Hello all!
First off I wanted to take a moment to wish you all a very happy and healthy Thanksgiving holiday. I hope all of you and your families were able to share the joy and meaning of this truly great American Holiday together.
Secondly, I'd like to proudly announce that me and a nice young couple who I've been working with have been approved by HGTV and Pie Town Productions for our very own episode of House Hunters. We're very excited to have House Hunters coming out to film our search, next weekend actually, as we look for the perfect home in the Chicago area for this wonderful young couple. If all goes to plan, the show will be edited and schedule for air on HGTV later in the Spring or in the early Summer months. I want to, from the bottom of my heart, thank my clients and the producers at HGTV for being so helpful and supportive. I'd also like to thank my colleagues and friends at Saffron Realty Group for all of their help and support.
I'm not going to give anything away here, (it's all going to be a big surprise for all of us actually, including myself and my clients), but I will say that these folks are perfect buyers for an urban suburbanite Realtor like myself. They're new in town, work in the suburbs, but have been living in and really enjoying the city. So their dilemma has been, do they stay in the city and take advantage of all that life can offer a young couple there? Or do they position themselves closer to work and live in the suburbs where their money might go a little further and their respective commutes would be far less? Great questions and a great scenario! I don't even know what they will ultimately choose.
It's one of the truly fun things about being the urban/suburban Realtor. The fact that I know the suburbs and the city, in most cases, equally well, I've really been able to help them hone in on the areas of the city, as well as the areas of the suburbs, that could be good choices for them no matter which way their decision goes.
It's all very exciting!
I also wanted to point out that, at least in some areas I've seen recently, it appears that my hunch about people being out there and buying in these last months of 2007 is proving to be true. I'm actually seeing places that I've been showing reluctant buyers, going under contract and closing quickly. Here in the town where I live, Brookfield Illinois, things are showing signs of a stealth-like recovery. This community has a lot to offer though. Brookfield has culture and science, with one of the largest private zoological parks in the country right here. We also have excellent schools, (in fact Riverside Brookfield High School was recognized in Newsweek magazine two years in a row for academic acheimvent and excellence), reasonable taxes and affordable housing. All of this within 13 miles of Chicago and right on a light rail, (Metra), stop. We actually have 2 stops: One that services the area directly around the zoo, (and allows people from all over to visit the park without driving there), and one right in the downtown area. Brookfield Illinois is really becoming an area to watch. It's truly an urban/suburban community:Big city feel, close to Chicago, but still in the more placid suburban surroundings.
There are a lot of communites, concentrically around the edges of the city of Chicago. If you ever have any questions let me know!
And keep your eyes peeled for our House Hunters episode airing in the Spring or Summer of 2008.
I'll keep you posted on how things go with the show and all other developments in the market here at www.urbansuburbanite.com .
Cheers!
Rick Doty
Friday, November 23, 2007
Monday, November 05, 2007
I hate to say I told you so BUT. . .
No to toot my own horn here, but I think we're starting to see the emergence of an untapped or under utlized, (and oft misunderstood), segment of the real estate market. That segment is the multi-unit investment market.
For several years I've been telling my buyers, particularly those who were considering investing, to look into small multi-unit buildings. There were definitely concerns over these last few years; the biggest one was cash flow. A good number of people were put off by multi-units because they required larger downpayments and, despite these down payments, would barely break even on a yearly basis when all was said and done. I stressed to these buyers that a multi-unit investment property can really boost their portfolio long term and even if they broke even or sustained losses for a period of time, the curve would catch up with them and they profitability would eventually be there. Particularly if we're talking about owner occupied multi-unit residential buildings. It simply translated to having an apartment you live in while renting out the others. Ostensibly, this would be to offset your mortgage costs and any losses or improvements to the the rental units could be written off directly providing the owner with some distinct tax advantages.
And what came of my urgings?
Some people saw the logic and purchased properties, even if they were losing a bit of money in the short term. This is going to end up being a favorable mark in their corner at this point, no doubt, as we are seeing more and more fallout from the subprime mortgage crisis.
Currently in the real estate market, across the board, we are facing several negative factors. We are seeing home prices receeding on the heels of increased supply. That's basic supply and demand: supply goes up, prices go down until demand re-engages or meets up, (or hopefully exceeds), supply. The reason the supply of unsold properties is going up has a lot to do with subprime mortgages. These mortgages weren't just to people who had marginal credit; mortgages were, literally, being written without income verification. This basically meant that if you could prove a certain amount of money moved through your account, you could get a loan for "x" based on the amount of cash going through your account. The logic behind this, (I'm guessing), is that the lender could see cashflow that may or may not, (more than likely would not), show up on more conventional benchmarks such as the review of a buyer's income tax returns. What this did is it flooded the market with people who essentially, by their assertion, claimed to be able to afford homes they clearly could not.
The banks became greedy because these subprime loans were frequently at higher rates of interest because of the "risk." The lenders failed to recognize just how much risk there was.
The second segment of the mortgage market that has caused this monsoon of foreclosures are the ARMs or Option ARMs. These were loans that were hard for most consumers to understand. The assumption on the lender's part was that the actual realities of these loans were properly explained to the buyers and that the buyers understood the additional risk if they did not refinance their loans prior to the rate adjustment that was built into the ARM. An ARM or, Adjustable Rate Mortgage is a mortgage that has an intial fixed rate, (sometimes called a "teaser" rate), that is artificially low for a period of time. After that period of time, the rate adjusts exponentially leaving the owner with payments significantly higher than they had been paying. An Option ARM threw in the "convenience" of allowing a buyer to choose their monthly payment during the fixed period. This, allegedly, allowed the buyer to compensate for cash crunches in some months and play catch up in others. All the while, there were different fees or resettings/re-amortizations of these loans as people paid at different rates from month to month. At the end of it all loomed the big rate adjustment that would blindside the owner and put their monthly payments beyond their monthly means.
The third segment of the mortgage market that contributed to this meltdown are HELOCs or Home Equity Lines of Credit where homeowners were, basically, allowed to use whatever equity they had in their homes as an ATM or, even worse, a revolving line of credit that was designed to be next to impossible to pay down.
The result was debt, upon debt, upon debt!
All of which has lead up to people not being able to afford the homes they worked so hard to purchase. The options are foreclosure in which the bank forcibly takes the home from the former owner in a legal proceeding. The former owner is then responsible for those legal fees and, often, any difference between the price the home sells for and what is owed on the loan.
Smart homeowners who are in trouble are working with their lenders to either keep their homes or to mitigate losses on both sides. If an owner is clearly unable to financially support the home, the bank may negotiate a short sale wherein they agree to allow the home to be purchased for less than is owed on the mortgage.
The bottom line with all of this is that these mortgage issues are far from over and with another wave of mortgages due to adjust in the next 12-18months, there could be more ripples, (or tidal waves), throughout the market. Perhaps the worst part about it is that people who fall into default will cause harm to their credit which will, in turn, hurt their chances of getting another mortgage. And with the banks tightening lending restrictions we could soon see an even bigger glut of unsold homes because the pool of qualified buyers is significantly smaller.
Certainly there will come an answer or help, be it from the banks directly or in the form of governmental assistance. Regardless, the prevailing fear and the tightening of credit standards has created a whole new pool of people. . .renters.
Sam Zell announced a few years ago that he would be building the largest residential rental development in Chicago in many, many years. People thought he was nuts but if we've learned anything about Mr. Zell, he's crazy like a fox. He must have anticipated that there was going to be significant rental demand to take a gamble on investing in high end rentals. And he was right!
So if any of you out there have thought about real estate as an investment, now is the time to strike. With prices sliding back, there should be an excellent opportunity to acquire multi-unit properties that can be easily upgraded and, given the stronger pool of renters, could also provide some cash flow. Even smaller single family homes in good school districts would be ideal investment properties.
And for those of you considering purchasing, particularly if you are looking in the city; now may be the time to look at 2-4 flat multi-unit buildings. If you qualify and have available cash for a down payment, you could command significantly higher rents than in years past.
There are some great investment opportunities in the multi-unit residential market. Please contact me for details or if you have any questions.
Your urban/suburban Realtor.
Rick Doty
For several years I've been telling my buyers, particularly those who were considering investing, to look into small multi-unit buildings. There were definitely concerns over these last few years; the biggest one was cash flow. A good number of people were put off by multi-units because they required larger downpayments and, despite these down payments, would barely break even on a yearly basis when all was said and done. I stressed to these buyers that a multi-unit investment property can really boost their portfolio long term and even if they broke even or sustained losses for a period of time, the curve would catch up with them and they profitability would eventually be there. Particularly if we're talking about owner occupied multi-unit residential buildings. It simply translated to having an apartment you live in while renting out the others. Ostensibly, this would be to offset your mortgage costs and any losses or improvements to the the rental units could be written off directly providing the owner with some distinct tax advantages.
And what came of my urgings?
Some people saw the logic and purchased properties, even if they were losing a bit of money in the short term. This is going to end up being a favorable mark in their corner at this point, no doubt, as we are seeing more and more fallout from the subprime mortgage crisis.
Currently in the real estate market, across the board, we are facing several negative factors. We are seeing home prices receeding on the heels of increased supply. That's basic supply and demand: supply goes up, prices go down until demand re-engages or meets up, (or hopefully exceeds), supply. The reason the supply of unsold properties is going up has a lot to do with subprime mortgages. These mortgages weren't just to people who had marginal credit; mortgages were, literally, being written without income verification. This basically meant that if you could prove a certain amount of money moved through your account, you could get a loan for "x" based on the amount of cash going through your account. The logic behind this, (I'm guessing), is that the lender could see cashflow that may or may not, (more than likely would not), show up on more conventional benchmarks such as the review of a buyer's income tax returns. What this did is it flooded the market with people who essentially, by their assertion, claimed to be able to afford homes they clearly could not.
The banks became greedy because these subprime loans were frequently at higher rates of interest because of the "risk." The lenders failed to recognize just how much risk there was.
The second segment of the mortgage market that has caused this monsoon of foreclosures are the ARMs or Option ARMs. These were loans that were hard for most consumers to understand. The assumption on the lender's part was that the actual realities of these loans were properly explained to the buyers and that the buyers understood the additional risk if they did not refinance their loans prior to the rate adjustment that was built into the ARM. An ARM or, Adjustable Rate Mortgage is a mortgage that has an intial fixed rate, (sometimes called a "teaser" rate), that is artificially low for a period of time. After that period of time, the rate adjusts exponentially leaving the owner with payments significantly higher than they had been paying. An Option ARM threw in the "convenience" of allowing a buyer to choose their monthly payment during the fixed period. This, allegedly, allowed the buyer to compensate for cash crunches in some months and play catch up in others. All the while, there were different fees or resettings/re-amortizations of these loans as people paid at different rates from month to month. At the end of it all loomed the big rate adjustment that would blindside the owner and put their monthly payments beyond their monthly means.
The third segment of the mortgage market that contributed to this meltdown are HELOCs or Home Equity Lines of Credit where homeowners were, basically, allowed to use whatever equity they had in their homes as an ATM or, even worse, a revolving line of credit that was designed to be next to impossible to pay down.
The result was debt, upon debt, upon debt!
All of which has lead up to people not being able to afford the homes they worked so hard to purchase. The options are foreclosure in which the bank forcibly takes the home from the former owner in a legal proceeding. The former owner is then responsible for those legal fees and, often, any difference between the price the home sells for and what is owed on the loan.
Smart homeowners who are in trouble are working with their lenders to either keep their homes or to mitigate losses on both sides. If an owner is clearly unable to financially support the home, the bank may negotiate a short sale wherein they agree to allow the home to be purchased for less than is owed on the mortgage.
The bottom line with all of this is that these mortgage issues are far from over and with another wave of mortgages due to adjust in the next 12-18months, there could be more ripples, (or tidal waves), throughout the market. Perhaps the worst part about it is that people who fall into default will cause harm to their credit which will, in turn, hurt their chances of getting another mortgage. And with the banks tightening lending restrictions we could soon see an even bigger glut of unsold homes because the pool of qualified buyers is significantly smaller.
Certainly there will come an answer or help, be it from the banks directly or in the form of governmental assistance. Regardless, the prevailing fear and the tightening of credit standards has created a whole new pool of people. . .renters.
Sam Zell announced a few years ago that he would be building the largest residential rental development in Chicago in many, many years. People thought he was nuts but if we've learned anything about Mr. Zell, he's crazy like a fox. He must have anticipated that there was going to be significant rental demand to take a gamble on investing in high end rentals. And he was right!
So if any of you out there have thought about real estate as an investment, now is the time to strike. With prices sliding back, there should be an excellent opportunity to acquire multi-unit properties that can be easily upgraded and, given the stronger pool of renters, could also provide some cash flow. Even smaller single family homes in good school districts would be ideal investment properties.
And for those of you considering purchasing, particularly if you are looking in the city; now may be the time to look at 2-4 flat multi-unit buildings. If you qualify and have available cash for a down payment, you could command significantly higher rents than in years past.
There are some great investment opportunities in the multi-unit residential market. Please contact me for details or if you have any questions.
Your urban/suburban Realtor.
Rick Doty
Friday, October 26, 2007
Are you ready to share your homebuying experience with the world?
Hello to all of you.
I know that some of you may be regular readers or people who just pop in. Others, may be just poking through the internet and stumbling across me and my business. You may be a friend or a client, both, or perhaps you want to be a client, (or a friend).
Regardless, I've just been given the potential, (that's potential not promise), of an extraordinary opportunity from my friends over at Pie Town Productions. They contacted me, just like many clients would, because they found me on the internet. Interestingly enough, they liked me enough to propose that I might have some interest in participating in a little show called House Hunters on HGTV.
If you've never seen the show the premise is pretty simple: The buyer and their Realtor, (in this case ME), identify their top 3 picks of homes they are seriously considering. They weigh the pros and cons of each home and, the buyer makes a final decsion. The whole time they are covering the process and the end result is you the buyer, going from your old place to your wonderful new place.
Of course, not everyone is ready to get in front of the camera. So if any of you are seriously looking for a home in the Chicago area, city or suburbs, and feel you'll be making this purchase within the next 6 months, (the sooner the better for TV consideration), then by all means drop me a line and I'll give you the details on how it all works.
If you want to see the fun, check out House Hunters at http://www.hgtv.com/hgtv/shows_hnt
Lots of fun for everyone!!
Happy house hunting.
I know that some of you may be regular readers or people who just pop in. Others, may be just poking through the internet and stumbling across me and my business. You may be a friend or a client, both, or perhaps you want to be a client, (or a friend).
Regardless, I've just been given the potential, (that's potential not promise), of an extraordinary opportunity from my friends over at Pie Town Productions. They contacted me, just like many clients would, because they found me on the internet. Interestingly enough, they liked me enough to propose that I might have some interest in participating in a little show called House Hunters on HGTV.
If you've never seen the show the premise is pretty simple: The buyer and their Realtor, (in this case ME), identify their top 3 picks of homes they are seriously considering. They weigh the pros and cons of each home and, the buyer makes a final decsion. The whole time they are covering the process and the end result is you the buyer, going from your old place to your wonderful new place.
Of course, not everyone is ready to get in front of the camera. So if any of you are seriously looking for a home in the Chicago area, city or suburbs, and feel you'll be making this purchase within the next 6 months, (the sooner the better for TV consideration), then by all means drop me a line and I'll give you the details on how it all works.
If you want to see the fun, check out House Hunters at http://www.hgtv.com/hgtv/shows_hnt
Lots of fun for everyone!!
Happy house hunting.
Wednesday, October 24, 2007
Could we be looking at an urban exodus in Chicago?
It seems like the writing is on the wall when it comes to real estate in Chicago, I wonder if urban dwellers actually see it.
In Cook County and Chicago we are facing some serious issues with county and city government. With two large political machines in charge, Todd Stroger in county government who managed to ride on his daddy's coat tails to a victory. Todd Stroger, who has consistently upheld the wasteful patronage that his father instituted over decades of waste and corruption. And the Daley machine in the city of Chicago: both Daley and Stroger seem poised to impose some of the most brutal tax hikes in Cook County or Chicago history.
There's speculation on many levels as to why this is. Many within Cook County believe that Mr. Stroger is making room for more patronage programs hiring friends and family members into do nothing jobs at high salaries; all on the backs of the taxpayers. As for Mayor Daley, who has been untouchable as far as scandal is concerned, I think the prevailing opinion of his motives are pretty transparent. Mr. Daley really wants Chicago to host the summer Olympic games. He's spent tons of time and taxpayer money, (on top of private money), to woo the Olympic committee in an attempt to get Chicago anointed. But he has a way to go and he's starting to look toward the taxpayers for help.
There is no doubt that Daley has done a lot of good. Unlike his county counterpart who has accomplished nothing more than being the heir apparent to wasteful patronage, the mayor has done a lot to beautify, improve and strengthen the city of Chicago. At least, on the surface, the improvements are apparent.
But if you peel back the layers of the onion, many people, particularly property owners within the city of Chicago, are becomming increasingly disenchanted. One of the most problematic issues pertains to Chicago public schools. Many people who live in the city, and this is by their own testimony, have related to me that despite the cost of their property, (in many cases, I'm talking about people who have paid 600k up to well over 1million for a home), the city has been unable to produce a satisfactory public school in their area; despite their enormous tax bills.
For many of these people, they have opted for pricey private schools. I even spoke to one gentleman recently who has 2 children, both of whom go to the British School in Chicago, and for whom he pays approximately $20k per year each for tuition. His personal property tax bill is already in the high teen yet, for that money, he doesn't feel confident in the public services this money is supposed to provide so, as a result, he pays over $40 thousand dollars per year for his young children to attend school. All, ostensibly, for the "privilege" of residing in the city of Chicago. So when people like this see that the county wants more money; that the city wants more money; they begin to wonder if it is really worth it to continue to reside in either.
The city of Chicago and Cook county are on a very precarious, very slippery slope in regard to their opressive taxation. For years, there has been a "natural" cycle of people flowing into the city and then, conversely, flowing out of the city. I believe these cycles are generally every 5-15 years. This was a phenomenon that was, at one time, referred to as "white flight" where, theorhetically, "white" people left a city because of encroachment of too much integration in their areas. In this case, I can see the flight on the horizon but it has absolutely nothing to do with color. If Mr. Stroger and Mr. Daley continue to levy increasingly oppressive taxes, this flight will be strictly economic. It will, without a doubt, either lead to a massive, Boston Tea Party like revolt, or will inspire a quiet revolution. A revolution that will slowly drain Chicago and its Mother county of taxpayers and will leave a legacy for years to come.
People feel helpless. People don't feel their interests are being fully represented. People are sick of being robbed of their hard earned money.
And people are finding that there is little that the city offers that they can't find in many suburban areas. People are discovering they can find reasonable homes with good schools that are supported by fair local taxes in counties beyond Cook county. People are discovering that, no matter what color they may be, or what their personal circumstances are, a better quality of life often lies within 20 or 25 miles of the city, out of the reach of greedy king Richard and prince Todd.
If this trend continues, the people will leave the city. The jobs will relocate to the suburbs as well because they'll also have more incentive to do so and, if I'm right, Mr. Daley will be sitting by himself with his Olympic torch and Mr. Stroger won't have the money to hire any more of his friends and relatives. The people, and the money, will be gone.
The leaders in both city and county government need to take heed. For if they continue on this paty, we could be looking at a massive urban exodus.
There has to be a better way if Chicago and Cook county are going to survive.
Increasing taxes is not the answer.
In Cook County and Chicago we are facing some serious issues with county and city government. With two large political machines in charge, Todd Stroger in county government who managed to ride on his daddy's coat tails to a victory. Todd Stroger, who has consistently upheld the wasteful patronage that his father instituted over decades of waste and corruption. And the Daley machine in the city of Chicago: both Daley and Stroger seem poised to impose some of the most brutal tax hikes in Cook County or Chicago history.
There's speculation on many levels as to why this is. Many within Cook County believe that Mr. Stroger is making room for more patronage programs hiring friends and family members into do nothing jobs at high salaries; all on the backs of the taxpayers. As for Mayor Daley, who has been untouchable as far as scandal is concerned, I think the prevailing opinion of his motives are pretty transparent. Mr. Daley really wants Chicago to host the summer Olympic games. He's spent tons of time and taxpayer money, (on top of private money), to woo the Olympic committee in an attempt to get Chicago anointed. But he has a way to go and he's starting to look toward the taxpayers for help.
There is no doubt that Daley has done a lot of good. Unlike his county counterpart who has accomplished nothing more than being the heir apparent to wasteful patronage, the mayor has done a lot to beautify, improve and strengthen the city of Chicago. At least, on the surface, the improvements are apparent.
But if you peel back the layers of the onion, many people, particularly property owners within the city of Chicago, are becomming increasingly disenchanted. One of the most problematic issues pertains to Chicago public schools. Many people who live in the city, and this is by their own testimony, have related to me that despite the cost of their property, (in many cases, I'm talking about people who have paid 600k up to well over 1million for a home), the city has been unable to produce a satisfactory public school in their area; despite their enormous tax bills.
For many of these people, they have opted for pricey private schools. I even spoke to one gentleman recently who has 2 children, both of whom go to the British School in Chicago, and for whom he pays approximately $20k per year each for tuition. His personal property tax bill is already in the high teen yet, for that money, he doesn't feel confident in the public services this money is supposed to provide so, as a result, he pays over $40 thousand dollars per year for his young children to attend school. All, ostensibly, for the "privilege" of residing in the city of Chicago. So when people like this see that the county wants more money; that the city wants more money; they begin to wonder if it is really worth it to continue to reside in either.
The city of Chicago and Cook county are on a very precarious, very slippery slope in regard to their opressive taxation. For years, there has been a "natural" cycle of people flowing into the city and then, conversely, flowing out of the city. I believe these cycles are generally every 5-15 years. This was a phenomenon that was, at one time, referred to as "white flight" where, theorhetically, "white" people left a city because of encroachment of too much integration in their areas. In this case, I can see the flight on the horizon but it has absolutely nothing to do with color. If Mr. Stroger and Mr. Daley continue to levy increasingly oppressive taxes, this flight will be strictly economic. It will, without a doubt, either lead to a massive, Boston Tea Party like revolt, or will inspire a quiet revolution. A revolution that will slowly drain Chicago and its Mother county of taxpayers and will leave a legacy for years to come.
People feel helpless. People don't feel their interests are being fully represented. People are sick of being robbed of their hard earned money.
And people are finding that there is little that the city offers that they can't find in many suburban areas. People are discovering they can find reasonable homes with good schools that are supported by fair local taxes in counties beyond Cook county. People are discovering that, no matter what color they may be, or what their personal circumstances are, a better quality of life often lies within 20 or 25 miles of the city, out of the reach of greedy king Richard and prince Todd.
If this trend continues, the people will leave the city. The jobs will relocate to the suburbs as well because they'll also have more incentive to do so and, if I'm right, Mr. Daley will be sitting by himself with his Olympic torch and Mr. Stroger won't have the money to hire any more of his friends and relatives. The people, and the money, will be gone.
The leaders in both city and county government need to take heed. For if they continue on this paty, we could be looking at a massive urban exodus.
There has to be a better way if Chicago and Cook county are going to survive.
Increasing taxes is not the answer.
Banks tightening restrictions on lending
The real estate business everywhere in the United States has become a tragic mess. Mortgage lenders are filing for bankruptcy or begging for the federal government to bail them out. News of record breaking foreclosure rates are permeating the media. Just yesterday, I even heard that a builder, Neumann Homes is filing for bankruptcy. Is there any wonder why the real estate buyers seem to be heading for the hills or searching for cover?
Fear of real estate has taken us over, but there seems to be no real explanation. Yes, foreclosures are up; yes lenders are tightening their restrictions on credit and looking for larger down payments; yes there is a lot of negative stuff out there. I believe the media has overblown things and, as far as real estate goes, is actually causing an unnatural knee jerk reaction in the public.
Let's look at things from less of a fear mongering point of view and more of an opportunistic point of view. The interest rates are still at near historic lows. It appears that the federal reserve will be lowering rates again in an answer to the current "crisis" in the housing market. Housing prices have moderated and short sales and pre-foreclosures are presenting even greater opportunities for buyers. The job market is still very robust. As a reaction to people fleeing toward rentals, landlords are now commanding some of the highest rents in history, making it more sensible to buy than ever. So what is stopping people from buying?
Fear.
Don't be afraid of real estate people! This has happened before and will, in all likelihood happen again in the future but if you aren't a flipper, or someone who only has the very short term picture in mind, then you should seriously re-evaluate your position on making a purchase.
The banks are even getting wise and starting to help out. Take for example my friends at e-loan. I trust very few lenders these days. Ask me personally and I'll only give you a handful of reccomendations, (because I want my deals to close and if you are a buyer so do you). But e-loan has come up with a program for people on the bubble; people who want to buy but whose credit is just short of what they need to commence a transaction.
So what is e-loan doing differently? They are offerring in house credit counselling that will help you improve your credit scorese and get you the loan and the home that you want. It's a bit of a pilot program and I'm one of the few Realtors or real estate agents out there who has been made aware of it but I want to shout it from the rooftops.
If your credit scores are just short of the mark, at least there's a bank out there that will help get you to where you need to be. No costs or gimmicks, just some guidance and help to get you to your real estate goals.
I'm hoping other lenders will follow suit.
The smart people will see this as an opportunity. This market is currently full of opportunities but, as with any opportunity, the window is likely small.
I'm reccommending to anyone who is interested in real estate either as an investment, as their first entry into the market, or as an improvement to their current situation: this is a buying opportunity.
If you have any more questions, please ask me, e-mail me, or click on one of the links on my sidebar.
I'm happy to help you and will be happy to answer any of your real estate questions.
You're trusted Realtor in the Chicago area.
Rick
Fear of real estate has taken us over, but there seems to be no real explanation. Yes, foreclosures are up; yes lenders are tightening their restrictions on credit and looking for larger down payments; yes there is a lot of negative stuff out there. I believe the media has overblown things and, as far as real estate goes, is actually causing an unnatural knee jerk reaction in the public.
Let's look at things from less of a fear mongering point of view and more of an opportunistic point of view. The interest rates are still at near historic lows. It appears that the federal reserve will be lowering rates again in an answer to the current "crisis" in the housing market. Housing prices have moderated and short sales and pre-foreclosures are presenting even greater opportunities for buyers. The job market is still very robust. As a reaction to people fleeing toward rentals, landlords are now commanding some of the highest rents in history, making it more sensible to buy than ever. So what is stopping people from buying?
Fear.
Don't be afraid of real estate people! This has happened before and will, in all likelihood happen again in the future but if you aren't a flipper, or someone who only has the very short term picture in mind, then you should seriously re-evaluate your position on making a purchase.
The banks are even getting wise and starting to help out. Take for example my friends at e-loan. I trust very few lenders these days. Ask me personally and I'll only give you a handful of reccomendations, (because I want my deals to close and if you are a buyer so do you). But e-loan has come up with a program for people on the bubble; people who want to buy but whose credit is just short of what they need to commence a transaction.
So what is e-loan doing differently? They are offerring in house credit counselling that will help you improve your credit scorese and get you the loan and the home that you want. It's a bit of a pilot program and I'm one of the few Realtors or real estate agents out there who has been made aware of it but I want to shout it from the rooftops.
If your credit scores are just short of the mark, at least there's a bank out there that will help get you to where you need to be. No costs or gimmicks, just some guidance and help to get you to your real estate goals.
I'm hoping other lenders will follow suit.
The smart people will see this as an opportunity. This market is currently full of opportunities but, as with any opportunity, the window is likely small.
I'm reccommending to anyone who is interested in real estate either as an investment, as their first entry into the market, or as an improvement to their current situation: this is a buying opportunity.
If you have any more questions, please ask me, e-mail me, or click on one of the links on my sidebar.
I'm happy to help you and will be happy to answer any of your real estate questions.
You're trusted Realtor in the Chicago area.
Rick
Sunday, October 07, 2007
My Fall/Winter 2007 Market Predictions
So depending on who you listen to, and there are many opinions out there; predictions for real estate for the remainder of the year are a mixed bag at best.
You have some people predicting further gloom and doom. The spectre of increasing foreclosures and further fallout from the sub prime mortgage market has buyers wary. Certainly concerns over the falling value of the American dollar as well as concerns about inflation and growing concerns about more escalation in the Middle East spurs even more concerns about what is going to happen.
But let's face reality people. If the housing market doesn't pick back up, we could very well see ourselves on the way to an economic nightmare.
Of course, landlords are happy. Based on some current statistics, occupancy rates are in the mid to high 90 percentile in rental properties, (and for any of you who didn't believe me when I told you to buy multi-unit flats over the last several years then, there you go!); landlords, as a result, have been able to hike rents to their highest levels in years. So even though the rental prices are increasing at a pace where, once again, it makes more sense to buy, and even though rates are still low and over inflated real estate prices are receding; people still aren't buying houses.
WHY?
Where are all the buyers?
I believe they are out there and I believe they are all waiting for something, some big sign that it is OK to come out. Just like in the Wizard of Oz when the Munchkins realize the witch is dead, the fearful little people are hiding out looking for their Dorothy.
Or, perhaps home buyers are more savvy than anyone thinks. For what it's worth, here are my predictions:
I believe that the demand has not shriveled up and blown away. On the contrary, I believe there is a lot of pent up demand out there and plenty of people who qualify for loans despite the tightening of lending restrictions. Additionally, I think these people will benefit from the government coming in and expanding FHA backed loans and this will go a long way to stabilize the market long term.
The fact is that there is enough inventory out there that these buyers are waiting. They are patient. They do their research. And the smartest ones are waiting for the Winter to make their move. Particularly in states like Illinois where there can be harsh weather conditions that keep buyers away; the smart buyers are looking to find the wounded and limping sellers in the toughest season and it will be, at that point, the deals will start to happen. Sellers will make concessions they would never have dreamed of a year or two ago and the buyers will benefit from all of the market instabilities. I believe there will be a short run up in the Winter market that will lead to a roaring comeback in the Spring. That's when the carpet baggers, or the fearful Munchkins if you will, recognize that there has been a divine sign from the risk takers and will take that as their cue to strike.
If they lower rates further at the next Fed meeting, then I'm confident we can expect a scenario like this.
The bottom line: If you are looking to buy a piece of property, this might be the time. Particularly if you are looking at this as more of a long term investment which is what really makes real estate a winner. The days of short term gains may be long gone but if you are looking for a home or an investment that you will be holding as part of a portfolio; I sincerely think that this is going to be one of the best opportunities we've seen in years and, quite possibly, for years to come.
Time will tell.
You have some people predicting further gloom and doom. The spectre of increasing foreclosures and further fallout from the sub prime mortgage market has buyers wary. Certainly concerns over the falling value of the American dollar as well as concerns about inflation and growing concerns about more escalation in the Middle East spurs even more concerns about what is going to happen.
But let's face reality people. If the housing market doesn't pick back up, we could very well see ourselves on the way to an economic nightmare.
Of course, landlords are happy. Based on some current statistics, occupancy rates are in the mid to high 90 percentile in rental properties, (and for any of you who didn't believe me when I told you to buy multi-unit flats over the last several years then, there you go!); landlords, as a result, have been able to hike rents to their highest levels in years. So even though the rental prices are increasing at a pace where, once again, it makes more sense to buy, and even though rates are still low and over inflated real estate prices are receding; people still aren't buying houses.
WHY?
Where are all the buyers?
I believe they are out there and I believe they are all waiting for something, some big sign that it is OK to come out. Just like in the Wizard of Oz when the Munchkins realize the witch is dead, the fearful little people are hiding out looking for their Dorothy.
Or, perhaps home buyers are more savvy than anyone thinks. For what it's worth, here are my predictions:
I believe that the demand has not shriveled up and blown away. On the contrary, I believe there is a lot of pent up demand out there and plenty of people who qualify for loans despite the tightening of lending restrictions. Additionally, I think these people will benefit from the government coming in and expanding FHA backed loans and this will go a long way to stabilize the market long term.
The fact is that there is enough inventory out there that these buyers are waiting. They are patient. They do their research. And the smartest ones are waiting for the Winter to make their move. Particularly in states like Illinois where there can be harsh weather conditions that keep buyers away; the smart buyers are looking to find the wounded and limping sellers in the toughest season and it will be, at that point, the deals will start to happen. Sellers will make concessions they would never have dreamed of a year or two ago and the buyers will benefit from all of the market instabilities. I believe there will be a short run up in the Winter market that will lead to a roaring comeback in the Spring. That's when the carpet baggers, or the fearful Munchkins if you will, recognize that there has been a divine sign from the risk takers and will take that as their cue to strike.
If they lower rates further at the next Fed meeting, then I'm confident we can expect a scenario like this.
The bottom line: If you are looking to buy a piece of property, this might be the time. Particularly if you are looking at this as more of a long term investment which is what really makes real estate a winner. The days of short term gains may be long gone but if you are looking for a home or an investment that you will be holding as part of a portfolio; I sincerely think that this is going to be one of the best opportunities we've seen in years and, quite possibly, for years to come.
Time will tell.
Thursday, September 06, 2007
Anatomy of a foreclosure
Hello again!
A lot of people have been asking me questions about foreclosures lately. I think there area a lot of misconceptions out there so I thought I'd post something I've been sending out to all of my clients and prospective clients.
Real estate is something that interests everyone. When the market is down, it seems that there are even more opportunities for buyers. While this is true, I understand there is still a lot of trepidation. Even more so, I understand there are a lot of misconceptions.
Today, I want to address the idea of foreclosures.
It seems that, every time we turn on the news or listen to the radio, there is a gloomy report on the housing market. The concept of “sub-prime,” “ARM’s” and “foreclosures,” are big news all around. I think that has been giving a lot of prospective buyers a sense that, if they just wait it out, there are going to be loads of properties available for rock bottom, next to nothing prices.
This is a real misconception among many people.
One of the biggest sources are these infomercials that tell people they can make “big money” in foreclosures if they just follow the simple system that costs “x” amount of dollars. If that were the case, don’t you think everyone would be rich on foreclosed properties?
So, just to help you understand, (if you don’t already), a foreclosure is a pretty complicated series of events. It isn’t simply a matter of someone missing a payment or two and then being kicked out of their home. The foreclosure process can take a year or more in some cases and with the foreclosure rate rising, banks are actually starting to help people avoid the foreclosure process in a number of ways.
Generally, by missing one or two payments, the bank or lender sends an “intent to foreclose” letter. This notifies the homeowner that if they do not make the payments the formal foreclosure process will begin. By the 3rd or 4th payment missed, the lender has employed legal assistance in the matter and is filing the proper legal paperwork for foreclosure. At any point, the homeowner can stop the process by making the payments including any late fees and/or legal fees.
The homeowner also has other options. They can retain an attorney or even declare bankruptcy which effectively stops the bank and slows the foreclosure process considerably.
It is at this point that, many banks, are encouraged to work with struggling homeowners in an attempt to help them keep their homes. The lender can elect to restructure the loan, defer payments or set up a payment arrangement.
And remember, at any point during this process, a distressed homeowner can always put the home on the market and sell it!
The bottom line, for those facing foreclosure, there are many options. Couple that with recent programs the government and the Federal Reserve are sponsoring to keep people in their homes and foreclosures may not be all they are cracked up to be.
That doesn’t mean there aren’t opportunities.
The market has corrected in many ways and sellers have definitely become more realistic. Prices have moderated and come down; perhaps not as much in the Chicago area as they have in other markets but they have come down. In my opinion that reflects the overall strength of the Chicago area as far as real estate is concerned.
So the opportunities are there, you, as a buyer, have more negotiating power than you’ve had in at least 5 years. Prices are down to more reasonable levels. Money, while not as easy to borrow as it was, is still readily available at excellent rates to qualified buyers.
And there are also “short sale” opportunities. This is a, relatively, little known way for people facing foreclosure to get out of their loan. If you can find one, this can be a great opportunity for you as a buyer. Basically, a “short sale” is an agreement by where the seller’s bank/lender, review any offers and, if the bank agrees, will actually allow the seller to sell you a home for LESS than they owe on it and will absolve the seller of any deficit on the loan. These situations can be win/win situations for everyone. YOU, as the buyer, are often able to negotiate a great deal while the seller, who is facing foreclosure, is able to get out of their home and loan and their lender is able to cut their losses without having to deal with the expense of legal action.
Expect that, if anything, we’ll see more “short sale” opportunities in the market if it continues to be sluggish. All signs are pointing to a recovery as soon as Spring so it is definitely hard to predict exactly what we can expect
A lot of people have been asking me questions about foreclosures lately. I think there area a lot of misconceptions out there so I thought I'd post something I've been sending out to all of my clients and prospective clients.
Real estate is something that interests everyone. When the market is down, it seems that there are even more opportunities for buyers. While this is true, I understand there is still a lot of trepidation. Even more so, I understand there are a lot of misconceptions.
Today, I want to address the idea of foreclosures.
It seems that, every time we turn on the news or listen to the radio, there is a gloomy report on the housing market. The concept of “sub-prime,” “ARM’s” and “foreclosures,” are big news all around. I think that has been giving a lot of prospective buyers a sense that, if they just wait it out, there are going to be loads of properties available for rock bottom, next to nothing prices.
This is a real misconception among many people.
One of the biggest sources are these infomercials that tell people they can make “big money” in foreclosures if they just follow the simple system that costs “x” amount of dollars. If that were the case, don’t you think everyone would be rich on foreclosed properties?
So, just to help you understand, (if you don’t already), a foreclosure is a pretty complicated series of events. It isn’t simply a matter of someone missing a payment or two and then being kicked out of their home. The foreclosure process can take a year or more in some cases and with the foreclosure rate rising, banks are actually starting to help people avoid the foreclosure process in a number of ways.
Generally, by missing one or two payments, the bank or lender sends an “intent to foreclose” letter. This notifies the homeowner that if they do not make the payments the formal foreclosure process will begin. By the 3rd or 4th payment missed, the lender has employed legal assistance in the matter and is filing the proper legal paperwork for foreclosure. At any point, the homeowner can stop the process by making the payments including any late fees and/or legal fees.
The homeowner also has other options. They can retain an attorney or even declare bankruptcy which effectively stops the bank and slows the foreclosure process considerably.
It is at this point that, many banks, are encouraged to work with struggling homeowners in an attempt to help them keep their homes. The lender can elect to restructure the loan, defer payments or set up a payment arrangement.
And remember, at any point during this process, a distressed homeowner can always put the home on the market and sell it!
The bottom line, for those facing foreclosure, there are many options. Couple that with recent programs the government and the Federal Reserve are sponsoring to keep people in their homes and foreclosures may not be all they are cracked up to be.
That doesn’t mean there aren’t opportunities.
The market has corrected in many ways and sellers have definitely become more realistic. Prices have moderated and come down; perhaps not as much in the Chicago area as they have in other markets but they have come down. In my opinion that reflects the overall strength of the Chicago area as far as real estate is concerned.
So the opportunities are there, you, as a buyer, have more negotiating power than you’ve had in at least 5 years. Prices are down to more reasonable levels. Money, while not as easy to borrow as it was, is still readily available at excellent rates to qualified buyers.
And there are also “short sale” opportunities. This is a, relatively, little known way for people facing foreclosure to get out of their loan. If you can find one, this can be a great opportunity for you as a buyer. Basically, a “short sale” is an agreement by where the seller’s bank/lender, review any offers and, if the bank agrees, will actually allow the seller to sell you a home for LESS than they owe on it and will absolve the seller of any deficit on the loan. These situations can be win/win situations for everyone. YOU, as the buyer, are often able to negotiate a great deal while the seller, who is facing foreclosure, is able to get out of their home and loan and their lender is able to cut their losses without having to deal with the expense of legal action.
Expect that, if anything, we’ll see more “short sale” opportunities in the market if it continues to be sluggish. All signs are pointing to a recovery as soon as Spring so it is definitely hard to predict exactly what we can expect
Monday, June 18, 2007
Real Estate is Sucking in the Spring!
OK everyone!
So I'm going to turn my traditionally optimistic market view to one of looming horror, (at least for myself).
I've got cicadas coating the trees around my home but my buyer traffic has all but dried up. That's definitely making sellers, (mine included), pretty anxious.
What happened? Everything was banging until just before Memorial Day and then. . .dead!
HELLOOOOOOOOO!!!! Where are all the home buyers out there? Don't you know that now is the time people? I have people who bought in the last couple of years that would have killed for the deals you can get now. It hasn't been this affordable in close to 5 years! What is everyone waiting for?
Perhaps everyone is waiting for the Cicadas to go away. If they're anything like some people I know, then my guess is the buyers are entophobes who are unable to deal with the cicada invasion.
Not me! I'll brave anything for my buyers and sellers!
Let's get moving people!!!
So I'm going to turn my traditionally optimistic market view to one of looming horror, (at least for myself).
I've got cicadas coating the trees around my home but my buyer traffic has all but dried up. That's definitely making sellers, (mine included), pretty anxious.
What happened? Everything was banging until just before Memorial Day and then. . .dead!
HELLOOOOOOOOO!!!! Where are all the home buyers out there? Don't you know that now is the time people? I have people who bought in the last couple of years that would have killed for the deals you can get now. It hasn't been this affordable in close to 5 years! What is everyone waiting for?
Perhaps everyone is waiting for the Cicadas to go away. If they're anything like some people I know, then my guess is the buyers are entophobes who are unable to deal with the cicada invasion.
Not me! I'll brave anything for my buyers and sellers!
Let's get moving people!!!
Father's Day 2007
So it was off to the races for the Doty family this Father's Day. In a wonderful surprise I was taken for a fabulous Father's Day brunch in the International Room of Arlington Park Racecourse. There is definitely a reason why the call it the "Sport of Kings"; I certainly felt like a king.
While it was extremely hot this year, we were in air conditioned comfort in the International Room. Having this handy made trips outside more bearable.
I'd definitely reccommend this treat to any family looking for something different to do on Father's Day. For the kids, there were pony rides, a petting zoo, clowns, and face painters. For grown ups there was live entertainment and, of course, the main event: the races!
I'm thinking this might have to be our new Father's Day tradition.
While it was extremely hot this year, we were in air conditioned comfort in the International Room. Having this handy made trips outside more bearable.
I'd definitely reccommend this treat to any family looking for something different to do on Father's Day. For the kids, there were pony rides, a petting zoo, clowns, and face painters. For grown ups there was live entertainment and, of course, the main event: the races!
I'm thinking this might have to be our new Father's Day tradition.
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