The Lastest Numbers Are In

From the Illinois Association of Realtors"


Illinois Housing Statistics

January 25, 2007

Statewide Median Home Price Gains in December;Total Home Sales in 2006 Off 8.9 Percent from the 2005 Peak
...
In the Chicagoland Primary Metropolitan Statistical Area (PMSA), total home sales (single-family and condominiums) were 7,532 in December 2006, down 21.5 percent from 9,600 home sales in the same month of 2005. The median home sale price for the Chicagoland PMSA was $245,000 in December, up 0.2 percent from $244,500 in December 2005.

I would say the change in median price is a statistical 0%. Sales down 21.5%? Wow. What is happening?

Politicians At Work

Daley foe's housing plan

Brown calls for 10 percent set-aside

January 25, 2007
BY FRAN SPIELMAN City Hall Reporter One-upping Mayor Daley in the quest to solve Chicago's housing crisis, mayoral challenger Dorothy Brown on Wednesday proposed a 10 percent affordable housing set-aside on all projects -- public and private.

...

Daley favors private sector incentives and affordable housing mandates, only on city-subsidized projects. He remains adamantly opposed to mandatory set-asides on all private sector projects because of the impact lower-cost units could have on the city's property tax base and the chilling effect such a mandate could have on development.

"Developers need Chicago," Brown said at a news conference Wednesday. "This is a booming market. . . . We will not drive developers out of the city." Brown said her plan would offer developers fee waivers, density bonuses and fast-track approval of permits to minimize the financial risk.

Ms. Brown is not paying attention to the City. Chicago RE is dead in the water. Ms. Brown is not much of a business person, nor has much economic sense. Developers NEED to make money. Developers NEED to move their products. They do not NEED Chicago to do those things.

Brown's 10% set a sides will drag Chicago development to a screeching halt. Take a look around the area where Cabrini is/was. Many 3-flat condos sprung up on the rubble of the high-rises. Those 3-flats already have the set a sides. They are sold to yuppies promising them that the projects are going away and if they buy now their property values will skyrocket. What the yuppies were not told is that the residents for the high-rises would be moving in with them! Many of those condos are empty and for sale.

Waiting For What?!

...to get robbed? Raped?? Murdered???

[My snide comments in brackets.]

The waiting game

Urban pioneers settle in, hoping their investment pays off

By Mary Ellen Podmolik
Special to the Tribune
Published January 18, 2007

Four years ago, Collett and Brian Hudecek [they are white yuppies, sorry pic was in newstand ed.] were renting in the heart of Lincoln Park, near Steppenwolf Theatre in Chicago. Then they decided it was time to buy, but the upscale neighborhood was out of their budget. Today, they are seasoned urban pioneers. [Good for them!] Having outgrown their condo in West Humboldt Park, they are getting ready to move to a single-family home a few blocks further west [wait, wrong direction], hoping that the small signs of progress they've seen in the neighborhood will follow them.

"True, there's a lot of shady elements and you have to be careful and smart," [Smart how? Like NOT being an urban pioneer??] Collett Hudecek said. "But we've seen a coffee shop and some restaurants popping up. [That will solve everything, eh?] It hasn't exactly reached our street per se, but it's getting there."

They are not alone in their waiting game. Spurred by a desire to own a home [just how bad to you need a home??] and a budget that makes more affluent communities unattainable, buyers are venturing into unfamiliar neighborhoods and buying houses priced at a fraction of what they would cost elsewhere. They are fixing them up, settling in and waiting to see if their investment will appreciate as the neighborhood around them improves.

Real estate agents who themselves buy in diverse areas [but who DON'T live there] warn their clients that first and foremost, they have to think of a potential house as their home and not just an investment property where they happen to live. The tradeoff of living in a fringe neighborhood should be a home full of potential on the inside while you wait for the home's surroundings to change.

The benefits outweighed the risks for early buyers into Chicago neighborhoods such as Wicker Park, Bucktown and North Kenwood/Oakland. But how do you know for sure if the neighborhood you're eyeing will be the next to turn around?

You don't, and you've got to be willing to take a gamble early, say those who've done it and the real estate professionals that advise them. Potential buyers who wait until after developers, stores and restaurants arrive on the block will find prices already inching up.

"The drugs and the gang activity always precede gentrification," said Nacho Gonzalez, association director of the University of Illinois at Chicago Neighborhoods Initiative. "That's when a neighborhood has bottomed out. You look at it and say it's bad, but that's when you can get property at its cheapest." [Is he actually suggesting to clueless investors to buy in the most gang infested neighborhoods???]

Finding the right house requires homework, and a lot more of it than a buyer would do in a more stabilized neighborhood.

First, real estate agents say, look at the neighborhood's infrastructure.

Is easy access to transportation nearby? An "L" stop, perhaps? Has gentrification already hit neighborhoods on "L" stops closer to downtown? What about the roads? Is the house on or close to a major boulevard? Homeowners in South Chicago see a new Dan Ryan exit ramp at 91st Street as a sign of the community's up-and-coming status. [OOOOO, WOW an exit ramp! I'm so excited!!]

Another factor to consider is the existing housing stock. If much of it is teardowns waiting to happen, you don't want your older home surrounded in a few years by brand-new construction, regardless of how many updates you made. [But I thought if a mega million dollar houses was built next to a shack, it would increase the shack's value also. Has something changed?]

Jose Acevedo, broker-owner of Landmark Heritage Realty in Chicago, advises buyers to consider a graystone.

"Buying a graystone is better than buying stock," Acevedo said. "You buy a two-flat graystone in Bucktown, it's $800,000 to $1 million. You can find one in West Humboldt Park. You may be able to find it for $350,000 to $450,000. The question is how long is it going to take" for the neighborhood to improve and your investment to grow, Acevedo added.

When Michelle Parkinson was looking at buildings in North Lawndale, she was impressed by how beautiful the building exteriors looked in the winter. She bought a three-flat graystone five years ago and moved from Rogers Park two years ago. Inside, the building's three units had to be gutted. And outside, when the weather warmed, she saw clusters of people on the street corner, selling drugs. [THAT'S great!]

But she is heartened by the progress she since has seen, inside and out. A new police station opened nearby in February 2005. She qualified for a rehab loan from Neighborhood Housing Services and sees neighbors fixing up their own homes. She also counts small actions, such as a neighbor who frequently sweeps off area sidewalks, [They are sweeping up the empty littered dope baggies from the gangbangers] among signs of progress that community pride is strengthening on the block.

Parkinson has decided the purchase was a good one and estimates it will be another three years--or eight years total from the time she bought into the neighborhood--for her neighborhood to turn the corner.

"I figured there's so much gentrification east of me. I figured it won't be that long before it came to me," she said. "It's definitely going to pay off. I see the prices of homes, and they've gone up. I paid $149,000, and right now the building is worth $400,000." [So you want some one to buy your house that is surrounded by gangbangers for $400,000?!?! Are you nuts?]

When house-hunting, look for signs that the neighborhood is slowly catching the eye of other pioneers and determine your comfort level, say real estate agents. Drive around the neighborhood [dodge stray bullets] or walk from the train station at night. [HAHAHHAAH! GREAT idea!! Have wallet handy to give to muggers. Have multiple wallets in the case of multiple muggings.] To separate perception from reality, check the Citizen ICAM on the Chicago Police Department Web site, http://12.17.79.6/, a database of reported crime statistics by address, street, police beat or school. [In my links to the right, you are welcome.]

"I used to say I'll let Starbucks do my research for me," [I just threw up.] said Kara Finnegan, a sales associate at Dream Town Realty Inc. in Chicago. "And then Starbucks got too conservative and safe. Now I say if there are places that I want to eat at, grab a drink at or shop at, it's on the up and up."

Finnegan and her husband bought an 1885 brick two-flat in East Humboldt Park five years ago and moved in two years later. Now the couple is considering turning it into a single-family home for themselves.

"I just fell in love with the neighborhood," she said. "I stopped seeing it as a meal ticket and started meeting the neighbors."

Collett Hudecek has found her new neighbors, which include three generations of one family, to be welcoming and the block family-oriented. Still, she knows there's gang activity in the neighborhood and if it increases, she'll cut her losses and move. [Maybe you should not have gone there in the first place!]

"If I felt that was taking over the neighborhood, instead of the neighborhood pushing that out, [Those gangbangers ARE the neighborhood! They were born and raised there. That is their turf. Many Chicago gangs were founded in the 1950's as a youth group to keep outside youths from their neighborhoods. It was not until the 1980's-1990's that many gangs turned into narcotic dealing businesses.] that would be a sign for me to leave," she said. [That should have been a sign for you not to go there in the first place.]

Other signs for concern may include an increase in burglaries [The burglary victims are the pioneers. They are not from the hood and most local thieves would think twice about breaking into a neighbor's grandmother's house.] on the block or a loss of seniors, who often act as the neighborhood's eyes and ears.

The problem with buying into a changing neighborhood, real estate agents say, is that if an owner decided to sell, the pool of potential buyers is only like-minded pioneers.

It can be several years [or never] for a turnaround to take shape in some neighborhoods, so real estate agents warn prospective buyers that they have to be not only pioneers but patient pioneers. Give the area at least two years to show signs of improvement, they say, particularly if the next closest neighborhood to the city already is on the mend.

Pioneers also need to be aware that after years of seeing real estate speculators descend on other communities, longtime residents can be wary of outsiders. The key, UIC's Gonzalez said, is to become involved.

"The mistake they make is many gentrifiers go into a neighborhood, and they are encouraged by the real estate people to form an association," he said. "If you go into a neighborhood like that, join the local association that has always been there instead of separating yourself and then getting into conflict."

"When I lived in a condo and didn't talk to my neighbors in Logan Square, people would yell at me, `Yuppie, go home,'" said Sarah Linn, [Is that a sign?] a real estate agent at Baird & Warner who recently moved into a single-family home in West Humboldt Park. "When I bought my home, it was a very different feel. It was a block of homeowners, little old ladies and I went out and introduced myself. They were overjoyed. They asked me, `Is this an investment, or are you going to live there?' because they know the difference." [What was your answer?]

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Copyright © 2007, Chicago Tribune

Chicago is a city of neighborhoods. Many of which strangers should not be wandering around in the dark by themselves. Like it or not, Chicago's neighborhoods have a history of segregation. Readers from outside Chicago will be shocked and dismayed. But it is not a one way road, it is a multiple lane highway.

Fed Leaving Door Open to Lower Interest Rates

Fed's Moskow sees core US inflation easing, but still 'predominant' risk

WASHINGTON (AFX) - US economic growth is expected to strengthen and inflation is seen slowing in 2007, but it is still too soon to say rising prices no longer pose a threat to the economy, [Michael Moskow] the President of Federal Reserve Bank of Chicago said today.
...
He [Michael Moskow] said that continued weakness in the housing sector is holding back economic growth, but he does not think 'the developments in the housing markets will lead to more general economic weakness.'
...
'If firms and workers expect inflation to be high, they will want to compensate by raising prices and wages or building in plans for automatic increases,' he said.

Ya, God forbid firms raise wages, Mr. Moskow! Maybe us worker bees can afford a single family home, you know, that CRAZY American Dream we all have....

Believe it or not, I would like to see a quarter point raise in the rates. I think that will shake out the real estate market. Average hard working Americans cannot afford these prices. There are not enough lawyers and doctors to buy these shoe boxes in Chicago for what they are asking. Not every car is an Aston Martin, nor can you sell every car for Aston Martin prices. Same thing with housing. Sooner or later, they will have to let the everyday people back in. The only way to do that is to lower the prices.

NEWS FLASH!!!!

U.S. home prices unaffordable for many workers: study

WHAT!?!? NO WAY????

By Andrew Stern
Wed Jan 10, 8:02 AM ET



CHICAGO (Reuters) - U.S. home prices may have dipped over the past year, but many American workers would still struggle to afford a median-priced home in major cities, a new study said on Wednesday.

"American workers are really not gaining ground and they're so far behind in the first place," said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.

While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.

Maybe that is why NOTHING IS SELLING. The sellers are asking for too much!

A great question to ask a seller is this: "Could you afford to buy your house for the price you are asking?" Watch their face REALLY close. You will see a twitch, then a response, "Oh ya sure." That initial twitch will tell you that they are lying.

The biggest rip-off neighborhood in Chicago is Edison Park. Look it up then take a drive. The entry price for a small 1,000 sq ft ranch with 3 beds is $370,000 - $400,000. Maybe it has Central Air. Maybe it has a 2 car garage. If it does, it's probably falling over. What a joke.

Again, the Tribune has the median home price in Chicago at $283,000. That is alright if you do not mind bullets flying through your windows. Find me a 3 bed, 1.5+ bath, 2 car garage house north of Irving Park Road for $283,000! Look on realtor.com, there is not one house in 60631 for under $300,000. If you want a nice place to live in Chicago, you WILL pay. Then the government will tax you right out of it.

Let's Run It Into the Ground! #2

Pimco's Gross Says Fed Will Cut Key Rate to 4.25% This Year

By Elizabeth Stanton

Jan. 4 (Bloomberg) -- Bill Gross, manager of the world's biggest bond fund, says the Federal Reserve will lower its benchmark interest rate by a percentage point to 4.25 percent this year.

I am bearish on Real Estate. RE is over priced, and without a price correction, it will flounder. I see it with my own eyes, and there is a problem.

The median Chicago family income of $68,000, and the Chicago median home price of $283,000. Do the math: $68k x 3 = 204. Using the safe traditional model, the median family can only QUALIFY for $204,000! That puts them nowhere near the $283k.

Reverse the math: median home price is $283,000 / median family income is $68,000 = 4.16. Banks have to loan more than 4x the median families' GROSS income to get that family to QUALIFY for the loan. That means nothing when it comes to staying in the loan.

The median family cannot even AFFORD the safe and traditional qualification of $204k. Let's give the median family income a 15% tax. Now they are only taking home $57,800....x 3 = $173,400. That number is what they can AFFORD.

The rate cuts predicted by Pimco, Inc. would be nice IF the sellers held their prices. And we all know they will do nothing of the sort. The dollar signs will pop in their eyes again and prices will rise. Exactly what the market does not need.

Let's Run It Into the Ground!

2007: The year ahead

More Internet, higher rents, rising sales

December 29, 2006
BY CELESTE BUSK Real Estate Reporter

The findings:

The CAA sees rents in Chicago and the surrounding suburbs continuing to move higher by 5 percent to 6 percent in early 2007.

Ya, sure, with all the condos on the market that cannot sell, and all the ones still being built.

We should start the early part of the year breaking below 6 percent, which will help spur home sales along with refinance activity. By June, I think we will see rates around 5.5 percent.

"With many buyers choosing to sit on the sidelines in 2006, they won't be able to resist the lower interest rate environment along with lower heating and gasoline prices," he said. "Not to mention the fact that people continue to outgrow their current home and want larger ones; get divorced and need a new residence; become empty nesters and want smaller digs that don't require maintenance.

Right, right. And the Greedy Sellers will not increase their prices, right? The problem is not the interest rates. It's the monthly note. Budgets are stretched already. So it's a smooth move on the part of the IAMB. Lobby the Fed to lower the rate and it might help convince the buyers that they can do it. However, the real problem is the Greedy Sellers. God bless them, they are trying to make their first million on the roof of their raised ranch, but they have pushed it too far.

"The current buyers' market won't last much longer. By July, we should see inventories of homes for sale start to drop along with marketing times. In 2007, we should see normal appreciation of 6 percent throughout the Chicago metro area

LIVE IN FEAR!!!! If you don't get in now, you will NEVER get in! Housing prices ONLY go up! Inventories dropping? Not anytime soon. There are many major housing projects no where near done yet. Many more condos to come one the market 2007-09.

Rizzo said. "We'll continue to see historically low interest rates and homes selling closer to market price. The law of supply and demand, more than anything, is going to be the driving force that keeps the market relatively 'flat'" throughout the year. Until surplus is absorbed, competition will be fierce among builders to clear their inventory, forcing homeowners to set realistic prices when it comes time for them to sell."

We can only hope!

The 30-year fixed-rate mortgage is forecast to gradually increase to 6.7 percent by the fourth quarter of 2007, said David Lereah, NAR's chief economist.

"Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced," Lereah said.

Fear mongering at it's best.

CS: Area Wages

Here's how your pay measures up

Here is the lastest showing of how much people make in the Chicagoland area.

"
This study was conducted by ERI Economic Research Institute, based in Redmond, Wash.
...
The median family income in the Chicago area was $69,900 last year, compared with $59,600 for the nation. Chicagoans need that extra money -- the cost of living in the Chicago area is 27 percent higher than the rest of the nation, Lampkin said.
"

The Tribune reported a few weeks back that the median home price in Chicago is $283,000. In the traditional model, a median family income cannot qualify for the median home price!

Here is the list:

Chicago average salaries -- now and in the next year: Job title Avg. salary Chicago wage
increase prospects
Commercial pilot (jet)$110,957 A
Purchasing manager $80,477 A
Real estate sales agent $44,023 A
Anesthesiologist $307,629 A
Camera operator, TV, video, motion picture $38,871 A
Surgeon $295,583 A
Financial manager $63,817 A
Financial sales rep. $52,452 A
Marriage and family therapist $48,402 A
Choreographer $37,976 A
Psychologist $78,410 A
Construction manager (superintendent) $100,868 A
Nuclear medicine technologist $62,419 A
Pharmacist $100,513 A
Loan officer $60,404 A
Social worker $50,686 A
Music teacher $50,260 A
Computer and info. scientist, research $72,457 A
Biochemist and biophysicist $77,987 B
Biomedical engineer $77,499 B
Registered nurse $60,869 B
Counselor $54,313 B
Funeral manager $49,952 B
Podiatrist $156,188 B
Chef $52,557 B
Clergy $49,810 B
Financial analyst $68,460 B
Insurance sales agent $48,475 B
Zoologist and wildlife biologist $47,952 B
Astronomer $121,435 B
Budget analyst $54,072 B
General practitioner M.D. $168,987 B
Health and safety engineer $70,436 B
Certified public accountant $67,376 C
Microbiologist $69,394 C
Political scientist $60,408 C
Sociologist $62,724 C
Architect $72,198 C
Dentist $143,655 C
Electrical engineer $80,675 C
Math. statistician $75,978 C
Purchasing agent $44,869 C
Sales manufacturers rep. $47,824 C
Substance abuse counselor $45,198 C
Software engineer $85,254 C
Civil engineer $67,329 C
Law clerk $42,874 C
Veterinary technologist and technician $29,289 C
Chemist $65,254 C
P.R. coordinator $51,401 C
Firefighter $41,065 C
Librarian $53,783 C
Police officer $55,539 C
Database administrator $86,183 C
Electrical instrument repairer $45,183 C
Environmental engineer $67,248 C
Hydrologist $71,329 C
Septic tank servicer $44,714 C
Mathematician $71,432 C
$60,505 C
Broadcast news analyst (journalist) $31,868 C
Economist $90,810 C
Executive assistant $58,284 C
Forensic science tech. $48,556 C
Geographer $66,225 C
Historian $49,330 C
Interpreter and translator $40,289 C
Security guard $30,743 D
Meeting/convention planner $71,757 D
Taxi driver $27,513 D
Human resource specialist $55,491 D
Bookkeeping, accounting clerk $34,698 D
Paralegal $52,157 D
Chiropractor $105,063 D
Tax examiner, collectors agent $67,407 D
Chemical engineer $77,629 D
Commercial designer $51,388 D
Drafter (Level 3) $50,087 D
Physical therapist $64,344 D
Courier, messenger $24,751 D
Forester $52,841 D
Machinist, computer-aided $38,213 D
Interior designer $50,784 D
Social services aide $29,175 D
Fitness & health supervisor $65,097 D
Receptionist $28,274 D
Carpenter (journeyman) $43,871 F
Cashier (retail) $23,824 F
Desk clerk (hotel) $24,495 F
Computer programmer (mid-range) $75,699 F
Physicist (Ph.D.) $102,564 F
Dental hygienist $60,342 F
Roofer $39,771 F
Bartender $24,079 F
Computer support specialist $52,014 F
Electrician (journeyman) $59,782 F
Cement mason (journeyman) $45,160 F
Construction equipment operator (paving) $50,947 F
Waiter/waitress $22,266 F
Construction laborer $31,472 F
Dishwasher $21,182 F
Public health worker (aide) $26,294 F
Environmental technician $49,410 F
Environmental engineering technician $29,490 F
Desktop publisher $38,828 F
Broadcast technician (television) $40,162 F
Brickmason (journeyman) $51,191 F
Epidemiologist $85,640 F
Claims examiner $34,596 F
SOURCE: ERI Economic Research Institute www.erieri.com

Chicago Commute: 2nd Worst

Top 10 Worst Commutes by City



They claim 33.2 min for one-way. How does that compare to your commute?

Skyscraper Projects Booming in Chicago

WP.com: CHICAGO -- In this city where the skyscraper was born, it is being reborn

"
Luxury condominium towers and office buildings that climb 600 feet and more are sprouting up all over downtown. Along the Chicago River, the Trump International Hotel and Tower is inching its way up to a planned 92 stories.
...
"I remember at least two (planning and development) staff members saying `Can't you make it taller? We really would like it taller,'" Chicago architect David Haymes says about discussions with the city for a planned condominium tower.
"

"
And they said, Go to, let us build us a city and a tower, whose top may reach unto heaven; and let us make us a name, lest we be scattered abroad upon the face of the whole earth.
"

Tower of Babel

I would never try to compare Chicago RE to South Florida, but there are allot of tall crains in the South Loop sky. The other day, I counted 7! Per the WP story, one such high rise will not be rolling untill 2009! I think that will be too little too late.

Past Housing “Cycles” and the Current Housing “Boom”: What’s Different This Time?

MIT studies the historic cyclic movement in house prices since 1975

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Going forward, rising interest rates could both reduce homeownership and cause a more sudden exodus from the 2nd home investment market. These changes would cause prices to correct more severely than in the past.
"