Online Foreclosure Sites Come With a Price

Buyers interested in foreclosures need a real estate professional’s help navigating the online listings unless they are willing to pay a substantial monthly fee to use heavily advertised sites like ForeclosureStore and ForeclosureToGo.

Sites that are free, like Zillow.com and Trulia.com, just display filings culled from other sites, so users ultimately end up at the pay sites.

Users of the pay sites can often see a partial address and description, but if they want the whole enchilada, then they must cough up monthly fees that range from about $40 to $80.

RealtyTrac advertises free access, but often the addresses and other details are incomplete.

Source: The Associated Press, Alex Veiga (12/22/2008)

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Chicago Home Buyer Tax Credit: How It Works

First-time homebuyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.

The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.

The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.

If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.

The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit

Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

[Editor's Note: The credit is set to expire in mid-2009, although industry groups, including the NATIONAL ASSOCIATION OF REALTORS®, are encouraging Congress to extend it. NAR is also encouraging Congress to make the credit available to all buyers and to eliminate the repayment requirement. More detail on how the credit works is available from NAR on REALTOR.org.]

Source: Chicago Tribune, Mary Umberger (12/28/2008)
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Developer seeks OK to make Bucktown building a hotel

“I found this article very interesting in Crains- However the current status is unknown as the developers financiers have just started foreclosure preceding.  I hope it goes though as a hotel is really a great idea of the six points”

By Alby Gallun, Sep. 17, 2008

(Crain’s) — A city panel on Friday will consider a plan to convert the tallest building in Bucktown into a 90-room hotel, a project that has yet to receive the blessing of the neighborhood’s alderman.

1600 N. Milwaukee Ave.

Wicker Park developer MCM Realty Ltd. has asked the Zoning Board of Appeals to approve a special-use permit for the redevelopment of Northwest Tower, a 12-story Art Deco office building at 1600-1608 N. Milwaukee Ave. The project would round out Bucktown, a once gritty neighborhood now known for its expensive homes, trendy restaurants and high-end boutiques — but no hotels.

Alderman Scott Waguespack (32nd), who represents the area, likes the idea but is withholding his support for the permit because he hasn’t seen a specific plan.

“There’s just a lot of questions,” says Paul Sajovec, the alderman’s chief of staff. “Our concern is that right now this could be anything. It could be a Motel 6 or it could be a high-end product.”

MCM representatives did not return phone calls for comment.

An MCM affiliate paid $5 million for Northwest Tower in January 2007, financing the property with a $5.2-million loan from Amcore Bank, according to documents filed with the Cook County Recorder.

The developer also acquired three low-rise buildings just north of the tower and drew up plans for a major mixed-use development on the properties, a proposal that Alderman Waguespack shot down last year. All the buildings, including the Northwest Tower, are now listed for sale on MCM’s Web site, suggesting that the developer is open to all options for the properties.

The landmark Northwest Tower, which was built in 1929, isn’t the only big redevelopment candidate at the intersection of Damen, North and Milwaukee avenues. Chicago developer Jon Goldman paid $18.4 million in March for the Midwest Bank building at 1601 N. Milwaukee Ave., with plans to convert the property to retail use.

Related story: Bucktown blockbuster

Though retailers have flocked to the neighborhood, hotel rooms there are in short supply.

“We have 33 beds at bed-and-breakfasts in Wicker Park and Bucktown,” says Paul Barrington, executive director of the Wicker Park and Bucktown Chamber of Commerce. “We do see an increase in the need for hotel rooms.”

Alderman Waguespack agrees but isn’t ready to back MCM’s plan until he sees more details. He plans to send a letter saying just that to the Zoning Board of Appeals, says Mr. Sajovec, his chief of staff.

The Wicker Park Committee, a residents group, has similar concerns. MCM has yet to show its proposal to the group, a step most developers take before they seek the city’s approval on a project, says Craig Norris, chairman of the organization’s preservation and development subcommittee.

“I think in fairness, the community would like to see what the plan is and have some meetings,” he says. “That’s pretty standard.”

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Fannie Tightens Lending Rules on Condos

Fannie Mae is tightening mortgage criteria on condos, particularly in Florida.

Fannie sent a memo Tuesday to lenders that the number of delinquent mortgages it owns or guaranteed that are secured by condos in Florida is at an all-time high. To combat the problem, it is requiring higher loan-to-value ratios for condos. It also increased the minimum share of condos that must be owner occupied in a new or newly converted building to 70 percent from 51 percent.

Fannie tightened criteria across the country as well. No more than 15 percent of the units can be 30 days or more past due on association payments.

Source: American Banker, Allison Bisbey Colter (12/18/08)

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Many Americans Opt to Stay Put

These days, more Americans are staying rather than moving, according to a survey by the Pew Research Center released Wednesday.

The survey found that 60 percent of Americans have moved to a new community at least once, but more than one-third still live in their hometowns and 57 percent have never lived outside their home state.

The remaining 40 percent, which Pew dubs “movers,” aren’t necessarily thrilled with the place where they currently live, but they say they aren’t moving again.

About 40 percent of people who have lived in two or more places in their lives complain that they aren’t currently living in their “heart home” – the place they consider their true home – but for one reason or the other most aren’t returning there either.

Pew concluded that the trend is toward less moving around for two reasons. It’s hard to move two-career couples because both must find work, and the population is aging and those over 30 are, compared to younger people, generally less likely to move.

Source: San Jose Mercury News, Mike Swift (12/18/08)

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Market Data Dec 12-18th

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How to Tidy a House in Record Time

The home is a pigsty and potential buyers are arriving within the hour. Here’s what home owners can do to turn chaos into order, says Julie Edelman, author of The Accidental Housewife: Your Guide to a Clean-Enough House.

Target the bathroom. Wipe down the sink, toilet, mirror and floor with disinfectant wipes. Empty the trash. No toilet bowl cleaner? Drop in denture cleaner, let it fizz for 20 minutes and flush.
Salvage the kitchen. Clear the countertops. Put dirty dishes in the dishwasher. Spray down the counter with a clean-smelling multipurpose spray.
Pick up debris. Concentrate on getting rid of clutter in the living room. Put it in a bag and hide it in a bedroom closet.
Vacuum everywhere.

Source: Chicago Tribune, Emilie Le Beau (12/21/2008)

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2008 Method of Home Sales

The majority of home sales are transacted through a real estate agent or broker. During the survey period, 84 percent of home sellers sold their home with the assistance of a real estate agent. The share of homes sold using a real estate agent has been relatively constant during the past six years, hovering around 84 percent. Some sellers attempt to sell the home themselves, but then turn to real estate professionals to “get the job done.”

Among those sellers who used an agent in their home sales transactions, more than four out of five depended on the assistance of a real estate agent for A broad range of services and management of most aspects of the home sale. Nearly half – 48 percent — used the same agent to help them purchase a home.

Of course, there are always sellers who choose to sell their home themselves. For-sale-by-owner (FSBO) sales accounted for 13 percent of transactions during the survey period, up slightly from a record-low market share of 12 percent in both 2007 and 2006. The share of FSBOs has remained at 12 percent to 13 percent for the past four years. The level of homes sold without professional representation has trended lower since reaching a cyclical peak of 18 percent in 1997.

A large number of these FSBO properties were not placed on the open market – 45 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances.

Open market homes sold without professional assistance were 7 percent of all sales – the other 6 percent are unrepresented sellers in private transactions. This matches the results in the 2007 study and marks a downtrend from 10 percent sold on the open market in 2004.

Those home sellers who choose FSBO as their method of selling face special challenges. The most difficult tasks reported by unrepresented sellers are selling within the planned length of time, getting the right price, preparing the home for sale, and understanding and performing paperwork.

The 2008 NAR Profile of Home Buyers and Sellers:

Focus on Sellers
by Paul Bishop, Harika “Anna” Barlett and Danielle Hale, NAR Research

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Profile of Home Sellers

The median age of home sellers who sold a home between July 2007 and June of 2008 was 47. Home-selling households had a median income of $91,000. Three-quarters were married couples. Their home was on the market for eight weeks. Five percent of sellers who also purchased a home reported selling their home in a short sale.

The typical home seller has owned their home for six years. Very few sellers (4 percent) owned their home for less than one year, while one in ten had owned their home for more than 20 years. Sellers of detached single-family homes, which account for the largest share of homes sold, owned their home for a median of seven years. Sellers of condos in buildings with five or more units, along with sellers of cottages, had the shortest tenure, with more than four in ten owning their home for three years or less. Perhaps not surprisingly, younger home owners tend to be more mobile, resulting in a much shorter length of tenure when they sell their home. While the youngest group of sellers owned their home for a median of two years, those 65 and older sold their home after a median of 13 years.

The 2008 NAR Profile of Home Buyers and Sellers:

Focus on Sellers
by Paul Bishop, Harika “Anna” Barlett and Danielle Hale, NAR Research

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Eliot House Sandburg Village

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Is Now a Good Time to Refinance?

Refinancing now sounds appealing, but for lots of people, it isn’t all that easy.

Applications for refinances tripled earlier this month after the Federal Reserve promised to buy up $600 billion of mortgage debt. And rates for 30-year fixed mortgages are falling below 5 percent – the lowest in 50 years – but many home owners will have trouble doing the deal.

Having at least 20 percent equity in a home is important. A credit score of at least 720 and a debt ratio that is less than 43 percent are both essential.

Jumbo mortgages are still expensive. A 5/1 adjustable-rate with an initial interest rate for five years and an annual reset is averaging 6.6 percent. Traditional 30-year fixed are at 7.49 percent. Home owners in this situation may have to just ride it out.

Source: Business Week, Lauren Young (12/22/08)

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Where Prices Have Increased the Most in 2008

U.S. Home values declined an average of 8.4 percent in the first three periods of 2008, down $2 trillion in total value, according to Zillow.com Real Estate Market Report, released this week.

Thirty of the 163 metropolitan statistical areas covered by Zillow, either showed gains in the median value of homes in the area or values stabilized.

Here are the 10 areas where values increased and declined the most.

Places Where Values Increased the Most
Ithaca, N.Y., 5.6%
State College, Pa., 4%
Jacksonville, N.C., 3.9%
Winston-Salem, N.C., 3.4%
Bay City, Mi., 3.2%
Rochester, N.Y. 3.1%
Greenville, S. C., 2.8%
Anderson, S.C. 2.7%
Burlington, N.C., 2.6%
Spartanburg, S.C., 2.0%

Places Where Values Decreased the Most
Las Vegas-Paradise, Nev., -24.6%
Bakersfield, Calif., -24.9%
Madera, Calif., -26.2%
Gainesville, Ga., -26.4%
Riverside-San Bernardino-Ontario, Calif., -30.4%
Modesto, Calif., -31%
Salinas, Calif., -32.4%
Merced, Calif., -32.5%
Vallejo-Fairfield, Calif., -33.2%
Stockton, Calif., -35.5%

Source: Zillow.com (12/15/08)

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Ten Real Estate Predictions for 2009

2009 is likely to be a year of continuing adjustment to a changing real estate marketplace. Prepare yourself and your business with these predictions from HGTV’s FrontDoor.com Web site.

Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.
The Obama administration will act on its plan to crack down on abusive lending practices.
Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate’s Joint Economic Committee has predicted two million foreclosures in 2009.
Banks’ restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.
Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.
The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages, and credit enabling better decision-making going forward.
Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.
Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.
The recession will end and buyers will regain confidence in the market.

Source: Frontdoor.com (12/03/2008)

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Sam Zell Predicts Spring 2009 Housing Recovery

Financial mogul Sam Zell, beleaguered owner of the Tribune Co., which declared Chapter 11 bankruptcy last week, told an Israeli business conference Sunday that the U.S. real estate market will be in recovery by spring 2009.

Zell pointed out that the U.S. population is growing and with fewer than 600,000 building starts in 2008, a million fewer than any of the last 10 years, demand for housing will rise.

Zell blamed the current crisis – at least in part – on ill-considered decisions.

“We are living through our first Blackberry recession where, literally, information is instantly disseminated around the world and people, in effect, respond to it, perhaps, often without any particular caution or attention,” he said.

Source: Reuters News, Ori Lewis (12/14/2008)

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Tips for Buying at a Foreclosure Auction

If you’re thinking about buying a house at a foreclosure auction, here’s some advice from experienced auction buyers.

Pay cash. Most auctions require you to close in fewer than 30 days. That’s not enough time to get a bank loan. Hard-money loans are an option, but the going rate is 15 percent plus points, and refinancing right away is probably not an option.

Check the place out. Most auction companies working for banks will let you get in with an inspector a week or so before the sale.

Get a separate appraisal. A knowledgeable appraiser can keep you from getting caught up in the frenzy and paying too much.

Look for short sales. Instead of buying at a foreclosure auction, negotiate a short sale prior to foreclosure. Buying short takes patience, but you are likely to get a very good deal.

Source: Fortune, David Whitford (12/22/2008)

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Chicago MLS Real Estate Data- Ending Dec 11th

30-Year Rates at Lowest in 4 Years

Freddie Mac reports a decline in the 30-year fixed mortgage rate to 5.47 percent during the week ended Dec. 11 from 5.53 percent last week and 6.11 percent a year ago.

Some lenders are locking in even lower rates as they build on momentum started when the Federal Reserve announced plans last month to purchase a substantial number of mortgage-backed securities. HSH Associates and Inside Mortgage Finance are reporting interest on 30-year fixed loans at 5.33 percent and 5.09 percent, respectively.

Freddie Mac chief economist Frank Nothaft says mortgage rates also were driven downward by the recession and rising unemployment.

Source: The Washington Post, Dina ElBoghdady (12/12/08)

Dec 8th Market Stats