Finding the good news in this economy

Everyone always wants to hear some good news that can be found with this troubled economy.  The  National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) just completed a study that nationwide housing affordability has reached its highest level in five years at the end of 2008. 

Of all the homes that were sold in the last quarter of 2008, 62.4% of them were affordable to families that were earning the national median income of $61,50o a year.  In the third quarter of 2008, only 56.1% of homes met that criteria, and in the final quarter of 2007, that percentage was only 46.6%.  house-on-money-749529

So what’s causing this change?  Obviously, lower home prices to get homes sold more quickly among the massive inventory as well as decreased mortgage interest rates.  National Association of Home Builders Chairman Joe Robson said that he hopes the new tax credit and government legislation will help incent more buyers to purchase homes.

Indianapolis, Indiana came in as the most affordable city in the country.  It’s actually been first on the list for the past 14 years.  Other areas were: Warren-Troy-Farmington Hills, Michigan; Youngstown-Warren-Boardman, Ohio-Pennsylvania.; Detroit-Livonia-Dearborn, Michigan; and Grand Rapids-Wyoming, Michigan.

At the bottom of the list (the least affordable) was New York-White Plains-Wayne, New York-New Jersey, where just under 14 percent of all homes sold during the period were affordable to those earning the median income of $63,000.  Other areas included San Francisco, California; Nassau-Suffolk, New York; Los Angeles-Long Beach-Glendale, California; and Miami, Florida.

For the Chicago-Joliet-Naperville area, 56.8% of homes in the final quarter of 2008 were affordable.  We ranked 164th nationally. 

Click here to download a complete list.  More information can be found in this article.

Are you ready to make that home purchase in the Chicagoland area?  Please visit me online for assistance.

How Chicago homeowners can save money on taxes

taxcutIf you are a homeowner in Cook County, and you live in the North Chicago townships, the county is giving owners until March 16th to file an appeal to get their property taxes lowered. 

You are eligible if you own any of the following: homes, condominiums, townhomes, businesses, and apartment buildings.  You can appeal directly to the Cook County Board of review if you feel your assessment is too high.

For a complaint form, you can call the board directly at 312-603-5542.  You can also write to them at Cook County Board of Review, Room 60l, 118 N. Clark, Chicago, IL 60602.  If you’re going to be in the area, feel free to stop by there, as well.  If that’s a trek, you may also visit one of these satellite offices:

Skokie, 2nd Municipal District Circuit Court, 5600 Old Orchard Rd., Room 155; 847-470-7522.

Rolling Meadows, 3rd Municipal District Court, 2121 Euclid Ave., Room 237; 847-818-2067.

Maywood, 4th Municipal District Circuit Court, 1500 Maybrook Drive, Room 082; 708-865-5509.

Bridgeview, 5th Municipal District Circuit Court, 10200 S. 76th Ave., Room 237; 708-974-6074.

Markham, 6th Municipal District Circuit Court, 16501 Kedzie Ave., Room 237; 708-210-4116.

What the board is looking for that might be helpful to your appeal includes the following: a photo of the property, a recent real estate appraisal (if available), proof of recent sales of comparable properties to the property you’re appealing, assessed values of comparable properties, and any evidence of damage to the property from water, fire, etc.

If you’re looking to appeal your property taxes, please visit me online to get personalized valuations to your property to help you appeal your taxes.

How the new stimulus package affects you

With the new stimulus package signed by Congress last week could have many positive impacts on our economy.  It will help home buyers, homeowners and even those in fear of losing a job, or those who already have.  The Congressional Budget Office said the bill could increase employment rates to 2.3 million jobs by the fourth quarter of 2009. 

A previous tax credit for first time home buyers was $7,500 that would have to be paid back over 15 years.  The new bill raised this amount to $8,000 and took away the repayment criterion.  That should hopefully induce more home sales in 2009, especially given that the money does not have to be paid back.  stimulus20package

For those in the market to purchase a new car, the bill allows for you to deduct the sales tax of the car from taxable income.  While this may be a modest break, it’s another benefit and can help everyone save a bit of money.

Most Americans would also get a tax credit of $400, or $800 for married couples.  This would increase the average tax payer’s paycheck by about $8/week.  Retirees who receive Social Security benefits those on disability would receive a $250 tax credit.  The package has other tax credits such as a child tax credit for low-income families and a tax credit of up to $2,500 for parents paying for higher education for their children (this will be available in 2009 and 2010).

I had written before about tax credits for making homes more energy efficient, but only for items bought in the past.  The new bill is going to offer expanded credits to those making higher incomes and provide $5 billion to weatherize more than 1 million modest-income homes.  Public housing projects will also benefit, with new windows, insulation, and furnaces.  This should save the average family about $350 in utility bills.

For those that are currently unemployed, there will be a $25 weekly increase in benefit checks through 2009.  This should get more money into people’s hands to hopefully stimulate the economy a little bit more.  The bill also extends the period that people are eligible for unemployment benefits from 26 to 33 weeks.  The National Employment Law Project estimates this will help more than 3 million people.  Other companies are stepping in to help, as well.  I saw a commercial yesterday that if you purchase a car from Hyundai, and you lose your job, with their new Assurance promotion, they will make your car payments for you for up to 3 months.  If you still aren’t working and can’t make the payments, they’ll let you return the car without affecting your credit score.

While all of these benefits might be small to start, the government is hoping they offer some hope.  The major goal is to get consumers out there spending more money to give the economy a much needed boost.

More information can be found in this article.

For more questions about the stimulus package and the housing economy, or how you can earn your tax credit, please visit me online.

Getting a mortgage is easier if you avoid these mistakes

With the lending industry becoming stricter in who they choose to help with loans, it’s important that you have all your ducks in a row prior to getting pre-approved to purchase a home.  Mortgage lenders will need to verify income, view prior tax filings, as well as pull credit to determine your eligibility to purchase a home.

It’s important that you make sure your credit report is clean before you take this step.  Consumers are entitled to one free report every year from each of the three major credit bureaus: Experian, TransUnion, and Equifax.  You might never know there’s a problem until someone else pulls your credit if you don’t look at it first. 

Credit scores range from 300-850.  They’re also referred to as FICO scores.  The higher the number, the less “risk” you are to a creditor. 

2960895definition-of-mortgage-with-magnifying-glass-postersThis is a guideline for some of the important items to pay attention to on your report.

1. LATE PAYMENTS.  After 7 years, any late payments should no longer show up on the report.  Make sure that you check the dates on these because your credit score can be affected by 35% over late payments.

2. COLLECTIONS.  Same with late payments.  Once 7 years have passed, these should no longer show up on your report.  It’s a good idea to hold onto 7 years with of reports so you can see when these items start to fall off. 

3. PAYMENT RECORDS.  Once a collection has been paid in full, it should show as a zero balance.  Make sure that this is updated on your report.  It should also show a zero balance if you settled for an amount lower than what was due.

4. MYSTERIOUS ACCOUNTS.  This should be your first step toward noticing if you are a victim of identity theft.  You should recognize all the accounts that are showing on your report.  If something doesn’t seem right, contact the creditor immediately and check against your Social Security number.  If it turns out that it is a case of identity theft, you’ll want to request a fraud affidavit from the creditor and file a police report.

5. ORIGINAL DATES.  15 percent of a credit score is determined by the dates when accounts were first opened.  If you have ever merged accounts or one creditor was acquired by another, this could be reported incorrectly on your report. 

6. AVAILABLE CREDIT.  Your credit limits on this report should match what you see on your credit card statements.  Experts suggest keeping balances at 50% below the available limit if possible.  If you can do less than 30%, your score will be even higher.

7. TYPES OF ACCOUNTS.  Make sure the accounts are in the right category.  For instance, a home equity line of credit should show up as a second mortgage, not just a line of credit.  Contact the creditor if you feel something is miscategorized.

8. REASON CODES.  Make sure you read to find out why your score is the way it is.  They also suggest what actions consumers could take to improve their score.  However, if you have good credit, don’t do anything the codes suggest because it could end up lowering your score in the long run.

Another suggestion is to avoid closing a credit card completely.  This could actually hurt your score.  Feel free to cut it up or never use it again, but don’t go to the trouble of closing it with the creditor.

The credit report will also completely ignore: your race, color, religion, marital status, age, salary, employment status, interest rate amounts, and where you live.

You can download a great guide to learning more about your credit scores on the MyFico site.

If you’re ready to start looking into mortgages or have any more questions, please visit me online.

Why Evanston is Excellent

century1Last week, the Chicago Tribune wrote a great piece on why Evanston, IL is such a great place to live.  And I couldn’t agree more!  Residents said not to call Evanston a suburb, but rather a small city in and of itself.  Because of the diversity among the residents, most homeowners in Evanston feel it’s a great place to invest, especially in the long term.  This investment could be a business, home, restaurant, or a number of other sites, as long as it’s one where you plan to plant roots and stay a while.

Aside from the appeal of being in the same town as Northwestern University, residents love the proximity to Lake Michigan, the diversity among cultures, and the large selection of eateries.

Susan Tash, a real estate agent with Koenig & Strey, mentions that the housing market in Evanston is a reason why residents love to live there.  She says that you have a combination of both new construction and vintage homes, which makes housing appealing to everyone. 

And you can’t beat the entertainment.  With theatres offering selections ranging from blockbusters to independent films, Northwestern also offers lecture series and dance performances on a regular basis.  Plus, there are several little “downtown” areas ranging from the Central Avenue shopping strip to the Church Street-Dodge Avenue area. 

To get around, Evanston is one of few areas that offers the Metra, CTA, and Pace.  But many residents choose to bike around town, skate, or even go for a nice, leisurely stroll. 

What has really skyrocketed is the professional services and business sector.  Almost 40 percent of residents who live in Evanston work there, as well.  In this town of about 75,000, there are more than 3,000 businesses.  The public transportation and the academics of the university are huge drawing points for entrepreneurs and business people to make a start in this town.  Businesses also appreciate the large range of housing prices to appeal to groups from all financial backgrounds.  In 2008, homes sold from between $114,500 all the way to $2,875,000.

Evanston is a town where I love to work because of the great diversity of people, places, and things.  I’d be happy to help you find a home here.  Just visit me online!

Government to help with mortgage debt

Barack Obama announced on Thursday a plan to subsidize mortgage payments for default borrowers before they actually start to default.  I had talked earlier about plans that were in development for homeowners who were already late or behind in their payments.  This initiative would be a first in government, one that would try to help homeowners before they become late. 

Obama has planned to spend at least $50 billion on this program.  One suggestion he had to help was an interest rate reduction.  Treasury Secretary Tim Geithner said the full plan would be announced in a few weeks.  He’s been meeting with banks, housing lobbyists, and others to help learn about some proposed ideas for slowing the foreclosures in the country.

barack-obama-for-presidentHomeowners would have to qualify in order to be eligible for government assistance.  An affordability test and a housing appraisal are two of the items that would determine if they could be helped.  Then the lenders could go ahead and adjust their loan terms, preventing the investors of the mortgages to lose any money.

There will be an estimated 2 million foreclosures throughout the U.S. this year, and the government is hoping that this process would greatly decrease that number and help stimulate the housing market by stabilizing housing prices.

While the Treasury Secretary and the Obama administration are finishing up the details of their plan, they are asking the banks to put a stop to foreclosures.  Massachusetts Representative Barney Frank is also asking the banks to put a moratorium on foreclosures until this is resolved. 

If foreclosures decreased or stopped altogether, it would greatly stimulate the housing market by reducing the inventory available and shortening market times of the homes that are for sale. 

More on this topic can be read here.

For any more comments or questions on the foreclosure process, please visit me online.

10 real estate predictions for 2009

Denise Lones is a founding partner of The Lones Group, and has over 20 years experience in real estate and business analysis.  She believes (and our fingers are crossed) that 2009 will be a year of recovery and stabilization for the housing market and the industry.  I wanted to share her predictions for what will happen in 2009.

1. Mortgage rates will drop, then rise, and then stabilize.  She predicts that they’ll start to climb back up in early spring.  Once we hit the summer, rates will begin to level off.

2. Investors will come back to the market.  The Federal government plans to help by buying mortgage-backed securities.

3. Buyers will come back to the market.  If I’ve said it once, I’ve said it a thousand times.  Now is the time to buy!  With rates this low (and even if they go up a little), there’s not a better time to buy a home.

4. Sellers will become more creative in the incentives they offer to sell their homes.  Besides sending buyers on a vacation or offering closing cost assistance, they might agree to help with financing or do interest rate buy-downs.

5. Listing inventory will go down.  Many builders focused on selling existing inventory in 2008 rather than build new homes in addition to what they had.  imagesAs more investors work their way back into the market, they will also pick up some of the inventory that has been sitting for a while.

6. Market time will decline.  We’ll start to see the numbers decrease as the inventory gets picked up.  Denise predicts that by early spring the market numbers will start to show a decline.

7. Realtors will leave the business.  For those that survived the 2008 market, 2009 will bring more new business.

8. Many builders will leave the business.  To sell off remaining properties, they might try to auction them off, rather than significantly decreasing prices.  Because of weak sales in 2008, they won’t have the financial means to stay in the business in 2009.

9. New construction will reach record lows.  Many builders weren’t able to purchase new land in 2008, so they won’t be building new homes in 2009.  Denise predicts that by fall, new home inventories will be a lot lower than usual.

10. Consumer confidence will soar!  As buyers start entering the market, consumers will feel more confident about making a purchase and will turn to their Realtors for guidance.

Denise offers 5 more great predictions for the market in 2009.  Please click here to read them.

For any real estate assistance you need, please visit me online.

How to get a great deal on a short sale

If you’re in the market to buy a home, chances are you’ve come across many short sales.  In short, a short sale is where the amount owed on the home is more than what the sellers are asking for it.  According to CNN Money, 14% of homeowners nationwide are behind in their mortgage payments.  There are some advantages to these short sale deals.  First of all, many times the owners still live in the homes, so they’re not distressed or destroyed like some foreclosures might be. 

Here are some tips to get a great deal on your purchase of a short sale:

1. Be aware of what you’re getting into.  Unlike the term short sale, most often these deals aren’t “short.”  It can take the bank upwards of 6 months to approve a deal.  You also don’t want to low-ball the lender.  You can wait 6 months to find out they didn’t even accept your offer.  The owner of the home does have to approve the contract first, before it’s submitted to the lender. 

2. Find a Realtor willing to stick with you.  Since these deals take a long time, you’ll want to find someone that is persistent and can walk you through each step of the process.  Some Realtors don’t want to deal with them at all, because of the amount of time and the amount of work.  But don’t do it on your own.  There is a lot involved that you need to know.

3. Pick and choose carefully.  header-1You don’t want to bid on a home that already has several offers.  Oftentimes the Realtor won’t submit yours until the first one or several have been rejected.  And be sure to pass on homes that have more than one lien against them.  It’s hard enough waiting to hear from one lender, let alone two. 

4. Settle on the right price.  As I said earlier, you don’t want to low-ball the bank.  Make sure your Realtor determines fair market value for the home, before presenting your offer to the seller.  The seller’s Realtor could very well have offered the home at way below market value, just to get some offers on the home.  If the fair market value is lower than the list price, come in 10% lower.  And make sure you have proof of funds or a pre-approval letter before submitting your offer.  Most banks won’t even look at an offer without that.

5. Protect yourself.  Make sure there’s a clause in the sales contract that you won’t have to do a home inspection or appraisal until after the lender approves the deal.  This way you won’t be out hundreds of dollars if the lender never accepts your offer. 

6. Be persistent.  These banks receive hundreds of offers on short sale homes a week.  The paperwork continues to pile up.  Make sure the seller’s Realtor is in touch on at least a weekly basis with the lender. 

With continuous support and a Realtor knowledgeable in the short sale market, you will be able to save money and get a great new home.  Please visit me online for any questions or help with a short sale purchase.

Is your listing tired? Update it!

For all those homes that have been sitting on the market for weeks and months, now is the perfect time to breath some life back into your home.  As the weather starts to slowly warm up (hopefully), you will be attracting more buyers into your home.  If you haven’t done anything to your home since you initially listed it, you might want to make some changes that will cost you very little, if anything at all.

1.  Move it!  Rearrange furniture around the room.  showimageSimply moving the couch from one side of the room to the other can change the entire appearance of a room.  Add a rug, remove a lamp.  Little things like adding a mirror can make a room appear much larger.

2. Plant it!  This is one you might want to avoid if you don’t have a green thumb, since plants that aren’t maintained can actually hurt what you’re trying to do.  Purchase a decorative container and put the plant in directly with its pot.  Plants can add texture and warmth to any room.

3. Paint it!  A new paint color can make a huge difference in any room.  If you do have a room that has been sponge painted or something that’s not quite in style anymore, a simple coat of neutral paint should do the trick.

4. Organize it!  It’s so easy to build up clutter in a home.  One or two days worth of mail can easily bury your countertops.  Purchase some baskets (for mail and magazines ) and removable hooks to hang coats, hats, and keys.  A simple chair rail in a room is also a great way to hang a quilt or blanket. 

5.  Hide it!  A minor dent in the wall can be easily covered up.  Paintable wallpaper can be a low-cost alternative to hiding wall dents or smoothing out surfaces. 

6. Replace it!  Replacing hardware on kitchen cabinets is a great way to spruce up the kitchen for a very low cost.  A broken switch plate can easily be replaced.  Make sure that anything in focus of a buyer looks its best at all times.  Simple items like vent covers and new towels in a bathroom can make all the difference.

7. Light it!  If you have buyers coming to see your home at 5 p.m., there’s a good chance the lighting in a room will not have the effect you want.  Make sure dark rooms have enough light to be bright in the evening.  Dimmers can be added to regular switches for a more cozy effect earlier in the day.

8. Clean it!  This is probably the most important way to make your home appear fresh.  Make sure floors, carpet, counters, etc. are clean at all times.  Put your laundry away.  Make your bed.  Clean out your refrigerator.  It sounds so simple, yet so many homeowners fail to do these simple tasks.  One dirty room can turn buyers off from your home completely. 

More information on sprucing up your home can be found in this article.

For more tips or comments, please visit me online.

Easy ways to lower your water bill

While many consumers fear the rising cost of oil and gas to heat their homes, many are shocked that their monthly water bills are climbing higher than their electric bills.  Even lowering your water bill can save you money and energy.  Let’s look at some of the common causes of high water bills.

plumbing-sink-leakDid you know that in a leaky sink or faucet, one drip every second wastes as much as 260 gallons of water a month, which is more than 3,000 gallons a year?  What’s worse is that you’re paying money to heat your water, and now all that money is literally going down the drain, too. 

Another big consumption of water is an older showerhead.  Showerheads in general often account for 25% of the household’s water consumption. Some wall-mounted ones and some hand-helds that are older models use 3 to 8 gallons of water per minute.  If you don’t want to replace your showerhead with a newer model that uses 2.5 gallons or less per minute (Energy Star offers one for about $18 at Home Depot and only uses 1.5 gallons per minute), think about adding a water flow restrictor to your current showerhead.  This could reduce your water use by a third.

New dishwashers and washing machines are the way to go to cut water use.  Older models of a washing machine appliance use as much as 50 gallons per load, while new ones are down to 30.  Dishwashers have reduced water usage from 11 gallons to 6 per load.  Again, you’ll save money on your heating bill with newer models since you’ll have less water to heat.

For more tips, read this advice in the Chicago Tribune.

Please visit me online for other real estate advice.  I always welcome your questions and comments.