Fed Ahead

This afternoon the FOMC announces it's rate decision... will they keep the Fed Funds Rate at its current 4.75% level? Will they decrease? Increase? The market is pricing in a decrease in rates, however this will not necessarily mean a decrease in mortgage rates.

The Fed Funds Rate is a short term - overnight - rate. Mortgage rates are long-term - 15 years, 30 years, or even longer. Longer term rates are more affected by the outlook for inflation, rather than by overnight rates. The Fed has been more focused on turmoil in the credit markets and economic growth recently, since current inflation seems relatively tame, meaning the Fed is more likely to decrease rates (to help boost economic growth) than to increase rates (which helps fight inflation).

So, if the Fed decreases rates as it is expected to do, this will likely send stocks rallying, and the dollar falling. With investors shifting assets out of mortgages and into stocks and foreign investments, the likely outcome would be for mortgage rates to actually rise.

Resiliency in the Midwest Market?

Today's economic information showed that the number of existing home sales decreased 8% in September from August. OUCH! And this happened to be even worse than what economists were expecting with a 4.5% decrease. Yes this did rock the market a little, with treasuries in a safe-haven buying rally, especially amidst some more unrest in the Middle East.

However, if you look at the data broken out by region, the Midwest has been more resilient than most to a decrease in home sales. While the number of homes sold in the Northeast dropped a full 10% for September, the number of home sales in the Midwest only dropped by 7%, better than the national average.

Even better, median home prices increased 1.4% in the Midwest, while home prices in the West dropped almost 9%, and the national average was a 4.2% decrease. So, while almost all other areas of the U.S. are seeing falling prices, the Midwest is still appreciating! And I appreciate that. :-)

A "Shining" Icon of Chicago

If you live in Chicago, you know The Bean. For those not familiar with the Windy City, let me explain why one of the most popular Chicago landmarks is named after a legume.

The Bean, officially named Cloud Gate, is a 110 ton sculpture made of 168 stainless steel plates welded together and polished to an almost mirror-like finish. Designed by British artist Anish Kapoor, it reflects the skyline 360 degrees around it to create a beautiful icon of the city at the entrance to Millennium Park. The $23 million structure is shaped like - you guessed it - a bean, and was funded entirely through private donations. The original plan was to build it overseas and ship it to Chicago via the Panama Canal. In a likely smart decision, it eventually was decided to build the sculpture on-site in a tent-like enclosure. In a process which took 3 years, you can imagine the suspense the public felt at what was going on underneath that tent. There were several occasions where the tent was lifted to give the public a glimpse of what was going on underneath, but most of the construction was done out view of the public. In the picture to the right you see the structure beneath The Bean's shiny surface.

Standing underneath the concave center section of the bean can be likened to standing in the mirror section of a funhouse. I've tried many times to count the number of reflections of myself from The Bean's uniquely constructed "inside", but usually become frustrated around 30. On any given day, you'll find hundreds of locals and tourists posing, photographing, and praising the work of art.

Go North on Knolls, Turn at Knolls, Then Take a Left on your First Knolls

I really felt it was necessary to post this picture. Can anyone tell me who DeKalb's city planner is? He really needs to review City Planning 101. We found this street sign in DeKalb while trying to find a friend's house on Knolls Street... needless to say it was not easy to find.

Mortgage Applications Numbers Explained

MBA Mortgage Applications rose 2.4% last week... this compared to the previous week's drop of 2.7% seems like good news for the housing market. But before you jump to conclusions, however, let me tell you a little bit about how MBA Mortgage Applications are measured.

First, the MBA Mortgage Applications information is based on data received from retail lenders (generally your typical bank or credit union), but the number excludes mortgage applications from wholesale brokers (your LendingTree, Guaranteed Rate, etc.). You may be aware that many mortgage brokers recently have closed their doors amidst the mortgage market turmoil. This means that many customers who normally would have visited that broker have been forced to visit their local banking institution to obtain a mortgage, effectively increasing the number of applications that are counted. In theory there could be the same number of people applying for a mortgage, but many more of them are applying at retail lenders (which are counted in the figure) versus brokers (which are not counted in the figure).

Another item to note is the number counts all applications, whether they are approved or not. Say Joe Schmo goes into his local bank branch, applies for a mortgage, and gets denied. Maybe he does the same thing again the next day. And again the next day. All three of these applications are counted in the MBA Mortgage Applications number. With credit tightening, more people might be getting denied on their first application and going back a second time before they qualify, increasing the number of mortgage applications counted.

So while the MBA Mortgage Applications number is a little skewed, don't let that turn you off of the housing market.

It is a GREAT time to buy: housing inventories are at incredible highs, meaning that as a buyer you have many more choices available to you. Additionally, many developers and sellers have begun slashing prices to sell more quickly.

If you're looking to sell and then buy: while the average time to sell has been a little slower in this market, if you're priced correctly, you will be able to sell. Illinois sales prices are still up from this time of year in 2006 so on the average there are still profits to be made. Say, for example, homes just like yours are going for $15k less than you were hoping to sell for. Well, if you sell for that $15k less, you'll still make up for it on the other side - when you turn around and buy your next house discounted by $15k or maybe more!

26.2

The air conditioning in my car is broken; a week and a half ago I figured I wouldn't have to worry about getting it fixed until next June. Was I wrong or what? This weekend was SWELTERING... enough for race officials to actually cancel one of the world's most famous marathons midway into the race. No, there were no world records broken in yesterday's marathon heat. Even just watching the Chicago Marathon from the sidelines, I could feel the trickle of sweat down my forehead. Eighty-eight degrees by 10am will do that to you.

What's going on? Maybe this whole global warming thing is hitting us faster than I thought. When I was a kid, I would spend hours of October outside shivering, bundled in my OshKosh B'Gosh jacket and carefully building what I believed was the world's largest pile of leaves, constructed only to break my fall from the picnic table as I jumped from it. This October I'd be better off floating on a raft in a swimming pool with a strawberry daiquiri in hand.

No matter the reason, it's happening. This October is no longer October - it's July. And this "July" there was one very hot marathon. About 10,000 runners didn't even show for the race and another 10,000 were unable to finish. One after another, I saw people struggle to cross the finish line only to collapse at the feet of those in front of them. Talk about determination.

The race always begins and ends right near Buckingham Fountain and usually attracts an enormous number of spectators and volunteers. Starting at Grant Park and going straight up north through Lincoln Park, the crowds can get up to 20 people deep to watch this morning display of will power. Get there early if you plan to cheer on your friends! An easy spot to watch the race is right at the corner of North Avenue and Sedgewick - however this area can get VERY crowded due to its proximity to the purple line. If you want to cheer somewhere that the runners would really appreciate and that you will have a better view, I'd head south. Also, don't expect to be able to watch the finish up close and personal. The finish line is bordered by bleacher seats reserved for those who have special tickets. And if you're going to be watching for someone specific, tell them to wear BRIGHT COLORS. Black and white don't stand out very well in a sea of 30,000 runners. And in weather like yesterday's, don't forget to bring your own ice cold waterbottle.

This year was the 30th anniversary of the Chicago Marathon and most likely the last year for its LaSalle Bank sponsorship. The well-known Chicago area bank has recently been purchased by Bank of America.

Baseball Season?

Most say its baseball season. But I live on the north side of Chicago, so to me, it's Cubs season. Granted, baseball (and please don't stop reading my blog to punish me for saying this) has never been at the top of my "favorite types of entertainment" list. There are lots of things that I'd rather watch, like the Hawkeyes beating Michigan to win the BCS, or Project Runway for instance. But this time of year, baseball is more difficult to avoid than trying to find a group of sober college kids in Lincoln Park on Friday night.

So as you likely already know, the Cubs won the National League Central Division Championships last week. For most cities, you'd think this would result in several overcrowded sports bars, a long wait for a drink, and a couple of randoms using the world as their restroom. But for Chicago, it results in PURE MADNESS. The photo to the right is of the police brigade required to contain the complete chaos in Wrigleyville.

Now if you moved to Wrigleyville recently and like your peace and quiet, I highly suggest you make it your winter home. Any city that turns its police officers into full-blown equestrians for the sake of a game has a serious case of baseball fever. But don't get me wrong. I love that about this city. I love that the only time Cubs fans voyage south of Van Buren Street is to go to a Bears game. And I love that Sox fans think that 35th is the only useful stop on the Red Line. There are really only two words to sum up the attitude of sports fans in Chicago. Die Hard.