Tough Times on the Horizon for Chicagoans
November 17th, 2008 categories: Chicago Real Estate News
As someone who makes his living selling real estate, I like to keep up with our city’s economic fortunes. After all, when Chicago’s economy is humming along, more people think about buying and selling homes. When it’s not? That means I have to work just as closely with my clients to make sure they are taking all the steps necessary to either sell their homes for fair prices or buy their ideal homes without overpaying.
The Nov. 13 edition of the Chicago Sun-Times, then, did little to make my morning. There on the front page, in a big, bold headline, was the news from Mayor Daley that local corporations are expecting “huge layoffs” to hit our city very soon. You can read the grim news here.
What does this mean for Chicago homebuyers and sellers? It means that more residents of our city are going to be facing uncertain financial times. More are going to be worrying about losing their homes and meeting their mortgage payments.
For buyers, it may mean even more homes on the market for amazing prices. During this real estate slump, buyers have benefited. They are now able, even in some of Chicago’s top neighborhoods, to get more home for their money. That isn’t going to change. Housing affordability might even improve a bit.
For sellers, the news isn’t as good. Many homeowners will be forced to sell their homes. No one wants to be in this situation. But if you are, it’s imperative that you work with a skilled, savvy REALTOR®, one who knows your neighborhood and the best price to attach to your residence. Such a REALTOR® can get you a fair sale in the least amount of time possible.
This has been a challenging time, not just in Chicago but across the nation. I still maintain that we’re fortunate to live and work in the city. The real estate crash has been far more serious in places like California, Florida and Nevada. While housing prices here have dipped in some neighborhoods, there are other neighborhoods, such as Lincoln Park, the Gold Coast and Lincoln Square, where housing prices have either remained solid or have actually risen. The city also benefits from a diverse economy. It’s not dependant on one industry, but on many. That helps during an economic slowdown.
There may also be an Obama effect. A new administration might be willing to try new ideas to resolve our country’s housing and economic slumps. And you can’t discount the sense of excitement that Obama’s historic election has brought to many in this country. It may be symbolic, but when people are optimistic about the future, they are more willing to invest in items such as housing.
Perhaps the most important thing to keep in mind during this economic slump is to remember that we will get through this time. The same edition of the Sun-Times had an excellent column by writer Mark Brown. He wrote about all the recessions of his lifetime, seven in all. Despite that, the column wasn’t depressing at all. The point was that he and his family, not to mention the country, had survived all of them. We’ll survive this one, too.
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The Art of Negotiation
November 14th, 2008 categories: Chicago Real Estate News, FSBO's, For Buyers, For Sellers
A top REALTOR® can help you with all phases of the home-buying and –selling process. But the best REALTORS® truly shine during the negotiation process.
Negotiations may be the most important part of the real estate transaction. But it’s the one part of the process that few people think about or plan for.
This is astounding to me. Think about it: If you negotiate successfully, you can save thousands of dollars on the purchase of your home. You can work with sellers to get roofs repaired, electrical lines moved or plumbing updated before you move into the home. You can even work out the closing dates that are most advantageous to you.
But too many buyers give little to no thought to the negotiation process until they actually make a formal offer. If you’re working with a skilled REALTOR®, though, that agent will help you plan for negotiations. The REALTOR® will work out with you beforehand what is most important: Are you most interested in lowering the price of the house? Or are you more interested in getting specific repairs done before you take ownership? Do you want credits to pay for foundation repairs? Or do you want a delayed closing date?
Armed with the knowledge of your priorities, your REALTOR® can then work with the sellers and their agent to work out compromises that make everyone happy.
The negotiation process is especially important in Chicago’s top neighborhoods. Home values are holding steady or increasing in places like Lincoln Square, Lincoln Park, River North and Lakeview. The sellers of homes here are not desperate. They are not unloading properties. They are looking for the best offers, the ones that are fair and reasonable. A good REALTOR® will help you present that fair offer, and then handle the negotiations that follow until everyone is satisfied.
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Today’s Shaky Economy Has Even Trumped The Donald
November 12th, 2008 categories: Chicago Real Estate News
You’d think that if anyone could get through today’s slumping economy and struggling real estate market with few problems, it’d be Donald Trump. And you’d think that his 92-story high-rise in River North, the much-heralded Trump International Hotel & Tower, would be a strong enough draw to easily sell out all of its units, even in tough times for the housing market.
Well, turns out even Trump can’t escape today’s tough economy unscathed.
Crain’s Chicago Business reported late last week that Trump has gone to court to sue for more time to pay off the $640-million construction loan he took out on Trump Tower, which is located along the Chicago River in the city’s River North neighborhood. You can read the story here.
Basically, Trump is saying that the lending group has wrongfully refused to extend the maturity date of his loan. The story in Crain’s also highlights the struggles Trump has faced in moving the tower’s pricey condo units. According to the story, Trump has sold condo and hotel units worth $204.1 million. Another $353.1 million in purchase contracts have yet to close. Trump certainly has some significant money tied up in the project. The tower, at 401 N. Wabash Ave., will cost nearly $847 million once it is complete, Crain’s says.
I bring this all up because it shows that no one is immune to the real estate slump. That’s why before you decide to put your house on the market, or before you decide to begin shopping for a new home, you must meet with a licensed, skilled REALTOR®. A top REALTOR® is more important than ever in a tough market. REALTORS® can guide buyers toward fair deals, and can help sellers get the best price possible for their residences.
A house is one of your biggest investments. Why wouldn’t you protect it by working with a professional?
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Stock Market Woes? Turn that Frown, Up-Side-Down
November 10th, 2008 categories: Chicago Real Estate News
It’s easy to get depressed these days when the statements from your retirement accounts come in. You open that envelope, take a deep breath, look and then … Well, it’s safe to say that you don’t like what you see.
You’re far from alone, of course. Thanks to the country’s economic slump, the monetary values of 401(k) plans across the United States have been falling fast.
But the struggling stock market shouldn’t keep you from buying a house if you’re ready to purchase.
Certified planner Chris Bird last week told an audience at the 2008 REALTORS® Conference & Expo in Orlando that the stock market will eventually regain its strength and that your investments will again begin growing. The stock market isn’t meant for short-term gains, Bird said. It’s meant to create long-term wealth.
Does that sound familiar? It should. It’s what I always say about residential real estate. It’s not designed to double your money in a year. It’s designed to steadily pick up worth over several years.
You can read about Bird’s speech here. The gist, though, is that you shouldn’t fret too much over “the talking heads who say the sky is falling.” That’s good advice, whether those talking heads are bemoaning the state of the stock market or the health of the housing industry.
In fact, the falling stock market might actually mean good things for residential real estate. Because the stock market has had such a rough year, many investors have lost faith in it. They’re looking for somewhere else to put their money. And what’s a safer, steadier investment than residential real estate? Not even in the worst housing markets in the country has the value of residential real estate fared as poorly as has the stock market this year.
I always advise my clients to look at real estate as an asset to be held for several years. The days of buying a home, fixing it up and then selling it a year later for immense profits are over. Personally, I’m glad. That boom market caused too much artificial inflation of home values over the years in Chicago and across the nation. We’re moving back toward a normal market, where homes will still appreciate in value, just not as quickly as we saw during the real estate boom of 2001 through 2006.
So next time you open that 401(k) statement, or the next time you worry about the worth of your home, remember not to panic. Be patient. Your investments will regain their health again.
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One More Time: Your LOCAL Market is the One That Matters
November 7th, 2008 categories: Chicago Real Estate News
I always tell my buyers and sellers not to pay too much attention to national news reports regarding the housing industry. That’s because those reports focus on the entire country, while my clients need only worry about their local markets.
To see what I mean, visit the Chicago Tribune’s Market Pulse Web site, which you can find here. The page lets you click on different Chicago neighborhoods to find their median housing prices and how they have changed during the last year.
By doing this, you’ll discover that housing in Chicago has seen widely varying performances in the last year depending on the neighborhood.
For instance, in Logan Square, the median housing price has dropped 4.84 percent during the last year. On the Near West Side, the median price has dipped 1.97 percent during the same time.
It’s true that most Chicago neighborhoods did see their median housing price drop during the last year, something that is to be expected given the country’s long-running housing slump.
But the city’s traditionally strong neighborhoods have bucked this trend and have seen their median housing prices rise during the last year, even as the struggles of the national industry worsened. In Lincoln Park, for instance, the median housing price of $475,000 represents an increase of 4.4 percent from one year earlier. And the news is even better in the Near North Side, where housing prices jumped 14.49 percent from one year earlier. The median housing price in this slice of the city, which includes the Gold Coast, River North and Old Town neighborhoods, now sits at $395,000.
In Lincoln Square, one of the hottest neighborhoods in Chicago, the median housing price of $352,500 is 20.31 percent higher than it was one year ago.
The news is even better if you check how median prices have changed in the last five years. Do this, and you see that the vast majority of Chicago neighborhoods have seen the value of real estate appreciate during this time.
The lesson here is clear. Just because housing prices are stagnant or dropping in many parts of the country, doesn’t mean they’re doing the same here in Chicago. If you’re looking to buy in the city, rest assured that residential real estate here is still a top investment.
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