Chicago Condo Sales are Down

The Chicago Tribune recently dug into Chicago area condo sales for August numbers and found that sales in the condo market are much slower than the single family home market.  Condo sales have crashed in several neighborhoods year over year:

• Rogers Park down 13.2%
• Edgewater down 32.9%
• Uptown down 27.1%
• Lakeview down 35.7%
• Lincoln Park down 12.9%
• Near North side down 13.9%
• Near West Side down 10.2%
• West Town down 29.5%
• Loop down 32.8%
• Near South side down 48.7%

Sales are being hampered by tighter credit and falling prices which puts pressure on other sellers to lower prices, which many are unwilling to do.

“Condo sales, until the beginning of this year, were the best part of our market,” said David Hanna, president of the Chicago Association of Realtors. “There aren’t any buyers for this stuff because the lending process is tortuous.”
Also, the condo market for move-up buyers is hampered by the high cost of jumbo mortgages of more than $417,000 and the higher down payments required for those loans. Foreclosures and short sales are bringing down comparable prices within buildings too.
“Prices are a disaster and it’s creating this vacuum in the market where everyone’s prices are pulled down,” Hanna said. “And it’s happening in the best buildings in the city.”

Some sellers whose property has been on the market for months are going to try and become landlords.

Phil Sammarco didn’t think it’d be so hard to sell his two-bedroom, two-bathroom condo in the city’s DePaul neighborhood when he put it on the market in March for $449,000. Now priced at $435,000, he has fielded — and rejected — a few low-ball offers and showed the unit to a lot of first-time buyers who have indicated they have a wealth of properties to look at.
Now he’s thinking of turning it into a rental instead of lowering the price again.
“You’ve got a lot of choices,” Sammarco said. “Right now nobody is really comfortable that the worst is behind us. If you don’t think the market is stable and you don’t think it’s going to be as good or better, why wouldn’t you rent?”

The article talks about how sales are up in September due to the looming deadline for the first time homebuyer tax credit.  But how many of those buyers are buying $400,000 and $500,000 condos?

Chicago single-family-home sales jump, but condos are still suffering [Chicago Tribune, Mary Ellen Podmolik, Sep 25, 2009]

The Market is Down

The August sales and price statistics are out from the Illinois Association of Realtors and show further declines in the city in both sales and median price. Chicago appears to be struggling to increase sales more than the total Chicagoland area.

The first-time home buyer credit boosted sales for the month. The IAR also states that foreclosures and short sales continue to put downward pressure on prices.

From the Illinois Association of Realtors:

In the city of Chicago, August total home sales (single-family and condominiums) totaled 1,928, down 7.2 percent from 2,078 homes sold in August 2008. The city of Chicago median price in August 2009 was $229,476, down 22.9 percent from $297,500 a year ago in August 2008.

“Homebuyers continue to be active, and the absorption of distressed inventory is the reason the number of units sold in August 2009 is nearly the same as this time last year. Still, the housing market in the Chicagoland area is far from robust, as most home sellers will attest. We strongly advocate for an extension and expansion of the American Recovery and Reinvestment Act’s first-time homebuyer tax credit program, broadened to include all buyers and favoring no taxpayer over another,” said David Hanna, president of the Chicago Association of REALTORS®.

“Here in Chicago the move-up buyer and those with higher incomes are facing a number of additional financial and procedural obstacles that must be addressed.”

Sales were actually higher by 1.3% year over year in the 9-county Chicagoland area as 7,009 homes sold in August compared to 6,917 in August of 2008.

“The Internal Revenue Service recently reported the $8,000 first-time homebuyer tax credit has provided a tax benefit to more than 1.4 million people to date. REALTORS® are urging Congress to extend the tax credit beyond the fast-approaching deadline of December 1 so more people can take advantage of it,” said Onorato, broker-owner of Onorato Real Estate in Coal City. “Also just now gaining awareness is the Illinois Home Start program, which offers eligible first-time buyers a short-term no-interest loan of up to $6,000 for the down payment in anticipation of the tax credit. With more time, these programs can really help sidelined homebuyers.”

According to Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois: “The size of the unsold housing inventory continues to make this a buyers’ market with an approximate value of nine months for Illinois and almost 11 months for Chicago at current sales rates. Absent an uptick in sales, it is unlikely that prices will recover much before the middle of 2010.”

August Illinois Home Sales Strong at the Entry Level, Statewide Median Price at $165,000 [Press Release, Illinois Association of Realtors, Sep 24, 2009]

Will there be $8000 tax credit in 2010.....Yes

My answer is a yes. Yes, our beloved Federal Government will extend the tax credit to new buyers for another year because of 2 main reasons.

1. The politicians may be fools, but they are survivalists first. The economy and stock market are both trending up on some very weak data. Any blip in the economy could send them both cascading down just in time for the 2010 elections. The number one job for Senators and Representatives in their minds is to get re-elected. They will not take the risk.
2. It is one of the few programs coming out of Washington that has worked right out of the box. The politicians need something to hang their hat on and the new homeowner tax credit is a success.

These self same politicians may even extend it to all homebuyers for the year or two. Not that I would recommend it, but the $8,000 largess from the federal government could end up a permanent fixture like the mortgage deduction.

A Great Oak Brook Builder is Broke

This was a good builder for the Oak Brook and Hinsdale Area

September 22, 2009

By NICK VOGEL Contributor

Oak Brook resident and Oakbrook Terrace-based contractor Anthony Montalbano Sr. has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court in Chicago.

One hundred and four creditors are named in the bankruptcy filing, including numerous banks and individuals in Illinois and Arizona, Anthony Montalbano Jr. and the village of Oak Brook's water department. According to court documents, Montalbano estimates that he owes anywhere between $100 million and $500 million.

The largest creditors who claim Montalbano owes them money are asking for more than $151 million alone.

The highest debt among those creditors is about $35 million, owed to the Colorado-based company RBC Builder Finance. The next highest is claimed by Countrywide/ Bank of America Real Estate Managed Assets, which says Montalbano owes it $22.5 million.

On Aug. 24, five days after Montalbano filed for bankruptcy, RBC filed a foreclosure against Montalbano in Will County, claiming that Montalbano borrowed more than $64.5 million and still has an unpaid balance of about $34 million. The actual foreclosure lists the following as defendants: Montalbano Builders Inc., Montalbano Homes of Arizona Inc. Montalbano Builders of Arizona Inc., APM Holdings Inc., Interstate Bank, Kenmare and Associates Inc., Illinois Brick Company, Nantucket Cove Homeowners Association, unknown owners and non-records claimants.

No court dates have been set.

Montalbano's employees also claim they are owed money. Court documents show that former employees are asking for a total of about $108,000 in unpaid salary, wages and benefits. Filed among the bankruptcy case's documents is an e-mail sent to former employees on behalf of Montalbano. In the letter, which was sent May 20, Montalbano apologizes for not being able to meet the payroll deadline. "(T)he Company greatly apologizes for any inconvenience, and greatly appreciates any and all understanding and patience you can provide during this difficult time for everyone," the e-mail reads.

The company's Web site has been disabled, a call made to Montalbano Homes was not answered and Montalbano's attorney did not return a phone call seeking comment before deadline.

HInsdale Home market for second quarter

• Off the 322 listings, 7 homes are temporarily off the market
• 35 are under contract
• 20 are short sales (8 under contract now)
• The average single family home price is $1,299,687. The median price is $995,000
• The average home has 10.6 rooms with 4 bedrooms and 3 and 1/2 bath

Looking at the last two years sales for single family homes in Hinsdale, we can see that while the number of units being sold returned to the rate being sold in August 2007, the average and median prices (both right around $800k) are still dramatically lower than the average price of $1.6mm at the same time in 2007. While we are looking at a month with an extremely skewed average price – its still pretty amazing to see the average price change by 100%.

So is this a good time to buy? There will be another round of foreclosures coming due by the end of the year and so we shall see another drop in the market. The soft market will put pressure on the sellers to drop prices as more foreclosures come on the market. It is a perfect time to learn the Hinsdale area and be prepared to buy. Call me @ 630-464-2633

Plano and expect more to come

Good economic news seems remote in towns such as Plano. Plano sits at the western end of Kendall County, where metropolitan Chicago blends into rural Illinois. Ten years ago the area's flat prairie land was covered in corn and soybean fields.  However, between 2000 and 2007 Kendall became the fastest-growing county in the US, as people moved in search of more affordable property in "bedroom communities". Dozens of developments such as Lakewood Springs were built and the county's population doubled to about 100,000. In Plano the growth was even faster, doubling in the past five years alone.

That housing boom has turned to bust. Kendall County now has the highest foreclosure rate in Illinois, with one in every 26 households receiving a foreclosure filing in the first six months of the year - three times higher than the state average and well above the national average of one in every 84 homes.

That underlines the changing nature of the US mortgage crisis. When the housing bubble burst about two years ago, some of the worst-affected areas of Chicago were poor urban neighborhoods, such as some areas of the south side. In the past year the far suburbs - overwhelmingly middle-class - have become the new face of foreclosure.

The shift reflects a move away from a "subprime" problem: one in three of the US's new foreclosures between April and June were from prime, fixed-rate loans, up from one in five a year earlier, says the Mortgage Bankers Association.

Lakewood Springs exemplifies the problem. A total of 34 homes in the neighborhood have been repossessed, with another two homeowners filing for bankruptcy. But Cole Taylor, a Chicago-area bank, has also foreclosed on its loan to the project's developers, resulting in its taking over another 23 properties directly from them.

Mr. Hausler has been working with Cole Taylor to make sure the lawns are mowed on the foreclosed properties. But there are few signs of potential buyers returning to the development.

In the years after the second world war, Plano proudly called itself "the biggest little industrial city in the world". The town remains largely blue-collar, but manufacturing jobs are hard to come by. One of the biggest local employers is Caterpillar, which makes earth-moving equipment at a plant in eastern Kendall. The company has cut more than 1,400 jobs at the factory this year - about half of its workforce.

Homeowner protection act

In April the state of Illinois passed a Homeowner Protection Act, which blocks foreclosures in the first 30 days of delinquency, requires lenders to inform borrowers they have another 30 days to seek counseling and gives them a further 30-day grace period to work with a housing counselor.

Geoff Smith of the Woodstock Institute, a think tank in Chicago, says that combined with the federal government's Home Affordable Loan Modification Program the Illinois initiative has helped, although he notes the US Treasury reported in August that only 9 per cent of eligible US borrowers were receiving loan modifications. "That's a big concern," he says. "The state has done a little bit to try to slow down the foreclosure process, but the mortgage servicers haven't been modifying enough loans to make a big difference. There needs to be more pressure on lenders."

Back in Kendall County not all is gloom. Sales of existing homes rose 19.7 per cent in July from last year, the fastest growth in the Chicago metropolitan area according to the Illinois Association of Realtors.

But Valerie Burd, mayor of Yorkville, a town near Plano - who has held two foreclosure workshops to advise residents - expects more foreclosures. Unemployment is still rising and her constituents tell her mortgage providers are still unwilling to lend money. "We lagged behind the rest of the country," she says. "We were somewhat insulated here but now - well, now it's definitely hit us."

Author: Hal Weitzman

3847 Forest, Western Springs, IL

Photo from Connect MLS
This is another nice home in foreclosure. The home features 5 bedrooms, 5.5 bathrooms and a 2 car detached garage, all on a 50x167 lot. The house was built in 2008 and has never been occupied. The current asking price is $899,900, down from the original list price of $1,249,000.00. The home is listed by Brian Bomba of Coldwell Banker. It is a house worth its current list price and the bank is ready to unload it. Call (630) 464-2633 if you are interested in seeing it.

Clarendon Hills Area

This is an interesting graph view of the Clarendon Hills area in the past few months.

Zero Interest Mortgages, Part II

When all of the nothing down and zero interest mortgages were released by our government,every one scrambled to buy a home. Now these mortgages have changed in what the owner has to pay. The rates have changes every six months and they will continue to vary. It is a very cautious time to have one of these. These are not a good value and so many people are in them.
First ,get out. Change over to a fixed 5,7,15,or 30 year. If you have a change in your income then get to your banker and let him know asap. You might be able to work a deal out. These mortgages are dangerous and they will send this market back to the toilet.

Where are the interest only mortgages?

This will make you think.

2.8 million interest only mortgages that are still on the market.

Many of these loans are still very toxic and are attached to homes that are underwater. Essentially homeowners are betting that the homes are going to rise, otherwise they will be repaying a higher balance in a shorter time when the loan matures.

The odds of homes prices rising enough to get these folks above water are slim to none, which means a whole new crop of foreclosures or short sales hitting the market.

Still, interest-only loans represent an especially large problem. An analysis for The New York Times by the real estate information company First American CoreLogic shows there are 2.8 million active interest-only home loans worth a combined total of $908 billion.

The interest-only periods, which put off the principal payments for five, seven or 10 years, are now beginning to expire. In the next 12 months, $71 billion of interest-only loans will reset. The year after, another $100 billion will reset. After mid-2011, another $400 billion will reset.

John Karevoll, a longtime senior analyst for MDA DataQuick, sees the plight of interest-only owners this way: “You’re heading straight for a big wall and you can’t put the brakes on.” NYTimes.com.