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Lakeview development slashes prices

filed under: Buyers, Developments, FHA loans, First-time buyers, Lakeview posted on August 10th, 2009

As summer draws to an end, we are seeing more large developers cut prices in an effort to spur sales. The latest example is an FHA-approved building at 2930 N Sheridan, a rehabbed tower that looks a bit drab from the outside. Sales here have been sluggish for two years, and this week the sales center is announcing substantial price cuts.

One-bedroom units now start at $209,900, rather than $249,900. Two-bedroom condos are $229,900 (a $40,000 drop) and three bedrooms can be had for $299,900 (a $50,000 cut).

A new three-bedroom condo in Lakeview for under $300,000? This really is a buyer’s market. Inside the building, the units are bright and modern. But they don’t have balconies, and the brownish mid-century facade outside doesn’t offer much curb appeal. Still, FHA approval means that buyers only have to put 3.5% down, and if they close before Nov. 30 first-time buyers can take advantage of the government’s $8000 tax credit.

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 »

$8,000 tax credit spurs buyers to act. $15,000, anyone?

filed under: Buyers, First-time buyers posted on June 17th, 2009

The $8,000 tax credit Congress approved earlier this year probably helped jumpstart the housing market more than anything else the government has tried. The credit is available to first-time homebuyers (and those who haven’t owned a home for at least three years) who close on their purchase before Dec. 1, 2009. There are income caps and other restrictions, so for a full account please consult  the IRS rules at

http://www.irs.gov/newsroom/article/

0,,id=204671,00.html

Combined with sagging home prices and low interest rates this spring, the tax incentive seemed to pull many buyers off the fence. According to some estimates by the National Association of Realtors, more than half of recent home sales involved first-time buyers. Nearly all of my buyers this spring, now that I think about it, have been first-timers.

If you’re thinking about buying this year, think hard. It may be time to start looking, because if you plan to take advantage of the tax credit you only have a few more months to find a home, get it inspected, apply for a loan and close.  This process usually takes at least a couple months, depending on how long you house-hunt.

In the meantime, lawmakers are now exploring whether to increase the tax credit. Rep. Johnny Isakson (R-Ga.) just introduced a bill that would nearly double the credit to $15,000. It would also expand the program to ALL buyers, not just first-timers, and remove the income limits so that even affluent people could benefit. If approved, this would be a shot of pure adreneline to the housing market… but it would also cost the federal government about ten times as much as the current measure.

Written by Sue Fox // Please leave a comment.