Chicago Home Prices are weathering the storm

Posted on August 29, 2008 by Mark Killion

Chicago Home Prices are weathering the storm

The Illinois Association of Realtors released the sales data for July 2008.
In the city of Chicago, sales prices remained steady vs. July 2007.
Even though the number of transactions were down significantly,
sales prices were only off by 1/3 of 1%.

I read in a recent stock market article that “flat is the new up”.
I guess you could apply that to home sales prices as well.
Even though the number of sales were down, there was still a huge
amount of homes being sold. 2,167 properties were sold in July 2008.
So contrary to media headlines, homes are being bought and sold
every single day in Chicago.

Chicago home prices fared better in the city than in the larger metropolitan area.
In the metropolitan area, which includes the suburbs, home prices were down
about 3%. As a whole, Illinois prices fell about 5% compared to last year.

Nationally, prices fell about 7% compared to last year.
So, relatively speaking, Chicago is holding up pretty well.
Now, if we could just figure out a way to stop all of these foreclosures,
prices will begin rising again. There is just so much inventory on the market.
Supply and Demand are way out of balance. Once supply drops down to normal
levels, the market will stabilize. Also, when the media starts saying that “now is
the time to buy”, just watch how fast things turn around. But by then, it
might be too late to get the best deals. Until the next time…

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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Tax Loophole closed…watch out!

Posted on August 21, 2008 by Mark Killion

Tax Loophole closed…watch out!
In a previous post, I talked about how Uncle Sam allowed a couple to keep up to $500,000 in profits tax free when they sold their property. This was assuming they had lived in that property for 2 of the last 5 years.

So a couple of savvy investors could:

1) Buy a property in a fast appreciating area.
2) Rent said property for 3 years.
3) Move into said property for 2 years.
4) Sell said property and pocket up to $500,000 tax free!

Then, they could reinvest half of the tax free money, and
repeat steps 1 to 4. As they say, knowledge is power. I’m sure more than a few people got rich off of this maneuver.

Well, as they also say, all good things must come to an end.
(who is ‘they’ anyway? :)

Apparently, this tax loophole has been closed. As part of the Housing Crisis Relief Bill, Congress modified the tax code for this scenario. Now, in the above example, the couple would be taxed
on the three years that they didn’t live there. In the above scenario, they didn’t live there 60% of the time. So, they would be taxed on 60% of the profit (or $300K). That would be a HUGE Tax bill. Could you imagine having to write a check for that bill on April 15th? This is really where the mortgage relief money will come from. By changing this tax code, Uncle Sam will generate billions in additional tax revenue.

If you were lucky enough to have bought your investment property before 2008, then this tax change shouldn’t affect you.
Also, it won’t hurt anyone that uses their property solely as their principal residence. I’m sure some investors will be caught off guard in a few years and will be hit with a monstrous tax bill.
Hopefully, one of those investors will read my blog before they
buy their next building.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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Lincoln Park Real Estate Stats

Posted on August 21, 2008 by Mark Killion

Lincoln Park Real Estate Stats

Now let’s take a look at the ever popular Lincoln Park neighborhood.
Lincoln Park has definitely weathered the real estate storm.

Now granted, sales are probably off 15% compared to last year, but keep in mind, everything is relative. They could be down 30%, and still do better numbers than most other neighborhoods in Chicago.

Lincoln Park neighborhood residents enjoy a lively cultural scene, exceptional architecture, lovely gardens and of course, the 1,200-acre park that runs along Lake Michigan.

Lincoln Park is one of the most popular neighborhoods in Chicago. It has the most restaurants per capita in the city. Lincoln Park offers just about anything from the Lincoln Park Zoo, a Nature Museum, beaches, golf, tennis courts, theaters, and comedy clubs along with hundred of restaurants and bars to choose from. Shopping includes a mixture of independent and one-of-a kind businesses. It is also home to the acclaimed Old Town School of Folk Music, a popular entertainment venue and music school.

The neighborhood population is primarily made up of young professionals, recent college graduates, and young families. It is home to DePaul University.

This report will give you a good idea of what to expect if you’re thinking about buying or selling in Lincoln Park. The Lincoln Park boundaries are loosely defined. But for the purpose of this report, I am focusing on the following boundaries:
——————————————————————————
Lincoln Park

North Boundary: Diversey (2800 North)
South Boundary: North Ave (1600 North)
East Boundary: 200 West
West Boundary: Ashland (1600 West) ———————————————————-
Lincoln Park Map

———————————————————————————

The following results are based on Real Estate activity for the last 6 months (roughly Feb 2008 –> Aug 2008)
This data is taken from the Multiple Listing Service.

Executive Summary

1) Single Family Homes:

The median asking price = 1.8 Million
There are currently 166 Single Family Homes on the market.
The average market time is 6 1/2 months.

Here’s the breakdown on average asking prices:
a) 2 or less bedrooms = 749K
b) 3 bedrooms = 900K
c) 4 bedrooms = 1.4M
d) 5+ bedrooms = 5.53M (yikes)

Now let’s take a look at what sold:

The average selling price = 1.68 Million
66 Single Family Homes sold in the last 6 months.
The average market time was 5 months.
On average, sellers got 95% of their asking price.
0% of the listings expired (were not sold).
That’s right..not one listing expired. WOW!
That’s a big difference from Bronzeville (a popular area on the Southside) where 50% of the listings are expiring.
It just goes to show you, that Real Estate is a very local business. So, don’t pay too much attention to the “gloom
and doom” that the media is throwing at us daily. Chicago is holding up relatively well in comparison to other parts of the country (i.e. California, Nevada, Arizona, and Florida).

At the current rate of sales, Lincoln Park has a 15 month
supply of Single Family Homes.
============================================================

2) Condos

The average asking price = 618K
There are currently 693 condos on the market.
The average market time is 4 1/2 months.

Here’s the breakdown on average asking prices for condos:
a) 2 or less bedrooms = 398K
b) 3 bedrooms = 692K
c) 4 bedrooms = 1.58M
d) 5+ bedrooms = 5.53M

Now let’s take a look at what sold:

The average selling price = 478K
484 condos sold in the last 6 months.
The average market time was 3 1/2 months.
On average, sellers got 97% of their asking price.
Also, 0% of the listings expired (were not sold).

Here’s the breakdown on average selling prices for condos:
a) 2 or less bedrooms = 376K
b) 3 bedrooms = 676K
c) 4 bedrooms = 858K
d) 5+ bedrooms = 1.2M

At the current rate of condo sales, Lincoln Park has
about an 8 1/2 month supply of inventory.
It is generally considered a “Seller’s Market” when inventory
levels are at 6 1/2 months. So, apparently, Lincoln
Park has been largely unaffected by the current housing slump.

=====================================================================
IN SUMMARY:

Lincoln Park is surviving, and excelling, in the current housing
slump. It’s really amazing that Lincoln Park is still selling 80 condos per month. We’re not talking about cheap condos either.
These are $480,000 condos!

It is interesting to note that the current average asking price,
for condos, is significantly higher than the average selling price for condos in the last 6 months. This probably indicates that prices will be trending higher over the next several months.

After analyzing the data for this post, I am strongly
considering focusing my Real Estate business on Lincoln Park. That way, I could possibly benefit from all this action.
So if you’re looking to buy or sell in Lincoln Park, and you
need a great Realtor…. I am here to serve you!

For more information on Chicago Real Estate,
please contact me. Until the next time…

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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Bronzeville Condo Rentals

Posted on July 22, 2008 by Mark Killion

Bronzeville Condo Rentals

Now let’s take a look at the Bronzeville Rental Market.
In my previous post, I examined the current Bronzeville ‘For Sale’ market.
The current rate of sales in Bronzeville is about 9 condos/month.
I would guess that only the best condos, in the best condition, at
the lowest price are getting sold. The rest are just sitting on the market.
If it is an option, I would suggest that sellers make any necessary repairs,
put up a fresh coat of paint, and then rent their condos until the market heats up.

There should be a huge demand for quality condo rentals.
Right now, the problem isn’t buyer demand. The real problem is a lack of
available condo financing. Most conventional lenders are looking for a 10% down
payment. They also want good credit scores. The FHA program, which only requires a 3% down payment and a 580 score, doesn’t particularly care for condos.
It is hard to get a condo approved for FHA Financing. These factors should bode well
for landlords. Right now, I am noticing an increase in rent amounts. But, as more and more rental units start hitting the market, we should see rent amounts stabilize or even
drop slightly.

Here’s an analysis of the current Bronzeville Rental market*
* Based on data from the Multiple Listing Service as of July-12-2008

===========================
1 Bedroom, 1 Bath
Total Available: 8
Average Rent: $1,128
——————————–
2 Bedrooms, 1 Bath
Total Available: 5
Average Rent: $994
——————————–
2 Bedrooms, 2 Baths
Total Available: 22
Average Rent: $1,472
——————————–
3 Bedrooms, 2 Baths
Total Available: 19
Average Rent: $1,890
——————————–
3 Bedrooms, 3 Baths
Total Available: 4
Average Rent: $2,463

—————————————————————————
Owners:
It is interesting to note that once your rental exceeds $2,000 per month,
it takes much longer to get it rented. It may take up to 3 months or longer.
I would recommend staying below the $2,000 price point if at all possible.

It is apparent that the rental market should be strong for some time.
Most people don’t realize that Realtors work with rentals too.
Owners, I can assist you with finding a qualified tenant for your Bronzeville condo.
Let’s put it on the MLS!
For more information, please contact me. Thanks!

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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BRONZEVILLE Real Estate Market Stats

Posted on July 22, 2008 by Mark Killion

BRONZEVILLE Real Estate Market Stats

Now let’s take a look at the popular Bronzeville neighborhood.
Bronzeville is located on the mid South Side of Chicago.
The area has a rich history, and is currently experiencing a revitalization.
Over the years, a number of famous African Americans have come out of Bronzeville.
The term Bronzeville, which came about several decades ago, probably referred
to the skin tone of the majority of its residents. Rehab projects have played a
huge role in the current revitalization of this culturally rich neighborhood.

This report will give you a good idea of what to expect if you’re thinking about
buying or selling in Bronzeville. The Bronzeville boundaries are loosely defined.
But for the purpose of this report, I am focusing on the following boundaries:
———————————————————————————————————————

Bronzeville

North Boundary: 2900 South
South Boundary: 4500 South
East Boundary: 800 East (Cottage Grove)
West Boundary: 0 (State)
———————————————————————————————————-
Bronzeville Map

—————————————————————————————-

The following results are based on Real Estate activity for Jan 2008 — Jun 2008.
This data is taken from the Multiple Listing Service.

Executive Summary

1) Single Family Homes:

The average asking price = 532K
There are currently 55 Single Family Homes on the market.
The average market time is 7 months.

Here’s the breakdown on average asking prices:
a) 2 or less bedrooms = 189K
b) 3 bedrooms = 506K
c) 4 bedrooms = 573K
d) 5+ bedrooms = 540K

Now let’s take a look at what sold:

The average selling price = 402K
11 Single Family Homes sold in the last 6 months.
The average market time was 10 months.
On average, sellers got 94% of their asking price.
52% of the listings expired (were not sold).
At the current rate of Single Family Home sales,
Bronzeville has a 27 month supply of inventory.
============================================================

2) Condos

The average asking price = 224K
There are currently 241 condos on the market.
The average market time is 6 months.

Here’s the breakdown on average asking prices for condos:
a) 2 or less bedrooms = 179K
b) 3 bedrooms = 263K
c) 4 bedrooms = 352K
d) 5+ bedrooms = 325K

Now let’s take a look at what sold:

The average selling price = 227K
52 condos sold in the last 6 months.
The average market time was 5 months.
On average, sellers got 96% of their asking price.
Also, 52% of the listings expired (were not sold).
At the current rate of condo sales,
Bronzeville has a 28 month supply of inventory.

Here’s the breakdown on average selling prices for condos:
a) 2 or less bedrooms = 181K
b) 3 bedrooms = 273K
c) 4 bedrooms = 275K

=====================================================================
IN SUMMARY:

Bronzeville real estate is still selling, albeit at a relatively slow pace.
There is an oversupply of real estate on the market in Bronzeville.
This means that it is a very strong buyers’ market.
It is interesting to note that the current average asking price,
for condos, is about 1.5% lower than the average selling price for
condos in the last 6 months. This is a great sign!

It signals that Real Estate is becoming more affordable for Bronzeville buyers.
It also indicates that prices are trending downward for condos. Single Family
Homes are a different story. There seems to be a huge disparity between
asking prices and selling prices. One might conclude that sellers of single family
homes are unknowingly pricing themselves out of the market. However, as their
market time climbs, I suspect we will start to see substantial pricing corrections.

If you are thinking about selling in this market, you will need to price
your home or condo aggressively. You will need to jump in front of the trend
and be willing to give buyers a good deal. Also, properties in the best
condition, at the best price, will still sell.

If you expect to sell your home or condo, you will probably need to be in the top 25%
in condition, and the bottom 25% in pricing. If you are not ready to price at a
discount, you should consider staying put for a few more years. If that is not an
option, I would suggest renting your condo. The Bronzeville Rental market is very strong.
I can help you find qualified tenants. But, we’ll talk about that later.

For more information on Chicago area real estate stats, please contact me.
Until the next time…

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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Logan Square Market Stats

Posted on July 11, 2008 by Mark Killion

I will try to look at the market stats for several Chicago neighborhoods.
This will give you a good idea of what to expect if you’re thinking about
buying or selling in these neighborhoods. This post will focus on the
popular Logan Square neighborhood. Although neighborhoods and areas are
loosely defined, Logan Square generally refers to the following geographic boundaries:
———————————————————————————–

Logan Square

North Boundary: 2800 N (Diversey)
South Boundary: 2000 N (Armitage)
East Boundary: 2400 W (Western)
West Boundary: 3600 W (Central Park)
Primary Zip Code: 60647

Map of Logan Square

——————————————————————————-

The following results are based on Real Estate activity for Jan 2008 — Jun 2008.

Executive Summary

1) Single Family Homes:

The average asking price = 768K
There are currently 208 Single Family Homes on the market.
The average market time is 6 months.

Here’s the breakdown on average asking prices:
a) 2 or less bedrooms = 329K
b) 3 bedrooms = 511K
c) 4 bedrooms = 852K
d) 5+ bedrooms = 1137K

Now let’s take a look at what sold:

The average selling price = 727K
56 Single Family Homes sold in the last 6 months.
The average market time was 5 months.
On average, sellers got 95% of their asking price.
41% of the listings expired (were not sold).
At the current rate of Single Family Home sales,
Logan Square has a 20 month supply of inventory.
============================================================

2) Condos

The average asking price = 335K
There are currently 475 condos on the market.
The average market time is 6 months.

Here’s the breakdown on average asking prices for condos:
a) 2 or less bedrooms = 291K
b) 3 bedrooms = 414K
c) 4 bedrooms = 499K

Now let’s take a look at what sold:

The average selling price = 334K
214 condos sold in the last 6 months.
The average market time was 5 1/2 months.
On average, sellers got 98% of their asking price.
Also, 22% of the listings expired (were not sold).
At the current rate of condo sales,
Logan Square has a 12 month supply of inventory.

=====================================================================

It appears that Logan Square is still in demand.
The real estate can be a bit pricey though.
It also appears that condos are in higher demand than Single Family Homes.
For more information on Chicago area real estate stats, please contact me.
Until the next time…

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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Rent with an option to buy

Posted on July 4, 2008 by Mark Killion

Are you curious about Rent-To-Own properties?
You’re not alone. Many people have been asking me
about this topic recently. I am posting an article I found
online. Hopefully, someone will find this information useful.

If you would like a list of rent-to-own properties in your area,
please send an e-mail to: “mark@markkillion.com”

I provide FREE assistance to all buyers and renters!

www.773property.com

—————————————————————–

In a “rent-to-own,” or “lease-option,” arrangement,
the seller is giving you the right — at some point in the future —
to buy the house at a price that is agreed upon today.

Usually, a portion of your rent over a specified lease period
goes toward your eventual down payment. Typically, a tenant
would pay slightly above-market rent over the lease period,
usually from one to three years, for the right to enter into this
arrangement.

It’s also common for the tenant to pay a fee in
“option money” for the privilege of having the
option to buy the property. The option money is non-
refundable! Its usually equal to about 3 months rent!

For example, if a house would typically rent for $1,000,
the option fee might be $3,000! You might be asked to
pay $1,200 per month, a portion of which, say $500 —
would be credited to your eventual down payment, depending
on the contract you work out. Such an option usually
expires at the end of the lease. In other words you must
exercise the option before the lease expires.

But be careful. In some lease-purchase agreements, you are
contractually obliged to buy at the end of the lease.
Sellers and agents now often use the two terms interchangeably.
But whatever name they attach to the arrangement, make sure you
have the option.

The arrangement gives you more time to think about the deal
plus provides a built-in structure to save for your down payment.
It also allows you to discover any flaws in the home that may not
have been detectable on an inspection and to get a feel for the
neighborhood without committing to a long-term mortgage.


However, it’s usually a good idea to first talk with a lender about
eventual financing for the house before entering into a
lease-purchase pact. Many would-be purchasers in these
arrangements find they can’t buy at the end of their lease
anyway, often for the same reasons they couldn’t buy at
the start of the lease: bad credit, insufficient down payment,
not enough income, etc.

In that event, you would lose your option money —
in the form of an up-front fee or added rent — and
any deposit you made. On top of that you would have paid a
higher-than-normal monthly rent.

In areas where real estate values are quickly rising,
locking in a purchase price on the day you sign the
initial rent-to-own contract could be very profitable for you.

If appreciation is significant during your lease portion,
you come out smelling like a rose. The problem with this
theory is that good lease-to-own deals are generally
scarce in hot sellers’ markets. If a seller sees rapid appreciation,
there is no motivation to agree to sell at today’s
price a year or three years later. Only owners who’ve had
their properties on the market a while, or had to move away quickly and
are struggling with two house payments, are likely to agree
to a lease-purchase arrangement.

Another potential disadvantage is that you may be obligated to tend
to repairs and maintenance throughout your lease stage, instead of
the landlord. Under most lease-to-buy contracts, any money or sweat
equity you put into major improvements will not be reimbursed in
the event you eventually opt out.

Where do you find rent-to-buys? Most real estate sales agents
and real estate rental agents have listings. Good luck!


Poster’s word of caution:
Please consult with a real estate agent before entering into
a rent-to-own deal. Some areas in the city are declining in value.
You want to make sure that the agreed purchase price is
low enough to make sense. If your Realtor says that the home is
in a neighborhood where sales are slow, try to get a purchase price
that is 5% lower than current market value.

The lender will not finance an overpriced property,
you will have to pay the difference in cash at closing :(
Honestly, if the house is in a “declining market”,
or an area where foreclosures are abundant,
chances are that the deal won’t make $ense.

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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FHA Financing

Posted on June 23, 2008 by Mark Killion

I will use this blog to share tidbits of real estate
information for the Chicago area. Hopefully, someone will
find my real estate ramblings useful at one time or another.

Unless you’ve been under a rock, I’m sure you’re aware that the
housing market is going through a tough time. The theme for most
media channels is ‘doom and gloom’. And while I must admit that
the current market isn’t great, we have to keep in mind that
that Real Estate is a very local business. Comparing the
Chicago market to the California market is definitely an
‘apples to oranges’ comparison.

Also, Chicago is so big, that it isn’t really fair to compare
neighborhoods either. Some neighborhoods still have a very strong
demand for housing (i.e. Loop,Near North), whereas other areas have
less of a demand. In comparison to other areas of the country,
Chicago is doing better in the midst of this “real estate slump???.

However, I must admit that the number of transactions are
probably down 25% vs. 2007. But, homes are still being bought and
sold every day in Chicago. If you’re planning on buying a home, that
you will live in for the next 3 to 5 years, then you don’t have anything to worry about.

Some buyers may be on the sidelines waiting to see if the prices
will drop. It is next to impossible to realize when you’re at the
bottom of any economic cycle. They don’t even know when we’re
in a recession, until two quarters later! Hindsight is 20/20.
Also, what about mortgage rates?! Due to this crazy inflation,
mark my words, mortgage rates will start climbing. So while you’re
waiting to see if we’re at the bottom of the Real Estate cycle,
the mortgage rates will climb, and you’ll miss your window of
opportunity. It is an excellent time to buy right now!

Unfortunately, we are still in a credit crunch. The lenders have
much tighter guidelines, and it is much harder to obtain financing.
Conventional programs want a high credit score, a good down payment,
and a good (verifiable) income. Most people have 2 out of 3 (and if
you’re one of my friends, you probably have 1 :) . So now is a good
time to pull your credit (www.myfico.com), and try to improve it.

You definitely want to pay off any collections. Also, the quickest
way to make your score jump is to pay down credit card balances!
If your credit is on the low side, don’t despair. You may still be
able to get a loan via the FHA program.

The FHA program is making a strong comeback in popularity.
The best part about FHA is that it isn’t driven by credit score.
If you have a 580 FICO middle score, and a decent verifiable income,
you should be able to obtain financing. However, you will need a 3%
down payment.

The days of “no money down??? loans are history (with the exception of
the VA guaranteed loans). But, the 3% FHA down payment can be a gift
from a family member, government program, or certain non-profit
organizations. FHA also allows the seller to pay your closing costs.
Congress is about to pass legislation barring the seller from funneling
the 3% down payment to a buyer via a third-party organization though.

Apparently, these types of deals have a much higher rate of foreclosure.
The biggest down side to the FHA programs, is that they generally
don’t approve condos. You will have a much easier time financing a
single-family home. Townhomes, and ‘2 to 4′ unit buildings should
be OK too. FHA also has a stricter appraisal process, and the seller
may be required to make certain repairs before closing. This may not
be feasible if you’re dealing with a REO (bank owned property).

FHA insured loans are the savior for this rough lending market.
FHA loans also allow a slightly higher Debt-To-Income Ratio. More on
Debt-To-Income Ratios later….

Until the next time,

Mark Killion
Real Estate Broker
Century 21 Affiliated
5200 S. Harper Ave
Chicago, IL 60615
24 Hour Voice Mail: 312-242-1822
Send me a note!

Visit me online: www.773property.com

EQUAL HOUSING OPPORTUNITY

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