Spring Time
As the snow melts and the sun shines through, we have something to look forward to… Spring time! The groundhog did not see his shadow, so spring shall be arriving early. All real estate agents know what this means. Spring is the best time of year for most real estate agents and companies. This is because a lot of properties get listed around this time of year and many people start searching this time of year as well.
Many people do not want to search for homes during the holidays as it is usually a very busy time of year. On the flip side, many people do not want to put their home on the market because they are too busy during this time. So when the holidays pass and the sun begins to shine again, the real estate market experiences a spike!
One of the reasons why spring time is such a great time of year for real estate is that many people start searching now, so that their kids can finish up the school year before the move takes place. Then once summer hits, they can move. The market usually experiences a decline around September, for the same reason. People would have already had to have moved if the kids are enrolling in a new school.
Spring time should be a great time for real estate agents to go out and get that business and this is also a great time for those home buyers to get in their dream homes!
Chicago’s Blizzard 2011 Has Passed, But a Spring Storm is Already on Its Way
By Noel Christopher
If you thought Chicago's blizzard of 2011 was bad, wait until you see the storm that is coming this spring. The OREO storm that is. OREO, or Other Real Estate Owned, is the term that banks use for the distressed properties they have on their books. RealEstateAuctions.com is poised to service banks and institutions nationwide through our innovative auction platform offering boots on the ground in all our auction markets.
We keep hearing about the “shadow inventory” in the real estate market, right? Well, a recently released Standard & Poor’s study shows that in Chicago there is a 54-month and growing inventory of distressed properties. Many of these properties are in the shadow inventory of bank properties that are waiting for one reason or another to be put out into the market. Lately there has been a hold on foreclosures due to the Robo Signing controversy, which has added to this shadow inventory. Also adding to this inventory are all of the previously foreclosed properties that were held back from the banks to make sure they filed the right paperwork. You can see why we are drawing comparisons with Chicago's blizzard of 2011.
Although the last four months in the distressed real estate market has been a little slow here in Chicago, that is all about to change. Industry sources tell me that banks are opening up the flood gates in the second quarter of 2011. So while we just had the great Chicago Blizzard of 2011, we are about to see a deluge of REO properties hit the market, much like the snow that recently buried us all. This is more than the market can absorb through the traditional Multiple Listing Service model.
RealEstateAuctions.com is the perfect solution to fill the need of banks by supplying an accelerated marketing option through auctions. A well-marketed auction puts the most eyes on a property with qualified buyers in the room, thus getting a great price for the bank and a good opportunity for a savvy buyer pick up a great deal.
Real Estate Investors
For decades - and especially the last decade - real estate investors seeking income have been advised to allocate a portion of their assets to real estate. After all, real estate offers a relatively high level of income (up to a 15% rental yield in some locations) and - as a hard asset - offers at very least some protection of principal.
In recent years, investors often sought diversification into real estate through real estate investment trusts (REITs), since owning actual properties outright was too expensive for the average retiree or income investor.
Bubble-era housing prices and the low interest rates that fueled them made it more attractive than ever for developers to build condos all around this country, but a recent decline in households' net worth, coupled with tighter lending standards, has made it harder than ever for developers to sell their properties. This bust for lenders has been a boon for savvy investors.
By employing a real estate auction company, savvy real estate investors are able to pick up condominiums in desirable locations like New York, Chicago, and Los Angeles for sometimes less than half of their original asking price.
And the case for buying condo properties now is compelling for many reasons. First, as an income-producing asset, real estate is almost unrivaled, since income can be realized in perpetuity (or until the building collapses) - try getting that yield with a bond!
Second, the prices that many real estate investors are paying through a real estate auction company often augment those yields and account for a good deal of greater downside in the market. Third, as a hard asset, real estate will outperform bonds or cash in an inflationary environment. And fourth, real estate is useful - it can be used as a residence. What high-yielding stock provides walls and central air?
Joking aside, most metropolitan real estate markets have taken huge hits, but there are some signs of stabilizing. The buyers who will make the most money in an inevitable long-term rebound in real estate are those that are willing to stick their necks out early.
Owning a condo offers an alternative to owning a soft-asset REIT for diversification and has the added bonus of being a hard asset that investors can live in or pass on to children, grandchildren, etc, and the ability to buy at auction offers the opportunity to get away with paying prices that - years from now - will seem impossibly low.
Chicagoland Market Update
Good things are happening in the Real Estate market in the Chicagoland area. Prices remain low for first-time and/or move up buyers and the high volume of inventory homes that once occupied our marketplace are finally diminishing. Existing home sales in the Chicago area have increased significantly since this time last year, and the homebuyer tax credit has been extended and continued to be a great incentive to improving the economic status of the economy.
The prices of single family homes and condos are at a record low, which is good news for all of the buyers and investors in the real estate market. Reports show that the supply of homes nationally is at its lowest level in 2 ½ years. High inventory was one of the major causes of the Chicago real estate market decline, and so the fact that the number of inventory homes is decreasing is certainly a sign that the real estate market is back on the rise.
Existing home sales in the Real Estate market in the Chicagoland area have increased 33.3 percent in the month of October 2009 as compared to the number of existing home sales last year. Also, Single family homes and condos were up 28.5 percent. The numbers were at 2,012 compared to the 1,566 that were sold last year during this time.
The Homebuyer tax credit is a big reason for the increased movement going on for both single family homes and the condo market and as well. This program has created a great incentive for buyers who at a time were undecided as to whether or not they were going to purchase. The tax credit was what pushed people over the fence. The fact that the government not only extended this tax credit but also expanded it to move up buyers as well was crucial and certainly helpful in improving the economic state of the economy. This will help to continue the positive trend and counteract the rising foreclosure and unemployment rates.
The government needs to continue to give the real estate market the continued support and attention that it deserves and needs in order to provide stability. The only way we are going to get out of this hole is by the government stepping in and doing something about the situation, taking measures on how their actions are affecting the market and continuing the actions that are currently making a difference in improving the economy.
Real Estate Trends and Predicaments for 2010
As the Real Estate market continues to decline, many people are wondering, what is the market going to look like in 2010? In terms of a full market recovery, this is highly unlikely during 2010. In order to fully understand where the world sits in terms of position, it is important to understand the issues related to the lead up to the world real estate market downtown. How these issues have affected the market will help in understanding the next year’s strategies most suitable for optimum returns.
The first important issue is the mortgage market. The mortgage market is hugely responsible for the downturn of the economy. The lack of control in this sector resulted in many borrowers defaulting on their loans. Many borrowers that took out a loan should have never qualified in the first place. The government has responded to this issue by reducing interest rates and having stricter control over credit checks.
Supply and demand is a movement that has also affected the real estate market. Many builders had too high of inventory. They kept building, in hopes of selling and what happened instead was a large amount of inventory just sitting on the market. In order to combat this, construction companies are slowing down on the construction of new homes to help bridge the supply and demand gap.
2010 will continue to be a buyer’s market, where those who are in a position to buy will still receive great bargains. Investors are taking advantage of this and purchasing for long term investments. This will in turn help shape up the economy. Purchasers and investors need to understand that if you are looking to purchase for investment purposes, then plan on staying in the home or holding onto it for a long period of time. Real Estate is no longer a short term investment where one can purchase a home, flip it and then sell it. Understanding this will control who is purchasing and what reason he/she is purchasing.
By gaining more knowledge on these sectors of the real estate market, it is easier to understand not only what needs to be improved but also what action needs to be taken to bring the market back to where it used to be or at least better than the previous years. Changing the real estate market will take many years but the good news is that we are on the upswing of turning this market around!
Extension of homebuyer tax credit
An extension of the homebuyer tax credit is assured, now that both the Senate and House of Representatives have passed the measure. President Barack Obama is expected to sign the new homebuyer tax credit bill on Friday, Nov. 6.
The Senate's 98-0 unanimous approval of the measure on Nov. 4, followed by passage in the House on Thursday by a 403-12 vote the following day, is an indication of how popular the program is. It is attached to a bill that will also give 20 weeks of extra unemployment insurance to people who have been jobless since last year.
Only first-time homebuyers were eligible to benefit from the original tax credit, which was first offered as part of the Housing and Economic Recovery Act of 2008. At that time, a $7,500 first-time home buyer tax credit was available for those who purchased a home between April 8, 2008, and July 1, 2009. Then, under Obama's American Recovery and Reinvestment Act of 2009, Congress raised the credit to $8,000 and extended the deadline to Nov. 30.
The extension of the homebuyer tax credit, as stated in House Bill 3548, makes the program available to many current homeowners as well as first-time home buyers. First-time buyers (or anyone who hasn't owned a home in the past three years) would still be able to get the $8,000 credit, and current qualified homeowners could get a tax credit of up to $6,500. The lesser amount would be available to homebuyers who have been in their current residence for a consecutive five-year period in the past eight years. To qualify for the tax credit, participants must meet certain income limits and would have to sign a purchase agreement by April 30, 2010, and close by June 30.
Under the new bill, intended to help spur activity in the slumping real estate market in Chicago and elsewhere, qualifying income levels have been raised to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum purchase price allowed for any house or condo would be $800,000, and only for principal residences, so vacation homes would not qualify.
According to the National Association of Realtors, which has been lobbying for an extension , as many as 400,000 resale transactions (out of 1.2 million homes sold through the program) were completed specifically because of the first-time home buyer tax credit, thereby helping to clear up the glut of available properties. Supporters believe the benefits of extending and expanding the tax credit will outweigh the cost, which could amount to as much as $10.8 billion in lost taxes.
According to U.S. Treasury statistics released in October, about $8.5 billion in refunds have already been claimed for new and resale homes. Provisions to curb fraud were added to the extension of the homebuyer tax credit after the Internal Revenue Service identified 167 suspected criminal schemes and began examining more than 100,000 potential civil violations of the program.
