoning and what new construction is planned on vacant land in the immediate area. Also consider the property marketability when it’s time to sell.
Above all, remember knowledge is key. No question is a silly question. Your real estate professional can be an invaluable asset throughout the process. Making smart home buying decisions will make the home-buying process less scary and your first home purchase a rewarding experience.

Can You Afford That House

2008-05-20T13:33:00.000-05:00

Before you start searching for your dream home, you first need to determine a price range you can afford. According to the Federal Housing Administration (FHA), depending on the consumer’s current debt ratio, most people can typically afford to pay 31 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is about $4,167. Thirty-one percent of that is $1,292.
There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.
However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses.

Utilities
The most obvious of additional housing expenses are utilities—gas, electricity and water. But don't forget about telephone, trash collection, and cable or satellite bills.

Taxes
As a property owner, you are responsible for property taxes. The rate will vary from city to city. In our community, the tax rate is (insert %) percent. That means for a home with a market value of $200,000, yearly taxes will run (insert dollar amount). To get a general idea on how much the tax bill will be for a property, ask the seller for a copy of the previous year's tax assessment. Your real estate professional can help you refine these figures.

Association Dues
Another cost you may incur is homeowner association (HOA) dues. Most condominiums and some (residential developments/subdivisions/neighborhoods) have HOAs, which are legal entities, created to maintain common areas and enforce deed restrictions. As a property owner, you are required to pay the established monthly or annual homeowner association dues. Be sure you factor this cost into your budget.

Maintenance
You also need to consider the upkeep of your home. You should budget for seasonal maintenance such as lawn care, pest inspections and carpet cleaning, as well as unexpected repairs. The amount you budget will depend on the age of the home, as older homes tend to require more repairs such as installing a new roof, painting and replacing older appliances.

Insurance
Depending on the type of coverage and your area, the costs for homeowners insurance each year can be anywhere from a few hundred to thousands of dollars. And, if you live in an area that has high risks for flooding, earthquakes, hurricanes, etc., you may need supplemental insurance.

Remodeling/Upgrades
Unless the home you purchase is picture perfect, you’ll more than likely be adding your personal touch. Therefore, you need add to your housing budget the costs for remodeling and upgrades. According to “Remodeling Magazine’s” 2007 Cost vs. Value Report, the national average for a midrange minor kitchen remodel is $21,185; a bathroom remodel averages $15,789.
Even minor cosmetic fix-ups such as light fixtures, window treatments, carpeting and decorative cabinet knobs can begin to add up.

By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.

May News

2008-05-14T10:27:00.001-05:00

Real Estate News from your Chicago Real Estate Agent - Ramona Sivulich

May Is Check-Your-Deck Month

When spring is in the air, buds begin to unfurl their bloom, bees buzz for honey, and birds sing enthusiastically. It's only natural that our thoughts turn to enjoying the great outdoors and our decks.May is Deck Safety Month, first rolled out in May 2006 to make sure that you or your loved ones don't get, well, decked by your deck.More than 92 million homes in the United States have a porch, deck, balcony or patio, and experts say that an astonishing 20 million of them are in need of immediate replacement or repair.The association says between August 2004 and December 2005, the U.S. news media reported 225 injuries and one fatality from deck collapses. Many more deck failures -- with and without injuries -- went unreported.Simpson reports that the average life expectancy of a deck is 10 to 15 years and requires frequent inspection.A qualified inspector should give your deck the once over to evaluate its safety and construction and to be certain it is structurally sound and properly maintained.Excerpts reprinted with permission of Realty Times.

Warning signs your deck may be about to give way

Rotted, split or decaying wood. Typically found where the deck attaches to the home, in support posts and joists under the deck, in deck boards, railings and stairs. Rotted, split or decaying wood weakens the structure and raises the possibility of collapse. Keep in mind, wood naturally cracks with age, but a deck with cracks throughout or large cracks in portions indicates major weakness.

Missing, loose or corroded fasteners and connections. Decks should have a redundant system of nails, screws, connectors, anchors and fasteners supporting the structure. Look for loose and missing parts, rust, a shaky handrail and stairs that sway or sag.

APRIL NEWS

2008-04-21T12:42:00.002-05:00

Real Estate News from your Chicago Real Estate Agent - Ramona Sivulich

Squeezing More Savings Out Of Energy-Efficient Home Electronics

Today's home electronics are much more energy efficient than they were years ago, but because households are stuffed with so many gadgets used more often, energy conservation recommendations for home electronics won't go away.Landmark research has found that the number of consumer electronics products per household has doubled since 1997 with televisions and personal computers leading the way. Along with televisions, desktop computers and their monitors, video recorders and cable and satellite set top boxes lead the way in terms of frequency of use, according to the Consumer Electronics Association's (CEA).Even with greater efficiency, ever larger big-screen televisions as well as computers and video game boxes with greater processing power, require more juice than the same items with smaller screens and less processing power.A study examined the energy use of 16 product categories, everything from answering machines to video cassette recorders and included home theater systems, cordless telephones, compact stereo systems and notebook computers, along with analog televisions, computers and DVD players and recorders.CEA found that consumer electronics consume 11 percent of residential electricity and three product categories account for approximately two-thirds of consumer electronics residential energy consumption -- analog televisions, desktop personal computers, and set-top boxes for cable and satellite services.

Excerpts reprinted with permission of Realty Times.

Energy Tips.
Look for the Energy Star® label. It can help you identify products that use less energy.

Unplug mobile phone or PDA chargers when batteries are fully charged or when the chargers are not in use.

When available, use personal and laptop computers' power management features to control energy consumption.

When you're finished watching a movie or playing a video game, don't forget to turn off your DVD player or video game console as well as the television or monitor.

Plug electronics, such as TVs, DVD players and audio systems, into power strips, and turn the power strips off when the equipment is not in use especially for long periods of time.

Investigate home-networking and automation products and services that let you control heating, lighting and cooling from a central location in the home.

When in the market for home office products, consider multifunction units combining, say printing, copying, scanning and faxing, instead of a single device for each function.

Use technology to save money. For example, save fuel by shopping and banking from home on your computer.

Consider a Different Neighborhood - This week Albany Park

2007-05-18T11:52:00.000-05:00

When looking to buy your first home have you considered different neighborhoods other than Lincoln Park, Lakeview, Gold Coast, Bucktown, Wicker Park, etc. You know what neighborhoods I am referring to. The really popular ones because of all the shops, restaurants and nightlife they have that can give you something to do at any moment of the day. So what neighborhoods can you still find affordable housing options but still have the cool shops, restaurants and nightlife that these other neighborhoods have?

Consider Albany Park. Some neighborhoods within this community are Ravenswood Manor, Mayfair and North Mayfair. All of which have their share of shops and restaurants. The one thing that Albany Park can really tote that a lot of other neighborhoods can’t is that it is the most ethnically diverse neighborhood in the city. Over 40 different languages are spoken in this neighborhood. Depending on where you want to purchase in Albany Park will dictate how much you will spend but a one bedroom condo can start as low at $136,000 and a 2 bedroom condo can start as low as $163,000 and with a little negotiating maybe even a little lower.

Since this a very diverse neighborhood there is a multitude of options when it comes to cuisine. One great place for Persian food is Noon O Kabab. William Rice a Tribune and Wine Columnist gave Noon O Kabab 4 forks. As the title suggest this restaurant specializes in Kabobs, along with other Persian fare. If Persian food is not for you how about some Swedish American food at the Tre Kronor. The ambience gives you the feel that you are eating in a friend’s house and the cuisine is very good. Want something sweet and perhaps something new to you. Try Jaafar Sweets where you can find different kinds baklava and various exotic sweets and cookies. Although there is its fair share of places to have a drink or two the one thing Albany Park is lacking is the nightlife of some of the other neighborhoods. Fortunately, Lincoln Square and the Irving Park neighborhoods have their fair share and are only a short walking distance. For more information on Albany Park or any of Chicago other neighborhoods contact Ramona Sivulich or log onto her website.

Check back next week for another neighborhood I will highlight that maybe you haven’t considered. And to get more information about Albany Park contact me Ramona Sivulich at 773-972-7182 or check the MLS listings for Albany Park homes.

Consider a Different Neighborhood

2007-05-07T14:14:00.000-05:00

This Week Lincoln Square

When looking to buy your first home have you considered other, less popular neighborhoods? For those of you that are newer to the city most of you when looking to purchase your first home go to the neighborhoods that everyone else is considering. You know what neighborhoods I am talking about; Lincoln Park, Lakeview, Gold Coast, River North, Bucktown, Wicker Park, etc. Need I mention more? All these neighborhoods have the great allure of the little shops and restaurants. The other thing these neighborhoods have to offer is high prices. Since there are so many people that are interested in buying in these neighborhoods the supply is low and the demand is high which means prices are higher than maybe some other neighborhoods. So what neighborhoods can you still find affordable housing options but still have the cool shops and restaurants that these other neighborhoods have?

Consider Lincoln Square. Some neighborhoods within this community are Bowmanville, Budlong Woods, Ravenswood and Ravenswood Gardens. All of which have their share of shops and restaurants. Depending on where you want to purchase in Lincoln Square will dictate how much you will spend but a one bedroom condo can start as low at $140,000 and a 2 bedroom condo can start as low as $175,000 and with a little negotiating maybe even a little lower.

If you get the opportunity take a bike ride or a drive down Lincoln Avenue between Montrose and Bryn Mawr. There you will find all kinds of shops and restaurants. Want a great place for a cup of coffee or a bite to eat try The Grind Café located at 4613 N. Lincoln Ave. Check them out at http://www.thegrindco.com/. Across the street form The Grind Café if you want a great place to sample some wine and cheese check the Fiddlehead Café. Besides wine and cheese they also have a full menu of some tantalizing fare. Take a walk down the street and you will find various stores that make this part of Lincoln Square really unique. If you go just little west of Western to Rockwell around the 4600 block you will also find another cute little street with a few shops, restaurants and bars as well. Some notable places on Rockwell are Scents and Sensibility which has a great selection of gifts for all occasions. Grab a bite to eat at Rockwell's Neighborhood Grill where the food is great and relatively inexpensive. For more information on Lincoln Square contact me, Ramona Sivulich. You can also refer to the Lincoln Square Chamber of Commerce website.

Check back next week for another neighborhood I will highlight that maybe you haven’t considered. And to get more information about Lincoln Square contact me Ramona Sivulich with Prudential Preferred Properties at 773-972-7182 or check the MLS listings for Lincoln Square homes.

Information About Subprime Loans

2007-04-30T14:45:00.000-05:00

Take from the National Association of Realtors website:

April 2, 2007—Every day brings another headline about defaults by homeowners who can’t make their payments on subprime loans. It’s an issue with serious implications for the housing markets, homeowners and Realtors working with buyers who may not qualify for a 30-year fixed loan requiring 20 percent down.
With hearings underway in Congress, regulations and legislation on the drafting table and the media watching default rates like a hawk, count on more headlines to come. Here are some thoughts and information that may help you talk about the issue.

Impact on the Market
NAR issued a news release Friday that includes Chief Economist David Lereah’s prediction that tighter underwriting practices may cause total home sales to fall by about 100,000 to 250,000 nationally, or no more than 3 percent a year over the next two years. Many of these households will probably, over time, purchase another home when they have attained the financial capacity to do so by saving for a down payment or growing their income.
Foreclosures are increasing inventories in some local markets. The projected flood of foreclosures are problematic and will add to the already loose housing supply in some local markets, but some of these local markets are exhibiting healthy economic activity, enabling them to absorb increases in foreclosures.

Key Points to Make
1. RealtorsÒ are part of the solution. We are the first point of contact for homebuyers in the real estate transaction. Consumers turn to RealtorsÒ for expert advice on financing. We encourage home buyers to shop for the mortgage that is best for them and we warn them against predatory loans that can poison the home buying process and trap unsuspecting borrowers into years of financial hardship. Consumer education by Realtors is a critical part of the solution to the problem of subprime defaults. RealtorsÒ not only want to sell homes to families, we want to make sure they can keep their homes.
2. Market impact is overstated in many media stories. Whatever impact tighter underwriting standards will have will be temporary. Mortgage rates are very low and the economy is growing and healthy. Jobs and liquidity are plentiful in the marketplace. The subprime problems may be a manageable problem within our $10 trillion-plus economy.
3. Congress can act now to help lower income borrowers. Many borrowers have turned to subprime loans in the past to buy their homes because Federal programs designed to serve their market failed to do so. NAR is urging Congress to enacts legislation to expand the roles of Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veterans Administration to provide more housing opportunities to lower-income homeowners and those living in high cost metropolitan areas. A few simple changes can make a big difference. NAR supports increasing FHA loan limits, allowing risk-based pricing of mortgage insurance premiums and reducing down payment requirements to reflect today’s mortgage market.
4. Overreacting could make the situation worse. Regulation or legislation that goes too far can make it impossible for deserving and responsible families to obtain financing that will help them buy a home. We vigorously oppose fraud, predatory lending and abusive practices and where they exist we believe that they should be prosecuted to the fullest.

Facts about Subprime Loans
• Subprime loans comprise about 10% of the overall mortgage market.
• Recent rise in delinquency rates are mostly associated with the subprimes. Defaults on prime loans have been steady with very little movement.
• Of the subprimes, the delinquency rate has climbed to 15%.
• At most, problematic subprime loans make up 1.5% of all loans outstanding.
• Majority of delinquencies never lead to a foreclosure as many catch up and make mortgage payments.
• Many of the delinquencies could be refinanced into FHAs or conventional loans. Mortgage rates are still near 45-year lows. But there will be more scrutiny on refinancing now due to "stringent" standards and lower home price appreciation in many markets.

NAR’s Position
Below is the news release NAR issued Friday, March 30. For more information, go to http://www.realtor.org/reinsights.nsf/pages/economistcommentary

NAR FORESEES SHORT-TERM IMPACT ON HOUSING MARKETS FROM SUBPRIME REFORMS

WASHINGTON (March 30, 2007) – Current market problems and reforms in the underwriting and pricing of subprime loans, including the tightening of underwriting standards by regulators, will have a short term impact on housing markets which will be lessened if Congress enacts legislation to expand the roles of Fannie Mae, Freddie Mac and the Federal Housing Administration to provide more housing opportunities to lower-income homeowners and those living in high cost metropolitan areas, the National Association of REALTORSÒ said today.
NAR Senior Vice President and Chief Economist David Lereah predicted that tighter underwriting practices may cause total home sales to fall by no about 100,000 to 250,000 nationally, or no more than 3 percent a year over the next two years. Many of these households will probably, over time, purchase a home when they have attained the financial capacity to do so by saving for a down payment or growing their income.
“Foreclosures are increasing inventories in certain local markets. The projected flood of foreclosures are problematic and will add to the already loose housing supply in some local markets, but these local markets are exhibiting healthy economic activity, enabling them to be able to absorb increases in foreclosures,” Lereah said.
“From a broader perspective, today’s subprime problems are occurring against a backdrop of cyclically low mortgage rates and a growing, healthy economy. Jobs and liquidity are plentiful in the marketplace, suggesting that the subprime problems may be a manageable problem within our $10 trillion-plus economy,” said Lereah in a commentary distributed to NAR members recently.
“Many of these households will seek mortgage loans from a revitalized FHA, from lenders making loans that meet Fannie Mae and Freddie Mac standards, and from other lenders offering fair and affordable mortgage options to subprime borrowers. Remember, many of these borrowers are low-income, minorities and first-time buyers -- all important participants in the home buying marketplace.”
Lereah warned against overreaction to the situation. “Tougher lending standards imposed by the marketplace and the regulators are necessary, but we need to be mindful of overcorrection. Responsible lending practices are what the doctor ordered, not practices that cause a credit crunch,” Lereah said.
NAR President Pat Vredevoogd Combs has led a campaign to modernize and revitalize the Federal Housing Administration (FHA) mortgage insurance programs, providing subprime borrowers with a safe and affordable alternative to problematic loans and helping bring stability to the whole subprime market.
“FHA mortgages can help meet the demand for subprime mortgages and help fill the gap in the mortgage market left by the decline of subprime and nontraditional products. A few simple changes can make a big difference. NAR supports increasing FHA loan limits, allowing risk-based pricing of mortgage insurance premiums and reducing down payment requirements to reflect today’s mortgage market,” she said.
As the first point of contact in the real estate transaction, RealtorsÒ are uniquely positioned to inform and guide consumers through the maze of financing alternatives to make sure a home buyer’s mortgage meets his or her financial needs. NAR distributes four brochures in its Shopping for a Mortgage? series to help RealtorsÒ educate home buyers about today’s mortgage options. Three of the brochures, Specialty Mortgages: What are the Risks and Advantages? Traditional Mortgages: Understanding Your Options, and How to Avoid Predatory Lending, were produced in partnership with the Center for Responsible Lending. FHA Improvements Benefit You: FHA Insured Mortgages was created in partnership with the Federal Housing Administration of the U.S. Department of Housing and Urban Development. All are available online in the Housing Opportunities section of www.REALTOR.org.

For Further Information on this issue of Operation Tip-Off
Contact Steve Cook, VP of Public Affairs and Strategic Planning, at scook@realtors.org 202 383-1014 or Mary Trupo at mtrupo@realtors.org, 202 383-1007.

Operation TIP-OFF is a service to Realtor® leaders from NAR Public Affairs. It is a cooperative exchange of intelligence and information on news media coverage of issues critical to Realtors. Operation TIP-OFF provides Realtor leaders advance information on potentially news-making events. Feel free to share this information and document with yo

2007 Economic Forcast

2007-04-30T14:39:00.000-05:00

Taken from the Chicago Association of Realtors website:

Stable Economy Supports Housing MarketIndustry Experts Provide 2007 Economic Forecast

CHICAGO - “These low interest rates are a once in a lifetime opportunity. Anyone standing on the sidelines will miss out,” Dr. Lawrence Yun, Ph.D., Managing Director and Senior Economist, National Association of REALTORS®, said.

This advice was just a fraction of information provided at the Chicago Association of REALTORS® 2007 Economic Forecast, held on January 19, 2007. In addition to Yun, other panelists included Gail Lissner, Vice President, Appraisal Research Counselors and Sara J. Walker, Senior Vice President and Investment Officer, Associated Bank.

The main focus of Yun’s presentation boded well for Chicago. “There is no bubble in Chicago; it is sound fundamentally.” Yun supported this statement with graphs comparing Chicago to other markets across the nation in relation to home prices, mortgage obligation to income, and prevalence of adjustable rate mortgages.

“We do see the bottoming out of the market, so if consumers can overcome the psychology of negativity, it will be fine,” Yun said. He cited existing/new home inventories falling, mortgage applications stabilizing, housing affordability improving, and renters getting squeezed.

Nationally, Yun had positive information to share on steady job gains (1.8 million in the past 12 months), wage growth picking up and falling oil prices. For 2007, Yun projected the GDP to be at 2.5%, unemployment rate at 4.8%, CPI inflation at 2.2%, and the 10-year treasury at 4.9%.

Sara Walker spoke on the economy globally and nationally. “We are seeing strong global growth, generating a lot of cash. Many corporations are experiencing double-digit earnings growth, despite hurricanes and terrorist activity. This is creating corporate optimism in CEOs, which is causing continued investment in business construction,” Walker said.

She also noted the high level of consumer confidence, with strong wage growth and job creation at nearly two million new jobs. Walker also touched on the fact that Americans are getting hit very hard with negative savings rates, though the news isn’t all bad. “Debt levels have been growing, but so have assets,” Walker said.

Gail Lissner gave a thorough insight into Chicago’s downtown market, which covers the Gold Coast/Near North, River North, West Loop/River West, Streeterville, Loop/New East Side, and South Loop neighborhoods. She highlighted recently announced condominium projects, providing information such as average price per square foot to the percent under contract.

“Last year, 4,200 new condo units were delivered in downtown; deliveries of 6,700 units in 2008 are expected,” she said.

Lissner admitted that $300 per square foot is now entry level, though nearly 30% of new construction condos in 2006 were $500+ per square foot. Legacy, a new project in the Millennium Park/Grant Park area, commands a price of $600 per square foot, and is more than 85% sold. Another new project, Aqua, is 80% under contract at about $500 per square foot. However, Aqua is unique in that it will be 80 stories comprised of condos, rentals, and condo hotels. Other projects are even fetching $800 per square foot.

“We are seeing a depletion of rental inventory due to condo conversions. Last year more than 50,000 jobs were created in Chicagoland, which helped to firm up the rental market.” Lissner said that rentals are at a 97% occupancy rate, but that doesn’t include investor-owned condos.

“In 2007, I expect to see fewer speculators,” she said.

To see more about Chicago Real Estate and search the MLS go to: http://www.MyChicagoRealEstateAgent.com

The Chicago Association of REALTORS® (C.A.R.), the "Voice for Real Estate™" in Chicago since 1883, represents more than 15,500 members from all real estate specialties including commercial sales, development, property management, appraisal, auctions, and residential sales.

Chicago Real Estate

2005-11-30T11:20:00.000-06:00

taken from http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20051128/BUSINESS/511280505

Real estate agents' reports meet skepticism

BY RACHEL BECK
AP BUSINESS WRITER

When real estate agents try to sell a home, they often zero in on the positives -- big closets, space for entertaining, potential to expand -- and hope everything from creaky floors to dated appliances gets overlooked.

It's the same tactic that the trade group representing many home sales agents, the National Association of Realtors, appears to be using right now: It asserts in a new report that a healthy housing market is here to stay and prices won't likely decline.

But that sounds awfully upbeat given recent data showing that homebuilder sentiment has plunged and that price inflation in certain local markets, including Florida and California, has started to slow.

At the same time, inventories are up, mortgage applications are down and real-estate lending, particularly home-equity loans, remains soft. Where the housing market heads next matters because of its potential economic impact.

Lehman Brothers estimates that one-third of economic growth over the last year is a direct or indirect consequence of the boom in home construction, sales and prices. So if the market begins to dramatically shift course, everything from employment to consumer spending to manufacturing could take a hit.

The trouble, of course, is that it's not yet clear if recent signs of weakness are just a blip or the beginning of a market shift, and that is fueling much debate over how much power the current boom has left.

According to the NAR, a downturn isn't likely and surely isn't imminent. In a report that looked at 130 local markets ranging in size from New York and Chicago to Sioux Falls, S.D., and Richmond, Va., it found that "the facts do not support the possibility of a housing bust -- not for these 130 markets and not for the nation."

Many local markets cited in its study were found to be in "excellent shape" with "potential for significant housing equity gains" -- even markets where there have been double-digit gains in prices without strong backing for such a climb.

To support its findings, Washington-based NAR points out that most metropolitan areas haven't seen overall price declines since 1968, when its record keeping began. It also said Americans shouldn't be concerned that home prices are rising faster than family income.

NAR said that mortgage rates likely will rise next year as interest rates continue to climb from 46-year lows, but said that should have only a "minor braking effect on home on home sales." And though that could slow the rate of price growth, "in many areas, inventory shortages will persist and home prices are likely to continue to rise above historic norms."

1031 Tax Exchanges

2005-11-07T14:45:00.000-06:00

Preserve Equity, Build for the Future - Using a 1031 Tax Exchange

By Ramona Sivulich
Prudential Preferred Properties

Thinking of trading up on an investment property? If so, look into 1031 Tax Exchanges (based on IRS Code Section 1031), which allow taxpayers to defer taxes on capital gains resulting from the sale of investment real estate, often a sizable sum since combined Federal and State taxes can run as high as 38 percent.

With an exchange, owners are able to preserve equity, while still selling the property. The underlying concept is that an exchange of like-kind property for like-kind property does not generate funds, which can be taxed since the profits go directly into the new or replacement property. To accomplish this, sellers hire a Qualified 1031 Intermediary (QI) to document the sale as an exchange and to receive the funds from the sale. The QI then delivers the funds directly to the closing agent for the replacement property who deeds the property to the taxpayer.

Central to a 1031 Exchange is the interpretation of like-kind property. While the common assumption is that like-kind implies land for land or a condominium for a condominium swap, the interpretation of like kind is actually less literal. Rather, it defines like kind as meaning that both the replacement and the original property must be used as an investment. So land, condominiums, single-family homes and motels can all be exchanged for one another as long as they are used in the exchanger's business or held as an investment. The amount of debt held on the replacement property must be the same as the amount of debt on the original.

1031 Exchanges are complex mechanisms and like all IRS requirements very specific. For example, exchangers have 45 days from closing to identify properties they intend to purchase and 180 days to complete the purchase. Purchase and Sale agreements must include verbiage indicating the intent to affect a 1031 Exchange.

The 45-day time frame used to be onerous for sellers. Now, they can opt for a Reverse Exchange, in which an additional third party called "the exchange accommodation title holder" (EAT) acquires title to the replacement property until the original property sells. Reverse Exchanges shift the 45- and 180-day time frame to the selling side of the transaction. With an Improvement Exchange, which also uses an EAT to hold the replacement property, sellers can build investment properties from the ground up or improve existing properties. The improvements have to be built and paid for during the 180-day period.

If you are interested in a 1031 Exchange, the first step is to consult your tax advisors as well as an attorney or CPA who is knowledgeable with 1031 Exchanges. Make sure that your real estate professional knows you plan to conduct an exchange and be sure that he or she is familiar not only with the process but also with the specific documentation and time frame mandated by the IRS.

This article is intended to inform readers, but does not constitute any financial or legal advice.

Ramona Sivulich can be reached at (773) 572-7574. Prudential Preferred Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

Log on to Ramona's website http://www.mychicagorealestateagent.com/ for more Real Estate information.

Chicago Real Estate-Condos

2005-11-03T14:19:00.000-06:00

Condominiums and townhouses offer an affordable option to single-family homes in most areas. But consider these facts before you buy.

1. Storage. Some condos have storage lockers, but usually there are no attics or basements to store belongings.

2. Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be the perfect option for you.

3. Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.

4. Maintenance. Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.

5. Security. Many condos have keyed entries and or even door attendants. Plus, you’ll be closer to other people in case of an emergency.

6. Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity or not.

7. Resale. The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual.

8. Freedom. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.

9. Proximity. You’re much closer to your neighbors in a condo or townhome. If possible, try to meet your closest prospective neighbors before making a decision.

Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS®
Copyright 2004. All rights reserved.

Check out Ramona Sivulich's website http://mychicagorealestateagent.com/ to search the MLS for free.

Lincoln Park

2005-10-31T12:01:00.000-06:00

Lincoln Park Then and Now
Though once a small army post in 1824, Lincoln Park today is known as a progressive neighborhood recognized for its incredible variety of entertainment, dining, cultural, and recreational activities.

Lincoln Park has it all -- whether you're looking for a vintage boutique, bustling pub, nighttime theater, walks on the sand, or a visit with lions and tigers.

The Origins of Lincoln Park
The area now known as Lincoln Park was still primarily forest with stretches of grassland and occasional quicksand, and was virtually untouched by Europeans as late as the 1820s.

In 1824, the U.S. Army built a small post near today's Clybourn and Armitage Avenues. Indian settlements existed along Green Bay Road, now called Clark Street (named after explorer George Rogers Clark), at the current intersection of Halsted Street and Fullerton Avenue.

In 1836, land from North to Fullerton and from the lake to Halsted was inexpensive, costing $150 per acre. Because the area was considered remote, a small pox hospital and the city cemetery were located in Lincoln Park until the 1860s.

In 1837, Chicago was incorporated as a city and North Avenue was established as its northern boundary. Settlements increased along Green Bay Road (now Clark Street) when (1) the government offered land claims and (2) Green Bay Road was widened.

Immigrants Fuel Growth of Lincoln Park
Lincoln Park's first wave of immigrants was Germans escaping religious persecution and political oppression in their homeland. At that time, agriculture was the primary industry in Chicago, and many German immigrants sought work as truck farmers. Small factories manufacturing agricultural goods also sprang up along the north branch of the Chicago River, including William Deering and Company Harvester Works.

Improvements in transportation led to further population growth in Lincoln Park. In 1855, the first horsecar line in the city ran from the central business district up Clark Street. Three years later, it was extended to Wright's Grove, a popular German picnic grove and beer garden. (During the Civil War, Wright's Grove became an Army camp where the 132nd and 134th Illinois infranty regiments assembled.)

In 1859, city leaders Michael Diversey, a brewer, and railroad men Joseph Sheffield and William Ogden donated 25 acres of land at Halsted and Fullerton so that the Presbyterian Seminary could relocate from Hanover, Indiana, to the area now occupied by DePaul University. The arrival of the seminary added about 1,000 residents, largely of Scotch-Irish descent, to Lincoln Park's ethnic mix.

Presbyterian Seminary became one of the largest landowners in the area with holdings valued at $1.3 million. The seminary built 55 houses on Belden, Fullerton, Montana and Altgeld, and later added 18 higher-quality homes on Chalmers' Place. These premium homes, known as the McCormick row houses, were named for Cyrus McCormick, who donated $100,000 to the seminary.

Looking for more information on the history of Lincoln Park check out
http://www.lincolnparkchamber.com/

Hud Homes

2005-10-20T11:07:00.000-05:00

Information taken from the U.S. Department of Housing and Urban Development at http://www.hud.gov/.

FAQs About Buying HUD Homes
Question 1: What is a "HUD Home"?

Answer: When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then we sell it at market value as quickly as possible.

Question 2: Who can buy a HUD home?

Answer: Almost anyone! If you have the cash or can qualify for a mortgage, subject to certain restrictions, you may buy a HUD home. HUD employees and relatives of HUD employees are eligible, but must receive written approval from the Director of HUD's Office of Single Family Asset Management in order to purchase a HUD-owned single family property. HUD employees should refer to paragraph 10-29C of Handbook 4310.5, REV-2, Property Disposition Handbook-One to Four Family Properties for the exact requirements to purchase a HUD-owned single family property. Other less common restrictions may apply.

Question 3: Are HUD Homes meant for people with low incomes?

Answer: HUD homes range in price, but most are affordable for low- and moderate-income Americans.

Question 4: Is it true I can get a HUD Home for a dollar?

Answer: No. HUD sells homes at market value - that means that the price is set based on the price of similar homes sold in the area.

Question 5: If the HUD Home needs repairs, will HUD make them?

Answer: HUD Homes are sold "as-is," without warranty. That means that HUD will not pay to correct any problems. But even if a HUD Home needs fixing up - and not all of them do - it can be a real bargain! For example, HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. HUD might offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. And keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs. Your real estate agent will have details. We encourage you to get the home professionally inspected before you make an offer so you will know what repairs you may have to make BEFORE you submit your bid.

Question 6: How do I buy a HUD home?

Answer: Start by finding a participating real estate agent. Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an "Offer Period." At the end of the Offer Period, all offers are opened and, basically, the highest reasonable bid is accepted. If the home isn't sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. They will be opened the next business day. If your bid is acceptable to HUD, your real estate agent will be notified, usually within 48 hours.

For more FAQs go the website for U.S. Department of Housing and Urban Development at:
http://www.hud.gov/

Bucktown/Wicker Park

2005-10-17T15:03:00.000-05:00

Exert taken from The New York Times

"Creative types cluster in the hip, somewhat grungy enclaves called Bucktown and Wicker Park, centered on Milwaukee, Damen, and North avenues. Locals flock to this area for its intriguing mix of nightclubs, cafes, theaters, coffeehouses, cutting-edge galleries, small businesses, and a bizarre bazaar of shops -- plus an increasing parade of sightseers drawn by what is arguably the best people-watching in the city. Musicians, artists, and young professionals call this area home, and an abundance of Latino American-run shops and restaurants is evidence of the strong ethnic influences.

Bucktown -- which is said to have taken its name from the goats kept by the area's original Polish and German immigrants -- encompasses the neighborhood surrounding Milwaukee Avenue north of North Avenue. The area south of North Avenue is Wicker Park -- named for Charles Wicker, who, with his brother Joel, established the community in the 1870s. The summer of 2001 brought MTV's real world cameras to a rehabbed apartment on North Avenue, right smack in the heart of the neighborhood. Creative types cluster in the hip, somewhat grungy enclaves called Bucktown and Wicker Park, centered on Milwaukee, Damen, and North avenues. Locals flock to this area for its intriguing mix of nightclubs,cafes, theaters, coffeehouses, cutting-edge galleries, small businesses, and a bizarre bazaar of shops -- plus an increasing parade of sightseers drawn by what is arguably the best people-watching in the city. Musicians, artists, and young professionals call this area home, and an abundance of Latino American-run shops and restaurants is evidence of the strong ethnic influences."

Read more on Bucktown/Wicker Park:
http://www.nytimes.com/Chicago/Bucktown_Wicker_Park

Ukrainian Village - Shop around Chicago Ave.

2005-10-17T13:15:00.000-05:00

Ellen Warren a Tribune senior correspondent wrote on January 28, 2005 for Metormix.com, "Pierogi lovers and urban cowboys (and girls) long have known of the glories of Chicago Avenue west of the Loop. Treasures such as Kasia's Deli & Catering (2101 W. Chicago Ave.) and Alcala's Western Wear (1733 W. Chicago Ave.) have a devoted clientele. But now a wide range of retailers make this mile-long strip through Ukrainian Village an even more eventful shopping destination. Local designers who show their home furnishings at Xyloform (1423 W. Chicago Ave.) and 3 Design Three (1431 W. Chicago Ave.) hope these two shops are just the beginning of a go-to design locale."

Want more information on other intriguing stores? Go to:
http://metromix.chicagotribune.com/wicker_park_ukrainian_village

Portage Park - The Next Big Thing?

2005-10-15T21:04:00.000-05:00

Jessica Volpe from Metormix.com in February 2004 wrote, "Portage Park is changing, and it's about time. For decades this Northwest Side neighborhood has attracted mostly families with its modest bungalows and commuter-friendly distance to downtown. But a recent influx of new bars and restaurants is breathing life into the neighborhood and attracting young urbanites to its affordable quarters.

Sure, it's no Lincoln Square (yet), but we think Portage Park--bounded by Montrose Avenue to the north, Roscoe Street to the south, Cicero Avenue to the east and Narragansett Avenue to the west--has potential to be the next big thing.

Explore the 'hood by hitting some of our favorite spots, from a charming new cafe to a sausage-stocked Polish grocery store."

Check out these hotspots:

http://metromix.chicagotribune.com/Portage_Park