The recession is over? Try again.

I’m sure a lot of you have either received information or heard that a group of economists determined that the recession actually ended over a year ago, in June 2009.  I received a CNN Breaking News report in my e-mail, opened it up, read it, and my jaw dropped.  I’m thinking, “Are you kidding?”  If that’s the case, why is unemployment rates still on the rise, foreclosure signs up everywhere, and people struggling to make ends meet?

So after the reports that the recession was over (ha!), even stocks jumped up.  The Dow closed up 122 points yesterday.  Anybody else notice short sale and foreclosure signs popping up everywhere in neighborhoods?  Me, too.  People are abandoning ship because of an inability to cover monthly expenses, whether related to a job loss, debt to cover basic living expenses, or other reasons.  I know one family that’s unsure of what to do because they applied for a loan modification with their lender, were denied, and now owe $8000 plus in unpaid principal to be current on their loan.

Dan North, chief U.S. economist with Euler Hermes, a leading credit insurer in Owings Mills, Md., said, “The economy and housing market may have bottomed out but that doesn’t mean things are good.  Foreclosures and underwater mortgages are still a big problem because of the absence of meaningful price appreciation.”

Home values are still way down compared to a few years ago.  Inventory is up, with a lot of it being bank-owned homes with decreased values, thereby pushing the rest of the home values down.  And in an almost Catch 22, why is inventory up?  Because banks are reluctant to loan money to borrowers unless they have a high down payment and excellent credit scores.  Just because you qualified for a loan 2 years ago doesn’t mean you will in today’s market.  And even if you have the money and the credit score to go with it, if you’re focused on other debts to tackle, do you want to take on a huge additional expense like a house?

I just picture a lot of unhappy people throwing things at the TV when they heard this news.  They’re thinking the same thing I was.  “Are you kidding?  I’m still unemployed with thousands upon thousands in debt about to lose my house and you think the recession is over?”  And not JUST over.  Over a year ago over.

I think Americans could use some positive news.  Some good news: mortgage interest rates are down.  The amount of home sales went up in July.  (We’ll hear how August fared later this week.)  However, I think we still have a while to go before the majority of people believe the recession’s over, especially in the housing market.

What do you think?  Am I totally off base?  Leave me a comment or visit me online.

Keeping closing costs low

With mortgage rates ridiculously low these days, what better time than to refinance or purchase a new home?  This past week, the 30-year fixed rate was at 4.44%, the lowest it’s been since Freddie Mac tracked the rates starting in 1971.  Even last week’s rate, 4.49%, is extremely low.  For the 15-year fixed rate, it was 3.92%, the lowest since Freddie Mac started tracking it in 1991.  So first things first – pick up the phone and call your mortgage lender now to talk about a possible refinance or purchase.

So if you are planning to refinance or purchase, you still have to worry about closing costs.  Here’s some tips on saving money during this process.

1. If you’re planning to refinance, contact your current mortgage lender/broker.  They already have your information so they won’t need to charge you again for an application fee or an appraisal fee (if it’s relatively recent.)  If you’ve refinanced recently, you also might be able to save on the fees for a title search.  Ask your lender about a reissue rate, which they can request for you.

2. Everything’s negotiable.  If you’re purchasing from a homeowner or builder, consider asking for money towards your closing costs in the price of the house.  You might be able to add $1,000 or $2,000 towards the purchase price and have them pay up to $5,000 of closing costs on your behalf. 

Fee-ed Up?
Here are just some of the costs of closing on a mortgage.

Fee  Average cost* 
Application  $272 
Appraisal  $310 
Credit report  $28 
Document preparation  $206 
Processing  $288 
Recording  $86 
Underwriting  $236 

 *Based on a $100,000 loan. Not every lender surveyed charges all of these fees.
 Source:  HSH Associates December 2003 survey of lenders

3. See if you can save money by providing your own reports.  For example, many lenders might charge you $30 for a credit report and $25 to FedEx documents.  While those numbers seem small, they add up quickly.  See if they’ll accept a credit report you provide that you’ve gotten free or allow the lender to pick up the documents to save on the cost of shipping.

4. Ask to review the HUD at least 24 hours prior to closing.  Your attorney can also do this for you.  Compare it to what you were quoted initially in your good faith estimate, and point out any differences to your lender.  Make sure everything is added up correctly (a mistake a little too common) and that you’re not charged twice for the same thing.  I’ve also had mistakes made where taxes were calculated wrong in the seller’s favor, rather than the buyer’s. 

5. Make sure you purchase homeowner’s insurance ahead of time.  Closing agents will need to see proof of insurance at the closing table.  If not, you might be forced to purchase the lender’s policy at a rate way over the typical charge.  Ask your lender and your Realtor for a list of essential items to take care of before closing so you don’t get stuck paying extra for something or for anything you don’t need.

If you have any more questions, please visit me online.

Keep your HOA bills current

I know it’s just another thing to worry about.  You’re struggling in this economy to keep up with your mortgage payments.  Now you’re having a hard time paying your homeowners association dues.  You may be surprised to find out that your HOA can foreclose on your home if your dues aren’t current.

HOAs have the ability to move a lot faster than lenders when it comes to foreclosures.  As I mentioned a few blogs back, it can take a lender (especially in IL) months to start the foreclosure process and can be more than a year before it starts until eviction.  Well, HOAs don’t have to deal with all that paperwork.  They can come in, take title, and remove the borrower from the home.  And they can take title for the cost of those delayed dues and attorneys’ fees, a very small amount.

Many borrowers believe they’d rather sacrifice HOA dues to throw extra money into their mortgage payment.  Be very careful.  Make sure to read the declarations and bylaws provided by the association so you know all the rules.  By you not paying your dues, the HOA doesn’t have the money they need to pay the vendors responsible for your lawn care, snow removal, garbage removal, etc., and then they can’t cover their bills.  So it’s an endless cycle.  Find out if your state is one of the 34 that allow HOAs to foreclosure on homes by judicial foreclosure.  Florida, for example, can do it in 10 days.  Texas allows for 180 days for the borrower to become current.

And if the HOA is having trouble paying their bills, it might be hard for new buyers to obtain mortgages for that community.  The banks want to make sure the HOA isn’t having any financial trouble before they approve a loan for a new buyer.

More information can be found here. And I can be reached online.  But this is just a friendly reminder to you to be careful in choosing what bills to pay and what bills to not pay if you’re struggling.  It’s best to contact a HUD-approved counselor for help.

Your best local fireworks displays

Since this blog was so popular last year, I figured I’d return to it over the holiday weekend to let you know where you can catch some of the best local fireworks displays in the Chicagoland area.  I hope you’ll all be able to get out to view some of these fantastic shows. 

Evanston: July 4th at 9:15 pm at Clark Street Beach (Clark Street and the lakefront).  Palatine Concert Band will be playing from 7:30 to 9:10 pm at Dawes Park.  View Evanston’s site for more info. I have to say, even though I do work in the Evanston area and am probably a little biased, that this show is absolutely fantastic year after year!

Glenview: July 5th (it’s Monday!!) starting at 7:30 pm at the Glenview Park Golf Club at 800 Shermer Road.  View the park district site here.

Skokie: Skokie is planning a 3-D fireworks display and the first 10,000 visitors get a free pair of 3-D glasses.  The show is at dusk on July 4th at Niles West High School, 5701 Oakton Street.  Their rain date for the show is July 5th.

Wilmette: Aside from Chicago’s fireworks tonight at the Taste of Chicago, Wilmette is also planning their fireworks display tonight, July 3rd.  The show is at Gillson Park at Lake Avenue and Lake Michigan and starts at 9:30.  Starting at 4 pm today, Wilmette is having a Tastefest and carnival rides for the kids.  View their Web site for more information.

Buffalo Grove: You’ll be able to view their fireworks from four locations starting at 9:15 pm July 4th.  You can see them at the Buffalo Grove Golf Course, Lake Cook Road & Raupp Boulevard, Rotary Village Green, or Willow Stream Park.  Starting at 7 pm, the Buffalo Grove Symphonic Band will be playing a concert at the Rotary Village Green.  More details here.

Libertyville: Fireworks begin at dusk on July 4th at Butler Lake Park, located on Lake Street west of Milwaukee Avenue.  In the Butler Lake Band shell, the Libertyville Village Band will play a concert at 7:30 pm.  View their site.

I hope you all have a safe and happy holiday weekend. Visit me online if you need anything!

Evanston tops foreclosure list on North Shore

A new study done by the Woodstock Institute puts Evanston at the top of its list for the most foreclosures on the North Shore for the first quarter of 2010.  Evanston has had 85 foreclosure filings since the beginning of 2010, up two from 83 filings in the same period of 2009.  The total 2009 count was 336.  I’m not surprised at the number of foreclosures.  Obviously, many homeowners these days are struggling to make their mortgage payments.  What I’m surprised by is that Evanston beat out other affluent suburbs on the North Shore like Wilmette, Highland Park, and Lake Forest.  Maybe it’s just that there’s many more homes in Evanston than those towns, which would push their numbers up.

For the first quarter of 2010, Highland Park had 37 foreclosure filings.  Lake Forest posted 15 and Wilmette posted 19.  Highland Park and Wilmette’s numbers have decreased since 2009.  Just Lake Forest and Evanston have an increase in their numbers. 

The suburb in the Chicagoland area with the highest number for the first quarter was Aurora with 572.  Naperville was extremely low compared to that number with 123.  Joliet had 414.  High numbers in Lake County included Waukegan with 265, Round Lake Beach with 154, Vernon Hills with 53, and Gurnee and Grayslake tied for 50 each.

When you compare numbers by county, Cook easily blows the rest away.  Cook County had 10,449, Suburban Cook County had 5,454, and Lake County had 1,715.  McHenry came in at the lowest with 842.  All of those numbers increased since the same time period in 2009 except for Cook, which was down 4.7% overall.

When you look at completed real estate auctions for the first quarter, Evanston already has 54.  Wilmette had 6, Highland Park had 16, and Lake Forest had 5.

So what do you think is the reason Evanston’s numbers are so high?  Do you think it’s because there’s so many more housing units and because the city is larger than the others?  Are residents from Evanston having more unemployment issues than those in other areas?  I’d love to hear your thoughts.  Please leave me a comment or visit me online.

Billionaire makes bold prediction

Last week I wrote about how the low mortgage rates were helping to increase the number of homes sold across the country and that the number of foreclosures was slowly decreasing for the first quarter of 2010.  I also mentioned that while homes are selling, values are not increasing, nor are they expected to any time soon.

Also, last week, John Paulson, a billionaire hedge fund manager and president of Paulson & Co., said he expects housing prices to rise 3 to 5% this year and another 8 to 12% next year. 

Let me give you a little background about Mr. Paulson before I comment on that.  His company one involved in the Securities and Exchange Commission’s civil fraud case against Goldman Sachs.  From, “The Securities and Exchange Commission on Friday charged Goldman Sachs Group Inc. and one of its vice presidents for defrauding investors. The complaint alleges that the company misstated and omitted key facts about a financial product tied to subprime mortgages as the U.S. housing bubble was beginning to burst in 2007.

The SEC said Goldman Sachs marketed a financial product, called collateralized debt obligation or CDO, to investors without telling them that a major hedge fund that was betting against the mortgage market had played a key role in selecting the portfolio.

The hedge fund, Paulson & Co., paid Goldman Sachs about $15 million to structure a transaction in which Paulson could take short positions against mortgage securities which it helped choose. While investors lost about $1 billion on the CDO, Paulson earned about $1 billion by betting against it, the complaint states.

The SEC alleges that Goldman Sachs Vice President Fabrice Tourre was principally responsible by structuring the transaction, preparing the marketing materials and communicating directly with investors. Tourre knew that Paulson’s interest in the CDO directly conflicted with the interest of investors, the complaint says.”

Paulson says that his company tracks housing prices in California and believes that California is the best indicator of what’s going on with the rest of the country and what will happen within the next six months.  How is this true?  Every state and even every area and neighborhood is different.  Some states are experiencing tons of foreclosures, like California and Florida, while other states are barely registering any.  You can’t take the example of an entire state and base numbers on that.

While I would be thrilled if prices started climbing (more so to help owners start seeing value in their homes), this is such a great time for buyers to take advantage of the situation we’re in now.  They can get homes at incredible values.  This might not be a time we’ll ever see again.  If you have the credit and money to purchase a house now, imagine what it could be worth 20 or 30 years from now.

I haven’t seen values climb in the markets I’m working in.  If you bought a home a couple of years ago and are trying to sell now, most likely you’re not even selling for more than you paid for it.  It’s unfortunate that sellers don’t have the equity they need.  But, again, while now may be considered a buyer’s market, we should hopefully turn around to a seller’s market down the road.  However, I don’t see that happening this year or next.  Maybe 2012.

I’d love to hear what your thoughts are.  When do you see prices turning around?  Do you think Paulson’s prediction will be true?  More on this can be found here. Please leave me a comment or visit me online.

New construction condos to quickly disappear

Do you have your heart set on all new wood flooring, stainless steel appliances, dark granite counters, and unbeatable views?  If you’re interested in purchasing a new construction condo in the Chicago area, now may be your last chance.  The availability of these condos is quickly coming to a standstill. 

According to this Chicago Tribune column, there are only 2 new buildings planned to go up in 2011: the 86-unit Ritz-Carlton Residences and the 198-unit Lincoln Park 2520.  In 2012, there are no condo projects planned at all.  This is all according to Appraisal Research Counselors’ report, which surveys the area bordered by North Avenue, Cermak Road, the Chicago River/Ashland Avenue and Lake Michigan.

In the past, on average, about 2400 new condo units are available for sale each year.  So next year we’ll see a total of 284 and in 2012 nothing?  That’s highly unusual for a city that sells thousands upon thousands of units each year. 

This information is good news for current condo owners who are hoping to sell and won’t have to compete with the amenities that new construction brings or the lower pre-construction/early construction pricing. 

It should also help stabilize the market a bit.  If all that’s available is condos for resale, those will end up selling (people need to buy), and we won’t have such a huge inventory of new, new, new … more units available than people looking.

I’ve actually been surprised at the number of new construction subdivisions I still see going up in the suburbs when I drive through.  A lot of that construction looks like it’s stopped midway, possibly because the builders have run out of money or just choose not to work in the cold.  The builders are stuck because they need to build to turn a profit but the number of people buying in this housing market has really dropped. 

If buyers can concentrate on purchasing resale condos and homes, it will help the market pick back up.  It will lessen the inventory until the market gets back on its feet and can start building new construction again. 

What are your thoughts?  Do you think it’s right that there’s nothing new planned for the city in the upcoming years?  Would you like to see inventory go down?  Please leave me a comment or visit me online.

Evanston receives grant money to rebuild/rehab

Ahh, a subject near and dear to my heart.  The town of Evanston.  With 267 foreclosures in 2008, Evanston has one of the highest foreclosure numbers in the Illinois suburbs.  Because of this, legislators found out last week that they would receive $18 million to help address the issue.

Last year they filed an application with the Department of Housing and Urban Development (HUD) to receive funds as part of a neighborhood stimulation program.  They competed with other communities around the country to receive money out of a possible pool of $2 billion.

So what do they plan to do with the money?  They have it broken down into a few different areas:

1. Create a new neighborhood of 8 homes and 6 condos to sell to buyers

2. Create 86 rental units as part of an affordable housing program made available to those earning 60% or less than the median area income

3. Acquire and rehab foreclosed properties to resell

4. Focus on an area just north of Howard Street and south of Oakton and running from Asbury on the west to the rail tracks on the east to rehab foreclosures

Aldermen and reps from Evanston are ecstatic over the news and think it’s a great thing for the area.  They’re hoping to purchase vacant and foreclosed homes to resell them back at market value. 

But is this a good thing?  One comment from the newspaper article mentions that the city doesn’t know who the ultimate purchaser of the properties will be.  And what’s to keep this from happening all over again?  A new buyer buys the rehabbed home, defaults on their mortgage, and the property gets foreclosed on again … all to start a new cycle.  What can we do to prevent that?

I’d love to hear your comments on the subject.  Please leave me a comment or visit me online.

Tips for renting out your home

If you’re having trouble selling your home, you might have considered renting it out instead.  This is a great way to continue to be able to pay your mortgage and be able to sell in a few more years once the housing market turns around.  However, if you are a first time landlord, the process of having tenants in your home can be traumatic.  And being the winter, it’s harder to find people who need a place now.  Here are some tips to find good renters quickly.

1. Make it look move-in ready.  If you were living there or did have tenants in there previously, just like selling a house, the home has to be in showing condition.  Tenants are like buyers and generally move in quickly once they find something they like.  Make sure the home is clean, smells good, and appliances/fixtures are in working order.  Clean carpets if they’re dingy or you had a pet in there previously.  Also, if you moved out but are going to be renting the home, make sure that you have appliances in there.  If you took the washer/dryer when you moved, a tenant is going to need one, too.  Put them in first.

2. Make it available to a wider audience.  Hanging signs and advertising on Craigslist can definitely help.  Generally, for the cost of only 1 month’s rent, putting your home in the MLS can attract a lot more tenants.  And they’ve already been pre-screened.  Most Realtors have been working with a lot more renters since the market turned around.  In order to find them a place, they will have a credit report and background check.  By listing the home in the MLS, you open the rental up to a lot more people, especially those working with agents already.

3. Know your competition and price accordingly.  Make sure you look at comps to know what similar homes are renting for in the area.  You don’t want to be the highest priced.  Make sure you base your price on location, amenities, schools, etc. 

4. Make it available.  Tenants usually don’t have much time to wait when their lease runs out and they need a new place.  If you’re not going to be around to show it, this can be another great reason to list in the MLS.  Your Realtor can show it for you and/or put on a lockbox so it’s always available for tenants to look at.  And you want to be more open to your tenants.  Allow pets.  You can always charge a pet deposit in case the pet does something to the home.  You’ll open it up to a lot more prospects this way.

Click here for more tips.

Again, if you do find someone interested, make sure to get a recent credit report and run a background check if possible.  Contact past landlords to make sure they’re good tenants and they paid on time.  Ask for the first month’s rent and security deposit from a cashier’s check, rather than a personal check.

If you need help renting your home and want some MLS exposure, please visit me online.

Understanding your property tax bill

For those of you living in Cook County, you’ve probably received your 2008 tax bill over the last few weeks.  I wanted to touch on a couple of points relating to this.  Most of you probably figure that given the recession and property values going down, you’re shocked to see your tax bill go up!  So how can this be?

taxesThere are multiple reasons.  First of all, this bill represents the 2008 tax year.  So the bill for the assessment done reflected home values as of January 1, 2008, which was before the housing market completely dropped.  All Illinois property taxes are paid in arrears.  That means we pay this year for what happened last year.  We won’t pay for this year until next year.  Better than prepaying, right?

Also, this bill was based on your home’s assessed value (as I mentioned before).  When home values were on the rise earlier in the decade, the assessments went up, too.  When this happened, lawmakers in Springfield gave every county the authority to impose a ceiling on assessment increases.  Well, Cook County was the only county to take advantage of this (Sorry, Lake!)  But the ceilings are slowly being phased out and the assessments are now allowed to begin to increase again.

Because of the housing crisis, it is possible that assessments will start to go down.  However, you will not see that reflected until you receive your bill in 2010 for the 2009 tax year.   There is a chance that even if your assessment does go down next year, your bill could still go up.  WHY?  Well, aside from being taxed on your value, you have to take into account any recent tax hike referendums, what level of financial support is going to local schools, and general assessments across a community.  (Visit your local town/village’s Web site for more complete information.)

So you’re probably wondering if you can appeal.  Unfortunately, you can’t.  If there is a mathematical error on the bill, you absolutely can.  But it’s too late to appeal your assessments for this bill.  Lake County residents have 30 days from receiving their assessment to appeal their assessments for 2009.  Visit Lake County’s site for more information on how to do this.

If you don’t pay your taxes, just like your mortgage, your house can be taken away from you and auctioned off at a sheriff’s sale.  But make sure to do your research to determine if you are being fairly taxed.  If you have any more questions, be sure to visit me online.