Chitownproperty

Popular sentiment seems to be that the hot real estate market of the past few years is going to end with a “soft landing,” no drastic price drops, but a gradual settling of home values back down from the stratospheric appreciation rates. This week, the New York Times examines what would happen to the housing market and the economy as a whole if the real estate bubble were to pop instead of letting its air out gradually. The two are inextricably tied, and the fate of the economy may be just as dependent on a healthy real estate market as housing is to purchasing power and consumer sentiment.

Despite the constant emphasis placed on home values in the media, a recent survery by Coldwell Banker found that only 5 percent of Americans view their homes primarily as investments. A vast majority, 67 percent, viewed their homes as just that, a place to live, and all things remaining the same, would not trade up to a new home if given the chance. The survey results seem to reflect a high level of attachment to homes, a contrast to the wheeling, dealing, and home equity raiding attitudes that press coverage of the last few years of the real estate market would have one believe. Read more for the survey’s results on why people choose to move, and what they really want when they do.

Fully-loaded 2 bed, 2 bath condo with skyline views

Price: $419,900
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Amazing penthouse 2 bedroom 2 bathroom condo in intimate elevator building. Stunning living room with cathedral ceilings, wood-burning fireplace and terrace. Beautiful kitchen with cherry cabinets, granite countertops and stainless steel appliances. Massive master suite complete with walk-in closet, private balcony and a stone bath with steam shower and a huge whirlpool tub. Spacious second bedroom and marble second bathroom. Skyline views, Brazilian cherry floors, organized closets and garage parking complete this home. The building boasts a common rooftop deck and is located steps from the el, shopping, dining and more. This is truly a special property. Also available for long- or short-term rental at $2000/month.

With markets across the country cooling down to more sensible levels, some people are sitting out of the real estate game, convinced that prices will go down even further. These “bubble sitters” are waiting for just the right moment to swoop in to pick up a great deal, cashing out of the market now by selling their home and renting, or waiting longer to buy their first home. But is this a smart strategy? It depends on your motivation.

Economists say that speculating by selling your home in hopes of buyer cheaper in the future doesn’t make a lot of sense. Between selling costs, the lost tax advantages by going back to renting, and purchasing costs of a new home later, you will probably cancel out any gains made from market fluctuations. If you have no other reason to move, it’s best to stay put. But if you need to downsize, or only plan on living there for a short amount of time (less than five years), it might make sense to rent while waiting to cherry pick the best deals. And if you are considering entering the market for the first time, you could benefit by renting just a little longer.

Of course, it’s hard to predict the precise bottom of any market swing. If you’re planning to stay in the new home for a long time (over five years, for instance), you should still look to buy as soon as you can to take advantage of all the traditional benefits of owning real estate. If you understand your local market and research carefully with the help of an experienced agent and appraiser, you won’t overpay.

Gone are the days when you can expect to sell your home fast for top dollar. Whether it’s the effect of rising interest rates, overpriced housing markets, or high local inventory, sellers need to alter their strategy to get the highest market value out of their homes in a reasonable amount of time. The American Homeowners Foundation offers this advice via the Sun-Times:

• Face up to the new reality – Buyers realize they have the leverage right now, and sellers have to face the fact that they can no longer expect to squeeze top dollar out of their sale. Sellers need to understand that if they don’t price their home competitively, buyer’s don’t have any reason to look at their home because there are likely three others for sale for less in the same neighborhood.
• Price competitively according to the very latest sales – Sellers should base their asking price on the most recent sales data available. Even comparable sales from three or four months ago may be unrealistic today.
• List in the MLS – Whether you go with a full-service or discount broker, make sure your home is listed in the MLS to reach the widest possible audience. The MLS feeds many other real estate websites, including sites for the major brokers and Realtor.com, the largest listing of homes for sale on the web.
• Offer incentives – We don’t mean silly, eye-catching perks like throwing in a new car, but tangible, cost-saving incentives to sweeten the deal for a potential buyer. Even if your house is in great shape, consider offering a decorating allowance to help the buyer defray furnishing expenses. Offer to pay for some closing costs, or pay down the buyer’s mortgage rate for a short amount of time. Also, whether you use a full-commission listing broker or not, you should strongly consider offering a commission to the buyer’s agent. They have to make a living too, and whether they do it consciously or not, will always be more enthusiastic about showing their clients a home that offers a commission.
• Put your best face forward – As always, your home has to look good to stand out. Make sure your finishes in important rooms like the kitchen and the bathroom are up to your market’s standards. If you can’t or don’t want to pay for remodeling, expect to have to lower your asking price to accommodate. Again, you want to give the buyer every reason to choose your home over a neighbor’s.

Remodeling your kitchen probably has the biggest impact on your home’s value of any project. But it requires careful consideration. How much should you spend? How long are you planning to stay in the house? And what is the standard kitchen in the neighborhood like? You don’t want to spend all your savings on a state-of-the-art chef’s kitchen. Some experts recommend spending 10-20 percent of your home’s market value as a rule of thumb. Your choice of finishes and appliances should also reflect how soon you might consider selling the home. If you’re planning to stay for a while, feel free to really customize it to your tastes, but you think you might leave sooner than later, you probably want to stick with more standard, popular finishes, hewing close to those in your neighborhood so you can compete in the market.

With much of the leverage in the real estate market swinging to buyers, they have become more demanding in their lists of must-haves for potential homes. High-end upgrades like walk-in closets and stone countertops are essential in new homes, but different groups of buyers focus on different things. Many younger buyers are looking for more space for home offices, an attached garage spot, larger rooms, and multiple bathrooms. For sellers, the trick is determining your likely buyer and making sure your home has the necessary features before you put it on sale. You may not be able to add an extra room, but small renovations and a good job of staging can help put your home’s best face forward.