Chitownproperty

Two separate articles in the Tribune and Sun-Times today about the cooling housing market, both with the same gist: the market peaked last year, sales will decline across the board this year, and if you’re mortgaged up to your eyeballs, you’re in trouble.

For the most part, I agree with these assessments. The housing market is slowing down, and any bubble that existed is deflating. We’re not like the National Association of Realtors economist David Lareah, who repeats his stock quotes about how the market is merely “stabilizing” every time you pull the string on his back. The market is cyclical, and we had a good run the last five years. Now it’s time for some sanity.

Debbie and I had an interesting discussion with our pediatrician today about the housing market. He said, “When the nurses are talking about their real estate investments, that’s when I know it’s time to get out.” That’s not meant as a slap to the fiscal responsibility of nurses. What he meant was that when everybody and their brother thinks they can flip a condo with $1,000 down for a 50 percent profit after two months, well, something has to give. Home values can’t continue to increase at the same rate they did the last few years forever. But people will always need a place to live, and fortunately for them, it may be a little more affordable again.

In our business, we are seeing longer market times for properties. Buyers don’t have the same sense of urgency because there is a larger inventory out there. They don’t have to snap up the first one-bedroom with a view of the backside of a dumpster that they find. They can afford to look around for the right place. On the flip-side, sellers are learning to be more realistic about the resale value on their homes. It’s probably unreasonable now to expect 15-20 percent returns each year like people were getting in the last few years. But that doesn’t mean they’ll have to sit on their place forever–if it’s becoming a buyer’s market, that means people will be on the lookout for deals. And as long as interest rates stay low, buyers will stay in the hunt, albeit more patiently.

A quick rundown of this past weekend’s local real estate news sections:

• Ever wonder how builders can work through all that snow? Contractors don’t slow down during winter months, but they do have to take special precautions to make sure concrete and masonry cures properly.
• The cost of living in college dorms has risen so high that some students have been finding ways to apply for government-subsidized housing intended for low income families. But starting next week, new rules passed by Congress will take the student’s parents’ income into consideration in most cases, even if the student claims to be living independently.
• Home heating retailers say sales of wood-burning stoves are up anywhere from 30 to 50 percent this season as people search for lower-cost heating and cooking alternatives to gas.
• Maybe you can’t afford the dream of living off the grid in one fell swoop, but you can start using enough solar power to make a difference, little by little.
• Rising interest rates are starting to squeeze homeowners with adjustable rate mortgages, no longer able to bail themselves out by refinancing their home based on double-digit price appreciation.
• Having trouble choosing cabinet finishes? Check out this guide to new cabinet options.
• More buyers are making offers with home sale contingencies, citing longer market times as reason to safeguard their position before committing to a new home. In a hot market, submitting an offer contingent upon selling an existing home would weaken a buyer’s negotiating position, because other buyers would likely be willing to make an offer with no such restrictions. But as the market cools, more people are willing to take this risk in order to make sure they have the proceeds from the sale of their home in hand for a downpayment.

Despite a drop in activity in December, 2005 was still a banner year for the housing market. From today’s Sun-Times:

The Commerce Department reported Thursday that construction of single-family homes and apartments totaled 2.065 million units last year. That was an increase of 5.6 percent over 2004 and pushed total construction to the second highest level on record, exceeded only by 2.357 million units built in 1972.

Construction of single-family homes hit an all-time high for the third straight year, rising to 1.714 million units, up 6.4 percent from the previous record of 1.611 million single-family homes built in 2004.

Pace of New Housing Construction Falls Sharply in December (From The New York Times)

The Cook Country Board is considering a proposal today that would cut property taxes on rental apartment buildings 27.5 percent over three years while shifting the burden to homeowners and commercial property owners. Those tax payers would see a 2 percent increase to make up the lost revenue. The proposal, which is expected to pass, is intended to create more affordable housing by easing the burden on landlords, and has the backing of Mayor Daley and County Assessor James Houlihan. While no tax increases are welcome, this one is relatively small, amounting to $80 on a typical $4,000 tax bill.

CNN keeps pouring it on with the real estate tips, this one about remodeling.

After months of warnings that energy bills this winter will skyrocket, make puppies cry, and eat your children, People’s Gas has agreed to refund $100 million to customers in Chicago and the North Shore. The settlement is the result of People’s shady dealings with Enron in 1999. The company is not supposed to profit from selling natural gas, but in just 18 months after the deal People’s and Enron split a $23 million profit from their joint venture.

$100 million sounds like a pretty big number, but it only translates into $50 per person this year and another $50 next year. Anything helps though. This December’s average gas bill was $360, 50 percent higher than 2004. Any horror stories out there? What’s been your highest bill?

Fantastic condo view from the heart of Old Town

Price: $339,900
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Fantastic condo in the heart of Old Town. Newly renovated kitchen with beautiful maple cabinets, granite counters, mosaic slate backsplash and breakfast bar. Gas fireplace, wood flooring, updated baths and custom paint. Beautiful northeast views from floor-to-ceiling windows in all rooms. Split floor plan. Balcony and prime garage parking spot. Building also includes doorperson, extra storage, and party room.

The home renovation boom is simmering down, feeling the bite of higher loan rates, according to a news report Monday

Immaculate West Loop loft

Price: $259,900
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Check out this immaculate and huge loft at the reputable Gotham Lofts in the West Loop! Hardwood floors throughout! Up-dated kitchen with an 8ft island and beautiful granite counters- perfect for entertaining! This unit has tremendous living space, custom window treatments and a gas fireplace. A large balcony is located off of the living room, which over looks the scenic courtyard. Un-unit washer and dryer, parking and extra storage complete this awesome condo.

Be wary of shady contractors pushing for unnecessary repairs

AKA, Don’t Let That Space Heater Burn the House Down

Keep your chimney clean without getting scammed

Southport Corridor Recent Rehab

Price: $317,500
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This Southport Corridor 2 bedroom 1 bath was rehabbed two years ago. This is not a shabby rehab like so many others. The large kitchen is finished with stainless steel appliances, cherry stained maple cabinets & granite countertops. The marble bath has a linen closet. The living room is an ample size and is wired for surround sound. Hardwood floors throughout, central air and laundry in unit complete this beautiful home. The kitchen opens to the back porch and huge common rooftop deck is easily accessible from this unit. Rental parking is available. The location on beautiful tree-lined Cornelia street is just steps from the el and all that the Southport strip has to offer.

Oversized 3 bedroom in Southport Corridor

Price: $549,900
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Gorgeous Southport Corridor 3 bedroom 2 bathroom home. The uniquely over-sized 25X183 lot allows for a large floor plan all on one level. There are elegant high end finishes throughout. The large living room is complimented by a bay lined with windows. Adjacent to the living room is the dining area. Open to the dining area is the large kitchen finished with cherry cabinets, stainless steel appliances, and granite countertops. The island with an overhang for stools and side deck for grilling make this kitchen perfect for entertaining. There are two full baths with marble and cherry. The master suite is a haven with 2 walk-in closets, Jacuzzi and separate shower. A second and larger deck is located off the back of the home overlooking a large common yard. Garage parking is included in the price. This home is located on a beautiful tree-lined street across from Blaine school and steps from all the restaurants, shops, entertainment and convenience Southport has to offer.