Monthly Archives: December 2007

Happy New Year 2008!!

Today is the last day of 2007, a year that brought many changes to real estate markets around the country. The Chicagoland market wasn’t spared the impact of peaking real estate values and the challenges of “creative” loans that created some of the artificial demand that contributed to the push up of real estate values.

Tomorrow we start 2008. In 2008 purchasers of real estate will be those who actually need, and can afford, the property they are buying. This will result in fewer transactions but those that are completed will be real transactions, with buyers who actually will be using the properties as a home or as a long term investment. Hey, isn’t that what should always be done?

This adjustment is positive for the long term strength of the real estate industry. We may not be able to make a complete adjustment in 2008, but we will make significant strides forward so that 2009 and and beyond will again be years of solid performance for the real estate industry in the Chicago area. Here’s to starting on the road forweard in 2008!

U of I Economists Issue Housing Forecasts

The following are some key points from the recent forecast prepared by the University of Illinois for the Illinois Association of Realtors. As always, this continues to be a good time to purchase real estate.

Key Messages in a Changing Market:

-Those looking to buy now have an advantage with a large inventory to choose from and room to negotiate.

-Don’t be scared off by stories about a “credit crunch”. Conventional loans are available at good rates for credit-worth buyers.

-Despite increases in mortgage rates over the past couple of years, rates still remain at historically low levels.

-On average, the value of a home nearly doubles every 10 years.

-Real estate remains the single best investment over the long term providing wealth accumulation, especially for those who keep the home for a typical holding period of 6-10 years.

-The average renter’s net worth is $4,800. The average homeowner’s is $171,000.

-A Realtor can sell your home for up to 16% more than selling it by yourself.

Source: IAR Communications Department. NAR Public AwarenessCampaign research.

Real Estate Outlook-Not All News is Bad

Real Estate Outlook
by Kenneth R. Harney/ Realty Times
Maybe it’s the beginning of a trend: For the second straight week, there’s been more economic good news for housing and real estate than bad.

Pending home sales — houses under contract but not yet closed — rose by two tenths of a percent in the latest report from the National Association of Realtors. That’s not a lot-but it’s the first directional change in months on this important, forward-looking indicator.

The latest home sale projections for the year are also more positive than the impression you get from reading the papers. Existing home sales are now forecast at 5.7 million for 2007 — making it the fifth highest sales year on record.

Yes, everybody knows that sales are down significantly in many areas from the record-setting boom years of 2004 and 2005, but those numbers were unsustainable and way off the charts.

New home sales will add another 800,000 onto that 5.7 million — giving us total sales of six and a half million homes this year. Any way you look at it, that’s a lot of homes changing hands!

Despite negative news stories, the economic fact is that the national housing market is very much alive — and large numbers of consumers are successfully buying and selling every week.

A key reason this is possible is that mortgage money remains affordable and readily available for most applicants who can document income and assets and have moderately good credit. The Mortgage Bankers Association of America reports that interest rates rose slightly this past week — but at 6.19 percent for 30-year money and 5.8 percent for 15 year loans-rates are still less than a point above all-time historic lows.

Another piece of positive news comes from the Federal Reserve Board: American homeowners’ equity stakes are withstanding the post-boom correction phase very well, and continue to hover just under the eleven trillion dollar level.

That is down slightly from the prior quarter — after all, that’s what happens during cyclical corrections — but it’s still $48 billion higher than it was just 12 months ago!

A new study released last week by research firm First American Corelogic offers insight on why the Fed’s home equity numbers remain high: It found home values stable or rising in twice as many markets as they are down.

That’s the real economic outlook for real estate, though not necessarily the one you get on network TV.

Published: November 30, 2007