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

Weekely Foreclosure Report

(click for larger view)

Last week the foreclosure activity was high. 4 single family houses went under contract (sold) and 6 more entered the market. The following houses were listed in MLS since September 13th:

Walmartization of Real Estate

In the recent surge of bad economic news and bad corporate earning, Walmart emerges as one of very few companies to stay stable during the recession and even make some healthy profits. Obviously, price driven consumers see the value in $9.99 toasters and $8.99 pairs of jeans. Bargain hunters are also prevailing on the real estate market. The average home sales price in Chicago metro area dropped significantly in February 2009 with huge discounts put on bank owned properties. In Chicago suburbs deals likes a $20,000 condo or a $99,000 house is what really brings buyers to the market. Some properties even receive multiple offers and sell in less than 2 weeks. Is this a start of a long awaited recovery on real estate market? Quite likely so. Especially that the word of cheap deals on condos and incredible prices on both investment and live-in properties, travels fast and more and more people get interested in buying a home again. As for now, real estate agents will have to learn to live on a “minimum commission” level that most of these cheap deals offer.  After all, a typical payment from a $20K sale is almost on a “poverty” line. But what starts small, hopefully will end up large. Some day.

First Time Home Buyers to receive $8,000 bonus

The Stimulus Bill becomes a law today and among 787 billion dollars, there is something everyone involved in the real estate business should be glad about: a bonus for first time home buyers! It is big enough to cover a 10% downpayment on a modest condo or a townhouse. Once President Obama signs the Bill, anyone who purchased a home between January 1st, 2009 and November 30th 2009 is entitled to $8,000 or 10% of the home's value, whichever is less, that can be claimed on 2008 or 2009 taxes.

Buyers may not have owned a home for the past three years and must live in the house for at least three years after the purchase. Otherwise they would have to pay back the credit to IRS.

There are also some income restrictions: buyers must earn less than $75,000 for single filers or $150,000 for couples. If the make more than that, they may receive a partial credit.

If there is anything to jump-start this real estate market, the first time home buyer bonus is certainly something we can count on. Cheap condos, especially bank-owned homes clog up our Chicago suburbs MLS inventory. An $8,000 bonus will certainly help clear the huge backlog created by bank foreclosures in our region.