Thursday, February 14, 2008

February 2008 - Things Are Happening; Make Haste!

The media has been broadcasting all sorts of depressing news having to do with real estate and the economy overall. Foreclosures and short sales are all too common in many markets around the nation - Detroit, Cleveland, Florida, the west coast, the east coast... they're all struggling. Right?

All of the newspapers, including the New York Times this morning, have made reference to the "housing correction".

"What a bad time for real estate", some people have said to me. "You must be wishing you were still in consulting!" others have shared.

I'm busy. Things are happening. I'm really busy! And its not just me.

I helped a client negotiate a contract over the weekend in a multiple bid situation. Multiple bid?! What is this, 2004?!? People are looking for well-priced homes in their price range, and when they find them, they're buying them.

I have thirty-one active housing searches for buyers running right now. Some buyers have more than one, and some aren't looking aggressively, and may not even buy, but thirty-one!?! That's more than a few people looking for homes.

And it isn't just me. My office is teeming with activity. People are taking new listings, people are selling homes. People are buying homes.

February, March, and April are great times to be transacting real estate, and this year is no exception. There is latent demand from November and December, during the holiday season when no one wants to shop for a home. There are New Year's resolutions, spring cleaning, and "it's time to sell" fever.

Mortgage rates are incredibly low, and that makes a difference. A 30-year conforming loan can be had for less than 6% at the time of this article. 5-year ARMs and 7-year ARMs are making a resurgence, because they now present a spread that makes sense. 5 1/8% on a 5-year ARM, wow!

Copyright © 2008
Reprinted with permission

The President signed the economic stimulus package into law yesterday, providing a tax rebate to American individuals and families. The law also changes the definition of conforming loan limits, which will help consumers in parts of the country to get larger loans at conforming loan rates (currently .75 to 1% lower than Jumbo loan rates). This may not have an impact on Chicago-area home buyers as the law is currently written.

What does this mean for the economy for this year? According to the WSJ, Benjamin Bernanke says that his
“baseline” forecast is for the economy to experience “sluggish” growth for the next several months but to regain some speed later in the year.
What about us Chicagoans and our real estate market?

The future is not 100% clear, of course, but I can tell you that things are looking pretty good from where I stand. Home buyers are out there, in droves, and they are looking for nice homes, but they are also looking for good deals. There is still a lot of inventory, so buyers can afford to be choosy, but there's also a great deal of over-pricing. There has never been a more important time to price your home correctly and competitively. With the depth of the current inventory and the buzz of home buyers, a well-priced home can sell very quickly, while an over priced home is almost sure to collect dust.

Home buyers are wondering why some homes have such long market times, and are steering clear. They are swarming to newly listed and freshly marketed places.

If you want to sell your home, don't wait until summer. Summer and winter are traditionally slow in Chicago. The mortgage rate future is unclear. The market conditions are unclear. What is clear is that things are happening now, and they're happening fast.