Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. This year he released a new paper on homeownership – The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home. [Read more…]
2014 has started off to be a really good year, and experts predict that on a national level we are headed back to a more normal (3-5%) appreciation year over year through 2018. This is stable, predictable growth and back on track.
The Home Price Expectation Survey done first quarter this year breaks down what the experts are saying. In green: look at the pre-bubble trend which predicted appreciation up by 19.4% which is very close to the blue column which is is an average of what all the experts said. The bulls in the market are very optimistic, forecasting over 28% appreciation. The most exciting news is that even the bears in the market predict over 10%. Remember these projections are on a national level, and our Near North Chicago neighborhoods are trending very well too. Watch for my next Market Profile coming out soon as we just closed on the end of first quarter sales data.
In recent months I’ve had a fair number of client relocating from other parts of the country with job transfers which is a good sign for our local Chicago economy. Some of these transferees are moving directly into a rental, and some have opted for a short-term or one year lease. The median rent prices in Chicago has gone up 10% since 2009. Jed Kolko, Chief Economist at Trulia reported in February that in all 100 of the major metros, it is cheaper to buy than to rent. On average, it’s 38 percent cheaper. It’s hard to find a 2 bedroom rental on Chicago’s Near North Side for less than $3000.
Another reason to consider buying instead of renting is that financial experts are saying that interest rates are going to be close to, if not greater, than five percent by this time next year. The FED Chairman, Janet Yellen recently announced that instead of prolonging the stimulus, she will continue tapering, pulling back on the stimulus throughout the year. As soon as she made that announcement, interest rates began to tick up.
If you are debating which way to go, please give me a call 312-953-7811!
We are all tired of getting around in the cold icy conditions here in Chicago, but home buyers are still out there looking! When you need a home, you get out and get looking ~ especially the serious home buyers.
If you are considering selling, don’t wait until warmer temps. Seasonally each year the inventory goes up in April and May. Inventory is still very low which means there isn’t much competition.
Chicago inventory levels across the Near North and Near West are well below national levels at 1-2 months of supply. In the beginning of the year the National Association of Realtors reported 4+ months for national levels. Balanced real estate markets carry 5-6 months of inventory. Above that is considered a Buyers Market, and below is a Sellers Market. On national and local levels we’ll tip toward a more balanced market as we head toward spring.
Use the scarcity to your advantage, but be mindful that today’s buyers are savvy and educated. Price within the market and you will have your pick of buyers.
Happy Birthday Chicago – 177 years old today!
“It is hopeless for the occasional visitor to try to keep up with Chicago. She outgrows his prophecies faster than he can make them.” – Mark Twain, 1883
A vibrant city with a friendly hometown feel, and one of the most iconic metropolitan flags in the country.
There is meaning to each aspect of our flag. The white stripes represent the north, south and west sides of the city. The top blue stripe represents Lake Michigan and the North Branch of the Chicago River. The bottom blue stripe represents the South Branch of the river and the Great Canal, and the Chicago Portage. The four six-pointed red stars represent major historical events: Fort Dearborn, the Great Chicago Fire of 1871, the World’s Columbian Exposition of 1893, and the Century of Progress Exposition of 1933–34. Each of the 6 points represent a concept. Click here to learn more.
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A lot of effort goes into preparing a home to go to market and setting the stage for showings. Many sellers to want feedback from the buyers and their brokers who come through. There are two categories for feedback: from buyers and from their brokers; and there are also two schools of thought.
Honest buyer feedback can be valuable, but there can be concerns about the validity for two reasons. The home search for a buyer is a dynamic process, often with their expectations adjusting as they learn the market. Priority that a buyer gives their criteria may shift. The seasoned buyer who has seen all the listings on the market, will have the valuable feedback. Sometimes replacing a light bulb with a higher watt bulb or moving furniture can make a big difference. If a seasoned buyers expectations around: location, room size or count or finish level are consistently not met, it could be an indication of price position. Broker feedback can be helpful too. Buyer Brokers have the opportunity to tour similar properties with all of their buyers in the neighborhood and surrounding areas, and they can offer a barometer for buyer expectations.
One school of thought is that feedback is helpful in understanding the market position. Factoring market data points along with feedback help determine if a price adjustment is necessary to take advantage of the buyer pool.
The other school of thought is that paper talks. If you get an offer, you are likely in the ballpark. If you don’t, you aren’t. This route calls for adjustments over time. Real estate rule of thumb is if you don’t have an offer in 30 days or after 30 showings, it’s time to re-evaluate.
In most areas Buyer Brokers take their customers through and the Seller’s Broker is not present. Chicago’s market is unique to many markets in that the custom is that Seller’s Brokers show the homes they have listed for sale. Home sellers here can get real time feedback, and make adjustments if necessary.
Median sales across Chicago’s north side are trending toward a steady pace of appreciation, measured growth. Inventory is still well below normal level with less than 4 months supply in most areas, well priced and well cared for properties are not on the open market long. There are still some distressed properties on the market, but they are selling much closer to market value.
It’s an urban (and suburban) myth that proximity to public transportation systems decreases property values and increases crime rates. In fact, just the opposite is true.
Riding the rail to increased property values
How much value does a close-by public transportation option add to a house? After looking at 41 studies of 15 rail systems across the county, researchers at California State-Fullerton concluded “…light rail transit has enhanced residential property values 2% to 18% in Portland, Sacramento, San Diego, and Santa Clara, with larger changes in cities with commuter rail systems.”
In San Diego, properties near commuter rail stops enjoyed consistent price premiums of 17% compared to properties further from public transit options, according to a study by the Urban Land Institute.
Light rail service in Dallas had an even bigger influence. Properties near stations increased an average of 39% more than comparable properties not on the rail lines, according to a study by the University of North Texas Center for Economic Development and Research.
Nearby transit can also help preserve home values during real estate downturns, according to a study of home sales activity in Chicago by RE/MAX Northern Illinois. During the first six months of 2009, while overall suburban Chicago home prices fell 19%, 32 Chicago suburbs served by Metra commuter trains saw the average price of a home decline by 15.2%.
However, not as many homes sold during the same time period in the Metra towns, perhaps an indication that home prices held steadier because owners refused lower purchase offers. On average, home sales were down 19.2% in the Metra towns, compared with a 15.6% drop in the suburbs as a whole.
There’s also a difference between being close to public transportation and being right on top of it. A house that’s so close to a rail line that the homeowners hear and feel train noise and vibration may be difficult to sell–or sell for less than a similar property that’s within walking distance, but not right next to, public transportation.
“[N]ot all residences benefit equally,” the study found. “Properties located too near a station may suffer nuisance effects, and it appears that in California the largest premiums accrue to owners of multifamily residential properties.”
Homes located along the rail line, but far from a station, will also be negatively affected. They’ll suffer noise and vibration without gaining the benefit that homes within walking distance of a station will gain.
Will it bring crime?
Another stereotype about public transportation is that it brings criminals into the neighborhood. Research shows, however, that the existing socio-demographic makeup of the neighborhood is what drives crime, not its proximity to public transportation.
As the Department of Urban Planning at the University of California, Los Angeles, School of Public Policy and Social Research found when it studied the issue, transit stations and surrounding neighborhoods in L.A. “are no more unsafe than other city streets. In fact, if we consider only serious crime, rail stations are safer than many city streets because of the higher rate of police deployment.”
The study did find that the type of crime committed was influenced by the environment. Pick-pockets work in crowds, while car theives work park-and-ride lots.
What you can do
Use it or lose it. If you’d like to show your support for public transportation, start by using it whenever possible. Systems with high ridership numbers are better able to expand routes, upgrade services and technology, and qualify for government funding.
Spend less on gas. By riding public transit, not only will you reduce the size of your carbon footprint, you’ll save money. Transit riders spend about $1,500 less on gasoline per year than commuters who drive to work, and transit availability and use can annually save $8,400 in a household budget, according to PublicTransportation.org.
Contact government officials. Let local and federal officials know you support public transportation in your community. Voter support helps build political momentum for mass transit funding.
Get involved. There are any number of ways to actively support public transit. Need something small and easy? Wear a button supporting public transit. If you’re really dedicated, volunteer for your community’s transportation advisory board.