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Prices hold up in Andersonville

filed under: Andersonville, Market conditions posted on July 31st, 2009

Ok, so home prices on the whole are down around 18% over last year in Chicago. But all real estate is local, and in a market as volatile as this one it’s important to zoom in on a given neighborhood before you generalize about the market there. Many areas, particularly gentrified neighborhoods near the lake that have a solid business core, have managed to hold their own in this downturn.

Take Andersonville, the quaint southern swath of Edgewater that runs roughly from Foster to Bryn Mawr and Broadway to Ravenswood. Once a Swedish enclave, Andersonville is a peaceful, tree-lined neighborhood anchored by a strip of small businesses along Clark Street. It offers plenty of restaurants, bars, clothing boutiques, and increasingly, antique shops.

As far as real estate statistics go, Andersonville is generally lumped in with Edgewater, making it hard to discern precisely what is happening in this tiny hamlet. So let’s look at Edgewater, where prices have slipped a bit over the last few years — but only a bit. In 2006, for example, a 2-bedroom, 1-bath condo sold for an average price of $246,525 in Edgewater. In 2008, the average price slipped to $239,188, a decline of about 3%. For single-family houses under $500,000, the average price during that two-year period fell about 5.5%, from $416,972 to $397,958. And for the more expensive homes above $500,000, prices dropped less than 2%, from $698,450 to $686,130.

So if prices are down about 2 to 6% in Edgewater as a whole, chances are Andersonville is doing just fine. Andersonville, which includes the tony Lakewood-Balmoral historic district, is generally more expensive than the rest of Edgewater. Single-family houses in Andersonville often fetch upwards of $800,000 and new condo developments (and there are only a few) tend to sell out quickly. With demand high, prices here have barely taken a haircut even though the city, overall, has been hard hit by the market downturn.

What does all this mean for prospective buyers and sellers? Well, if you’re a buyer in Andersonville, know that you’re unlikely to find massive discounts or a raft of foreclosures here. But rest assured that as a homeowner you, too, will be relatively insulated from price swings as compared to the rest of the city. Andersonville sellers, too, are better off than many in this declining market. Even if you bought your home just a couple years ago, chances are it is still worth around what you paid for it, or maybe a little less. And if you’ve owned it for five years or more, you’re probably ahead of the game.

Written by Sue Fox // Please leave a comment.

More signs of life: New home sales surge

filed under: Buyers, First-time buyers, Market conditions, Sellers posted on July 29th, 2009

Has the housing market finally hit a bottom? Only time will tell, but several recent signs point to a small but significant upturn in both prices and sales.

Nationally, home sales in 20 metro areas posted their first month-to-month increase in almost three years, according to the S&P/Case-Schiller Home Price Index. In Chicago, that spelled a 1.1% rise in prices from April to May 2009, the most recent month for which data is available. (As mentioned in my previous posts, however, the overall picture is much less rosy. Prices are down 17.5% in Chicago since May of last year, according to Case-Schiller. In other words, it’s still very much a buyer’s market.)

New home sales are also showing signs of traction. Yesterday the government reported that single-family home sales shot up 11% in June — well over the 3% increase economists were expecting. It was the largest monthly jump in almost eight years. And last week, resales of existing homes also rose, for the third month in a row.

Economists are sounding notes of caution, calling the uptick a modest recovery at best and pointing out that much of the activity appears to be at the lower end of the market, where first-time buyers are taking advantage of discounted prices, low interest rates and the $8,000 tax credit.

Written by Sue Fox // Please leave a comment.

Patience is a virtue: Using FHA to buy a condo

filed under: Buyers, FHA loans, First-time buyers posted on July 24th, 2009

At a time when most lenders require home buyers to put at least 10% down, Federal Housing Administration (FHA) loans are looking increasingly attractive. They only require 3.5% down, they often boast good interest rates, and with no income limits, even affluent borrowers can use these federally-insured mortgages to complete their home purchases. What’s not to like?

In short, FHA loans come with a lot of strings attached, particularly for condo buyers. Because the loan is backed by the government, each property must meet a long list of requirements — everything from “no peeling paint” on a house to “no special assessments” on a condo. For houses, the requirements can usually be met because the buyer and seller arrange to have any mandated repair work done before the loan closes.  But with condos, the deals often hinge on factors that neither the buyer or seller can control.

For example, if you want to buy a condo using FHA, you need to pick a place where construction is complete. The condo association must have been in existence for at least a year. There can’t be any special assessments. The building must be at least 51% owner-occupied. And so on.

In my experience, this rules out many new developments — and in Chicago, that’s a real drawback. Many of my condo buyers want new or gut-rehabbed units. Using FHA may spare them a hefty down-payment, but it also dramatically restricts their choices.

Another problem is that even if the seller’s realtor says “FHA should be no problem!” (and they all say that), getting FHA spot approval (the term for approving an individual unit in the building) often requires buyers to jump through a frustrating series of hoops, with no guarantee that FHA will actually agree to the loan.

“Going through the government was harder than I thought,” said LaTonya Wilkins, one of my buyers who recently used FHA to buy a two-bedroom condo in Edgewater. “What was most frustrating was I didn’t feel like I had control of the process, even though I had good credit and a good job.”

In Wilkins’ case, the deal hit a snag when — three weeks into the loan approval process — the lender learned that there was still a special assessment lingering over some units in the building, but not the one Wilkins was buying. The building had replaced its rear porches, and some owners who didn’t have the cash to pay their share in full were still paying the debt off monthly. A perfect example of a willing seller, a qualified buyer — and some FHA rule that neither could control!

After appeals from the lender to various FHA bureaucrats, an exception was granted and the deal closed as planned. But like all things FHA, it required a great deal of patience (and tons of paperwork), especially for the buyer.

Was it worth it? At the end of the day, Wilkins ended up getting a great interest rate and a low down-payment. If you are a buyer who doesn’t need a brand-new condo, and who is willing to deal with all the hurdles, FHA may have a deal for you.

Written by Sue Fox // 1 Comment »

Home sales start to rebound

filed under: Buyers, Market conditions posted on July 23rd, 2009

For the third straight month, home sales nationwide have increased, rising 3.6% in June. This three-month streak marks the first time this has happened since 2004, according to the National Assn. of Realtors. The news was even better in the Chicago metropolitan area, where sales were up nearly 26% over May.

“Overall, the news is positive,” Lawrence Yun, the NAR chief economist, said at a press conference. “We have increasing home sales for the third straight month, declining inventory and although prices fell, they declined at a less steep pace.”

“The housing market is healing after four years of recession,” he said. Now, I wouldn’t go so far as to say healing (or four years of recession, for that matter.) But the housing market is definitely perking up in 2009, as buyers snatch up bargains amid the marked-down prices and snag low interest rates on mortgages.

In the city of Chicago, home sales were up 27.2% since May. Prices were up, too, by about 7.7% for the month. Yet all these rising numbers are just a one-month snapshot, and if you pull the camera back and survey the past year, it’s clear that our local market remains distressed.

Since June 2008, sales have fallen 13.1% and prices have plunged 21.8 percent, according to figures from the Chicago Assn. of Realtors. As the group’s president, David Hanna, pointed out, “It is clear from the pricing we are seeing distressed property sales continuing to lead the market.”

Written by Sue Fox // Please leave a comment.