With all the negative news surrounding the U.S. housing market, you’d think that no one would be interested in purchasing a home here.
Of course, I always say not to believe the media when it comes to our housing market. Depending on where you live – say, for instance, in Chicago – the residential real estate market is still healthy.
Apparently, foreign buyers know this.
I recently read a story in the Wall Street Journal – which you can read here – about the growing number of Canadian buyers who are purchasing U.S. homes. In fact, according to the story, Canadians now account for the largest percentage of foreign buyers of homes in our country.
The story says that of all foreign buyers of U.S. homes from May of 2007 to May of 2008, 24 percent were Canadian.
The reasons why so many Canadians are flocking to our housing market are simple: The Canadian dollar is as strong as it’s been in years, while housing prices in many markets across the United States have declined. This combination makes residential real estate a strong investment for Canadian buyers.
In fact, the U.S. housing market is seeing an influx of buyers from all over the world, not just from our neighbor to the North, as a growing number of foreign investors see U.S. residential real estate as a true bargain.
Chicago has always been a lure to foreign buyers. It’s a world-class city, and it’s long been one with a diverse population. That’s why, when you drive through the city, you’ll see so many neighborhoods that serve as unofficial ports of entry for immigrants.
This is great news for sellers. The influx of foreign buyers simply means that there are even more potential matches for the homes for sale across the city.
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I wish I could see into the future. Then I could tell my clients exactly when the residential real estate slump will end, and when housing prices will begin climbing again.
Unfortunately, I don’t have this power. That doesn’t mean, though, that I don’t have my own thoughts. Personally, I think we’ve seen the worst of the housing slump already. I also think that starting next year we’ll start to see housing prices gradually begin to rise again. The real estate slump will end. Housing is too strong an investment to remain down for much longer.
I’m not alone in these thoughts. Even top officials with the federal government have gotten in on the prediction game when it comes to residential real estate. And they’re backing me up.
Steven Preston, secretary of the U.S. Department of Housing and Urban Development, earlier this month, in a story in the Christian Science Monitor newspaper, predicted that improvements in the U.S. housing market are probably about a year away. Preston says that we’ll start seeing housing prices going up again probably in the second half of 2009.
This may seem like bad news, especially if you’re trying to sell your home now or are considering listing your house in the near future. But at least we can now see an end in sight to the housing slump.
That is good news. Earlier this year, it was hard to see much evidence of improvement in the market. Today, there are positive signs.
For instance, the National Association of REALTORS® is predicting that we will see 5.35 million homes sold in 2009, up from an expected 5.01 million homes that will be sold this year. Association officials are also predicting that home prices will rise 2 to 4 percent in 2009, another good sign.
It’s my hope that we’re all wrong and that housing prices begin trending upwards again sooner than in the second half of 2009. But even if the experts’ predictions turn out to be accurate, we should all be happy that there is finally an end in sight to this long housing slump.
When people find out I’m a REALTOR®, they inevitably ask me one question: When are things going to get better in the housing industry?
I try to tell them that if they happen to be selling or buying a home in Lakeview, Lincoln Park, Roscoe Village, Lincoln Square or any number of Chicago neighborhoods, that their local real estate market isn’t bad at all. In fact, it’s healthy.
Most people, though, don’t want to talk about that. They want to know if the residential real estate market has hit the bottom, and if housing prices will now begin to steadily climb.
Personally, I think things are beginning to look up. No one owns a crystal ball, but some new housing statistics make me think that the housing market may, indeed, have already suffered through its roughest patch.
Take the new report from the National Association of REALTORS®, which you can read here. The report says that home sales should hold fairly steady in the coming months and will actually increase slightly — from 5.01 million homes sold in 2008 to 5.35 million sold in 2009 — next year.
The REALTORS® association is also predicting that home prices, after falling 4 to 7 percent this year, will rise 2 to 4 percent next year.
Is this good news? If it happens, yes. Then it’s a sign that the housing crisis has bottomed out. It’s also more evidence that it is once again becoming a good time to buy and sell, especially if you live in a market like Chicago’s.
There are certain Chicago neighborhoods that have been largely immune to the housing slump. Lincoln Square on Chicago’s North Side is one of them.
If you want proof, simply drive around the neighborhood. It’s a vibrant place, filled with restaurants, shops and even its own movie theater. You’ll also see new construction, a sure sign of life in a neighborhood.
One of the exciting projects nearing completion now is Fountain View, an 18-unit condo development at 2326 W. Giddings Ave. in the heart of Lincoln Square.
The project, by developer Terra Firma, boasts several “green” features. This is key, I think, to its popularity. Today’s buyers want a sustainable lifestyle. Fountain View provides that. For one thing, it’s located in a busy neighborhood. If you live in Fountain View – or anywhere in Lincoln Square for that matter – you don’t have to get in your car and fight traffic to get to entertainment, shopping and the basic necessities of life.
Fountain View also features double-pane windows and doors, a green roof, enhanced insulation and Energy Star-rated efficient appliances. Each unit comes with high-efficiency heating and air-conditioning systems. Units even come with their own dual trash chutes to make recycling an easier option for residents. As a further “green” touch, units also come with solid bamboo flooring and 100 percent recycled carpet in their bedrooms.
The best news is that this is just one of the many choices people have in Lincoln Square.
Another great option for buyers looking for a home in Lincoln Square is 4544 N. Seeley, a vintage building of eight gut-rehabbed condominiums by The Edge Construction Co.
This building includes large, open floor plans with Brazilian cherry floors and crown molding. It boasts granite countertops, professional-grade stainless-steel kitchen appliances, a breakfast bar, spa master bathrooms with steam showers and whirlpool tubs, and multiple outdoor entertaining areas.
You can read more about this listing on my own Web site here.
The Lincoln Square neighborhood is truly one of my favorites in Chicago. Home prices are appreciating here, and sales are holding their own. If you want to invest – and enjoy your investment at the same time – buying a condo or single-family home in Lincoln Square is a good move to make.
PLEASE CLICK HERE TO VIEW PROPERTIES NOT YET ON THE MARKET.
It’s no surprise that the last four tumultuous weeks on Wall Street have changed the entire landscape of the residential real estate market. Unfortunately, the hysteria surrounding the plummeting stock market has spread to and infected the Chicago housing market.
Simply put, it’s been a whole new (mental) ball game since Sept. 15.
I think it’s important for sellers to understand how the turmoil on Wall Street has affected the Chicago real estate market. In a word, the uncertainty has caused a paralysis in our local market. The traditional three – or, depending on how you look at it, four -- groups of buyers still exist today, as they always have. The first group is made up of those buyers who have the cash or credit to buy, but are scared to make a move. The members of this group are sitting on their hands, much like the banks are. The second group is made up of buyers who were on the fence either in desire or ability and are not buying now. They, instead, are waiting to see what happens before they make any move. The third group includes those buyers who couldn't or didn't want to buy. Well, they're still on the sidelines, either by force or by choice. Even the fourth group, the vultures, can't buy because banks aren't lending money for most deals, let alone those that are risky. As a result, deals are slow to materialize and those that already have been struck are being renegotiated or killed over minor details.
I don't know what this week or the next few months hold for the psyche of the Chicago buyer. But what I do know is that until the fear and resultant paralysis mitigates -- either thanks to real positive data or buyers realizing that if they can get a mortgage they shouldn't think twice about buying because this is the best buyer's market many have seen or will ever see -- sellers need to weigh their options and be careful to navigate this storm in the way that best suits their individual needs.
So... The options as I see them are as follows:
1) If you do not need to sell and can wait three to six months, you should think seriously about taking your property off the market and re-listing it when the psyche of the buyers has improved. Again, it's not that the factors aren't there for people who can buy to purchase, but most of them are scared and don't want to jump into choppy waters. Only those who have to buy are buying at this point, and I don't see that changing until spring of 2009. The pros of this approach are that you will save market time, resetting it completely if you take your home off the MLS for 91 days; return to living a normal (non-showing-ready) life; and not have to leave the house when it's cold/snowy (it's coming), etc.
The cons include the fact that you will probably be getting back into the market when it will have more competing inventory, you may have to sell for a lower price if the market continues to deteriorate. Also, you won’t be able to move into that new place you've been thinking about for the past several months now.
2) If you really want to or have to sell in the next 90 days, you must make sure that your list price is at or just below the ACTIVE COMPETITION. You then must be ready to sell for a price at or just below the most recent COMPARABLE CLOSED SALE. "Hope" and "want" (as in "I was 'hoping' for this price/return" or "I want X price") do not apply to this market in light of the global financial mess that has tainted even a stable Chicago real estate market. Sellers, with the help of their REALTORS®, need to come up with a price at which they can AFFORD to sell (not want to sell), and then price their homes accordingly.
The pros of this approach are that the chances of a sale are dramatically increased because property is still selling when priced well, sometimes with multiple offers for close to list price even in this market. Also, you get to move onto the next chapter of your life and take advantage of this mess on the buy side by extracting a much better deal on what you're buying (usually more expensive so it theoretically makes up for the "loss" you might take on the sale of your present place.) You can also avoid foreclosure.
The cons include a sale price that is lower than anticipated, hoped for or necessary to pay off your mortgage, thereby necessitating a short sale.
3) If you are in the above category of "have to/really want to sell," another real option is renting your present place out for six to 12 months. The pros of this is that you will stop the bleeding (if your home is vacant) and re-enter a possibly better market.
The cons are that this move will cost about a half month's rent (rule of thumb) to get your place back into showing shape when its lease is up. Also, showing a leased place can be difficult as tenants tend to begin to feel like they own a place by the time their lease is up. Finally, you will more likely than not re-enter a more saturated market because you will not be the only one going this route.
In sum, this is a very turbulent time in the financial markets - of which real estate is one. Your REALTOR® needs to make sure that he or she presents as many ideas and possibilities to meet all of your specific needs. If REALTORS® and their clients work together, we'll all get through these troubling times relatively unscathed.
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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