Chitownproperty

Housing affordability is at its highest point in 18 years, according to the Housing Opportunity Index released by Wells Fargo and the National Association of Home Builders last week. Over 70 percent of homes were affordable to families earning the national median income during the first quarter of 2009, up 10 percent over the previous year. Lower home prices, low interest rates, and the new $8,000 tax credit for first time home buyers contributed to the increase.

The most affordable city in the country was Sandusky, OH; the least affordable, New York City. Chicago was 165th out of 220 metropolitan areas.

Realty Times – In a Down Market, Pricing Needs to Get Out Ahead of the Curve

The hardest part about a declining or stagnant market is deciding where to set your asking price. In an “up” market, this was easy: you could look at recent sales of similar homes and set your price a little higher. But when things are moving in the opposite direction, how do you know where to start?

In the book Shift: How Top Real Estate Agents Tackle Tough Times, author Gary Keller says the same logic applies. Sellers in a down market have to get ahead of declining values and set their asking prices where they will attract offers, and this often means lower than recent comparable sales. As Bob Hunt says in his review of the book for Realty Times, “If you fail to get ahead of the market when the market is in decline, the consequence is not that you simply receive a lower price; the consequence is that you don’t get a sale at all.”

10 New Year’s Resolutions for Home Sellers

Homescape’s Duane Hopper offers up a real estate version of the perennial list of resolutions, this time for home sellers in a tough market. All ten are good ideas, but our two favorites are:

• Create the “wow” factor – Staging, staging, staging. You may think you have impeccable style, but potential buyers need to walk in a home and picture themselves living there, not you. That means sprucing things up, neutralizing personal touches, and making the very best use of space, and …
• Know your competition – Which translates to, “Set a realistic asking price.” You have to acknowledge the other properties for sale in your neighborhood and price tier. A home is only worth what someone is willing to pay for it, and if you can’t justify a higher price relative to the competition, you’ll sit on the market.

Homescape: Why Now is the Best Time to Buy

Steven Hyman, a real estate broker and blogger at Homescape, calls the time of year from Thanksgiving until the Super Bowl the “white death,” because of the general slowdown in real estate activity. Potential buyers are busy with the holidays and don’t spend much time shopping for homes, and sellers are left alone, willing to cut a deal. Hyman says this means the “white death” is a good time to buy:

In my opinion, the cool down periods are the best time to start your home search. For those home sellers who can’t wait for the peek selling season to put their homes on the market, time is of the essence. If the sellers don’t make a deal now, it may be a long, cold and lonely winter till another offer materializes. By then, their home may lose some of its appeal from being on the market too long. With limited competition during the slower months, home sellers will be more open to negotiate deals that could be favorable to the buyer.

Of course, that means you have to be able to get a loan. Credit markets are still tight, but surprisingly, Mary Umberger from the Chicago Tribune says that 34 percent of first-time home buyers in a 2007-8 study financed their purchase with no money down. While we would typically recommend against 100 percent financing (the old rule of thumb used to be 20%), such numbers are a sign that qualified buyers with proof of income still can secure a mortgage.

Finding an area with appreciation potential — chicagotribune.com

This syndicated article in the Tribune says that the trick to buying a home now is finding a neighborhood with appreciation potential:

Real estate specialists who view the economy on a large screen are confident that those with the nerve to buy a home in the current market will one day be glad they did—particularly if they’re now able to capture a quality property in a desirable neighborhood at a bargain price.

“Throughout history, property markets have always gone through cycles. Buying smart now means picking one of those prime neighborhoods where values will be among the first to rebound,” says Barry Nystedt, a real estate broker and president of the National Association of Exclusive Buyer Agents ( www.naeba.org).

Nystedt, who considers this an opportune time for first-time buyers to make a purchase, predicts that values in many coveted communities will very gradually begin rising during the next six to 12 months. In areas where the economy is weak, however, he says prices could remain stagnant for three years or longer.

First-time buyers who can make a good downpayment and plan to stay in their home for three to five years are in prime position to find a deal. To help you find the right neighborhood, the Trib also published this nifty map that shows home value changes all over the Chicago area for the past year.

Is Now a Good Time to Buy a Home? – WSJ.com

Doesn’t it seem like someone is always saying it’s a good time to buy a home? Obviously, this is a tough time to be doing any kind of significant spending, let alone making purchase as large as a home. But the Wall Street Journal says that now may be a good time to buy if you:

• have access to credit
• have fat cash reserves
• aren’t already over-exposed to real estate
• have a secure job or income stream
• expect to hold the property for at least two years

If you’ve been listening closely, that’s the same advice you’ve already heard about buying at any time, not just in the current tough market.

Wacko world of willfully weak market — chicagotribune.com

Are homeowners still in denial about falling home values, or have they learned to be realistic? It depends who you ask, naturally. Mary Umberger tells us that Zillow.com thinks homeowners are in denial, not surprising for a company whose business model is based on the presumption that it knows how much your home is worth better than you. On the other side, a study by Reuters and the University of Michigan finds that just less than half of homeowners–twice as many as last year–think that their home has declined in value.

We’ve found that the degree to which sellers are flexible about asking prices depends on their urgency. Those who are just testing the waters, or haven’t even started shopping for a new home yet, are more willing to stick to their dream price. Those whose home has been on the market for a long time, have already purchased a new home contingent upon the sale of their current one, or need to relocate, are more flexible.

We hate to use the term “realistic” about describing how someone determines an asking price, because that implies that holding out for a certain price is always bad, even if time and urgency allow. Some sellers can afford the risk of longer market times in turn for getting a higher asking price. But others need to sell within a certain time period, and those people need to be the most flexible and willing to adjust their expectations according to their circumstances.

Buying vs. renting, or cost vs. time — chicagotribune.com

Since the slumping home market has changed the equation determining the benefits of buying or renting, the Tribune is taking a fresh look at this age-old question. Prices are generally lower now, meaning it might be a good time to buy, but a tight credit market also means that buyers, particularly young people with little credit history, may have a harder time financing. Plus, overall energy cost increases mean that utilities and some repairs may cost more, adding to a homeowner’s responsibilities, whereas a landlord may pick up the tab for such things.

The best rule of thumb, as mentioned in the article, is to consider how long you will live in a particular place. In the past, three years was considered long enough to make it worth buying, but now that has gone up to five years.

Top 100 markets forecast: Where home prices are headed next

CNN/Money reports that housing prices should continue to decline in 75 of the top 100 U.S. markets over the next 12 months. As of May 2008, Chicago’s median home price is $279,000, a 29.2% increase in the past five years. However, this is expected to drop by 6.8% by next May.

In a recent survey conducted by Coldwell Banker, 78 percent of its agents reported that their clients have indicated more interest in living in the city instead of the suburbs because of higher energy costs.

The overwhelming reason for this change of heart is to reduce commuting costs, but a majority of those surveyed also cited the convenience of public transportation and being able to walk for services and entertainment. Another 84 percent of the agents said clients were looking for homes with a dedicated home office, so they could telecommute and work from home.

While this may mean more competition for buyers, increased interest in urban living is good news for homeowners in the city, as their homes’ proximity to business, services, and nightlife becomes more desirable.

Even in this climate, there’s no rule like an old rule — — chicagotribune.com

This week’s Tribune has a useful article about how longstanding “rules” of real estate still apply, even in today’s changing market. Buyers and sellers can count on certain maxims to get the best deal, regardless of the financial environment, including:

• You should always shop around for mortgages
• The right initial price is the key to selling
• Negotiate every offer

Zillow.com has just released their quarterly home value reports for major metropolitan real estate markets. The good news is that home values didn’t decline in the Chicago area as much as they did in the rest of the country. The bad news is that they did decline 5.8 since the first quarter of last year. The national average was an 8% decline.

What’s interesting is that numbers like this, plus the constant drumbeat of news coverage about declining home value, don’t seem to change people’s opinions of the value of their own home. According to another survey by Zillow, 72% of homeowners believe their home increased in value over the past year, while only 25% of homes actually did so.

Recognizing value key to buying home — chicagotribune.com

Calling today’s market a “buyer’s market” implies that now is the time to find a deal, but buyers show signs of wanting to wait a little longer, to see if prices will go any lower. That’s not a bad strategy, says the Tribune’s Carolyn Bigda, but the problem is timing that right. Instead of focusing on price alone, she counsels doing your research and finding good deals in neighborhoods you like; chances are, neighborhoods with good amenities, location, schools, etc have held their value, and will continue to do so. Choosing a particular lifestyle is just as important as finding a bargain.

It’s still buyer vs. seller — chicagotribune.com

The Trib’s feature real estate story this week points out something that’s painfully obvious to those of you trying to sell your homes right now: the buyers are in control, and not just by having a large selection. Buyers know that some sellers are desperate to move, and are demanding everything from simple inspection item repairs to furniture and new appliances with their offers.

Of course, this can get out of hand, and the example in the article of one buyer demanding that a flat screen TV and surround sound system be thrown in with the home is extreme. But as a seller, you can avoid some irritating requests by taking care of all those nagging repairs you’ve been living with at home–the bathroom door that doesn’t quite shut, the bathtub that needs more caulking, the furnace that runs a little hot, or the water heater that runs a little cold. These can be surprisingly simple to fix up front, but can become a major point of contention during a heated negotiation process.

Most housing markets are less overvalued – CNN/Money

Analysts from National City Corp bank say that the home valuations–the difference between what a home should cost and its actual price–are at their lowest in four years. That isn’t to say that home prices have stopped declining, but now, even in a market like Chicago that was never severely overvalued, is as good a time to buy as any.