Home prices in late 2009 showing some weakness

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Recently released report published by Standard's & Poor Case/Shiller confirms that home prices in 20 metropolitan areas mostly dropped in November 2009. Only 4 cities recorded modest gains while the the rest of metropolitan areas saw annual decreases in home values from -13.2% (Tampa, FL) to -0.6% (Washington, DC). The table below shows changes in home values between September and November 2009.

In Chicago area, the difference in home values between November 2008 and November 2009 was -8.5% while last both October 2009 and November 2009, each recorded steady 1% decrease. The graph below shows home values in Chicago area over the last 4 years.

Low mortgage rates will not last forever

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As long as Treasury is buying mortgages guaranteed by Fannie Mae and Fredie Mac, mortgage rates will remain near historic lows. Federal government is virtually the only purchaser of this type of securities, since private investors ran for cover in mid 2008 and never came back as viable players. If not for the Fed, there would be very few takers for financial products backed by US mortgages. Most of the experts predict that Treasury will gradually withdraw from buying large amounts of mortgage backed securities some time in 2010, most likely in 3rd and 4th quarter. So what happens when Uncle Sam stops buying our mortgages? Most likely the private banks that will replace federal government on the secondary mortgage market will charge much higher interest rates based on current (uncertain) economic situation.

Zillow releases 3rd Quarter Home Values

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The popular home valuation website - Zillow.com recently released its data for the third quarter of 2009.

Zillow Home Value Index

More Illinois Home Values

Overal, in the last 12 month, the average home value was $172,400, 10.2% less than in the same period of 2008. Chicago metro area homes lost 10.9% and Arlington Heights - 9.8% with the average home value at $290,000, down $85,000 from the peak of late 2006.

Is the Water still Cold?

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Summer is long over but I still remember my younger daughter sticking her toe into the calm waters of Lake Michigan to check if the lake’s temperature is finally good enough for her to jump in. That in turn resembles the behavior of so many home buyers waiting for the prices to bottom out. Is the market still going down? Is real estate still getting cheaper and cheaper? Will the continued unemployment force more foreclosures and devaluate home prices even more? Nobody knows answers to these questions - all we can do is watch the market and the prices of homes that recently got sold, in increasing numbers. I spent last 9 months “in the field” – showing homes, making offers, negotiating deals and, so often, losing them to other buyers. A year ago, it was almost unheard of that a house would sell over the asking price with 3 or 5 competing offers. Just within the last two months I experienced this scenario at least once a week.

Not all homes sell like that, only the “great deals” homes: no major repairs required, in good location, and at unbelievably low prices. So low that prospective buyers were happy to offer up to 10% ABOVE the asking price, just to get the home under contract ahead of others.

So, are there still people who think that home values will continue to drop? Yes, there are – they are still waiting for the prices to be “just right” – in 6 months or even a year from now. Waiting, however, is over for so many others who are actively seeking the great deals that are available here and now. They are enjoying huge price reductions, good quality homes, and low interest rates on mortgages.

My daughter’s friends had a long and joyful summer vacation. They did not wait until the water’s temperature was just perfect. They jumped right in and never regretted it. This is what I wish most of undecided home buyers did. Here and now.

Get a sample of Chicago suburbs foreclosures at www.ChicagoSuburbs-Homes.com

Foreclosures in Melrose Park - Back on the market

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Haunted Houses

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There are houses that are really scary. Not because of the ghosts, monsters or other surreal creatures. The reason for fear is very real - foreclosures. There are entire streets that have only half of houses still occupied, other owners have either left voluntarily or have been kicked out of their homes. They left behind overgrown yards, leaky roofs and boarded up windows. Some of them even left behind their belongings as if they were expecting ghosts to use them at Halloween...

Learn more about Chicago suburbs foreclosures at my website: www.ChicagoSuburbs-Homes.com.

Nationwide Home Prieces on the Rise

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The Standard & Poor's/Case-Shiller home price index of the largest U.S. metro areas was released today. The index shows another slight increase (1%) of home prices in August 2009, compared to the month before. Still, the median home price in the U.S. is 11.4% down from August 2008.

In Chicago metro area, home prices in August were 1.7% higher than in August and 4.4% higher than in July 2009.

Some experts signal though that the mounting pressure from the distressed homes market, particularly Chicago foreclosures (also, foreclosures in Chicago suburbs), will soon drive the prices back down, or at least make them flat for another 6-10 months.