It wasn’t the happiest of holiday seasons for retailers this year. And no wonder: With home prices and sales continuing to fall across the country, few people were in the mood to spend big on their holiday gifts this December.
It shows once again just how important the home-selling business is to the health of our nation’s economy.
SpendingPulse, a division of MasterCard Advisors that tracks sales paid for by credit card, checks and cash, came out with some depressing numbers regarding holiday shopping. According to preliminary figures, total retail sales during the holiday shopping season fell between 5.5 percent and 8 percent from a year earlier, according to the tracking service.
Not all of this can be blamed on the economy. Terrible snowstorms and bitterly cold weather throughout much of the country kept many shoppers away from the stores. I know I didn’t feel like doing too much shopping on those below-zero days in Chicago.
Still, if the economy were better, and if housing sales weren’t so dismal, you can bet that consumers would have spent more when checking items off their holiday wish lists. Whenever I read about grim sales numbers, it provides me with one more unneeded reminder of why it’s crucial for the federal government to do something to help free up mortgage credit. Buyers may want to take advantage of the great housing prices in their markets. But how can they if mortgage lenders are making it so difficult to qualify for credit?
I recommend to my buyers that they explore the possibility of FHA loans. These loans are becoming the go-to source of mortgage financing for a growing number of buyers. They come with great interest rates and require lower down payments. They’re backed, too, by the federal government.
No one wants to go back to the days of the housing boom, when mortgage lenders gave financing to everyone, no matter how dismal their personal financial situations may have been. But we can’t go too far in the other direction, either, making it nearly impossible for the majority of residents to qualify for home loans.
There has to be a happy medium out there. And if the government doesn’t do something to help us get to it, we can all expect to read about more terrible holiday shopping seasons in the years to come.
There was a time when it looked like home remodeling was going to replace baseball as our country’s national pastime. The remodeling craze has since cooled down a bit, but this doesn’t mean that homeowners have totally abandoned the home-improvement craze, especially if they’re thinking of selling. The question, though, is this: If you want improve your home, what projects will pay off the most when it’s time to sell?
The answer might be found in the National Association of REALTORS® Remodeling Cost vs. Value Report. The report, put out every year, highlights those home improvements that return the highest percentage of their cost. It also points out those that return the lowest.
For the second year in a row, the home improvements that provided the highest return upon resale were those that focused on a home’s exterior. Upscale fiber cement siding returned the highest percentage of costs, with home sellers recouping 86.7 percent of their costs when selling. Wood decks came in next, bringing a return of 81.8 percent. Coming up next were mid-range vinyl siding at 80.7 percent and upscale foam-backed vinyl siding at 80.4 percent.
Those remodeling projects that returned the least amount of value were home office remodeling projects, which returned 54.4 percent of the money homeowners put into them; sunroom additions, which returned 56.6 percent; and back-up power generators, which returned 57.1 percent.
Bathroom remodels have traditionally returned a high percentage of costs. That didn’t change this year, though the percent of costs that these remodeling projects brought back did dip a bit. A mid-range bathroom remodel can be expected to return 74.4 percent of project costs to a seller on resale.
All of this information is good to know. However, I don’t recommend that homeowners let expected returns be the sole factor in their remodeling decisions. Remember, you have to live in your home until you sell it. If you plan on living in your residence for several years, it makes sense to renovate it so that it fits the life that you and your family lead.
There was a time – not too long ago, actually – when every developer wanted to build a condo tower in downtown Chicago. And why not? During the residential housing boom, developers were able to sell the condos quickly, and for prices that rose as high as the towers themselves.
Remember the heady days when Donald Trump first announced, and then broke ground on, Trump International Hotel & Tower? He was confident that he’d sell out his project in record time.
Trump isn’t so confident today, as his development still hasn’t been finished and many of his condos sit unsold. And he’s hardly alone among local developers.
A recent story in Crain’s Chicago Business highlights just how far the fortunes of many Chicago condo developers have fallen. According to the story, a growing number of high-rise developers are either seeking or have received extensions on construction loans that are soon to be due. At the same time, developers are struggling to sell their empty condos, with many facing the prospect of loan defaults. The Crain’s story says that foreclosure may be inevitable for the weakest of the projects.
Of course, if you happen to be struggling to sell a condo of your own, you know exactly how the high-rise developers quoted in the Crain’s story feel. It’s difficult today to sell any home. Selling a condo is even more challenging.
The problem is that there are so many new condos available. It’s hard for someone selling a condo that’s even two or three years old to compete with all the brand-new spaces in newer buildings that are also on the market.
If you’re struggling to sell your condo, though, don’t panic. There are steps you can take to move that unit.
The most important of these is to price your unit properly. Work with a REALTOR® who can tell you what comparable units in the same neighborhood have recently closed for. This will give you a good idea of what the market will bear. Remember, your condo is only worth what buyers are willing to pay for it. Price it too high, and you’ll struggle to notch any solid offers.
Secondly, to sell your residence quickly and at a fair price, make sure you’ve updated your condo unit. Buyers like bright, open kitchens and large bathrooms. They’re looking for hardwood floors and higher-end appliances. If you can add at least some of these features, you’ll give yourself an advantage.
Finally, if you don’t have to sell, you might consider waiting out this bad market. The competition for condo sales is tough right now. It’s hard to stand out. Your best move may be to wait until the market turns around and the excess condo inventory starts to disappear.
There’s a big difference between buying into the stock market and purchasing residential real estate: Not only is a house a good long-term investment, it’s a place to live. This is something that many people seem to have forgotten as they worry about whether or not they will “lose money” by purchasing a home today.
If you buy a home today in Chicago – even in some of the city’s top neighborhoods – you’ll be paying a price for your home that’s near 2005 levels. That’s a great bargain. And as long as you don’t expect to sell your home immediately, the odds are high that you’ll make a solid return when you do sell.
Back before the real estate boom, people viewed their homes as more than just a way to make quick money. The run-up in housing prices that we saw in 2001 through 2006 changed that. But there are signs that people are again realizing that buying a home isn’t like purchasing stocks.
The latest evidence of this came from the National Association of REALTORS®, which reported that most buyers now plan to live in their homes more than enough years to ensure that their property will appreciate. According to the National Association of REALTORS®’ 2008 Profile of Home Buyers and Sellers, today’s homebuyers say they plan on staying in their homes for at least 10 years. That’s the proper approach to take when looking for a new residence. Homes are places to live, not piggy banks designed for a quick cash infusion.
While homes are appreciating, they’re also providing their buyers a place to live. Remember, your home is the place where you watch your children grow, where you celebrate holidays and anniversaries, where you escape from the stresses of long workweeks.
My advice is simple: If you’re not planning to sell your home any time soon, don’t worry about what it’s worth right now. Enjoy your house as a home. Yes, it is an investment, a big one. But it’s also the place where you live your life. Don’t forget that. And if you’re thinking about buying, don’t hesitate. Buyers today can get more home in Chicago for their dollars. The time is right for buyers in the city. Don’t miss this opportunity.
I’m sure we REALTORS® sometimes sound like broken records to our clients. But there are some things that bear repeating, no matter how many times you have to say them. “Make sure your home is ready for every showing,” is one of those things.
In today’s slower housing market, your home will not get nearly as many showings as it did just two or three years ago. Even in Chicago’s top neighborhoods, places like Lakeview, Lincoln Square, Bucktown, the Gold Coast and Lincoln Park, the number of potential buyers is down from the years of the housing boom. This means that sellers must always present their residences in the best possible light. There just aren’t as many people interested in buying any home right now. You need to give your residence every chance to shine.
Getting a home ready for a showing involves some fairly simple steps. I know no one enjoys housework. And after several showings, rushing around your home to get it into prime viewing condition can be a pain. But you never know when that right buyer will be touring your home. You want to make sure that your home looks its best when that buyer does show up.
The first step should happen before you even put your home on the market: Remove as much furniture, toys, televisions, knick-knacks and electronics as possible. The more clutter you have, the less attractive and the smaller your residence seems.
Secondly, there should be no personal photos of adults in the house and only limited memorabilia. Also, there should be no photos or memorabilia of your former college, nothing that clearly states your political views, no religious items and nothing that celebrates your sexual orientation. It may sound silly, but a buyer may see your University of Illinois banner and immediately get a negative feeling about your home because she attended Northwestern University. If you have a wedding shrine dedicated to photos of the big day, make sure to remove that, too. Buyers want to envision themselves in your home. It’s hard to do that if all they can see are photos of you and your spouse.
Next, never leave a mess behind before a showing. Make your beds. Wash your dishes. Clean the bathrooms and the kitchen floors. Vacuum the rugs. Again, I know this is a pain, but selling your house is a huge step. Do everything you can to make the sale happen.
Pets are tricky. Buyers don’t appreciate listening to a barking dog in the basement. And the sight of a litter box doesn’t generate happy feelings about a home. Before a showing, take your pets out, and don’t bring them back until the showing is over. Remove all evidence of them, too. Don’t leave chew toys on the couches or bags of dog food in the kitchen corner.
Finally, don’t forget your home’s exterior. Your home’s outside will make the first impression on buyers. You don’t want them to see an overgrown lawn or a front walk that hasn’t been shoveled. Keep everything on the outside neat and tidy. Buyers will then have a positive feeling as they open your front door.
Remember, the housing boom is long over. Gone are the days when even homes in less-than-sparkling condition would attract multiple offers. Take the extra time to prepare your home for every showing. It will pay off in the long run.
Mario Greco is the #2 full-service residential real estate agent in Chicago. He has sold over $575 million in Chicago real estate since 2002, and leads a group of 8 agents and 9 office personnel.
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