Pending Home Sales at a 6-Year High

Pending home sales are at the highest that they have been in 6 years, rising 1% over the expected month-over-month percentage for May with a high 6.7%, according to Business Insider.  Year-to-year percentages are also impressively over what was expected, coming in at 12.5% instead of 8.3%.

The Midwest has even more promising figures, with a monthly rise of 10.2% and a yearly rise of 22.2%.  These figures look at all homes where a signed contract is in place, but not closed (sale completed.)

We have seen that the rate of home price growth has slowed, but that isn't to say it has stopped, we are continuing to see a gradual climb in prices.  This is good news for home sellers who have been too far underwater to sell their homes, and a call to action for home buyers on the fence. 

While choices in the market are rather limited right now, Lawrence Yun of NAR stated that he believes buyers want to take advantage of affordability conditions before the currently low mortgage interest rates begin to rise as expected.

If you're considering whether or not to take advantage of the current market, send me an e-mail or give me a call and we can evaluate your situation.

Rise of Home Prices Slowing, Not Stopping

Home prices across the US have been growing rapidly for the past few months, according to Business Insider.  March this year had a staggering 10.87% increase - .65 more than expected, and the highest increase seen since April 2006.

However, home-seekers will be pleased to hear that this pace is expected to slow in the coming months.  The graph above depicts home prices across all categories for the city of Chicago over the last six months. The blue bars represent home list prices that went under contract in the corresponding week. Green bars represent the transacted (sold) price of homes that closed in the corresponding week. Note that contracted home prices have actually leveled out in the last 4 weeks, while the closed prices (reflecting contracts written 5-7 weeks prior) are still climbing.  The blue bars are indicative of what the green bars will look like 5-7 weeks out.  Chicago is seeing home price growth slow consistent with the experience of the nation as a whole.

We look to Paul Diggle of Capital Economics for his opinion as to why home price growth is slowing:

1. Price gains of these double-digit types are not sustainable.  If it continues to rise, buying rather than renting would become less preferable.  Additionally, mortgage interest rates would likely rise alongside it (as trends have indicated - another reason we encourage buyers to look sooner rather than later).  While the trends indicate increase, Diggle anticipates a slowing in the rate of increase, so the buyer-base does not wane.

2. "Bargains" are not an easy find.  Investors are interested in these bargains, and when there is scarcity, there will be a slow-up - especially when it will take time for the traditional homebuyer's base to make up for the decline in investors.

3. Inventory is thinning out.  In this case, sellers will be inclined to return to the market.

With all this being said, while price slowing can be expected, buyers should note that price decline is not.  Buyers should strongly consider looking now rather than waiting for a market improvement, because this is not anticipated.  In fact, in March, economists estimated that home prices would rise 8% overall in this coming year.  Personally, we expect these estimates to revise down again just a bit.

If you are looking for more clarity of the market here in Chicago, and/or want to get the ball rolling on your property search, give me a call or send me an e-mail.

Time to Buy - Low Mortgage Interest Rates Are On the Rise

A real-time interactive rent vs. buy map from Trulia (click the image for more)

Mortgage interest rates are on the rise, according to a recent analysis by Trulia.  Buying a home in Chicago is still, overwhelmingly, favorable versus renting, but the longer you wait, the higher your cost of home ownership will be.

Rates have been unusually low in recent times, and with this turn of events, analysts believe, and we agree, that now is the time to buy.  Mortgage rates recently rose to 4.15%, according to the Mortgage Bankers Association, which is a spike from the low 3.59% rate of last month.

While the numbers are not far off of historical lows, if interest rates continue to rise above the 7% range (for Chicagoland buyers), rates may start to negatively affect affordability.  Historically speaking, when rates climb, they generally do so fairly quickly.

Trulia still concludes that nationally speaking, as long as rates are below 10.5%, buying is still cheaper than renting.  However, rising rates naturally make finding a home more expensive, regardless of the buy-to-rent ratio.  With the rates being low right now and looking to continue rising, we encourage those who are on the fence about exploring the market to start looking to buy before it becomes more of a financial challenge.

Give me a call or send me an e-mail, and we can figure out what is best for you.

Jason Finn Awarded "Five Star Professional" Real-Estate Award for 3 Years and Counting

Baird and Warner Real-Estate agent Jason Finn has been awarded the 2013 "Five Star Professional" Award from Chicago Magazine, marking this as his third year in a row being chosen for this award.  This title is awarded to real-estate agents who have demonstrated the highest integrity, communication, and customer service.  This award is particularly significant for Finn given that it first came into existence in 2011, and he has been awarded it each year.

Only the top 1-3% of 42,000 real-estate agents are awarded this title every year.  With this being Finn's third year on the award list, it is a truly selective group of top-tier agents of which he is considered a part.
 
Five Star Professional is a research firm based upon the idea of helping consumers find the best service professional in their area.  For the Five Star Professional Award, real-estate agents are evaluated on their professional successes based on market-specific research and feedback from clients, peers, and industry experts.  There is no fee for industry professionals to be included on the list, and each agent undergoes a screening process to ensure that all licenses are current, valid, and not pending any disciplinary action.

Award recipients will be publicly promoted in an upcoming edition of Chicago magazine this fall.

Being a Buyer in a Seller's Market

Sometime in late February or early March, as the snow was melting away, something funny happened.  A "buyers market" became a "sellers market".  In September 2011 Chicago had over 12 months of market inventory (definitely a buyer's market) and as of the end of May 2013 we barely had 2 months of inventory (a crazy low number, a sellers market.)

Property prices are beginning to rise and almost every deal I've been involved with (or even heard of) this year is a multiple bid situation.  Many buyers are becoming frustrated with the fierce competition currently overwhelming the market.  According to a recent Redfin Real-Time Home-Buyer report, buyers believe prices are going to keep rising alongside a low inventory.  The most major concern for buyers looking for a new home falls not under cost, but low inventory, with 65% of buyers stating that there are "not enough good homes for sale."

This being said, does this mean buyers are trickling off?  Actually, no.  According to this report, buyers would rather pay more and accumulate some debt rather than stay in their current living conditions (should the appropriate financing plan be in place, of course).  Personally, I've worked with a handful of buyers in the last month who have decided to really "stretch" to make their way into a home that suits their needs.

Some rudimentary tips for navigating this new "seller's market":