New Home Sales Report Show Increase

Sales are up and prices are stabilizing. Good sign for home buyers, and, even sellers. Buying a home should be based on a few factors...

First, buy on the principle of paying yourself first. You have to live somewhere, so why not spend the money on yourself and not a landlord.

Secondly, try to find a location you really can live with... if this means going smaller, then do it. Chances are someone else will really want that location down the line when you sell. Being a pioneer in a new neighborhood just to get more space is not for everyone.

And third, the tax benefits and social value. A home lowers your tax exposure, ultimately lowering the cost of ownership... that's tangible. And ownership FEELS different. It really changes the way you live and decisions you make. It's great for the neighborhood and your growth as a person.

So don't base ownership on national media reports about the housing market. Just take a good look at your position in life and you'll decide that ownership may be the next positive step.

However, good national news is helpful!


New home sales soar March gain of 13.8% the biggest in 13 years, showing surprising strength in housing market, but that was partly driven by builders cutting prices.
By Chris Isidore, CNNMoney.com senior writer
April 26, 2006: 2:06 PM EDT
NEW YORK (CNNMoney.com) - New home sales posted the biggest jump in 13 years in March, but sales got a boost as builders cut prices to cope with higher mortgage rates and a growing backlog of houses on the market.
The government reported new homes sold at an annual rate of 1.21 million homes in March, up 13.8 percent from a revised 1.07 million pace in February. That easily topped forecasts for a 1.1 million pace from economists surveyed by Briefing.com.
The jump, the biggest since a 16 percent rise in April 1993, came even as mortgage rates hit an average 6.32 percent last month for 30-year fixed-rate loans, according to Freddie Mac, up from 6.25 percent in February.
The mortgage rate was the second-highest for any month since 2002. Rates have risen further since, climbing to 6.53 percent in the most recent weekly survey.
With rising mortgage rates driving up the cost of financing home purchases, most economists have been looking for the real estate market to cool off in 2006 after several years of record sales.
But economist Bob Brusca said last month's drop in new home prices is a sign that the market for new homes isn't nearly as strong as the jump in sales would suggest.
He noted that the report showed an unusual drop in prices from both February and a year earlier, which could be a sign that home builders are cutting prices to move a large supply of new homes now on the market.
"New homes sales sprang back to life like a zombie in a cheap horror flick," Brusca said. "And like that zombie, housing really is dead. Don't let all that twitching fool you."
He said that many of the new homes sold in March were probably built in a stronger real estate market.
And unlike existing homes, where sellers can live until they get an acceptable price, "builders can't live in these houses unless they have a lot of family," he said. "By and large they must finance them at rising interest costs."
In fact, about one builder in five has reported a jump in cancellations of new home orders, according to a recent industry survey. And Wednesday's report showed that there were 553,000 new homes for sale in March, up 25 percent from a year earlier.
Meanwhile, average prices fell 7.1 percent from February to $279,100, after topping $300,000 for the first time in the February revised figures. The median price, which reflects the point at which half the homes sell for more and half sell for less, also fell 6.5 percent to $224,200.
And while month-to-month declines in home prices are not unusual, more significantly, prices also fell from a year earlier: a 2.2 percent decline in median prices and a 3.6 percent fall in average prices over that time.
Still, Wednesday's big jump in sales came after existing home sales also showed an unexpected increase last month in a report from the National Association of Realtors Tuesday.
New home sales, while a fraction of the overall real estate market, are more closely watched since they're more of a leading indicator of conditions in the housing market.
Existing home sales are recorded at closing, typically a month or two after a purchase agreement, while new home sales are tracked based on when contracts are signed.

City living in the face of gas hikes

You will never hear me complain about the cost of a gallon of gas. Surprising considering I'm a Realtor who basically lives out of his car. Okay, maybe I'll complain about the cost of the actual gallon of gasoline, but not oil prices. Let me explain.

Crude oil prices are subject to a free market. Crude oil is a very special market commodity affected by the widest range of global issues, trends, and conflict. It is also a market commodity that, effectively, can and will change the daily course of our lives. The countries that produce oil will enter into agreements with the countries that want it. Then... we buy it.

Gasoline in the states is also highly taxed... not as high as Europe... so the cost is highly subjective to governments. Something very worthy of complaining about if you feel tax money is being squandered.

So when gas prices go up I feel it as much as anyone (due both to my dependence on my car and my indignation towards the use of tax money), but complain less. This is because I live in Chicago and have a choice to drive less. Even as a Realtor, I can take public transportation on certain days when I predominately work in the office.

Because of the centralization of jobs and industry downtown, a nice little condo by public transportation is a much more valuable commodity than oil. So I don't complain... because the higher gas prices get, the more it makes sense to live near work and take public transportation. And the Chicago housing market thrives.

Remember, the market can change the cost of goods and services on a dime. The location you choose to live will help you weather those fluctuations and dampen their effects.

Location and Transportation Vs Size = No Brainer

Size doesn’t matter… at lease not with Chicago condos. Let me explain.

I’m currently working with a very cool couple from Michigan. They are first time buyers this spring, but have rented in the city for two years. They have a pretty big place now-and pay a hefty rent. So, finding themselves established in Chicago, buying makes sense for them considering what they shell out each month for a vintage rental.

However, home shopping has been a little bit of a shock. To meet their transportation, social and price needs they found the available condos a bit small. How would they fit all of their stuff? Would they feel cramped? Could they possibly have their first kid here or there?

Ahhh… the constant conundrum for many of my “suburban young couple turned urban professional” clients.

In these cases I usually suggest we could be in Tokyo or New York City. If that doesn’t do it, I move on to the many values that make living in Chicago great and the need for smaller dwellings necessary. It is a real gut check for young people who have grown up in sizable homes.

I first remind clients how great it is to walk a couple blocks to the Red Line or Brown Line and zip to work. You don’t even have to remember where your car is (if you have one). Secondly, how great is it to walk to the lake, the coffee shop, even the grocery store. This is truly a lifestyle thing… a gift the City gives us. For instance, it is a fact that urban populations are thinner and healthier than their cohorts in the suburbs.

Third, finding a great little condo with majestic mature trees on the block, a terrific outdoor space, and modern amenities will trump giving some landlord all your money for a large vintage dump. A small space is also a chance for a new beginning, free of clutter and unnecessary possessions. Besides, the reason to be in the city is to develop your career, try new things, enjoy the culture, university and social outlets, and re-prioritize your values. Your own home is a comfortable, customized pit stop during your busy week.

So, by staying light, freeing up clutter, choosing a flat that’s close to transportation and offers out- door space, and allowing yourself to enjoy the lifestyle and urban beauty at its best… you won’t sweat the square footage.

Oh, and the Michigan couple… we found a great brand new conversion, two bedroom condo with a large deck and front terrace, near the lake and Red Line for under $225K… oh and it’s a top floor too.

When deals go bad

Recently, I represented clients of mine in what appeared to be a simple condo purchase. We looked for a couple months and found a great place that met their needs. I helped them present a strong offer, providing suggestions that would increse their chance of an accepted contract.

Oh, by the way, it was a multiple offer situation too.

My clients did present a strong offer and their contract was accepted. But of course, this is not the end of the story. Turns out a few things came up in the home inspection I arranged. More so, the condo association had scheduled major work to the building that would directly affect my clients potential unit. We caught many unknowns in the attorney review period.

When these issues arise, what do you do? Does it instantly mean the deal is over? Can you change the offer price? Can you get out of the deal if you do not like the terms?

Did the deal happen? If yes, why? If no, how come? What did our attorney and myself suggest to my clients?

Call me or email me sometime and you might be surprised by the answers.

Great Open House

This weekend's open house was really terrific at 4518 N Ashland. Open both Saturday and Sunday, over a dozen groups came through. The majority were sent by Realtors or viewed one of our many advertisements. With showings previously in the week, and now two Monday night, I expect an offer this week.

Pricing was a very important aspect of this listing. It is difficult to find a 2 bed 2 bath with the same space, low assessments and location of this unit. It shows great and I market to all my contacts. As well our exposure is diverse. We feature properties on the most used web sites and continue to utilize Google and yahoo campaigns to reach condo buyers. We even have a full color print ad.

Sometimes it is difficult taking a listing that just doesn't look good. Sometimes clients demand to price the listing too high. This time, however, it's hard to deny the price is excellent and the showings are a pleasure.

NEW LISTING: 4518 N Ashland

I just listed a 2 bed 2 bath condo at Ashland and Wilson. Great split floor plan with all the modern finishes. Granite, maple, marble, exposed brick, wood burning fire place... you name it.

The best thing about this place is the open kitchen/great room combo. It makes for a great sized room. Plus, there is a formal entry way and living room. You can actually have the family over for the holidays with this lay out (that is, if you want to).

The condo goes for $319K. Its great space and location. Walk to the Brown Line, Starbucks and boutique BYOBs!

As a Realtor, I don't always get the most ideal properties to show... This one however, is a terrific looking place in a great location... shows well and is at a price point many can afford.

Call anytime for a showing and look at pictures on our web site. Just click the link for our listings below or call 773-510-1597.

City Planning Euro Style

I'm a big walker. And I'm a big believer in planning cities (read-suburbs) with downtown areas that promote living and working in close proximity. With today's service and information economy, it is more possible than ever.
The editorial/opinion column below addresses this issue in a fun way, if not in very simple terms. The author fails to speak of the economic and governmental differences that dictate city planning to some extent. But city planning and how we live and interact is a great topic for discussion.
With the Dan Ryan construction project starting at the time of this writing, it's as good a time as ever to question our driving tendencies.

Friday, March 31, 2006 Inman News]]> We Americans are a puzzling bunch. We travel to Italy, France or Spain and come back smitten with the charmingly walk-able streets, close-knit houses, and humanly scaled public spaces we find there. Yet we seldom stop to wonder why our own built environment is so utterly lacking in those traits.
It's no mystery: In spite of rising population and dwindling resources, America remains saddled with long outdated planning ideals that are the furthest thing from the European examples we admire so much.
America is a vast nation, and perhaps in consequence, our planners and engineers have historically been trained to think big. This tendency has produced some magnificent civil engineering projects such as railways, dams and bridges. Yet it hasn't been nearly so successful at the scale of human habitation.
Thanks to the megalomania of our traffic engineers, for example, American cities are among the least pedestrian-friendly in the world. Each year, larger and larger swaths of urban and suburban land are paved over with ubiquitous six-lane thoroughfares bristling with redundant arrays of traffic signals. Aside from creating barren, monotonous and alienating cityscapes, such roads are also daunting barriers to people on foot, no matter how many kinds of whiz-bang pedestrian signals we install. Rather than drawing our cities together, our roads tear them apart, providing one more incentive for Americans to drive instead of walk.
Ironically, in the dwindling number of places where human-scaled roads still remain, city engineers are even now scrambling to widen them, always with the specious objective of easing congestion. Yet as both traffic studies and common sense can easily confirm, this so-called improvement is pure bunk. The only thing America's incessant street widening programs really do--aside from keeping paving contractors in clover--is to invite even more automobile traffic.
Europeans are notably less obsessed with road widening. Unlike us, they recognize that the difficulty of negotiating their picturesque streets in a car is a blessing in disguise: It makes people prefer to take public transit, or to simply live within walking distance of their jobs. In short, Europeans design their cars to suit their cities, whereas we design our cities to suit our cars.
As for our homes, the much-adored human scale of European villages is all but unheard of in suburban America. This is no accident, either--our neighborhoods can't help but be coarsely scaled, since our moribund zoning regulations typically still insist that houses be surrounded by useless strips of setback land.
The custom of spacing buildings far apart may have made sense a hundred years ago, when America was an agricultural nation and land was cheap and plentiful. Yet that day is long past. With today's usual practice of shoehorning huge tract homes into postage-stamp building lots, the resulting sunless, 10-foot-wide gap left between houses has only one function: to let developers fetch higher prices by continuing to sell their units as "single-family detached."
In older European towns, by contrast, even houses in wide-open rural areas are often clustered together in villages, their walls adjoining. The cumulative savings in otherwise useless setback land can then be devoted to public space that actually has some purpose.
The need to prize every little scrap of land has been central to Europe's way of building for centuries. But it's a lesson we Americans have yet to learn. When it comes to our professed admiration for Europe's charms, we talk the talk, but we sure don't walk the walk.

Consumer confidence not an oxymoron

Friday, March 31, 2006 Inman NEWS:

Consumer confidence rose in the latest survey largely due to gains among households with incomes above $50,000, and the majority of consumers expect the Federal Reserve to continue to raise overnight interest rates, according to the University of Michigan's Survey of Consumers.
"Higher-income households much more frequently reported that their finances had improved and more frequently anticipated further gains during the year ahead," according to Richard Curtin, director of the survey.

Three out of four consumers in the March survey said they expected continued interest-rate hikes, and consumers emphasized the importance of price discounts to their buying plans for everything from homes, to vehicles, to household appliances and furniture. The discounts were seen as critical to offset the higher costs of credit, according to the survey.

While personal consumption expenditures are expected to grow by nearly 3 percent during 2006, new residential investment is expected to decline. "The critical issue is how much of the weakness in the home market spreads to other purchases via reduced cash-outs of home equity," said Curtin. The size and frequency of cashouts depend on changes in home prices and mortgage rates, with changes in both expected to limit cash-outs.

The index of consumer sentiment was 88.9 in the March 2006 survey, between the 86.7 recorded in February and the 92.6 recorded in last March’s survey. The index of consumer expectations, a closely watched component of the index of leading economic indicators, rose to 76 in March, slightly ahead of the 74.5 in February, but well below the 82.8 recorded in March of 2005. The current economic conditions index was 109.1 in March, up from 105.6 in February and 108 in March of 2005.

The March gain in the sentiment index among households with incomes above $50,000 was 5.1 index points, while among households with incomes under $50,000, the sentiment index fell by 0.4 index points.

"Upper income households were half as likely as lower income families to report that their financial situation had been significantly weakened by higher prices, and higher income households were three times as likely to anticipate increases in their real incomes during the year ahead," Curtin noted. The gap in financial prospects between those households with above median incomes and below median incomes has never been wider during the past decade.

There was evidence of a growing belief across all households that the pace of economic growth would slow in the second half of 2006. "Despite the expected slowdown in the pace of growth, most consumers do not expect bad economic times, but they do anticipate that the unemployment rate will begin to inch upward," according to Curtin. Half of all consumers in the March survey expected an economic downturn sometime during the next five years, however.
Source: Inman News

Buying tips music to my ears

When I meet home shoppers at my open houses or online, I try to communicate certain aspects that will provide a smooth process. The number one thing I plead new clients to do is meet with their bank or a good mortgage broker before looking at places. When this subject is brought up, many first time buyers who just started looking respond that they have not met with anyone, but will when they get serious.

This is backward thinking. To get serious, you must work with your bank and mortgage broker to fine tune your finances. Understanding your finances, the loan products available, the price point you may purchase in, and the homes available at that range will provide you a much better experience.

The story written below is a fantastic third party view of what I'm talking about. So, when we work together, you know I will be very adament about your understanding and executing the steps involved in home buying. You will find a home you will love and that will help you on the road to a better financial position. But you must be ready to go for it when that home comes along. I'll prep you for sure.

Monday, March 27, 2006 Inman News]]> If you postponed buying a home during recent years, or found yourself unable to buy due to fierce competition from other buyers, now could be the window of opportunity you've been waiting for. Interest rates, although gradually rising, are still low. And, generally, the inventory of homes for sale is increasing.

The first step is to find out how much you can afford to pay by talking with a mortgage broker or lender. Knowing your price range will help you to determine whether you can afford to buy a single-family residence or a condominium. Condos tend to be less expensive. Your price range will also dictate the neighborhoods in which you'll be able to buy.
HOUSE HUNTING TIP: It's wise to get pre-approved for the mortgage you'll need to complete the purchase. In order to get pre-approved, you'll need to complete a loan application and have your credit checked. This takes time so if you aren't already hooked up with a mortgage person, interview several before you go through the pre-approval process.
Ask each person you interview to explain your mortgage options. There are countless mortgage products available, but some are riskier than others. Find a mortgage broker or loan agent who will take the time to explain the pros and cons of the various mortgage options in words you understand.

Pre-approval can make a big difference in your negotiations with the seller. Recently, an Oakland Hills, Calif., seller received two outstanding offers. One was accompanied by a pre-approval letter that included underwriting approval from the lender and verification of the buyers' funds for the down payment and closing costs. The second offer was presented with a letter from the buyers' mortgage broker that didn't include underwriting approval and was subject to verification of the buyers' funds needed to close. The sellers accepted the first offer.

The next step is to find a good real estate agent. This doesn't necessarily mean the agent who sells the most property. Your agent should be ethical, professional, trustworthy and diligent, and should specialize in the area where you want to live. Other key attributes are good negotiation skills and a willingness to commit time and attention to your needs.

It's helpful to prepare a wish list of all the features you'd ideally like in a home. Share this list with your agent and get feedback on how realistic it is. Buying a home will inevitably involve compromise. Fine-tune the list after you have incorporated your agent's input. Determine which items on the list are must-haves and which ones you can do without.

Now you're ready to start your search. How long this will take depends on what you're looking for and whether it's readily available.
In areas where there is a glut of listings on the market, you'll have an easier time finding a home and there will be more opportunity to negotiate on the price and terms.
In low-inventory markets, you may find yourself in competition. However, unlike last year, it appears that multiple offers in today's market aren't necessarily boosting the price considerably over the asking price.

Where inventories are skimpy, you'll have more success if you relax your search parameters and broaden your horizons. For instance, you might look in more than one area or be more flexible on the architectural style you're willing to accept.
Don't overlook listings that have been on the market for a while. The sellers might be open to negotiating. And keep an eye open for price reductions. Most buyers concentrate on listings that are new on the market.

THE CLOSING: A better deal might be made on a listing that isn't drawing a lot of attention.
Dian Hymer is the author of this column

Mortgage rates holding

The Chicago Association of Realtors reports avergae 30 year fixed mortgage rates at 6.07% by days today. Not bad. If your close to a decision on a place, this could be a good week to lock in your rate for up to 60 days without paying an outrageous rate lock fee.

Rates have been holding steady, but mortgage bankers and real esates economists predict the dreaded 7% by the end of the summer. Just remeber this spring that there are great properties going on the market, sellers are reasonable, and rates are still low.