"You've Caught the NET!"

Just reviewed some fairly recent statistics compiled by Discount Real Estate Broker ZipRealty, and reported by Mary Umberger, Real Estate Columnist for The Chicago Triubne.  The numbers are a bit unnerving!

In aggregate, unsold inventory of homes and condos increased 1.2 percent in February, comparing with January, 2008.  In the Chicago Metro Area, inventory climbed by 2.7% between January and February, and today's inventory level is up 17.2%, as of the end of February, 2008, versus February, 2007.

As of February 29th, 72,842 homes and condos were active and for sale throughout Chicago and the suburbs, and 38% of these sellers had reduced their asking price at least once during their listing term.

How are our clients reacting?  In some ways we may have predicted, and other ways that have surprised us!

Some observations -

1.  Buyers see more value in today's real estate market here in Chicago, but they are waiting for prices to go down even further.    Folks read the papers (although, usually, they read them ONLINE!)  They see predictions of further price erosion.  They either want the perfect discount deal NOW, or they say they will wait, indefinitely, until that perfect deal falls into their laps.  When we tell them "It's difficult to time the market so precisely,"  they stubbornly resist our suggestions.

2.  Buyers feel they can purchase ANY property AT THEIR LOW PRICE, period.  Many are brazen - offering 20 or 30 percent lower than asking price, and refusing to budge when counter offered.  Others offer more reasonably, versus current "today" comparables, but then try to get money or unreasonable repairs during the inspection period, within five days after contract acceptance by the seller.  Funny thing - often times, the sellers give them what they ask for, no matter how unreasonable!

3.  Sellers are at first surprised, then angered, by how the market has eroded their value, and potential asking price.  Recent informal surveys by RealtyTrac indicate that 7 out of 10 sellers feel their property value has been stable, or even appreciated, over the past year, despite what they hear in the media.   Some clients disbelieve you when challenged on value - others understand how the market has changed, but they are now putting off their plans to move!  When we say price recovery will also mean the price of the new home you want to buy will go back up as well - they often don't understand, or they disagree!

4.  Sellers and Buyers don't really understand what has happened to the mortgage market.  It is very difficult for many to understand they can't find that high-leverage, low-interest-rate, no-doc loan anymore.  "It's got to be out there somewhere,"  many think.   When they can't find the same favorable terms as they might have found two years ago - they retreat back into the Valley of Indecision!

5.  Agent loyalty - from both Listing and Buyer Clients - is waning!  Back in the day - a couple of years ago, things happened quickly in this business.  You listed a properly-priced home, condo, or investment property, it sold quickly, very close to the asking price.  Inspection issues were easily deflected - the buyer's didn't want to risk losing their "rare find" of a home.  Advertising costs were kept to a minimum, since a lot of marketing was not required to sell a home.  Now, lack of early success puts everything a Realtor does under a magnifying glass!  "You didn't advertise enough, or do the right advertising, or do enough Open Houses," and on, and on! 

Buyers become frustrated when they can't get the house they want at as much of a discount as they would like.  "Perhaps you're not really working for me," some claim to their Real Estate Practitioners.  Higher interest rates and more stringent loan terms - must be your fault.

Sellers and Buyers more easily want to defect!

6.  Buyers, and Sellers, quickly SPREAD THE WORD on what THEIR take is on today's Real Estate Market.  On and on, these possible Realtor referral sources spread bad karma about the market today, and, unfortunately, the Realtor's role in it.  If not pre-framed and kept under the proper light - this could hurt an agent's tomorrow business!

Our post yesterday at BlogChicagoHomes.comprovides a bit more insight, as well as a link to Ms. Umberger's column in the March 16th Edition of The Chicago Tribune.

DEAN & DEAN'S TEAM CHICAGO

Our Team, Sue and I hope you have a Blessed Easter!

Before we head out the door to see the family today, we wanted to pose this question to you and your families. Very appropriate to consider today!

When something's got you down in this Real Estate Market - how do you Get Back Up? Would love to compile a big list, and spread it far and wide in the AR Community.

Here are my Top 5 "Blues Busters" for an often-challenging, frustrating real estate market -

1. EXERCISE! If you work out on a regular and consistent basis - even if just a short time every day, you'll feel better, be physically stronger, and less will get you down. It's true - Exercise does relieve stress, as well!

2. AFFIRMATIONS! Every day, Sue and I read one page together from Chellie Campbell's Classic Guide to Financial Stress Management, "The Wealthy Spirit!" We then each recite, aloud, about two dozen affirmations (one sentence each) that we live by each day. Funny, in these times of financial stress, it's amazing how the right attitude can change your outlook.

3. A GRATITUDE JOURNAL! Human nature makes looking at the NEGATIVES IN LIFE far more natural than focusing on the positives. Turn that around - you have lot of POSITIVES to be thankful for, in life, and in business. WRITE THEM DOWN, and REVIEW THEM!  No journal book?  A legal pad will do!

4. WRITTEN GOALS, and a WRITTEN STRATEGY TO ACHIEVE THEM! Review these each day. You will be amazed how many you have achieved already - that makes achieving the rest possible. Course correct as necessary - but do not put them aside.

5. ROCK & ROLL/CLASSIC TV! According to Dick Clark, music is the soundtrack of our lives, you know! When in the car, my love for oldies - from the 50's through the 70's - reminds me of those good times, and reduces focus on things that stress.  Classic TV, especially the old sit coms, is mindless, funny stuff, that often takes the edge off the day (in moderation, of course).

Again - yours? Please share!

Enjoy the holiday with your families!

DEAN & DEAN'S TEAM CHICAGO

"It's 10:30!  Do You Know Where Your Children Are?"  The honey-voiced TV announcer used to recite these memorable words each weekday night after the 10 O'Clock News.

Effective tonight, they could make that announcement at the BEGINNING of the news!  The Chicago Curfew, for youths under the age of 17,moves one-half hour earlier tonight.  Chicago Police, publicizing the change earlier this week, cite concern over a slight increase in overall crime statistics - up 3% in 2008.  More alarming is a fourteen percent increase in homicides citywide - especially in several of the poorest neighborhoods here in Chicago.

Few arrests are made of youths violating the city curfew - but police can bring the offending teens home, or take them down to the local police district and call their folks - both pretty embarrassing options for those young people who feel they are invincible!

Citations can also be issued to the parents of curfew offenders here in Chicago.  Since the beginning of the year, over 3,000 tickets have been issued to curfew violators and their parents.

Read more info and updated Chicago crime statistics in our blog post today in BlogChicagoHomes.com.  We cite an article by Angela Rozas in today's Chicago Tribune.

DEAN & DEAN'S TEAM CHICAGO

Is YOUR Market Area on the List?

Several Mortgage Insurance Providers, including AIG United Guarantee, are toughening their MI Underwriting Rules in areas which it considers "Declining."  In these zip codes, it will be tougher for those with low down payments on their new homes, or low equity in existing homes they wish to re-fi, to get new financing.  More stringent rules apply to those seeking certain adjustable rate loans, or purchasers on non-owner-occupied investment properties.

See the entire AIG Declining Markets list here. 

Those with FICO Credit Scores under 620 will have difficulty getting Mortgage Insurance at all.  If you have a FICO between 620 and 680, or if one of your co-signers on the loan has what MI considers "non-traditional credit," you'll need at least 5 percent down.    AIG's latest Underwriting Guidelines, updated March 10th, provide further technical details.

Entire Metro Markets appear on the "Declining" list - Phoenix AZ, Las Vegas NV, as well as many large zip codes in California, Florida, Ohio, and Michigan.  Fortunately, zips in the Chicago area do not appear on the list, for now - but MI standards remain tough here for low down payment borrowers.

The Spring Real Estate Market, traditionally robust across the country, has been dampened in 2008 by universally tougher mortgage underwriting standards, as well as the decline of sub-prime mortgages, sought by those with challenged credit.  Here in Chicago, inventories of for-sale properties remain high - over three years in some areas - as fewer qualified borrowers have their choice from a vast number of available properties.

Where sub-prime has disappeared, many have turned to FHA loans, with easier down payment and underwriting requirements - and no Declining Market list.  In some states and major cities - including loans underwritten through the City of Chicago and the Illinois Housing Development Authority - additional programs exist for many lower-income and first-time home buyers.

Larger mortgage lenders are separately increasing their down payment requirements in what they consider to be "declining markets."   Wells Fargo now requires a minimum 25% down in areas they consider "declining." 

Relative to re-financing,  some lenders, including National City Bank, are refusing to subordinate their smaller second mortgages.  They fear these smaller loans may not be repaid should the homeowners default on their primary home loan.

The conventional loan threshold for Fannie Mae and Freddie Mac loans will increase in some market areas, as a result of President Bush's Economic Stimulus Package.   This could provide relief in certain metro areas (but not the Chicago area).  Many experts agree, however, that the home loan market will continue to be tight for a while, reducing chances for a fast housing market recovery.

Take a look at our post yesterday evening via BlogChicagoHomes.com for more details, including a link to an article in yesterday's Chicago Tribune by reporters Alan Zible and J.W. Elphinstone.

DEAN & DEAN'S TEAM CHICAGO

THE CHICAGO IL REAL ESTATE MARKET, AND OTHER THINGS CHICAGO, FROM THE POINT OF VIEW OF A LITTLE WHITE DOG!

. . . Realtors, folks!  That was the word I was thinking of here.  Realtors!

Believe me, I mean no offense to Chicago's Finest, but if there is a stereotype for them, there is surely one for us!  It's our local Starbucks - the one down the street from our office, on Wilson Avenue at Lincoln, in Chicago's Lincoln Square Neighborhood.

I am a Real Estate Broker, you know - so I am qualified to comment here.  Indeed, I am the only Licensed Pekingese in the entire State of Illinois.  I'm not counting the Beagle who does commercial appraisals out in Arlington Heights, or the lady Great Dane, up in years now - she is almost 9 - handling leases in Hyde Park.

But, me, as a Real Estate Practitioner, seem to know what the Human Members of Our Profession drink every day like it was going out of style!  Double Skim No-Fat Lattes, Cafe Americanos, Grande Mochas, Frappuccinos in the Summertime.  Whew!

I don't know what you Humans see in this stuff!  One time, while working outside, my Human Dad, Team Leader Dean, left his Starbucks Tall Coffee of the Day, black, on the sidewalk. I took a quick lick - he never knew it when he finished the cup.  But - woof - NASTY!  I'd prefer a hunk of roast beef, anytime!

Well, it seems in an effort to rev up flagging sales at Starbucks locations nationwide, the company, at its Annual Shareholders Meeting this week in Seattle, will be making a few enhancements in its stores.

According to Howard Schultz, Starbuck's CEO, each store will begin to grind its own beans once again - like they did in the old days when they first started.  Today, drip coffee is pre-packaged in a filter pack, and that all-important Starbucks Aroma is nearly lost.

Their introducing a new, more flavorful "Pike Place Roast."  The original Starbucks store, in 1969, was located at Seattle's famous Pike Place Market.

And they will begin to install semi-automated Espresso Machines - The Mastrena- to more consistently and more predictably make their signature espresso drinks.  These machines, shorter than the old ones, will allow the baristas in each store to more easily interact with their customers - and talk Market Trends with those customers who happen to trade in Real Estate for a living.

Starbucks also purchased a small, eleven-person coffee machine manufacturer in Seattle - Coffee Equipment Company - and their patented machine, The Clover.   This high-end coffeemaker brews one cup at a time, quickly, with full flavor, and aroma!

Over the last few years, Starbuck's Share Price has fallen precipitously - from around $90 a couple of years ago, to $17.50 at close on the NASDAQ last Wednesday.   Apparently, they want to shine things up to the way they once were, in hopes of improving their profit picture.

And, in the meanwhile, make thousands of Realtors happier each morning when they pick up their morning java.

Check out our post today at BlogChicagoHomes.com.  It provides more information, as well as a link for more details to Janet Adamy's article in today's Wall Street Journal.  For relevant video, read the AP story in today's Chicago Tribune.

BTW - look for me each morning this Summer, tied up to some wrought-iron outdoor furniture, in front of the Lincoln Square Starbucks.  I would be waiting for my Human Daddy, Team Leader Dean, getting his morning coffee fix inside.  It's easy to recognize me - I'll be wearing white, reading the Red Eye, and NOT drinking black coffee!

YOUR ACE REPORTER ON FOUR PAWS,

BUDDY HOLLY MOSS & DEAN'S TEAM CHICAGO

Hey, everyone!

The Winter That Never Ends continues here in Chicago, even through Friday, March 21st - the first official day of Spring, 2008.

Man, I am getting blue!  And, you know, so are my clients!  Even here in Chicago, where we are quite used to it, only the die hards (and those very motivated) search the housing market in the middle of a moderate snowfall!  (It's a great time for geo-farming, however - everyone else is hunkered down).

Starting Thursday night, the National Weather Service is predicting another possible six inches of snow to fall in the city and suburbs.  More is predicted further north, near the Wisconsin border.

If snowfall exceeds 6.4" at Chicago's Official Weather Reporting Station, O'Hare International Airport - we will be then ranked in the Top 10 Snowiest Winters here.

It has seemed a lot worse, however!   Practically every day - grey skies, little sun, howling wind, and ever-present snow.  We're just starting to remember what the ground looks like, and it's going to be covered up again!

Good thing about this time of year, though - it melts pretty fast!  We hope!

Anybody got a condo in a warm climate we can escape to this weekend.  I have about 7 Million freezing friends, shovels at the ready, who might want to join me.

Think Spring, everyone!

Here's our thoughts and Weather Service Links via our BlogChicagoHomes.com Blog Center.  I have also included a link back to Lil' Buddy's Blog, penned by our own Buddy Holly Moss, with a link to a ranking of Chicago's snowiest winters.

DEAN & DEAN'S TEAM CHICAGO

This is a troubling story, and a troubling trend.  Brian Ban, one of the Top Producers in our Keller Williams Office here in the Lincoln Square Neighborhood of Chicago, brought it to our attention.

It's even more troubling that I can understand the logic behind the defaulting borrower's decision, as he faces foreclosure.  I can see their logic - and that is what is frightening!

What goes up higher, comes down faster, and harder.  So spins the Northern California Real Estate Market in 2008.  Here, the foreclosure rate in some areas is among the highest in the country, and many recent home buyers are so upside-down in their loans, and their adjustable monthly mortgage payments have gone up so quickly, that some home owners are more inclined to simply WALK AWAY from their delinquent home loan. 

They would rather face foreclosure, and certain three-to-seven year destruction of their credit, rather than negotiate forebearance with their lender! 

And . . . it's no big deal to them!

In a story by Carolyn Said, in last Sunday's San Francisco Chronicle, she tells of one Iraq War Veteran's feelings - it's like "throwing good money after bad" to pay a monthly mortgage payment on a home that is declining in value.  The more they continue to pay their escalated mortgage, the more they are getting themselves in over their financial heads, with what they feel to be no way out.

There is even a new, San Diego-based company - YouWalkAway.com - that helps homeowners in a similar situation walk away, guilt free, from their homes - for a $500 to $1,000 counseling fee.

Luckily, here in Chicago and nearby, we are not plagued with the precipitous declines in home value that those in California, Nevada, Arizona, and Florida are now facing.  But we still have many, many home and condo owners  that over-leveraged when money was easy - with 95%, 100%, and even 106% interest-only financing.  When their adjustable mortgage payments increase, selling their home is not an option - they will sell negative!

Folks, my wife and I are of the Baby Boomer Generation.  Forty and Fifty-Somethings.  As kids, we were taught the importance of home ownership.  Having home equity, and protecting that equity.  Having stellar credit.

Today, these values we thought everyone shared, seem fleeting.  Many recent buyers have very little equity, with little prospect for building much equity any time soon.  While a "walk away" decision would be a wrenching one for we Boomers, it is apparently far easier for some younger homeowners little money at stake.  The attachment to their home, where they may have lived for only a short time, and the homeownership process itself, is plainly not there!

Out in California, home mortgages are "non-recourse" instruments - lenders can not dog down foreclosed homeowners for the money they have lost.  It's different in Illinois - lenders CAN file a Deficiency Judgement in certain situations, trying to recover some foreclosure losses, especially if fraud or duplicity was involved.

But recently, one homeowner in San Francisco's East Bay first pulled $100,000 of equity out of his home using a Home Equity Line of Credit - and built a luxury swimming pool.  He then went delinquent, and is trying to re-negotiate his total indebtedness with his bank - under threat of simply walking away.  Apparently, he has made progress in his negotiations.

Man, I am shocked!

Do you see this happening in your market areas?  If so, it seems our entire sense of money managment and values might have radically changed.  Your thoughts?

DEAN & DEAN'S TEAM CHICAGO

Good Evening, folks!  We hope, tomorrow morning, bright and early, you'll still have Fond Memories of St. Patrick's Day, 2008!

Coincidentally, I heard the old 1970's Edgar Winter Group song, "Come On and Take A Free Ride," on the XM Satellite Radio 70's Channel on the way home from the office tonight.  It would have been cliche to refer to it here - until I remembered that many of today's seniors might have fond memories of that great 1973 song from their youths!

THAT SONG WAS A HIT 35 YEARS AGO - many reading this post WEREN'T EVEN BORN YET!  What a Reality Check - huh?

Today, March 17th, Illinois joined Pennsylvania as the only two states in the U.S. offering FREE Mass Transit Rides to those over the age of 65.   With strongest transit usage in the Chicago Metro Area, many seniors were quite excited about the new program.  For many who still work, the new law will save them many hundreds of dollars each year on commuting expense.

Others were a bit skeptical of the plan - thinking it "political window dressing". 

Indeed, it was offered as a "peace offering" by Illinois Governor Rod Blagojevichafter he very reluctantly approved an increased Sales Tax Package to help bail out Chicago-Area Mass Transit last January.  Without new monies, CTA, METRA, and PACE Local Transit Agency officials were predicting massive service cuts, and big fare increases, for L, bus, and train riders here.

As part of the Transit Funding Package, the City of Chicago passed an increase of 40% to the Chicago Real Estate Transfer Tax.   Effective April 1st, Chicago Home Sellers will pay an additional $3.00 per thousand of sales price to sell their home in the city - Chicago Home Buyers will continue to pay the long-standing $7.50/M Buyer's Transfer Tax.  (See our posting on BlogChicagoHomes.com dated March 15th for more info).

A few transit riders today around Chicago found the plan mis-directed.  They felt it should have targeted the poor, rather than any particular age group.

In any event, seniors now ride public transit FREE, in and around Chicago.  Perhaps, now, that predicted $4.00 per gallon gas this summer will be somewhat less of a sting - for some!

Our Dean's Team Chicago Blog Center Post todayprovides more details on the "Seniors Ride Free" Plan here in and around Chicago.  The link to Richard Wronski's article in today's Chicago Tribune provides relevant video and rider commentary as well.

DEAN & DEAN'S TEAM CHICAGO

Happy St. Patrick's Day, everyone!

Properties Pending Sale and Average Sale Price numbers stable this week - let's see if things pick up in the coming weeks with warmer weather.  It seems, from our personal experience, listings traffic is beginning to pick up. Average Days on Market still high, but stabilizing as well.

Sold Units actually up strongly this week - many who purchased a month or so ago, wanting to close and do any improvement work as the weather gets warmer.  Expired Listings fell once again - typical for mid-month. Sales Volume fell off, but encouraged by stable Average Sales Price. 

Absorption Rate and Percentage of Sale Within Six Month (180 Days) remain high, although there was another  drop - for the third week in a row - by 2.3% - in the three-month rate versus the week ending March 9th.  The chances of selling a home within a normal six-month marketing time frame got slightly worse last week.  Statistically, home sellers in this North and Northwest Side of Chicago Benchmark area stand slightly better than a 1 in 5 chance of selling their home within a normal 6-month marketing time frame.

Communities and clients we serve reside, or plan to reside, in the Chicago Neighborhoods of The Chicago Loop, The Gold Coast, River North, Lincoln Park, Lakeview, Uptown, Edgewater, North Center, Lincoln Square, Albany Park, Ravenswood, Wicker Park, and Bucktown. 

Also, these Great Chicago Neighborhoods: Logan Square, Rogers Park , West Ridge, Portage Park, Jefferson Park, Norwood Park, Sauganash, Edgebrook, and Edison Park.   Plus All Chicago Suburbs. 

SINGLE FAMILY, CONDOS, AND SMALL MULTI-UNIT PROPERTIES - NORTH SIDE OF CHICAGO, NORTH OF ADDISON STREET, WEST OF ASHLAND AVENUE

                             ACTV LISTINGS        JUST SOLD         CLOSED        EXPIRED

Please visit and review our Chicago IL Real Estate Stats Pack Archive via our Team Blog Center - BlogChicagoHomes.com. 

Call or write our Team if you have any questions about the Chicago Real Estate Market, and trends within any Chicago Neighborhood,  or suburb nearby. 

DEAN & DEAN'S TEAM CHICAGO

More and more, as the Chicago Real Estate Market continues at a comparatively sluggish pace, several of our seller clients are considering renting their existing homes - rather than risking vacancy, or becoming more frustrated, in their opinion, continuing to try to sell them.

For some, not inclined or with the experience or mentality to be landlords, the answer is pretty clear cut - reduce your price to sell, and MOVE ON!

But for some of the others, renting is a good option for them.  It's a good option, however, only if they understand the following-

1.  Stable tenants require leases - at least one year, perhaps longer - and they have to commit to renting for at least that time, and hope the sales market improves afterward.

2.  Shorter-term rental, or house sitters agreeing to keep the house staged and in best showing shape while the house continues to be marketed, is an alternative to long-term leasing - but this service is not without cost.  However, for many, it may be attractive, especially if they don't want to have a longer term tenant.

SitterCity.com shows over 6,000 folks, with varying degrees of experience and availability, willing to sit houses in Chicago, for varying amounts of time.

3.  Often times, renting will result in negative cash flow, especially if a seller is highly leveraged, and has high taxes and homeowner assessments.  This negative can be several hundred dollars, or more.  Better than a vacant property, but sometimes less than deep discounting to sell.  Can the seller handle the negative each month?

4.  Renting for more than three years could make the seller fail the Principal Residence Test by the IRS, and they will have to pay long-term capital gains and cost recovery as if the property were always an investment.  Of course, have them check with their Accountant on this one for exact interpretation.

5.  The amount of Gross Rent is TAXABLE INCOME, although it is reduced to net by subtracting interest paid, maintenance and homeowner association fees, and insurance and other costs.  Principal Payments on the mortgage, of course, do not get deducted from the gross.

6.  Most  insurance companies charge hefty additional premiums for vacant properties, or may refuse to pay claims if vacancy is not reported to them prior to a fire, natural disaster, or other casualty.  With renters in the home, owners insurance may reduce your overall monthly insurance bill, however, as you no longer have to insure any personal effects in the home.

7.  More than likely, there will be fix-up costs when the seller eventually markets the home or condo.  Of course, few tenants, if screened correctly, don't destroy the joint - but some repairs, repainting, and other cosmetic touch up may be required at lease term end in preparation for re-sale.

8.  As a landlord - the seller is still "on call and responsible."  If the heat goes out on Christmas Eve.  The toilet leaks on Easter.  Or the weather stripping on the back door is not adequate in the dead of winter.  Of course, you can contract with tenants to handle snow shoveling, lawn and garden care, and routine clean up around your home while they lease it.

9.  Leases are legal contracts - they can't be arbitrarily broken if you happen to find a buyer several months down the line.  Buyout is always an option - but the tenants in your home are under no obligation to leave early.

10.  Prospective tenants must be screened carefully!  An eviction can take 90 days or more here in the Chicago area, start to finish - and, with no rent coming in for that time, funds may get a bit tight!  Also, the rental market really dries up here during the months of November through February - so a vacancy or rent payment delinquency during those months can add up quickly.

In our experience, when presented with these 10 Items of Consideration, most sellers decide to REDUCE, and SELL!  But, they always have the Rental Option!

See our posting on our Team Blog Center - BlogChicagoHomes.com- from earlier today.  We cited an article by Lew Sichelman from today's Chicago Tribune here as well.

DEAN & DEAN'S TEAM CHICAGO