The Real Estate Paparazzi #1

Today's blog post is going to be the first of a group of posts titled "The Real Estate Paparazzi". Real estate is in the news so often these days that we almost seem to know what's going on in the market at all hours of the day, similar to how the paparazzi allow us to keep tabs on the daily lives of almost any celebrity we wish. I'd like to cover these topics and point out anything relevant to the Chicago market, as well as break them down into organized explanations. If you read any of today's headlines, you're sure to have noticed that they were chock-full of articles about how the housing market has plunged and has hit record lows and so-on. This was due to reports released by a few sources:

1) The Census Bureau report showed that 68.7% of all occupied homes were occupied by homeowners (versus renters). Last year, the number was 69.8%. This was the largest one-year drop on record. Not-so-good news for those unable to obtain a mortgage and are stuck renting, but not-so-bad news for landlords.

2) The SP/Case Schiller Index reported that this was the 11th consecutive month of negative annual home price returns nationally. This data is through Nov 2007. However, of the 20 major metropolitan areas surveyed, Chicago posted the 7th best annual return of -3.9%. Leading the pack was Charlotte who experienced a positive 2.9% annual return. Most hard-hit were Miami (-15.1%), San Diego (-13.4%), and Vegas (-13.2%).

3) Realtytrac, a real estate website which I subscribe to, reported that total foreclosure filings in 2007 increased by 75%. I just closed a bank owned foreclosure property last week which I got for my buyers at 18% below list price PLUS a $10,000 closing credit to them. If you're thinking about purchasing real estate right now for any reason, foreclosures might be the place for you to start looking. I have access to foreclosure listings; contact me so I can find you a great buy.

FOMC Emergency!

Early this morning the outlook was gloomy for stocks, with the Dow expected to end the day down 600 or more points on global fears of a U.S. recession. Enter the Fed. For the first time in 7 years, the Fed voted for a non-meeting rate cut. They slashed the overnight rate by 75 basis points to 3.5% and signalled that a further rate cut was likely and could potentially occur at the next meeting, scheduled for just next week. Not only was this the first mid-meeting cut in 7 years, but it was the largest one-time cut in 17 years. The Dow ended the day down a "mere" 130 points.

What does this mean for you? While mortgage rates - long term rates - aren't specifically tied to the Fed Funds rate - a short term rate - we'll still see some effects on the costs of home ownership.

1) Those with adjustable rate mortgages (ARMs) due to reset soon will benefit from a slightly lower reset rate. It won't be sufficient to bail out anyone in serious trouble, but it will help them stretch their dollar a little further.

2) Banks dropped their prime rate after the Fed cut, which will benefit consumers with home equity loans, credit card debt, and auto loans.

3) The market has already priced in a rate cut, so mortgage rates are already very low!

4) The rate cut is likely to increase mortgage applications as buyers attempt to find the best rate possible and more people begin to consider home ownership as a possibility.

5) The down side is... don't expect your savings to grow as fast as it was before! Banks lower the interest rates they offer on savings and CDs at the same time they lower the rates at which they lend to you.

Is Now The Time To Buy?

I've gotten this concern very frequently from hesitant buyers. "I don't want to buy now because I'm afraid prices will drop even more in the coming months." Here are two things to consider:

1. Real estate is a long-term investment. If you plan to buy a place and then sell it in a year, then yes, you should be concerned about where prices are heading soon. However, if you are like most buyers and expect to hold onto your property for 3-5 or more years, there are sure to be natural ups and downs to the value of your property anyway. There is nothing you can do about that and you'll NEVER know when the price is at its absolute lowest. Waiting for prices to drop and drop and drop could potentially leave you in a situation where prices suddenly skyrocket, and where does that leave you?

2. Home prices are not the only thing to consider. Mortgage rates change just like home prices change. What if you KNEW that home prices will drop in 6 months? Well, then you might wait 6 months to buy your home. But what if you also KNEW that mortgage rates would rise in 6 months? Then what would you do? For instance, a P&I payment on a mortgage for a $300,000 home at 5.5% interest would be $1703/month. However, if the price of the home FALLS 3% but at the same time, mortgage rates go up 0.5 percentage points to 6%, your monthly P&I payment would be $1744. So, you'd actually be paying MORE per month for a home that cost less.

View this blog from a respected mortgage industry leader for more insight to the mortgage market and where rates might be headed. And this article from NAR will help you understand how the real estate market is predicted to fare this year.

New Years REVOLUTION

It's the first full week of 2008 and I'm sure many of us have already given into our cravings to eat junk food, sleep in and skip the workout, or wait another day to quit that bad habit. Of course, if you're a trying-to-quit smoker, Chicago's new smoking ban will help you out a bit by keeping you from lighting up in public places.

Since I am not a big fan of New Years Resolutions (who really keeps them anyway?), I'd instead like to talk about something else - Chicago's New Years Revolutions - not the things we resolve to do in our lives, but the changes that we'll witness over the course of the next year.

1. Green home ownership on the rise. As oil prices spike (last week it actually hit $100/barrel), even those less-concerned with the environment will begin to adopt more environmentally-friendly concepts for their homes such as energy-saving light bulbs. If anything, it will at least save some "green" on the utility bills as gasoline costs cut into the budget.

2. Increased celebrity sightings. With the increase in paparazzi trailing celebs and the explosion of TMZ TV and such over the last couple years, those who aren't currently working on a Hollywood project are likely to want to find a summer getaway. Chicago is a relatively undiscovered hub for shopping, attractions, fine dining, business, and night life. The only thing we are lacking in the Windy City are the exorbitant housing costs of Manhattan and the environmental disasters of Cali. And we have the Lake - how many of them do you really think are swimming in the Pacific Ocean? We've got sand and we've got sun; isn't that all they really need? Not to mention that just last year there were at least 2 major motion pictures shot in Chicago.

3. Southward movement. The South Loop is growing at an unbelievable rate considering the serious market constraints other parts of the U.S. are experiencing. Driving down Roosevelt Rd. you'll see more than 15 cranes putting up new buildings all in one 360 degree view through your car windows. And you thought developers were having problems? That wouldn't explain why Donald Trump is currently putting up a 92 story Trump International Hotel & Tower right downtown. Its close proximity to the lake, museums, Soldier Field, Columbia College, School of the Art Institute, Grant Park, McCormick Building, the Loop, 3 CTA trains, and major highways promises a thriving South Loop economy.

I wish everyone the best in keeping their New Year's resolutions. However, if all else fails, at least you still know you live in the best city in the world!

Bernanke-Panky

The Fed meeting is today again, with market watchers eyeing whether rates will be cut by a quarter or a half point (0.25 or 0.5%). November job growth slowed (pointing to a larger reduction in rates), as shown by Friday's report, yet still exceeded forecasts (pointing to a smaller reduction in rates).

Since the Fed gets to decide on both the Fed Funds rate - the rate at which banks borrow funds from each other - as well as the discount rate - the rate at which banks borrow funding from the Fed - it's possible we witness a quarter point reduction in one and a half point reduction in the other.

Stay tuned...

On The Craziest Day Of Christmas...

A quick recap of what is quickly becoming the largest bar crawl known to Wrigleyville: Nearly 4,200 people showed up for 12th Annual Twelve Bars of Christmas (TBOX) bar crawl which dominated all of Wrigleyville throughout the day (and night!) on Saturday. People dressed as gorillas dressed as Santas, Miller Light cardboard boxes specially crafted into Christmas-like sombreros, and more elves than the North Pole itself dominated Addison, Clark, and Sheffield throughout the day. And yes, it did start at 10 am. Luckily though, everyone came prepared - to stave off the early morning hunger, boxes of cereal were abundant. Hang onto those boxes throughout the night and you're guaranteed to be able to last all night long (especially with the really sugary kind...my favorite being Lucky Charms). Note the Capt'n Crunch sprinkled atop Zack's beer in the picture... no this beer-in-cereal concoction is not typical of TBOX; however, an interesting twist on the cereal concept that is famous to the bar crawl.

And yes, we got in early for this grand event. Of the almost 4200 people, my number was a very low 52. I took part in the festivities last year and knew it was going to become an annual event for me. So, add TBOX to the list of MUST DO things in Chicago during December. That is, if you can handle beer and cereal at 10am.

I only wonder how many Santa hats and snowflake decorations were strewn down the road early Sunday morning...

Snow in the Windy City!

The ONLY thing I dislike about living in the Midwest happened to me this morning: scraping ice from my car windows while my fingers freeze. Honestly, it's the only thing I can't handle. But what can you do?... without the winter snows, we wouldn't have the gorgeous change of seasons which many other parts of the country lack.

So, I just try to enjoy it and forget about having to strap on my boots every time I leave my place. If that means blasting Mariah Carey's "Christmas" CD all day long, then so be it.

So, you wanna get into the holiday spirit but Mariah won't do it for you? You can't miss the following Chicago favorites:

1) The Walnut Room at Marsh..er... Macy's. Re-invented with a new wine bar in the dining room, families of all ages have traditionally come here during the holiday season to admire the massive Christmas tree and dine on anything from steak or chicken pot pie to walnut cookies. But beware... they don't accept reservations so get there early or expect to wait in the mother of all lines.

2)The Joffrey Ballet's Nutcracker. I saw it last year with a group of ex-ballet dancers and I can't stress enough how much a dance enthusiast will enjoy this. You may have seen it before, but it's always good a second, third, or even fourth time around. Heck, make it an annual tradition. 50 E Congress at the Auditorium Theatre.

3)Ice skating at Millennium Park. The plaza is replaced with a 16,000 square foot ice rink. Come by and show off your triple axel.

4)Winter Wonderfest at Navy Pier. More skating, trees, and lights. Basically a winter wonderland of fun!

5)Skiing down the wondrous West Loop Mountains! OK, just kidding. We all know Chicago probably couldn't get any flatter. However I have heard there are a few places you might be able to sled: (a)On Wilson, near Montrose Harbor, at Cricket Hill (b) The hill near Soldier Field, right near the lake path (c)A hill in the Beverly neighborhood. Sorry that's all I've got. You have more suggestions? Send them my way!

More to come...

10 Reasons to List Your Home During the Holidays

1. People who look for a home during the holidays are more serious buyers!

2. Inventory drops during the holiday season, meaning less competition for your home.

3. Houses show better when decorated for the holidays!

4. Buyers are more emotional during the holidays and more likely to pay asking price.

5. Buyers have more time to house-hunt during the holidays!

6. Some people must buy before year-end for tax purposes.

7. Many people start new jobs in January... those new to the area will be house-hunting before they start.

8. You can be on the market and still have the option to restrict showings during the days you are celebrating at home.

9. You can sell now at a better price and provide for a delayed closing or extended occupancy until early next year.

10. By selling now, you have the opportunity to be a non-contingent buyer during the spring when there are more houses on the market for you to choose from!

Ideal for Investors!

For anyone who has ever considered living or investing in the South Loop, I have a great deal for you. The Hanover Companies has created a very innovative program for real estate investors who want to purchase property in an area for use or sale at a later date who don't want to worry about finding and managing a renter. Their solution works for all parties involved. Here's how it works:

The Hanover Companies finds condo developers who are in financial trouble - those who need to SELL their condo units QUICKLY or else sink into even muddier waters. Hanover then strikes a deal with the developer to buy a bulk number of their condo units at a hugely discounted price. Hanover then turns around and sells to investors like you or I at going market rates. The incentive to you, however is such:

-Hanover will guarantee to rent your unit for TWO YEARS at a rental amount which generally covers your mortgage.

-Hanover PAYS YOUR PROPERTY TAXES

-Hanover PAYS YOUR ASSESSMENTS

-Hanover PAYS YOUR UTILITY BILLS (gas, water, sewer, cable)

-Hanover PAYS YOUR LEASING & MANAGEMENT FEES

-Hanover PAYS YOUR CLOSING COSTS

-Hanover gives you a TWO YEAR home warranty. For instance, say the furnace dies - it's covered. The ice maker in the freezer goes bezerk - it's covered. Etc. No worries to you.

This program is available in MANY developments throughout the country - Florida, Arizona, Vegas, Minnesota, and now CHICAGO! The Chicago development is called Vision on State at 1255 S State Street (State and Roosevelt), the heart of the South Loop and just steps away from public transportation and right next to a grocery store. There are 1 & 2 bedroom units available between $290,000 - $410,000. Parking is also available separately. These units are brand new (just finished in June), with granite counter tops, hard wood floors, balconies, washer/dryer hookups, and GREAT VIEWS. The building features a fitness room, business center, dog run, high speed internet access, and 24 hour doorman. There is availability up to the 19th floor. If you have any interest in the Chicago units, or others nationwide, contact me. Don't forget what an investment this might be if Chicago gets the 2016 Olympics where many of the events will be hosted VERY close to this location! See a picture from one of the units below.

Contact me for more information or to schedule a viewing of the available units!

OK, so a few questions you may ask:

Q: Do I have to use one of Hanover's lenders to qualify for this program? A: NO! You can use the lender of your choice. However, Hanover does have lenders you can work with if you like - you can get financing up to 90% with them.

Q: How do I know if the rental amount will cover my mortgage? A: The rental amount paid to you monthly = 8% of your purchase price divided by 12. This is USUALLY enough to cover your mortgage. Check with your lender to be sure.

Q: What happens after the 2 year program is over? A: From the start, the condo you purchase is yours. Hanover is only the tenant and does not have any ownership rights. After the 2 years is over, you can work with the current renter to continue renting the unit, you can use the unit yourself, or you can sell the unit. It's YOURS... do whatever you like with it.

Q: Can I get out of the program at any point? A: YES, however you must give Hanover 3 months advance notice for lease cancellation; some minor stipulations apply.

Q: They really pay my property taxes and assessments? A: YES. Taxes are paid at 1.5% of purchase price and assesments are paid. Simple as that.

Q: Are prices on the condos negotiable? A: Given that these are competitive going-market rates, the prices set by Hanover are not negotiable if you want to be a part of this program. Contact me if you'd like to see comparable properties in the market.

Q: What if I want to buy one of the condos but I don't want to participate in the 2 year program? A: You can still purchase through Hanover for 12% cash back at closing, should you choose not to take part of the rental program. Or, you can submit an offer to the developer. Contact me for more information.

Pocket Puppies

So for the past 6 months or so I have had what some would call a large obsession with very small puppies. The ones that are like 1 pound. Especially yorkies. So, a couple of weeks ago I found what is now my new favorite store right in Lincoln Park. It is actually called Pocket Puppies Boutique and sells the fiesty little animals, along with all of the clothing you could possibly want to pamper your pooch like a real child. My favorite dog I saw there was a 10 week old yorkie that was 12 ounces!! It had already been sold, so much to my despair, I could not hold it. It was, however, sold for $2500, so I can see why its owner wouldn't want strangers tampering with its delicate little body. There were plenty of others available to hold, however. And hold I did.

The location of Pocket Puppies is at 2479 N Clark. For those unfamiliar with this Lincoln Park area, you should know that if you need to shop, this is a great place to go. I also noticed that there is a new coat outlet that just opened up on Clark, just south of Diversey. This place had coats galore and I will definitely be making another trip there now that I'm starting to remember how cold it gets in the winter here.

It's not just puppies and coats you can find on North Clark - you have plenty of boutiques, restaurants, shoe stores, purse stores, you name it.

And don't forget the best hangover brunch joint in town - Golden Nugget. The name of it alone is enough reason for you to eat there at least once in your life.

Of course my absolute favorite shopping area in Lincoln Park is on Armitage. Between Halsted and Clyborn on Armitage, you can find the best shopping in the area. Want the most delicious specialty chocolates you've ever tasted? Two different places will nurture your cravings. These are often popular for weddings and special events. Want to make your own purse? There's the Lisa Lill Studio, where you'll commonly find bachelorette parties. Want to smell fresh and clean? Lush will clean you up. Shoes? Plenty. Purses? Do you even have to ask?

So, if you've got a day to shop around here, give it a try. But prepare your significant other for the idea that you may come home looking like this: