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Chicago bungalow of the month

filed under: Bungalows, Buyers, West Ridge posted on October 18th, 2010

A CLASSIC BUNGALOW: Located at xxx in West Ridge

A CLASSIC BUNGALOW: Located at 2705 W Lunt in West Ridge, this 3-bedroom bungalow was built on an extra-wide lot in 1925. It needs a bit of work to restore its lovely woodwork, hardwood floors, and built-in bookcases flanking the fireplace. Judith Newton of Coldwell Banker has the listing.

Check out this beautiful octagon bungalow that recently hit the market in West Ridge, just a block west of Indian Boundary Park. It needs a little TLC, including cosmetic upgrades and a new roof, but the oversized lot and spacious rooms may make this bungalow worth the effort.

Located at 2705 W Lunt, the home was built on a 40×125 foot lot, which is a good 15 feet wider than the standard size in Chicago. That leaves plenty of room for a large living room (20×18) surrounded by windows, a spacious formal dining room (17X14) and three large bedrooms, all on the main level. Although much of the original woodwork has been painted over and the floors are carpeted with a greenish-yellow shag, the structure of this classic 1925 bungalow is intact. All it would take is a bit of money and elbow grease to restore the woodwork and hardwood floors (not to mention the kitchen, which currently features an unfortunate acoustic tile ceiling, outdated cabinetry, and what looks like a sheetrock backsplash).

Yes, it’s a bit of a project, but not a total gut. A homeowner with patience and some extra cash could certainly restore this sleeping beauty, returning it to its historic charm and creating a beautiful home to enjoy. It’s been on the market for just three weeks, priced at $295,000. And the seller is even willing to include a classic 1965 Chrysler convertible with the sale of the home (no word on the condition of the car, which, judging from the house, may also need some love.)

Written by Sue Fox // Please leave a comment.

Some foreclosures halted in Illinois

filed under: Foreclosures, Market conditions posted on October 14th, 2010

FORECLOSURE FRENZY: A recent report showed Chicago foreclosure filings skyrocketed 69% in S

FORECLOSURE FRENZY: A recent Realty Trac report showed Chicago foreclosure filings skyrocketed 69% in September over the same period last year. Sigh. But now some befuddled banks are calling a time-out.

Trying to buy a foreclosed Chicago home, as I’ve written before, is usually a huge mess requiring saintly patience on the part of buyers trying to deal with the clueless, overwhelmed and unresponsive bank selling the property.  And now (surprise!) we’re learning that the banks were equally messy on the front end as they filed for foreclosure, taking homes by the thousand from delinquent borrowers without verifying the necessary legal paperwork.

So far, three major lenders — J.P. Morgan Chase, Bank of America, and Ally Financial (GMAC) — have imposed temporary moratoriums on foreclosures in Illinois and other states that require a judge’s order, called “judicial foreclosure” states. This move came after lenders admitted that employees were signing thousands of false foreclosure affidavits without confirming the underlying loan information.

Now Illinois Attorney General Lisa Madigan is demanding that 23 more loan servicers immediately halt all pending foreclosures in Illinois, including post-foreclosure sales and evictions, unless they can prove their affidavits and other foreclosure documents are legitimate.

What does this massive muddle of misinformation mean for our Chicago home market, you ask? Well, for now, far fewer homes are going to be re-possessed by banks, at least until the legalities can be straightened out. This should give the market a chance to catch its breath by temporarily stemming the flood of supply (houses and condos) and allowing the trickle of demand (qualified buyers) to build a bit.

Chicago has been swamped with a rising tide of foreclosures this year. According to a recent report by Realty Trac,  a company that analyzes foreclosure data, Chicago foreclosure activity soared 69% in September compared to a year ago.

To help struggling homeowners, the Circuit Court of Cook County recently launched a $3.5-million Foreclosure Mediation Program,  an attempt to push lenders and borrowers to the negotiating table to hash out a loan modification, short sale agreement, deed in lieu of foreclosure, or some other resolution. Will it work? The jury is still out, but the county says that 2,000 homeowners have already received this free assistance.

In the meantime, any break in Chicago’s foreclosure frenzy is probably a welcome time-out.

Written by Sue Fox // Please leave a comment.

Chicago sellers: Time to get real

filed under: Foreclosures, Sellers, Short sales posted on September 14th, 2010

CHASING THE MARKET: This West Loop condo

CHASING THE MARKET: This 3-bedroom West Loop condo, now being offered as a short sale, is finally under contract at a new price of $429,000. The owner tried to sell it anywhere from $780,000 to $650,000, steadily dropping the price, in 2007, 2008, and 2009.

In the last week, I’ve fielded the following inquiries from potential buyers: Can you find me a 3-bedroom house, preferably a foreclosure or a short sale, for under $200,000 in Irving Park? Another buyer asked me about how to find distressed sellers of two-flats in Lincoln Park. And a third inquired about finding a foreclosed or short sale multi-unit building in Edgewater or Andersonville.

These are the kind of calls a lot of Chicago realtors are getting these days. Buyers are looking for deals, and they are extremely wary about over-paying for real estate, even in the nicest neighborhoods. They are concerned — and rightly so, given the economic data on local unemployment and foreclosure rates — that prices have further to fall.

Meanwhile, every day hundreds of new properties hit the market in the Chicago region. Just today, according to Midwest Real Estate Data, LLC, some 730 properties were listed for sale here (while just 127 closed).

What does this mean for people trying to sell ordinary, not distressed, homes in good condition? It means you need to be super realistic, stone-cold sober, clear-eyed and steely-spined — and you need to price your property at the same level or slightly below what similar homes have sold for recently. Otherwise you will just be chasing this frightful market down, watching the market time pile up and desperately cutting your price to keep up.

Unfortunately, I’ve seen a few recent examples of sellers who refused to face reality. On the Gold Coast, I had a buyer who offered a seller almost 93% of his listing price (this on a condo priced well over half a million dollars) and the seller, after waffling for days, ultimately declined. Another Gold Coast seller abruptly pulled his listing off the market rather than negotiate an offer that came in about 10% below asking price. A few months ago, I had some buyers make an offer on a renovated house in Wilmette. But the sellers refused to take $575,000, which was a reasonable offer … and today, that same house is still on the market for less than $530,000.

Look, this is not the time for sellers to be testing the waters, fishing about to see if they can get the price they want. Only serious sellers should be in this market. If you are not prepared to compete for buyers, by ruthlessly pricing your property in accordance with the current market, then don’t even bother. You are just wasting your own time.

Written by Sue Fox // Please leave a comment.

Buying a home “never a better bargain”

filed under: Buyers, Chicago home prices, Market conditions, Mortgage Rates posted on September 3rd, 2010


A SWEET DEAL FOR 2010: This renovated 3-bedroom Lincoln Square house -- with a new roof, siding, windows, paint and appliances -- sold for $515,000 in June.

It always amazes me when I compare today’s cautious home buyers to the buyers of 3 or 4 or 5 years ago, who were willing to spend top dollar, at interest rates of perhaps 6 and 6.5%, to buy a home. Buying Chicago real estate is a MUCH better deal now, with prices down 20-30% in some neighborhoods, and banks offering rock-bottom mortgage rates of 4.5% or less for a 30-year, fixed loan.

Basically, if you buy today, you could get the same property at a huge discount compared to what you would have spent on it a few years ago. Yet buyers seem to be sitting on their hands during one of the best buyer’s markets ever, afraid to make a move.

So I was glad to see that Karl Case, an economics professor who was one of the creators of the widely-read Case-Shiller housing index, wrote an op-ed piece yesterday in the New York Times explaining that real estate was still a good investment, especially given today’s low prices and interest rates.

“This financial crisis has made us all too aware that we live in a Catch-22 world: the performance of the housing market drives the economy, and the performance of the economy drives the housing market,” Case wrote. “But housing has perhaps never been a better bargain, and sooner or later buyers will regain faith, inventories will shrink to reasonable levels, prices will rise and we’ll even start building again.”

BACK IN 2005:

BACK IN 2005: The same Lincoln Square house, located at 5069 N Winchester, sold for a similar price, $517,000, but without all the upgrades. I bet the new owners got a much better deal on their mortgage rate in 2010, too.

Case explained that the advantages of today’s lower home prices and interest rates translated into savings of hundreds of dollars per month on an ordinary house. He also pointed out that home owners can deduct the interest they pay on their mortgage, a tax break unavailable to renters.

This is, quite simply, an extraordinarily good time to buy a house. That’s what I try to tell my skittish buyers, emphasizing to them that if they plan to stay in the home for years (which I recommend), in all likelihood they will be making a sound investment.

But perhaps all optimistic realtors sound like… optimistic realtors. Maybe Karl Case says it better. To read Case’s piece, click here.

Written by Sue Fox // 1 Comment »

How to get a Chicago condo FHA approved

filed under: Buyers, Edgewater, FHA loans posted on September 1st, 2010

NOW FHA-APPROVED IN EDGEWATER: My buyer Michael just closed on this new 2-bedroom, 2-bath

NOW FHA-APPROVED IN EDGEWATER: My buyer Michael just closed on this new 2-bedroom, 2-bath condo at 5876 N Ridge in Edgewater... thanks to FHA. With the help of Condo Approval Professionals, the condo building applied for FHA approval so that Michael -- and now others -- could use an FHA loan to buy a unit there. We closed yesterday!

These days, a lot of sellers and some condo associations have become interested in getting their condo building approved by the Federal Housing Administration (FHA). That’s because FHA loans — which are insured by the government and require only a 3.5% down payment — have exploded in popularity, with more than a third of buyers now using them to purchase homes.

But in order to use an FHA loan to buy a condo, the entire condo building must be FHA approved. This is a somewhat laborious process that involves gathering up detailed paperwork to prove that the condo’s budget, reserves, collection of assessments, percentage of ownership and other factors all meet FHA’s rather stringent criteria. In Chicago, where many smaller condo buildings are self-managed, it may seem a confusing and overwhelming task for individual owners to put together an FHA application that stands a chance of being approved. Even larger buildings could often use a hand when it comes to FHA’s rules.

That is where an expert in securing FHA approvals can help. This spring, for example, I had a buyer named Michael who made an offer (which was accepted) to buy a newly-rehabbed 2-bedroom condo in Edgewater. But due to a combination of factors involving both the buyer and the building (he could only afford to put 5% down, and more than 10% of the building’s units were still owned by the developer) Michael wasn’t able to secure a conventional loan. He could use FHA, but then he was up against a major roadblock many Chicago condo buyers encounter: Most Chicago condos are not already FHA approved.

So we decided to see if, with the cooperation of the developer, we could get this 22-unit building approved. Wintrust Mortgage, Micheal’s lender, put us in touch with Steve Stenger of Condo Approval Professionals, LLC, a local company that specializes in getting FHA approval for condo buildings. And it worked!

Stenger worked hand in hand with the condo board to bring the building into FHA compliance, assembled the necessary package of documents, submitted everything to FHA and got the building approved in less than 30 days. And yesterday, Michael finally was able to close on his new condo.

“I think the key is really having someone with the ability to get it done, who knows what things need to be worked on to get the building into compliance,” Stenger said. “Some condo associations might try to do it on their own, but it’s difficult because there is a lot involved in terms of the budget, having the right insurance, looking at the declaration of bylaws. It’s not just ‘gather and submit.’ That’s why the FHA doesn’t want people to just pull documents together and send them off.”

Stenger, who has been in the business for 16 years, said he starts by “prequalifying” the building with a condo questionnaire and a budget review “to determine if they’re even eligible for FHA right out of the gate.” Sometimes, as was the case with Michael’s condo, the building isn’t in compliance — but could be, with a few changes. In this case, Stenger advised the board to collect some unpaid assessments (FHA won’t allow buildings with more than 15% of the units beyond 30 days delinquent in their assessments) and to use the condo reserves to cover some upcoming sewer repairs rather than levy a special assessment, which could also derail FHA approval.

“When I put that package together, I fully expect it’s going to be approved,” Stenger said.

Condo Approval Professionals doesn’t charge to prequalify a condo building, he added. But to work with the building and shepherd the whole FHA application package through, the fees are:

$500 – Building with 5 units or less; $750 – 6 to 10 unit building; $1500 – 11 to 20 unit building; $2000 – More than 20-unit building

In my opinion as a realtor who helps many condo buyers, it may be well worth the investment. Once a building is FHA approved, buyers can now use FHA loans to finance units there — which gives the building a huge competitive edge in a very sluggish market.

Steve Stenger of Condo Approval Professionals can be reached at (847) 293-2962.

Written by Sue Fox // 1 Comment »

Chicago home sales and prices drop nearly 20% in July

filed under: Buyers, Chicago home prices, Chicago home sales, Edgewater, Market conditions posted on August 27th, 2010

This 1-bedroom condo in Edgewater, a short sale, sold for $199,999 in July.

This 1-bedroom condo in Edgewater, a short sale, sold for $199,999 in July. It was originally priced at $325,000 in early 2008, but this loft-style development, built in a former ComEd substation, ran into financial trouble. By July, Chicago's median home price had fallen to $196,500.

Ouch. Once the tax credit expired, so did interest in buying homes. That’s the gist of the data released this week showing that home sales plunged in July, both in Chicago and nationwide.

Nationwide, the annual sales rate fell 25.5% in July over the previous year, according to the National Association of Realtors. The numbers were a little better in Chicago, where July home sales (single-family houses and condos) slid 19.5%. There were only 1,589 sales last month, compared to 1,975 homes sold in July 2009.

All the foreclosures clogging the Chicago market also helped to yank down prices. Chicago’s median home price was $196,500 in July, according to the Illinois Association of Realtors. That’s a drop of 19.8% over last July, when the median price was $245,000.

Genie Birch, president of the Chicago Association of Realtors, said that the abrupt drop in July home sales “seems consistent with what Chicago realtors anticipated for the summer, as buyers on the fence moved up their purchases to earlier in the season in order to qualify for the federal tax credits then offered to move-up or first-time home buyers. While it still remains a great time to buy, buyers are guarded as they consider their own financial stability and job security in the current market, hindering many from making a purchase.”

Statewide, homes sales fared even worse but prices held up better than in the city. Sales were down 29.7% in July compared to last year, and the median home price in Illinois fell 4.3% to $160,000. Illinois has been one of the hardest-hit regions in terms of both unemployment and foreclosures.

Written by Sue Fox // Please leave a comment.

As fall approaches, Chicago buyers emerge

filed under: Andersonville, Buyers, Mortgage Rates posted on August 19th, 2010


LOFTY LIFESTYLE: This 2-bedroom condo in the heart of Andersonville lives like a loft, with soaring 13-foot ceilings, a spacious living area, and exposed brick in every room. With buyer demand re-emerging, three buyers have asked to see it in the last few days.

The summer of 2010 was a particularly slow season for Chicago real estate, beginning in May when the federal tax credits for home buyers expired. But now, as summer heads into autumn, house hunting seems to be picking up again.

Super-low mortgage rates are certainly part of the allure. Many Chicago lenders are now offering rates well below 5%… This week I saw that Guaranteed Rate was dangling a 4.375% interest rate on a 30-year fixed loan, which is the lowest I’ve ever seen. These rock-bottom rates make borrowing money quite cheap, meaning that buyers can get considerably more house for the same monthly payment than they would have a few years ago when rates were between 6 and 7%.

At one of my listings, a 2-bedroom condo with parking in the heart of Andersonville, I’ve had three showing requests in the last three days. One of the prospective buyers told me she and her husband just sold their previous home. My theory is that now we’re going to see more buyers like her, people who managed to sell their existing property (perhaps thanks to the tax credits earlier this year) and are now in a position to buy again.

Written by Sue Fox // Please leave a comment.

Downtown Chicago condo sales plummet

filed under: Buyers, Chicago home sales, Developments, Downtown, Market conditions posted on August 18th, 2010

SLUGGISH SALES: With only a few hundred new condos sold each year in downtown Chicago, prices have declined as well, giving buyers an attractive opportunity to buy a luxury unit in the heart of

SLUGGISH SALES: With new condo sales down 52% in downtown Chicago, prices have declined as well, giving buyers a chance to buy an affordable luxury unit in the heart of the city. This new 2-bedroom condo at 505 N McClurg sold for $473,500, about 15% less than its asking price.

It looks like the wind has once again been knocked out of the sails for Chicago’s downtown condo market. Sales of new construction condos plunged 52% in the second quarter of 2010 compared to the same period last year, according to a new report from Appraisal Research, a real estate research firm based in Chicago.

Even compared to the first quarter of 2010 — when the federal government’s tax credits for home buyers were still in force — the numbers look pretty weak. There were 256 downtown Chicago condo sales in Q1, but only 150 sales — a 41% drop — in Q2 this year.

“With the tax credit expired, continued concerns about the economy and job market, worries about the stability of housing prices, and the difficulty in selling an existing residence and securing financing, many buyers continue to remain on the sidelines for the near term,” said the report.

It’s been a rather rude awakening for downtown developers, who once feasted on thousands of sales of glittering high-rise condos each year. In 2005, for example, developers sold more than 8,000 units in downtown Chicago. Last year they only sold 572. But the collapse means it’s a very attractive time to buy a new condo downtown, many of them with sweeping lake or city views, sleek gyms and swimming pools.

For the past few weeks, I’ve been taking out a pair of buyers to see many of the new 2-bedroom, 2-bath condos with lake views in Streeterville, and we’ve been pleasantly surprised by the prices. At 505 N McClurg, a snazzy building built in 2008 with floor-to-ceiling windows and beautiful finishes, a 2-bedroom, 2-bath unit that was priced at $554,500 last summer recently sold for $473,500. And with sales slumping, I expect to see even greater discounts ahead this fall.

Written by Sue Fox // Please leave a comment.

Chicago prices up in May… but wait

filed under: Buyers, Chicago home prices, First-time buyers, Foreclosures, Market conditions posted on July 30th, 2010

Chicago home prices rose slightly — 1.2% — in May, according to Case-Shiller Home Price Index data released this week. Chicago condos fared even better, with prices jumping 2.7% in May as many first-time buyers rushed to close on their home purchases so they could claim their $8,000 tax credit.

Ah, memories. While it’s good (and relatively rare) news to see Chicago home prices halt their four-year downward spiral, this uptick probably can’t be sustained. Not with the expiration of the tax credit and the flood of foreclosed properties poised to hit the market over the coming year. Illinois has one of the highest foreclosure rates in the nation, and Chicago ranks in the top fifth of foreclosure filings among more than 200 American cities.

Chicago prices are already down 1.5% over the last year. If you survey the real estate carnage of the last five years, you will see that single-family home prices have now plummeted almost 28% from their September 2006 peak while condo prices have sunk 20% since their high in September 2007. That basically wipes out most of the last decade in home appreciation, bringing us back to prices last seen in 2002.

Written by Sue Fox // Please leave a comment.

Home sales up 28% in June as prices slip

filed under: Andersonville, Bungalows, Buyers, Chicago home prices, Chicago home sales, First-time buyers, Market conditions, Tax credits posted on July 22nd, 2010

BUNGALOW BEAUTY: This restored historic bungalow in Andersonville was one of the 2000 Chicago homes that sold in June.

BUNGALOW BEAUTY: This restored historic bungalow in Andersonville was one of the 2,526 Chicago homes that sold in June. With a fireplace, built-in bookshelves, a gourmet kitchen, a full finished basement and a landscaped backyard, this home attracted multiple offers. I sold it in 3 days!

You can really see the impact of the $8,000 tax credit for first-time buyers. In June, the final month buyers could claim the credit, Chicago home sales shot up nearly 28% over the previous June, according to data released today by the Illinois Association of Realtors. That marks the 1oth consecutive month of year-over-year increases in Chicago.

But just because more properties are changing hands doesn’t mean home prices are recovering. In fact, the opposite is true in Chicago. The median home price, now $234,250, is down 3.2% compared to a year ago.

Genie Birch, president of the Chicago Association of Realtors, pointed out that the year-to-date number of homes sold in Chicago is up 41% for the first half of 2010 versus 2009. “We believe this is a positive indicator that Chicago’s housing market is stabilizing,” she said. “Motivated buyers and sellers are working toward realistically closing deals at current market values.”

I have my doubts about whether our market is truly stabilizing, or whether we are just witnessing a final surge of home sales fueled by a government stimulus program that no longer exists. Congress has since extended the date to close on a home purchase through September (provided you were already under contract by April 30) to help people seeking the tax credit who were unable to close by June 30, the original deadline.

So we may yet see a slight swell of closings in July, August and September that were actually spurred by the tax credit. But that doesn’t mean our local housing market is healthy enough to stand on its own.

Written by Sue Fox // 1 Comment »