Second City Bubble

Watch This Video

2008-12-02T12:23:00.002-06:00

Correspondent Lisa Ling

September 23, 2008 11:02 PM

For the past few years, the Inland Empire in Riverside County has been one of the fastest growing counties in the state - home to a major housing boom. But now the Inland Empire is pretty much the poster child for the foreclosure crisis. In the newer developments, house after house sits vacant - either up for auction, for sale by a bank or going for what’s called a “short sale” which is when the owner owes more than the house is worth.

Coming to a subdivision near you?

Geee, No Crap!

2008-10-18T09:52:00.003-06:00

Spire pay dispute spurs doubt

Spire pay dispute spurs doubt

Calatrava among consultants filing millions in liens against developer

By Mary Ellen Podmolik and Blair Kamin | Chicago Tribune reporters

October 18, 2008

The Chicago Spire's penthouse may be sold but there is growing doubt whether the project will rise out of the hole that's been created at 400 N. Lake Shore Drive.

Consultants on the project are starting to line up seeking payment for their work on the development, designed to become the tallest skyscraper in the United States and one of the tallest in the world. The most well-known of the consultants, architect Santiago Calatrava, filed a lien on Oct. 8 through his Lente Festina Ltd., seeking more than $11.3 million in payment from Spire developer Shelbourne Development Group Inc.

Separately, Chicago-based architectural design firm Perkins+Will Inc. filed a lien against Shelbourne for almost $4.85 million in payment. The two liens were filed with the Cook County recorder of deeds.

The liens suggest the project's financing, as well as its feasibility, is shaky.

Who wuda thunk it??

Not Getting It

2008-08-04T13:36:00.002-06:00

Boy, they just don't get it do they?

Fannie faces glut of unsold homes

Mortgage giants own 44 percent of foreclosed homes

By Bob Ivry and Sharon L. Lynch | Bloomberg News

August 3, 2008

Fannie Mae, the largest U.S. mortgage finance company, couldn't find a buyer who would pay $6,900 for the three-bedroom house at 1916 Prospect St. in Flint, Mich. So broker Raymond Megie, who is handling the foreclosure sale, advised cutting the price to $5,000. He still couldn't sell it.

"There's oversupply," Megie said.

As home prices decline, unsold properties are a problem for creditors like Fannie Mae because taxes, insurance and repairs drain their cash. Fannie Mae acquired twice as many homes through foreclosure as it sold in the first quarter, regulatory filings show, and late payments on its home loans—a harbinger of foreclosures—almost doubled in the past year.

...

Fannie Mae's goal in selling its properties is to get the highest possible price, even if it means hanging on to them longer, said Gabrielle Harrison, a vice president at the company.

"We want to treat that home as if it was your own, or as if you were living next door to it," Harrison said. "You wouldn't want that home to bring down your property value."

They obviously don't understand that by holding the price, the inventories will only continue to grow!

Ugh.

AWESOME!

2008-06-11T11:56:00.003-06:00

HAHAHAHAHAHAHAHAHAH

Some Buy a New Home to Bail on the Old

Fannie Plans Rules
To Avoid Practice
Described as Fraud
By NICK TIMIRAOS
June 11, 2008; Page A3

Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.

...

In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the "buy and bail," in which borrowers with good credit buy a new home -- often at a much lower price -- then bail out of the "upside down" mortgage on their first home.

Homeowners are able to pull off this gambit -- which some lenders and real-estate agents call mortgage fraud -- by taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold. And with the lending industry in disarray as it tries to restructure millions of mortgages, some boast they are able to pull off the strategy with ease.

Wow! DiTech was right: People ARE smart!!

Shocking News!

2008-05-22T16:28:00.002-06:00

City zoning employees are dirty!

U.S. charges 15 in city bribe-taking probe

By Jeff Coen and Dan Mihalopoulos | Tribune reporters
4:35 PM CDT, May 22, 2008

Greedy city workers and bribe-paying developers have corrupted Chicago's zoning and buildings departments, federal and local authorities said Thursday as they announced criminal charges against 15 people in an undercover sting operation dubbed "Crooked Code."

City Inspector General David Hoffman, who worked with federal investigators on the case, said corrupt developers were motivated by the desire to get things built cheaper and faster. Honest developers are unable to compete as a result, he said.

"There can be no doubt that we're talking about systemic corruption," he said. "This is completely unacceptable in this great city."

Daley's response was: "Whaa?"

How Could This Happen?

2008-05-14T14:13:00.002-06:00

Record condo numbers to saturate downtown

With sales slowing in weak economy, oversupply forecast
By Robert Manor | Tribune reporter
May 14, 2008

Nearly 6,000 condos, by far a record number, are expected to come on the market in downtown Chicago this year at a time when mortgages are tougher to get and sales have slowed dramatically, according to a report.

That adds up to a big worry about the Loop-area market, which has seen explosive growth in recent years.

"It's tremendously serious," said Steven Hovany, president of Strategy Planning Associates Inc., a planning and real estate consulting firm. "What you are going to see are buildings going into foreclosure."

Hovany predicts developers will cancel downtown projects for several years to come, until the excess housing is absorbed.

The developers won't even get the construction loans unless there is a large majority pre-con purchases.

Sales of newly built downtown condominiums plummeted by about 83 percent during the first quarter, to 201 units from 1,207 units a year earlier, according to a report to be released Wednesday by Appraisal Research Counselors.

Simple. Prices are too high. Lower the prices and the units will sell. Period.

Mike Hart, regional manager of Hanley Wood Market Intelligence, said developers are inclined to sweeten their offers but not necessarily lower the sales price. He said that means more free amenities included in deals, "whether it's flooring or something in the kitchen or maybe a free washer and dryer."

Well...so much for that idea. If they wait long enough, the cycle will return. But that might take 10-20 years. By then those condos STILL won't be worth it.

Lev said demand can change block by block, and some units are easier to sell than others. For example, Lev said, entry-level homes, meaning those costing less than $300,000, can sell to some first-time buyers because they aren't burdened by having a home to sell, and mortgages are available for people with good credit.

"It's the middle that is having a tougher time," Lev said. He defines middle-priced units as those costing somewhere between $400,000 and $800,000. He said those would-be buyers often have a home they must sell and cannot afford two mortgages for a protracted time.

Again, repeat it until it sticks: Cheaper homes sell. Cheaper homes sell. Cheaper homes sell. Besides, who can afford 2 mortgages for ANY time?? Anyone up for a Bridge Loan? HAHAHAHAH

Heaven and Hell

2008-05-06T19:37:00.002-06:00

Privately-Insured Mortgages Up - Housing Tracker

Quotes of the Day

“Capitalism without failure is like Christianity without hell.” and “Lenders and investors who were dumb enough to deal in subprime mortgages should not receive any special help.”– Berkshire Hathaway Chairman and CEO Warren Buffett. (Financial Post, May 6th)

Misc. financial news.

HOA and Assessment Fee Problems

2008-04-20T09:51:00.009-06:00

Many places like Florida and Arizona are having difficulties with Home Owner Associations. It seems that when people foreclose, they are not paying their assessment fees! These fees do not just go away. Someone has to pay. And as usual, the responsible people are the ones.

Foreclosures cause woes for property associations

STAFF REPORT
Published Friday, April 18, 2008 at 4:30 a.m.

Florida's growing foreclosure problems are wreaking havoc with the budgets of homeowner, condominium and community associations, according to a new survey by an industry trade group.

Two-thirds of associations polled by Community Association Leadership Lobby (CALL) said they would have to raise fees this year to compensate for the losses.

More than 60 percent of the nearly 500 associations surveyed said that banks and mortgage lenders holding title to foreclosed homes or units are not paying regular fees or other assessments.

and

Foreclosures force HOAs to cut corners on upkeep

Homeowners associations strapped by unpaid assessments related to the foreclosure-ridden real-estate market are mustering volunteer work crews, cutting maintenance jobs and scrimping on landscaping to save money.

Phoenix, Chandler and Avondale are among Valley cities fielding calls for help from HOAs that previously turned only to their own boards of directors and management companies.

"We are in new territory and need to find creative ways to work with everyone, whether that's stepping in with volunteerism or offering some training," said Annie Alvarado, deputy director of Phoenix Neighborhood Services.

Municipalities are trying to figure out what, if anything, they can do to help cash-strapped neighborhoods navigate the legal and financial difficulties that plague distressed properties.

Anyone that still thinks Chicago is different is delusional. The coveted Near North Zip Code of 60610 is an eye opener. Look at the building at 345 N. LaSalle. There are 15 condo units in pre-foreclosure, 1 going to auction in May, and 9 that are bank owned. 33 W Ontario Buildings has 11 in pre-foreclosure, 1 auction that has past, and 25 that are bank owned. I am sure that some of these assessments are getting paid, but the ones that are not are adding to burden of the stretched owners that are still surviving. Only time will tell. Expect some bleeding heart Chicago politician will try to pass a bill to make taxpayers front these people.

HELOCs go Bye Bye

2008-04-15T22:11:00.004-06:00

It seems that home equity lines and lines of credit are disappearing. Here is what is being reported:

When HEL Freezes Over -- Who's out in the cold with the HELOC freeze?

Banks spent the last decade trying to persuade everyone who came through their doors to take out a home equity loan (HEL) or a line of credit (LOC). Now they've changed their minds. Sort of.

Financial institutions are still marketing these products, but they've also started freezing accounts of current customers.

Countrywide suspended 122,000 accounts.

USAA pulled or reduced 15,000.

Chase, National City, Washington Mutual and Suntrust have mailed out HELOC Freezes

And the pending freezes list includes Bank of America and CitiGroup.

I haven't read of any lenders calling the loans due. What they are doing is tightening their lending practices. Loans that were already approved and in place, with the home as collateral, are riskier now that home values have fallen almost everywhere.

Who´s in trouble? Anyone who has an outstanding HELOC, or is trying to get one, whose outstanding mortgage loans would then exceed 80% of their equity. Let´s look at an example. The Browns bought a $300,000 home. Between their down payment and the monthly payments they´ve made, their loan is now only $200,000. They took out a $50,000 Home Equity Line of Credit last year to provide some major maintenance to the structure.

and

Banks Closing Doors to Home Equity Loans

When bankers use such catchphrases as "liquidity crisis" and "tightened lending standards," what they really mean is that it's tougher to get a loan. That's certainly true for home-equity lending. Until recently, borrowing against soaring home values was almost as easy as getting a new credit card. Now, prospective borrowers find it more difficult to meet lenders' increasingly stringent requirements.

Big Trouble

2008-04-14T17:12:00.002-06:00

The housing market is officially in BIG TROUBLE. The top tier law firms are scaling back hiring of new associates! Who will buy $600,000 2 bed condos now?!

Law Firms Curtail Associate Programs As Economy Slows

By ASHBY JONES
April 14, 2008; Page B1

For associates at law firms, how quickly things have changed.

This time last year, salaried lawyers at many of nation's largest firms had just scored a pay bump, as business was blazing and firms were scrambling to keep talent. Now, due largely to a slowdown in work relating to mortgages, real estate, mergers and private equity, some firms are taking such measures as rescinding offers to incoming associates and summer associates, asking first-year lawyers to start several months later and shortening their summer programs to save money.

I can hear Lincoln Pk and River North screaming right now.

No Way, Jose!

2008-03-29T13:50:00.003-06:00

Most Americans Oppose Federal Bailout for Homeowners

I most definitely agree.

Fifty-three percent (53%) of Americans say that the federal government should not help out homeowners who borrowed more than they could afford. A Rasmussen Reports national telephone survey found that 29% disagreed and believed that federal action is appropriate. Seventeen percent (17%) are not sure.

There is even stronger opposition to federal help for banks that made bad loans. By a 4-to-1 margin (61% to 15%) Americans reject that approach to resolving the current mortgage crisis.

My hard earned tax dollars should not be going to save idiots from themselves. Anyone who did not see this train wreck coming is a fool. Those who actually stopped in front of the train thinking that they would be immune to physics need to be taught a lesson. Any kind of bailout would tell fools and idiots that its OK to make bad moves because the whole country will drop what they are doing to dig them out of the mess that they made. Guess what will happen? Those same people will do the same stupid things all over again.

No. No way.

Wishing Price

2008-03-28T22:43:00.002-06:00

Be It Ever So Illogical: Homeowners Who Won’t Cut the Price

Falling on deaf ears.

In the wake of the biggest housing boom on record, it’s understandably hard to accept a new reality. Robert Glinert, a real estate agent in the Los Angeles area, said he has recently been saying no to almost half the sellers who have asked him to represent them. Their initial asking price is just too unrealistic.

“People say, ‘I don’t care about the market — my home is still worth what I paid for it in 2006,’ ” Mr. Glinert told me. “And I say, ‘To you. Only to you.’ ”

Some one needs to inform the Greedy Sellers that down payments are required now.

BREAKING

2008-03-13T23:23:00.003-06:00

I just got an email from a friend of mine that is very explosive for the housing market. As of March 14, 2008:

FHLMC recently announced that they would no longer purchase loans with LTV/TLTV/HTLTV's greater than 97%. This announcement affects all FHLMC products except Home Possible and Barrier Buster LPMI. Any FHLMC product that previously had maximum LTV or TLTV or HTLTV of greater than 97%, is now reduced to a maximum of 97%.

This means that Freddie Mac will no longer accept Zero Down loans. Buyers will have to muster up 3% or more to qualify for a home loan. So to get a $500,000 loan the buyer must pony up at least $15,000 cash.

I would say that this will put a damper on the market even more. Sellers will have to realize the higher their asking price the higher out of pocket cash the buyers will need. Some houses simply will not sell.

That's No Deal

2008-03-07T13:56:00.005-06:00

Buying in a Rocky Housing Market

by Aleksandra Todorova
Tuesday, March 4, 2008

Indifferent to the bleak real estate headlines, 26-year-old Michael Klauer and his fiancée recently bought a two-bedroom condo in the desirable Lake View neighborhood in Chicago. They weren't in a rush to buy, but when an opportunity presented itself only a month after they started looking, they jumped on it.

The apartment, listed at $519,000, was theirs for only $480,000 — an initial offer they didn't back down from, even though they knew the seller had bought the place 10 months earlier for $512,000. Factoring in the broker's fee and sales taxes, the seller lost more than $44,000 on that deal, according to the couple's realtor, Jay Michael, owner of the Estate Property Group in Chicago.

WOW! What a steal. $480,000 for a 2 bed room apartment?! Lucky there was no bidding war...

And even though the condo's value may drop further, the couple wasn't concerned since they plan to live in the place for at least three to five years. "It was a good time to buy," he notes. "Prices are on the down low, and it's something I could sit on for a while."

I hope they can because they will not see $480,001 or more five years from now. Are they not aware this bubble was a historic event, none the likes of man has seen before? Chances are no person alive will see price growth of this magnitude in their lives again.

Stay away from foreclosures

Foreclosures are touted as great deals (especially by services that sell foreclosure listings). In some areas, real estate agents have even started taking potential buyers on "foreclosure tours."

In reality, however, buying a foreclosed property — or even one in a neighborhood plagued by foreclosures — is risky. "A heavy concentration of foreclosures indicates that there's some sort of economic problem in the region that will keep your home value from at least remaining stable," says Miller. "Or that there was some speculation and there may still be some air left to come out of that market."

The author should look at ReatyTrac.com's map function. After reviewing the Chicagoland area tell me what neighborhood DOES NOT have forclosures? I'll clue her in: None.

Don't Forget Chicago, Mr, Stein!

2008-03-03T22:52:00.005-06:00

Ben Stein How Not to Ruin Your Life

The High and the Low

First, as I see it (and I'm often mistaken), the real estate market still has some serious falling to do. I base this on the fact that real estate in some of the most overpriced markets -- like Manhattan and the west side of Los Angeles -- have yet to fall dramatically.

I, your humble servant, have been looking for a condo here in L.A. for my son, and I've been floored by how high the asking prices are for these dwellings. Yes, they've fallen, but they're still far higher than they were four or even five years ago.

Keeping asking prices high may make sellers feel good, but it won't sell their homes. Consider this: On one hand, brokers tell me that prices haven't fallen much, and that they think that's a good sign. On the other hand, they complain that sales volume is way down.

Both Sides Now

Well, friends, the former has a lot to do with the latter. Volume isn't going to pick up until prices fall to accommodate the fact that we're in the midst of a real estate collapse. And buyers aren't going to step up to the plate in large numbers until it's clear that prices have fallen to reflect the new realities of the real estate market.

This means that if you're a seller, don't count on selling unless you have a price that makes sense in early 2008. Prices that made sense in early 2006 just aren't going to fly.

If you're a buyer, my advice is to still try to buy the house of your dreams, because they come along so rarely. But try to drive the hardest bargain you can; sellers should be very flexible. I would even say that if a seller isn't flexible, wait for a better mood to strike him or her.

Again, the real estate collapse has a long way to run yet, and it'll end when sellers get realistic. That could take four years, and maybe longer. But if you need to sell, there's no shame in asking a sensible price.

Very sensible article. However, LA and NY are not the only expensive cities in the country.

So What Could Possibly Go Wrong?

2008-02-23T13:05:00.008-06:00

Wall Street Bank Run

By David Ignatius
Thursday, February 21, 2008; Page A15

It doesn't look like an old-fashioned bank run because it involves the biggest financial institutions trading paper assets so complicated that even top executives don't fully understand the transactions. But that's what it is -- a spreading fear among financial institutions that their brethren can't be trusted to honor their obligations.

...

The public, fortunately, doesn't understand how bad the situation is. If it did, we might have a real panic on our hands. And there would be more pressure for bad policies -- ones that try to freeze the damage, rather than letting prices fall to levels where buyers will return and the markets will clear. Hillary Clinton's proposed moratorium on home foreclosures, in that respect, is one of the truly bad ideas of our time. It would make the situation worse by increasing even more the illiquidity and inflexibility of the housing market.

...

These markets are now so complicated that most of us can't begin to understand the details. So I asked the chief financial officer of a leading concern to walk me through what has been happening. The problem, he said, is that financial institutions are required to "mark to market" their tradable assets (which is a fancy term for setting a value) even when there isn't a functioning market. In many cases dealers can do little more than guess at the value -- and other investors down the line know it.

Read the remainder via the link. It is very good. But he does not go far enough. It almost reads like his editor cut the story half way through. He does not come full circle on the "mark to market" concept. That will have to happen for housing prices also, not just stocks and derivatives.

This About Sums It Up

2008-02-21T11:01:00.005-06:00

"What is going on with the market?"

Which market? Housing? Stocks? Bonds? Why are things going south, and why does it seem like nothing is helping? It all seems to be unraveling.

MSNMoney has a good summary:

Why Wall Street rescues are failing

The financial system has become dependent on debt and the transfer of risk via convoluted debt instruments, creating a mess that will require hundreds of billions of dollars and global cooperation to fix.

By Jon Markman

Since the wheels started coming off the stock market last summer, investors have looked to at least seven white knights to end the distress with a bold stroke.

Yet each, including Federal Reserve Chairman Ben Bernanke and U.S. superinvestor Warren Buffett, has failed to lift investors' spirits for more than a couple of weeks, ultimately leaving stocks to tumble ever lower. Why?

The fundamental problem in the world economy is that it grew over the past two decades to be incredibly reliant on optimistic risk takers' willingness to accept increasingly complex IOUs from companies, banks and government institutions as investments instead of real assets. Now we are seeing the same movie play back in reverse, as massive investor losses in debts once believed to be safe have led to falling confidence, rising pessimism and extreme risk avoidance.

...

Where will that money come from? The answer is nowhere, at least not very quickly. And that is why the markets are in danger of asphyxiation. It's also why the economy is threatened: For despite the lower cost of money, it's hard for businesses to get loans for expansion because banks need to keep as many dollars as possible on their balance sheets to meet reserve requirements.

Notice there is not too much housing talk in the article. Alittle lead up with the subprime mess. But he left out the impending Alt-A and other possible problems. Only time will tell.

Can You Believe These People??

2008-02-19T16:56:00.005-06:00

City transfer tax may expand to cover incomplete real estate deals

Unfinished real estate deals on city's radar

By Gary Washburn | Tribune reporter

February 19, 2008

The city's real estate transfer tax is a proven cash cow, but the Daley administration -- ever on the lookout for ways to generate revenue -- is considering ways to make Bossy produce more milk.

Revenue Department officials want to increase the number of people who pay the tax and to require others to come up with cash more quickly. The under-the-radar action comes as all Chicago property purchasers brace for a 40 percent increase in the transfer tax the City Council recently approved as part of a Chicago Transit Authority rescue package.

...

Under one proposal now in draft form, City Hall would require the transfer tax to be paid even when the buyer forfeits the down payment, which sometimes happens when a buyer backs out of a deal. Under a second proposal, the requirement to pony up would be triggered immediately when there is an installment agreement--a contract in which the buyer pays the seller over a period of months but does not receive title to the property until the last payment is made.

So.......they want to tax us on a transaction that did not happen?? ARE OUT OF THEIR FREAKIN MINDS?!?!?! Lord help us.

Helllllo???

2008-02-11T15:27:00.001-06:00

Home prices in the state of denial

Thursday February 7, 5:58 pm ET

By Chris Isidore, CNNMoney.com senior writer

Despite numerous reports showing home values in historic decline, more than three out of four homeowners believe their own home has not lost value in the past year, according to an online survey.

The survey was conducted by Harris Interactive for Zillow.com, a Web site that gives estimated home values.

The survey of 1,619 homeowners found 36% believe their home has increased in value, and another 41% believe their value has stayed the same. Only 23% believe their home has lost value.

"This survey reveals that despite the data to the contrary, people either aren't paying attention to their housing market or are in denial about their own home's value," said Stan Humphries, Zillow.com vice president of data & analytics.

"Maybe your house, but not mine!"

Ok pal.

MAYOR DALEY ADMITS CHICAGO PRICES ARE B.S.

2008-02-08T20:49:00.001-06:00

Flash! Daley just destroyed Chicago housing market!

Daley proposes overhaul of property tax system

CITY HALL Mayor says assessments skewed by fraud

February 8, 2008
BY FRAN SPIELMAN City Hall Reporter/fspielman@suntimes.com

Three months after pushing through the largest property tax increase in Chicago history, Mayor Daley tried Thursday to get back on the good side of homeowners.

The mayor unveiled a five-part plan to reform a property tax assessment system that, he has long complained, is so unfair and unpredictable, it needs to be “blown up.”

...

“If you look at the whole mortgage foreclosure crisis, much of it is fraudulent appraisals. You’ve loaned money. It was worth $200,000. Now, the home is worth $500,000 and the banks can get their money back. … Fraud is skewing the comparables” used to make assessments, Daley said.

HOLY F-! This crazy wack just said that houses that claim to be worth $500,000 are really only worth $200,000!! That is it. Game Over.

CNN Foreclosure Ranking

2008-02-07T00:00:00.003-06:00

#89

Chicago's very own West Pullman neighborhood tips in at #89 of the top zip codes that have the most foreclosures. Congrats!

$200,000

2008-02-06T23:51:00.002-06:00

How far will $200,000 go?

Depends on where you look

February 15, 2008

BY KAY SEVERINSEN SearchChicago - Homes editor

If you think you can afford a $200,000 property, you’ll have lots to choose from. That price range, which we set at between $190,000 and $210,000, garnered 1,841 listings on SearchChicago, more than appeared in any of the $100,000, $300,000 and $400,000 ranges.

Chicago has a lot to offer. Lot's of food, booze, museums and high taxes. What it lacks is good public schools, solid roads, snow and ice removal and safe neighborhoods. If you want all of that, live in the burbs. You can always visit the retsurants, bars and extras.

They Would Eat Their Young

2008-02-06T23:40:00.001-06:00

Chicago politicains are just simply unbelieveable. Just when the RE market is heading into it's toughest the spring selling season, they pull this stunt.

Chicago OKs real estate tax hike

February 6, 2008

BY FRAN SPIELMAN City Hall Reporter

Chicago aldermen held their noses today and held up their end of the deal that staved off massive CTA fare hikes and service cuts. But not before giving senior citizen homebuyers a reprieve.

Beginning April 1, Chicago homebuyers will be hit with a 40 percent increase in the city’s real estate transfer tax. Instead of paying $7.50 per $1,000 of sale price, they’ll pay $10.50.

I will predict a spike in closing before April. However, the damage this will do to prices and comps will yet to be seen. Stay tuned!

Hard News

2008-01-26T21:44:00.000-06:00

While you weren't watching ...... mortgage rates were tumbling

But joining the refi rush won't be so easy this time

By Michael Oneal and Mary Umberger | TRIBUNE REPORTERS
January 26, 2008

With long-term mortgage rates sinking to their lowest level since March 2004, it looked like one of those golden opportunities to refinance the home or condo this week.

But many who rushed out to their banker or mortgage broker discovered that it is much more difficult to borrow money than it was even a few months ago.

The real estate crisis dragging down the rest of the U.S. economy has frozen the market for many borrowers. As prices fall and lenders wallow in a sea of losses, only those with gold-plated credit ratings and ample equity in their homes are sailing through the application process, mortgage bankers said.

...

"There's a widening gap between those people who can qualify for a mortgage and get great rates and those who can't," said Barton Pitts, president of Professional Mortgage Partners in Downers Grove. "It's a totally different world."

...

What's happened is that banks and mortgage lenders have not only clamped down on exotic, subprime loans they can't sell in the secondary market, but they also have tightened rules or raised the cost for medium quality and jumbo loans that make up a big part of the market. They have demanded more equity, tougher appraisals, and higher credit scores.

Here it is. The coffin of the housing market is being hammered shut. Even here in the "it's different here" Chicago. With out getting a loan to match those crazy asking prices, the market will tumble.

The "tougher appraisals" are the two harshest words in the whole article. What I in vision here is the new and improved appraiser will under cut the sellers outrageous asking price. The Greedy Seller won't budge on the asking price. The foolish buyer will tell the bank that they really need that house. The bank will agree, but the 30 year fixed loan will be for the appraisal. A bonus loan at a much higher rate will be given to make up for the difference. We shall see.

Mostly gone are the once-popular "no doc" loans that required little or no proof of income or assets. And new requirements demand more equity as a percentage of home value in weak markets.

...

"What has gone away is you can't come in and lie to me," said Ken Perlmutter of Perl Mortgage in Chicago.

As if the mortgage broker was the victim! The once "popular no doc loan" is fraud, pure and simple. Both side of that contract should the imprisoned and fined.

Dirty is as Dirty Does

2008-01-26T17:17:00.000-06:00

No big surprise here: Chicago zoning procedure is corrupt.

Chicago Tribune Investigation (video)

Poor, poor frmr. Ald Matlak. Of all the dirty Chicago pols, why is he singled out? I suspect he got his fair share for all the re-zoning favors he did for his business pals.

But on the flip side where were the voices of dissent when those projects were elevating Lincoln Pk, Bucktown, Wicker Pk, and the eastern edge of Humboldt Pk to the highest home prices of all of Chicago? Also, imagine all the additional property taxes those developments brought the County! Remember, each condo unit's property taxes are assessed at its SALES PRICE. Many of the old buildings in those neighborhoods probably had very low assessed values. They should be happy to help.

Well, I guess in the end Matlak should just be happy the Feds did not sneak in one night and try to shove a Silver Shovel up his..........................

A Sign of Things To Come?

2008-01-25T10:04:00.000-06:00

What neighborhood is this in?

Englewood?

Washington Park?

Roseland?

West Pullman?

Garfield Park?

Hegewisch?

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.
.
Nope, sorry the correct answer is Detroit, MI. Sure looks like a Chicago-style Queen Ann Bungalow, right? Would you believe that Remax is selling it for ............ $1.00?! No joke. That house is for sale for ONE U.S. Dollar! And it is STILL for sale. That means, by my accord, if nobody will buy it for $1.00, it must be worth less than one dollar. How much less? 75 cents? 50 cents?

7727 RADCLIFFE ST
DETROIT, MI 48210
MLS ID# 27219986

Most People, Not All

2008-01-23T13:52:00.000-06:00

Housing crashes through floor

Sales decline picks up speed in 4th quarter; a tough spring ahead

Sales of new homes in the Chicago area fell even faster in the fourth quarter, and with the economy on the brink of recession, homebuilders face another tough spring selling season.

Builders sold 2,196 units in the quarter, a 51% decline from the year-earlier period and the biggest quarterly drop since the residential slump began more than two years ago, according to Tracy Cross & Associates Inc., a Schaumburg-based real estate consulting firm. Homes sold in the quarter at the slowest pace in 15 years, the firm says.

"It's frightening, it's nerve-wracking — it's a lot of things," says Jerry Thiel, president of G. W. Thiel Inc., a Rolling Meadows-based carpentry contractor that employs about 30 carpenters now, down from 275 in 2005.

Sorry, the Golden Age of the construction worker has ended. Back to business as usual. Did they really think it would go on forever??

The housing downturn, longer and deeper than most people expected, has rippled through the local economy, hitting businesses like Warrenville-based Neumann Homes Inc., which filed for Chapter 11 bankruptcy protection in November, and USG Corp. of Chicago, which saw its third-quarter profit plunge 95% amid weak demand for its wallboard, a key residential construction material. Chicago-based publisher Tribune Co. has seen a steep drop-off in real estate-related advertising. And big-box retailers Target Corp. and Home Depot Inc. are tapping the brakes on plans to expand in the suburbs as residential development slows (Crain's, Dec. 24).

Ya, I suppose they did.

The market "is probably worse than it was in the early '90s," he says.

Well, It did go UP much farther than the 90's too. Shame on you for not getting out while the getting was good. Nothing last forever. Nothing.

Many People About to be Schooled

2008-01-18T10:59:00.000-06:00

A return to old school standards for lending

January 18, 2008

BY SALLY DUROS Real Estate Editor, Sun-Times

James D. Shilling is a professor in the Department of Finance in DePaul College of Commerce and the Michael J. Horne Chair in Real Estate Studies at DePaul University.

The lenders today are going back to the old school and old standards. The old standards say that you cannot buy more than four times your income. So I believe the current lending standards are going to force prices down.

Four times income is too high. Talk to your parents. Real Old School is THREE times income. But ofcourse that will drive prices even further down. And NOBODY wants that do they??

Why are housing prices in Chicago so high?

They are so high in part because of zoning and in part because of tougher permit laws; the increased regulation causes prices to be higher. That is coupled with a substantial increase in income over time that has caused the run-up in housing prices.

All of these fees in lieu of property taxes have caused prices in general in Chicago to increase.

No, prices are high because people are crazy. Some people, many people really thought that a 900 sq ft shoebox ranch was worth $450,000. Or that a Northside 1 bedroom condo is worth $250,000. People were bidding against each other driving prices up to get stuck in a loan thay cannot afford in a house they cannot fit in.

Mabye they learned something by now.

Ah ....... the Truth Rings Out

2008-01-14T10:05:00.000-06:00

This article might be the most significant housing article to come out of a Chicago news outlet. It seems that if "now is a good time to buy", then tomorrow will be better.

Silver lining: Good credit can earn home savings

January 13, 2008
BY J.W. ELPHINS Associated Press

The upside to a housing slump is cheaper homes. But many prospective buyers don't see bargains yet, especially as stricter lending standards qualify only the cream of the credit crop.

Read that first sentence over. Ok, one more time. CHEAPER HOMES ARE GOOD! It's a HOUSE PEOPLE! It is not an investment vehicle. An investment vehicle does not need new roofs, new hot water heaters, and upgraded electricity in fear or burning down the investment vehicle. A houses is a depreciating asset. They get old and break down. Then you have to spend money on fixes.

''The apartment dwellers and those just looking for a change are holding back, either afraid to buy right now, or are waiting for prices to drop,'' he said. ''Few are looking to upgrade until this whole thing shakes out.''

Renters Italo and Alexandra Subbarao are biding their time in what they call a pricey Chicago market. They want to buy a two-bedroom condo close to downtown by next summer, but are torn about what to do.

''If the prices came down a little bit more we'd certainly be more apt to go for it without hesitation,'' said Italo, a physician. ''But we know it's a significant investment. There is uncertainty in the market and that gives us uncertainty.''

It's good to know that there are a few people that are still smart with their money.

Read the rest of the article. It has a lot of good points.

Eat It!

2008-01-09T22:37:00.000-06:00

Target 5: Could Housing Incentives Harm Some Customers?

PLAINFIELD, Ill. -- The drooping housing market is forcing some homebuilders to offer huge incentives just to get customers in the door.

It's a much different housing market than in years past.

When profits were high, builders would offer some free upgrades, or maybe a new television.

But hard times call for desperate measures and the incentive game is like never before.

But these incentives can come at the cost of other customers, like Bill and Meredith Rogers, who left Chicago for a bigger piece of the pie in suburbia.

They began building nearly one year ago with Gladstone builders in a new Plainfield neighborhood.

Just several months after moving in, the Rogers found an ad offering $100,000 off the base price of homes in their neighborhood.

The couple was shocked -- and immediately worried about their huge investment.

...

The Rogerses understand the struggle, but still want an explanation from the builder with whom they trusted their biggest investment.

"That $100,000 is a lot of money to take from us. It may not be in paper, but it's taken the value from what we put in here," said Meredith Rogers.

Worried about what? That they are fools for overpaying for a house. Tough bananas. You have not seen anything yet!

I don't know how important THIS couple is to warrant a news story about THEM. But, I do know they are not even smart enough to keep their mouths shut. Look people, just sit there and look smart. Can you handle that? Probably not.

Not So Fast!

2008-01-07T17:01:00.000-06:00

Pretty interesting development.

A court in Buffalo is trying to make the banks responsible for the physical maintenance of foreclosed properties that revert back to the lender. There is noway a former owner of a now foreclosed property would be responsible with what happens to a house after he was forced out. But it does not surprise me that the banks are trying to change the rules.

Dirty deeds

As housing crisis deepens, cities fight lenders over abandoned homes

By Michael Orey

updated 8:21 a.m. CT, Mon., Jan. 7, 2008

On Dec. 17 in a windowless Buffalo courtroom, Cindy T. Cooper, a prosecutor for the city, buzzes among a dozen men in suits, cutting deals. "You've got to unboard [the house], go in, and clean it out," she tells one. "If all the repairs are done quickly, I wouldn't ask for any fines." To another, she says, "the gutters weren't done right," and asks to see receipts for the work. It's "Bank Day" in Judge Henry J. Nowak's housing courtroom, more typically a venue where landlords and tenants duke it out over evictions and back rent. Instead, Cooper is asking lawyers for CitiFinancial, JPMorgan Chase, and Countrywide Financial to fix problems like peeling paint, broken masonry, and overgrown or trash-filled yards at houses the city says the banks are responsible for maintaining. It may be surprising to find these financial-services giants hauled before this obscure local tribunal.

This next part REALLY scares me.

That opens up a dispute over who is responsible for taxes and maintenance. Even when lenders do complete the foreclosure, they may walk away from the property, leaving it to be taken by a city for unpaid taxes, a process that can take years.

Anyone who has personal dealing with the City of Chicago or Cook County bureaucracy knows that this would be a terrible disaster! I could not imagine trying to negotiate with some city or county pawn over the price of some run-down ranch. Ugh.

This is good too.

Those charged with violations by Cooper include participants all along the complex mortgage-industry food chain, from loan originators to servicers to the Wall Street trusts that buy up the vast majority of home loans and then securitize them. A similar initiative is under way in Cleveland, where Judge Raymond L. Pianka puts lenders on trial in absentia when they fail to respond to charges.

Do they want to totally destroy the MBS market?? Imagine that you are holding a MBS. You are hoping beyond all hope that the market will turn around next spring. Many of the investment vehic...er i mean homes go into foreclosure. And now the originating lender points its finger at YOU! Because YOU are the owner of the property now.

Wow, rough times ahead.

Happy New Year!

2008-01-02T10:45:00.000-06:00

Reality check for prices

Reality check for prices

COMMENTARY

Fed gives market its lump of coal

December 23, 2007

BY JOHN F. WASIK

The Federal Reserve's quarter-point cut of its benchmark rate to 4.25 percent last week looks like a big lump of coal in the stocking of the U.S. housing market.

While some buyers and refinancers might benefit, home prices could be headed for more declines in the most overheated markets, no matter what the Fed does.

It is more to do with housing prices way to high in comparison with wages. Period.

Bad News for Some...Good News for Some

2007-12-27T17:42:00.000-06:00

Home prices take biggest dive

Survey finds 6.7% falloff in U.S.; 3.2% Chicago-area decline

By Susan Diesenhouse | Tribune staff reporter

December 27, 2007

With fewer buyers and a bulging supply of newly built houses, residential sale prices fell nationwide in October for the 10th consecutive month, posting the biggest monthly decline since these numbers were first compiled in 1988, according to the Standard & Poor's/Case-Shiller home price index.

The record 6.7 percent drop marked the worst falloff in same-house sale prices since the 6.3 percent decline during the real estate recession of April 1991.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," Robert Shiller, who helped create the index, said in a statement Wednesday.

Chicago was late to the bubble game, so late she will be to the burst. But burst she will. Chicago has the same bad fundamentals as the rest of the country. Home prices too high for average incomes, and over-supply. Chicago is suffering from the same valuation crisis as everyone else.

Chicago Condo Market in Trouble

2007-12-17T12:30:00.000-06:00

Foreclosures on condo projects rise

Is conversion crush an ominous sign?

The condo slump has put developer Liviu Mihulet in a tight spot.

His lender, Northside Community Bank, filed a lawsuit in August to foreclose on a 32-unit condominium conversion the developer launched in January in West Rogers Park. The bank asserted that the property, at 6500 N. Claremont Ave., had declined in value and demanded that Mr. Mihulet put another $500,000 of equity into the project. When he refused, he says, Northside demanded he repay the $3.1-million loan.

"This was an insult," says Mr. Mihulet, who is trying to refinance the project.

It's an indignity more developers are facing. As weak condo sales make it harder to pay off construction loans and skittish banks try to reduce their exposure to the depressed market, condo developers are increasingly facing a fate similar to that of the thousands of Chicagoans who may lose their homes to foreclosure.

That's what happens once most of everybody buys something and the rest of the population cannot afford what's left over.

These People Are...

2007-12-10T16:18:00.002-06:00

...Quite Probably THE Dumbest People in Chicago!

THESE people bought a house in the heart of ENGLEWOOD, and are regretting it now. That the boy only got his ass kicked once is a miracle. Now the ass-wooping might cause them to foreclose on their "dream home". Seems more like a nightmare to me....

Foreclosing on a dream

'I WOULDN'T WISH THIS ON MY WORST ENEMY' | Subprime loan and a run of bad luck have left Theresa Adamovitz with mortgage payments that she can't meet

December 10, 2007
BY KARA SPAK Staff Reporter/kspak@suntimes.com
Theresa Adamovitz had one thing to do before putting up her Christmas tree this year: File for bankruptcy.

...

The modest home in the 6100 block of South Loomis was a dream come true for Adamovitz and her then-husband when they bought it in 1997.

...

She totaled a car she still owed money on. Her job switched to hourly pay, costing her $500 in monthly income. Her son got mugged, needed surgery and lost his job. Her ex-husband didn't make his payments on the loan. The adjustable rate mortgage kicked in, jacking up the monthly payment to $1,853 from $1,175.

Buying something in the wrong neighborhood is a bad mistake no matter what.

Thank God, Not in Chicago!!

2007-12-06T23:20:00.000-06:00

House prices seen falling 30 pct

By Julie Haviv

NEW YORK (Reuters) - Housing markets from Punta Gorda, Florida, to Stockton, California, will crash and suffer price drops of more than 30 percent before the housing crisis is over, a report from Moody's Economy.com said on Thursday.

On a national level, the housing market recession will continue through early 2009, said the report, co-authored by Mark Zandi, chief economist, and Celia Chen, director of housing economics.

The report paints a worsening picture of the hard-hit housing sector, which is in the midst of its worst downturn since World War II.

Read that again! It says from Florida to California. It clearly says NOTHING about Chicago. We are safe. Everything is fine here. Go buy a condo.

Not Just the Poor

2007-12-04T16:28:00.000-06:00

Middle class and out of a home in Chicago

Poorer neighborhoods hit hardest, but wealthy, middle class also squeezed

December 4, 2007
BY ART GOLAB Staff Reporter/agolab@suntimes.com
The home mortgage meltdown isn’t just gutting the poorer parts of town.

It’s beginning to hammer wealthy and middle class Chicago neighborhoods like Lincoln Park, Lincoln Square, Irving Park, Portage Park and Mt. Greenwood — all areas where home mortgage foreclosures have shot up by 100 percent or more from 2006 to 2007.

The home mortgage meltdown is beginning to slam Chicago's wealthy and middle-class neighborhoods.
(AP)

Data released Monday by the National Training and Information Center shows that in Lincoln Park there were 18 homes in foreclosure during the first six months of 2006 — but that number more than doubled to 37 for the first half of this year.

In terms of sheer numbers, poor neighborhoods still are feeling the worst pain. But percentage increase in mortgage defaults is climbing faster in middle class areas, according to the data.

Poverty stricken West Englewood, for example, had 348 foreclosures, or 111 per square mile — yet that was just a 58 percent increase over the previous year.

But in middle class Portage Park, the heart of the Northwest Side Bungalow Belt, mortgage defaults jumped from 32 homes to 94, a whopping 193.8 percent.

Does anyone out there realize that prices went way too far ahead of income??? That is why the foreclosures are jumping. People could not afford the price tag, but they were goeded into stretching too far by the TV flipper shows, the real estate agents, the neighbors, the co-workers, et al. Now judgement day as arrived and they want a pass because they are too gullible.

Freezing the ARMS is a good first step,” said Rose, but he added that lenders should also work with borrowers to permanently change the terms of the loans so they don’t get into trouble again.

Also, government and lenders should to find new, healthier ways to bring mortgage money into poorer neighborhoods rather than just subprime lending.

"And to make sure this doesn’t happen again we’ve got to slap some rules on an industry that has gone virtually unregulated,” said Rose.

Overall in Chicago, the foreclosure rate was 40 percent higher for the first six months of this year compared to a similar period in 2006.

Does this sound about right?

Mr. Fvcked Borrower: Mr. Nanny-State Government! Mr. Nanny-State Government!

Mr. Nanny-State Government: What Mr. Fvcked Borrower?

Mr. Fvcked Borrower: I'm in trouble and I need your help!

Mr. Nanny-State Government: What is it?

Mr. Fvcked Borrower: I can't afford my lottery tick....er, I mean my HOME any more. I'm scared! Tell Mr. Lender to give me a break.

Mr. Nanny-State Government: Ok, Mr. Lender, go easy on Mr. Fvcked Borrower!

Mr. Lender: We know you lied on your lottery tick...er, loan application, Mr. Fvcked Borrower. But that was ok, because we liked the commissions. We will freeze your rate if you promise never to do this ever again. Do you promise never to get in over your head again with debt?

Mr. Fvcked Borrower: Oh, yes. Yes. I promise never to get in over my head again. Thank you sir, thank you.

[Mr. Fvcked Borrower is crossing his fingers behind his back.]

What's Going On Here?

2007-12-03T11:22:00.000-06:00

Developer sought for West Garfield vacant parcels

By Jeanette Almada | Special to the Tribune
December 2, 2007

A mixed-use developer is being sought for several vacant city-owned parcels in the West Garfield neighborhood.

City planners at the Chicago Department of Planning and Development on Nov. 19 issued a request for development proposals for any of several lots, most of which are on the 3900 block of West Jackson Boulevard and West Adams Street, and at 201 S. Pulaski Rd.

The city hopes to find a developer who will build residential projects on most of the lots, and a mixed-use project at 201 S. Pulaski. Developers who propose environmentally friendly and energy-efficient projects, and particularly proposals promising to build U.S. Green Building Council LEED-certified projects will receive favorable consideration in the application process, a Planning Department project manager told the Community Development Commission last month.

Ok, I find this really weird. If Chicago R.E. is fine and not under the pressure that other markets are under, then this should not be happening. Having a good idea about how the City works, I find it difficult to believe that NOBODY wants these lots! Things must be really bad if the politicians cannot hand out sweetheat deals to their buddies.

Chicago to Lose $3.9 Billion

2007-11-27T16:42:00.000-06:00

CNBC Video

Many major markets will take hits in the tax income. Chicago being one of the biggest hit.

I wonder how Daley and Toddler feel about all of this? They cannot really admit to a housing problem, Especially one that hits their town, since we all know that Chicago is invulnerable to the housing bust. Yet, this might be where all of the taxing problems are coming from. CTA on the ropes. Will CPS be next??

USA Today...Doom & Gloom Today??

2007-11-27T00:02:00.000-06:00

Housing woes have domino effect

Ofcourse Chicago is different and will be just fine! Just go to yochicago.com for all the proof you need. But the rest of the country is SCREWED!

If you haven't yet felt the impact of the nation's credit crisis, just wait. Chances are, you won't have to wait long.

So far, the turmoil may feel a bit remote for average people: Failed mortgage lenders. Gargantuan write-downs by banks. Foreclosures for people who couldn't really afford the mortgages they got.

What about the rest of us? Are we in danger? No one knows for sure, but quite likely, yes.

As the credit crisis seeps into farther-flung corners of the economy, more of us will find it harder — and costlier — to borrow money. The value of the funds in our retirement accounts could shrink. People with subpar credit will likely find it more difficult to qualify for auto and home-equity loans. Even consumers who make the cut may need higher credit scores and more documentation.

With loans harder to get, people will hesitate to buy cars, boats and other big-ticket items. The gravest fear? That weak consumer spending — along with surging energy prices, a long housing slump and sluggish job growth — will plunge the economy into a recession.

Jeez, could all of this happen because some jerk actually lent $400,000+ to buy a 900 sq ft shoebox ranch on the NW Side?? Nah, remember, "Chicago Is Different!"

Repeat after me:

"Chicago Is Different!"

"Chicago Is Different!"

"Chicago Is Different!"

"Chicago Is Different!"

"Chicago Is Different!"

Feel better yet?

AARRGGHH!!!!

2007-11-09T16:11:00.002-06:00

Fed chief calls for help on housing

Bernanke urges Congress to act, sees growth slowing

By William Neikirk | Tribune senior correspondent

November 9, 2007

WASHINGTON - Federal Reserve Chairman Ben Bernanke offered no immediate relief Thursday to Americans buffeted by a housing-induced credit crunch, record oil prices, a falling dollar and financial market turmoil.

In testimony before the Joint Economic Committee of Congress, Bernanke warned of slowing economic growth and gave no reason for hope that the central bank would cut interest rates again when it meets in December, instead cautioning lawmakers about the potential inflationary consequences of oil prices nearing $100 a barrel.

Good lord, doesn't he know that his rate cuts are causing those "potential inflationary consequences??!!

But Bernanke said there has been discussion about raising limits on the size of the loans that Fannie Mae and Freddie Mac can buy from lenders from the current $417,000, which would allow primary lenders to make larger loans that Fannie Mae and Freddie Mac could lump together and sell as mortgage-backed securities.

The federal government could guarantee the increased loan limit, he said, adding that any such move should be temporary. Jumbo mortgages, those above $417,000, have become harder to get since the troubles over subprime loans.

People cannot afford such outrageous prices! That is why the bubble popped. Increasing the conforming standard will help nothing.

Stagflation fears

One congressman suggested the country could be returning to a 1970s-style "stagflation," when slow growth and high inflation hammered the U.S. economy. But Bernanke said any such outbreak of stagflation now would be mild compared with the 1970s and not to worry.

YA! Someone finally said it! Rising prices + flat wages = STAGFLATION.

"I don't see any significant change in the broad holdings of dollars around the world," he said.

The dollar's value is rooted in the strength of the U.S. economy, America's trade situation and open markets, Bernanke said.

Please don't remind us, Ben.............

Wow! What Do They Know That We Don't??

2007-10-13T08:24:00.000-06:00

Sometimes a news story gets you spooked. Especially when it's alittle bit out of the blue.

Make sure your bank deposits covered by FDIC

By Eileen Ambrose
October 14, 2007

You can go for years not thinking about federal insurance on bank deposits—and then a bank failure reminds you of how important this protection can be.

That happened Sept. 28, when regulators took over NetBank Inc., an Internet savings and loan based in Georgia.

In a failure, customers whose deposits are fully covered by the Federal Deposit Insurance Corp. have ready access to their funds. But if deposits exceed the insurance coverage, you may have to wait years to get your hands on the uninsured money, and you might not receive it all back.

Which is why it's prudent, even in these days when bank failures aren't common, to make sure your accounts are fully insured.

...

Most of us have never been through a bank failure, but NetBank can give you an idea of what happens to consumers. It was the second FDIC-insured bank to fail this year.

OOOOOOOOOOOOOOOOk. Bank failures?? Bank runs?? This is in the Chicago Tribune. I thought the Chicago mass media did not think there was a housing bubble. If housing and the economy is just fine, why should I be worried about my bank account, like it's the Depression all over again??

Further reading:

Google.com: "Northern Rock"

Google.com: "NetBank, Inc."

Why Would Anyone Want to Live in the City?

2007-10-11T09:46:00.001-06:00

The Mayor does not even know:

'It's too much for the average person'

CITY HALL | Daley's call for record property tax hike stuns aldermen

October 11, 2007
BY FRAN SPIELMAN City Hall Reporter/fspielman@suntimes.com
Chicagoans would be saddled with the largest property tax hike in the city's history -- and pay more for everything from liquor, parking, telephone service and city stickers, to bottled water, auto leases and DVD rentals -- under a $293 million tax wallop proposed by Mayor Daley on Wednesday.

With rising home prices, stagnant incomes, highest gas prices in the nation, one of the worst commute times in the nation, government corruption, the falling dollar, rising taxes, failing public schools, reduced police enforcement in the taxpayer's neighborhoods, why would anyone with a brain choose to live within the borders of Chicago? Because of the restaurants? The Bean? The bars?? C'mon.

Is San Diego the Future?

2007-10-05T21:08:00.000-06:00

Condo Auction a Symptom of Ailing Housing Market

by Scott Horsley

All Things Considered, October 5, 2007 · Nervous homebuilders were eyeing San Diego last weekend to see just how soft the real estate market has gotten.

One of the nation's largest homebuilders, DR Horton, auctioned off more than three dozen condos that had previously gone unsold. The condos went for an average of 30 percent below the peak price previously advertised.

There are many Chicago are developer auctions. Most are still available if you want to catch a falling knife.

Cramer Opens His Yapper Again

2007-09-27T23:15:00.000-06:00

CNBC Video--Cramer says don't buy a home

WOW!! Mind you, I heard with my own ears on Mad Money a few months back that Cramer admitted to RENTING!!!! Yes, RENTING. Oh My God! Watch this video.

The NAR demanded a retration. Cramer and The NAR president-elect debated on The Today Show:

Video: Debate

Boy, you think the NAR with all their money that they could hire a professional debator.

Oh No He Didn't!

2007-09-25T15:12:00.000-06:00

The Federal Reserve's Interest Rate Cut Does Not Help Americans

by Axel Merk

In our assessment, the Federal Reserve's (Fed's) interest rate cut was wrong. Forget about the "moral hazard" of whether the cut would plant the seeds for further bubbles. Lowering interest rates is wrong because it will do few any good, but cause many a lot of harm.

As the most imminent result, the U.S. dollar has accelerated its decline versus hard currencies. When a country's central bank cuts interest rates, it is rare that the currency reacts in textbook fashion and declines more than a token amount versus other currencies; that's because, amongst others, lower interest rates may boost growth and make the currency more attractive for investments. Not so this time with the Fed's cut: lower interest rates are unlikely to boost economic growth. The reason? The markets are facing a valuation problem, not a liquidity problem.

The DJIA going above 14,000 for the first time ever. But what does that really mean when your dollars are worth less than when it was at 10,000?

"It's A Buyers Market", But...

2007-09-22T08:07:00.000-06:00

...Don't even think about...

Making a low-ball offer

By Amy Hoak
MarketWatch
Article Launched: 09/22/2007 01:41:01 AM PDT

CHICAGO - Home sellers are not automatically turning up their noses at offers that come in far below their asking price these days as prices stagnate and the inventory of homes for sale remains elevated in many markets.

But buyers who do ask for deep discounts still risk offending sellers to the point where they quash any deal. So before making an aggressive offer, some homework is in order, real estate professionals say. Further, buyers need to effectively explain why the price of a home should be lower.

Maybe THIS is the problem:

Homeowners Just Don't Understand Value Of Homes

Posted By:Diana Olick
Topics:Housing | Real Estate
Sectors:Construction and Materials

A new survey out today from Reuters/University of Michigan looks at homeowners’ perceptions of their own homes’ values. When the survey flashed over the wires this morning, my email lit up with all the “Alert” desk folks at CNBC saying, “Omigod, this is huge.” I don’t agree. I say it’s not huge enough.

The survey’s headline says, “A record 26% of U.S. homeowners say the value of their homes has fallen during the past year.” Further, 21% of homeowners polled in September expect the value of their home to decline in the year ahead. The survey finds even bigger numbers if you look at folks just in the West, but that’s an overall national picture.

Ok, so 26% is a record, but I have to ask, why isn’t it higher?? The latest survey from S&P/Case Shiller, which looks at the nation’s top 20 metros as well as a full U.S. National index, shows nothing but negative now, and given the trend, into the near future. The national index shows a price drop of 3.2% from a year ago, with the 10-city composite down 4.1% and the 20-city composite down 3.5% from a year ago.

Oh, I get it. the Greedy Sellers are completely out of touch. Hmmm, how much longer can they keep making adjusted rate payments? I am still holding my breath!

Thumbs Down

2007-09-22T07:27:00.002-06:00

Fed's move called into question

Rising bond yields and a slumping dollar fuel inflation worries after the rate cut.

By Walter Hamilton, Los Angeles Times Staff Writer

NEW YORK — Yields on long-term Treasury bonds jumped, the U.S. dollar sank and the price of gold surged Thursday, intensifying questions about whether the Federal Reserve's move this week to stimulate the economy could backfire.

Though the central bank's cut in short-term interest rates on Tuesday stoked the stock market, it has spooked some other markets -- mainly by raising fears of higher inflation that could undermine the economy.

...

Whatever is driving long-term Treasury yields up, it's bad news for the housing market.

"The cost of getting a mortgage has gone up, not down, since rates were cut," said Jim Keegan, a bond fund manager at American Century Investments in Kansas City, Mo. "So far the market's voting that [the Fed cut was] not the right thing to do."

The average rate nationwide for 30-year mortgages edged up to 6.34% this week from 6.31% last week, mortgage finance giant Freddie Mac said Thursday. The 30-year loan rate has mostly been falling since mid-July.

We will see what happens, but I think it it will be safe to assume that the Fed will cut again. The all important Dow did not flourish for long after the cut.

The only real way to help the housing market will be to pay off 1/2 of all homedebtor's loans. But what a mess that will be. And that will ruin homeownership those that did not get in and those about to come up.

As we well know, the Fed's job is to help out Wall Street not Main Street.

Fed Cuts

2007-09-20T22:54:00.000-06:00

In case you missed it, the Fed cut it's key rate:

Fed cuts rates by a half percentage point

Bold reduction in fed funds aimed to forestall disruption in markets, economy

WASHINGTON (MarketWatch) -- In a surprisingly strong move, the Federal Reserve unanimously voted to cut its overnight interest rate target by a half percentage point to 4.75% Tuesday, citing turmoil in financial markets as a threat to economic growth.

"The forest fires in the economy had been spreading rapidly in the July-August period, and the Fed has recognized that it is going to take more than just a few buckets of water to bring this situation back under control," said Brian Bethune, U.S. economist at Global Insight.

U.S. stock markets rallied on the first cut in the federal funds rate in more than four years. Financial markets and analysts had been expecting a smaller quarter-point cut.

What does this mean? Will you get a better rate now? Will you be ale to stave off high prices with a low low rate?

According to Bankrate.com, maybe not:

Mortgage rates lower, too? Not so fast

Whenever the Fed cuts the federal funds rate, customers call mortgage lenders, eagerly expecting to take advantage of a drop in mortgage rates. By the time these phone calls are over, customers frequently feel disappointed and even suspicious. It just doesn't seem right. Why would banks raise mortgage rates while the Fed is cutting rates?

Things aren't that simple (or that sinister). Mortgage rates go up and down according to investors' expectations of long-term inflation. Simply put: If investors think inflation will accelerate, mortgage rates (and other long-term interest rates) rise.

So, is long term inflation a problem?

Gold hits 28-year high after dlr sinks to record lows

and

Oil prices rise above $82 a barrel

Let us see what the dollar is actually doing:

Loonie's rise latest sign of our dollar's fall

The American dollar is tumbling around the world.

On Thursday it reached parity with the Canadian dollar for the first time in 30 years and hit its lowest level yet against the euro, also dipping relative to the British pound and hitting a nine-year low against the Indian rupee.

Parity means one Canadian dollar buys one U.S. dollar, so a bottle of maple syrup could cost an American as much in Toronto as it does in New York.

So with gold shooting up, oil making a new high and the dollar falling off the cliff, I'd say we might have long term inflation. One way to tell, let us look back to Bankrate.com:

Mortgage rates rise slightly

The Federal Reserve cut interest rates this week. So naturally, mortgage rates went along for the ride, right?

Wrong.

The benchmark 30-year fixed-rate mortgage rose 4 basis points, to 6.32 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of one percentage point.

So what has Ben wrought on us? Higher inflation and not necessarily lower interest rates that won't help the falling knife of the housing crash steam rolling away.

But there is more, international consequences are growing.

China threatens 'nuclear option' of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

and

Fears of dollar collapse as Saudis take fright

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

Ben Bernanke has placed the dollar in a dangerous situation, say analysts

"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.

"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.

The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.

and

Iran to replace dollar with euro

The Iranian central bank is to convert the state's foreign dollar assets into euros and use the euro for foreign transactions.

"The government has ordered the central bank to replace the dollar with the euro to limit the problems of the executive organs in commercial transactions," Gholam Hossein Elham, a government spokesman, said on
Monday.

"We will also employ this change for Iranian assets [in dollars] held abroad."

Elham said that Iran's budget would in future be calculated in euros.

"Until now the budget has been calculated according to revenues in dollars but this calculation will now change," he said.

Can you see where this is going? I might be getting a little a head of a Chicago RE blog here, but the macro motions must be understood. The Butterfly Wing Theory is in full play. You might not have noticed the guy that lied about his income and had many ugly marks on his credit that over paid for a 1000 sq ft ranch in Norwood Park. But if multiplied by the hundreds, or thousands, or millions more such fools, you cannot help but notice a breeze. The problem is that now everyone holding a US$ is coming down with a cold.

Thanks, Ben!

Hair Cuts Are Scary

2007-09-14T09:48:00.000-06:00

Fire Sale: Hovnanian Slices Luxury Home Prices

By AP 14 Sep 2007 10:29 AM ET Font size:

Hovnanian Enterprises, struggling like other home builders, is offering six-figure discounts on some of its properties this weekend as it attempts to draw interest in a slumping market.

Ross D. Franklin / AP

The sales blitz involves dropping prices by more 20 percent on some of its prime real estate.

The largest discounts are on the most expensive homes, including a 3-bedroom condominium by the Hudson River in West New York, which has been reduced $240,000, or 22 percent, to $862,000 this weekend. A 25-percent discount is
being offered on a 2-bedroom home in Jackson Township, N.J., which lowers its price tag to $300,501.

...

"We've certainly seen conditions in the housing market continue to deteriorate in the last several months," Chandan said. "The downward adjustment in prices, whether for new homes or existing homes, is going to be far more severe than what many people thought earlier this year."

...

"Depending on how successful it is, it might not be a one-time event," said Keith Gumbinger, vice president of HSH Associates, a consumer loan research firm in Pompton Plains, N.J., suggesting that buyers might wait if they thought a better discount was imminent.

Gumbinger found the sale remarkable, given low mortgage rates.

"You wouldn't think there is a need to go to the marketplace with such discounts," he said. "This is a pretty good indication from a prominent homebuilder that the market is troubled."

That Gumbinger guy is a blind fool.

I love the scare tactic with HOV. One time deal my ass. If a guy bought that condo for only $800k, would YOU buy a similar one for 20% more NEXT MONTH?? I think not.

Greenspan Said It, Not Me!

2007-09-07T10:04:00.001-06:00

Greenspan: We've seen this turmoil before

Report: Economic bubbles can't be defused through interest rate adjustments, he suggests in speech.

September 7 2007: 6:07 AM EDT

NEW YORK (AP) -- "The human race has never found a way to confront bubbles," Former Federal Reserve Chairman Alan Greenspan said Thursday in reference to the euphoria that can precede contractions, or reactions, like the current market turmoil, according to a published report.

...

Bubbles can't be defused through incremental adjustments in interest rates, he suggested, the paper reported. The Fed doubled interest rates in 1994-95, and "stopped the nascent stock-market boom," but when stopped, stocks took off again. "We tried to do it again in 1997," when the Fed raised rates a quarter of a percentage point, and "the same phenomenon occurred."

There you have it, folks! From The Great Maestro himself. This thing needs to unwind on it's own and that is it. The sooner the better.

Another One Bites the Dust

2007-09-01T01:42:00.000-06:00

Former Subprime Leader Ameriquest Closes

Saturday September 1, 12:25 am ET
By Gary Gentile, AP Business Writer

Former Subprime Leader Ameriquest Closes Amid Sale of Parent to Citigroup

LOS ANGELES (AP) -- Ameriquest Mortgage Co., once the nation's largest subprime lender, will close with barely a whimper, after the other assets of its parent company were sold Friday to Citigroup Inc.

Ameriquest, which saw its fortunes soar during the housing boom by lending to people with less than stellar credit, is the latest victim of a mortgage crisis that has left bankrupt companies and cash-strapped borrowers in its wake.

...

Under the agreement with ACC, Citigroup acquires servicing rights for $45 billion worth of loans. Terms of the deal, expected to close Sept. 1, were not disclosed.

...

The sale includes operational centers in Orange and Rancho Cucamonga, along with Rolling Meadows and Schaumburg, Ill., as well as a broker network extending across 48 states.

...

Ameriquest made a billionaire of its founder and chief owner, Roland Arnall, who is now U.S. ambassador to the Netherlands. He founded his company as Long Beach Savings in 1979 and built it into a major subprime lender.

How fitting. Who appointed him? I wonder how he got out of the S&L crisis in the 1980's? Probably the same way I'd imagine...

In March, the Texas Rangers severed a 30-year naming rights deal with Ameriquest and rebranded their home field as Rangers Ballpark in Arlington.

Boy, sounds like ENRON, eh? I wonder if the irony is lost regarding the team that accepted Arnall's money was the same team that Bush II owned...

I just cannot wait until Ditech goes under. I am so sick of their "People Are Smart" refi tv ad!

...and the savior might be:

2007-08-21T23:35:00.000-06:00

RON PAUL!

I might be going out on a limb here.

Although I am a True Blue Democrat, I cannot help but agree with and admire Ron Paul. Check out his statement on high risk credit:

The real answers are, and always have been, found in the principles of the free market. Let the market set the interest rates. If we had been functioning under a true and transparent free market system, we would not be in the mess we are in today. Government, like the American household, needs to live within its means to get back on stable fiscal ground.

The Middle Class is always the victim. The Regular Republicans are only for themselves and the top tier, high net worth 10%'ers. The Regular Democrats are only for themselves and baby-sitting-check-getting-welfare-queens. Those of us in the middle that actually work and pay the taxes so everyone else can stay up late and party need to organize.

Can Daley help us?

2007-08-20T09:29:00.000-06:00

No, he cannot.

Daley to target home foreclosures

Tribune staff report
August 19, 2007

CHICAGO - Speaking about the increasing number of home foreclosures in Chicago and in the nation, Mayor Richard Daley said Saturday that the city hopes to compile a list of people who lost their homes to foreclosures, in an effort to try to help them.

"We have to take a list of all of them, get all the mortgage companies and have to try to build their lives," the mayor said at a news conference announcing a new principal at Harper High School in West Englewood. He did not specify what the city would do with the list.

Sorry, Richie. There is no hope. I'm sure "the community" of West Englewood appreciates the words, but not even All The King's Men will be able to put Humpty back together. I wonder what culpability da Mayor and his developer buddies feel from whipping the public into a OwnACondo.com frenzy? Only now to see the error of their ways.

Can the Fed Help Us?

2007-08-17T12:51:00.000-06:00

No they cannot.

I saw on CNBC that Lehman Bro's is predicting a 50 bp cut to the fed fund rate, and Goldman Sachs is calling for 75.

I liked Rick Santelli's match with Krazy Kudlow the other day. R.S. was claiming that this won't help the economy. K.K. was disagreeing, in that it *will* help Goldman Sachs. They are both correct.

Fed is taking care of its members and widening their spreads to help them cover their Hedges, LBOs, and MBS. But the banks won't lower their rates. They can't. They need to be profitable. The big boys know that there are allot of foreclosures coming down the pipe and have to prepare.

R.S. is correct that Harry Potter can't magically put the pieces back together. Houses will sell for MUCH less in the coming years. They already are. People over bought. Those of us left at the curb are not going to chase the car anymore. Sorry.

But these foreclosures are still a problem. The auctions will pass with NO takers. The banks will sit on them for as long as possible eating at their cash reserves. Their LTV's are way too high, and poof one day they will all agree to kill the Comps and dump them, MARKING THEM TO THE MARKET!

Video: R.S. v. K.K.

Don't Go Away Mad, Girl, Just Go Away

2007-08-16T13:53:00.000-06:00

Audio clip from NPR about RE in MI and OH.

Listen here

Detroit = Englewood?

Funny, no mention of Chicago. All around us from Detroit to Cleveland to St. Louis, from California to Florida, the nations RE markets are going thermo-nuclear. But some how Chicago is impervious. Hm.

I think this Motley Crew song is appropriate....

Don't Go Away Mad lyrics

We Could Sail Away
Or Catch A Freight Train
Or A Rocketship Into Outer Space
Nothin' Left To Do
Too Many Things Were Said
To Ever Make It Feel
Like Yesterday Did

Seasons Must Change
Seperate Paths/Separate Ways
If We Blame It On Anything
Let's Blame It On The Rain

I Knew It All Along
I'd Have To Write This Song
Too Young To Fall In Love
Guess We Knew It All Along

That's Alright, That's Okay
We Were Walkin' Through Some Youth
Smilin' Through Some Pain
That's Alright, That's Okay
Let's Turn The Page

My Friends Called Today
Down From L.A.
They Were Shooting Pool All Night
Aleeping Half The Day
They Said I Could Crash
If I Could Find My Own Way
I Told Them You Were Leaving
On A Bus To Go Away

That's Alright, That's Okay
We Were To Kids In Love
Trying To Find Our Way
That's Alright. That's Okay
Held Our Dreams In Our Hands
Let Our Minds Run Away
That's Alright, That's Okay
We Were Walkin' Through Some Youth
Smilin' Through Some Pain
That's Alright Let's Turn The Page
And Remember What I Say Girl
And It Goes This Way

Girl, Don't Go Away Mad...
Girl, Just Go Away!

Jumbo Loss

2007-08-15T19:57:00.000-06:00

This is from Bubble News Network:

Thornburg Mortgage’s Jumbo Decline

Larry Goldstone, president of Thornburg Mortgage attempts to persuade viewers that the 46% drop Thornburg’s stock today was an overreaction. You do have to give the guy credit for facing the music, although, what else does he have to lose. Either way Goldstone offers very little substance to reassure investors.

Originally aired on: 8/14/2007 on CNBC

Thornburg Mortgage lends jumbo loans. Their stock has taken quite a hit. It seems like 6,700+ SFR and condo sellers will have allot of trouble finding a buyer.

What will happen? Will asking prices actually go down? Think about that number: 6,700! Now granted on Realtor.com you cannot pick a specific price, but you get the idea. Not everyone will sell their house at that price. When will Chicago wake up?

I Got It, I Got It

2007-08-14T11:28:00.000-06:00

It appears that nobody in the open market wants the junky mortgage backed securities anymore. Not even Canadians!

Coventree Fails to Sell Asset-Backed Commercial Paper

Aug. 13 (Bloomberg) -- Coventree Inc., the Canadian finance company that went public in November, failed to sell asset-backed commercial paper to replace maturing debt because of the credit crunch caused by U.S. subprime mortgage losses.

The shares tumbled 35 percent after the company extended maturities on C$250 million ($238 million) of commercial paper and sought emergency funding for another C$700 million of debt. Toronto-based Coventree's units have about C$16 billion of asset- backed commercial paper outstanding.

...

In the U.S., asset-backed commercial paper comprises about $1.15 trillion of the $2.16 trillion in commercial paper outstanding. The debt is backed by mortgages, bonds, credit card and trade receivables as well as car loans.

...

The company has other commercial paper maturing and may be forced to extend maturities on that debt too and draw more money from other sources, Coventree said.

I love the main stream media, it took about 1/3 through the article to get a definition of "commercial paper". I kind of figured that it was MSB's, but I did not want to put words in their mouths.

It appears that the Fed is trying to have it's cake and eat it too. They kept the Fed rate the same, but are throwing money at the problem. But who is catching it? And which problem are they talking about? Bush does not want a bail out for the lonely homeloaner. So why is the Big Banks getting free cash from the Fed, and where is it coming from?

The Fed Bought What?

What is significant about Friday's repurchase agreements is not so much their size, but the securities that the Fed exchanged for money: mortgage-backed securities (MBS). Indeed, the entire $38 billion dollar injection went to MBS purchases, the largest open market purchase of this asset type ever conducted by the Fed, smashing the previous record of $8.6 billion set back in September of 2005. See chart, above.

Remember, it's not the Fed's money to throw away. It's our. (And China's and Japan's and Russia's.........)

First Smartest Thing He's Said

2007-08-09T18:53:00.001-06:00

It took 6+ years, but he finally said something smart.

Bush Rules Out Any Federal Bailout for Homeowners

Topics:Taxes | Politics & Government
Sectors:Oil and GasBy AP | 09 Aug 2007 | 05:58 PM ET Font size:

President Bush said Thursday concern should be shown those who've lost their homes but it's not the federal government's job to bail them out.

"Obviously anybody who loses their home is somebody with whom we must show an enormous empathy," Bush said. Asked whether he would champion a government bailout, Bush responded: "If you mean direct grants to homeowners, the answer would be `No, I don't support that.'"

There is video too! Boy, up until now, I thought he was 100% dumb.

Wait, I spoke too soon:

In a wide-ranging news conference at the White House, the president also said that he's interested in exploring the possibility of providing tax relief to U.S. corporations.

I ALMOST had some respect for Dubya... ALMOST.

The Shrinking Jumbo Loan

2007-08-07T12:32:00.001-06:00

Mortgage Fears Drive Up Rates On Jumbo Loans

By JAMES R. HAGERTY
August 7, 2007; Page A1

Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors.

This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. Normally, mortgage rates move in tandem with Treasurys, but market jitters have caused investors to ditch mortgage securities.

...

Lenders -- having already slashed lending to subprime borrowers, as those with weak credit records are known -- now are jacking up rates on jumbo mortgages for prime borrowers. These mortgages exceed the $417,000 limit for loans eligible for purchase and guarantee by Fannie and Freddie. They account for about 16% of the total mortgage market, according to Inside Mortgage Finance, a trade publication, and are especially prevalent in California, New Jersey, New York City, Washington, D.C., and other locales with high home costs.

...

Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.

The higher costs for such loans will put further downward pressure on home prices in areas where homes typically bought by middle-class people can easily cost $500,000 to $700,000.

Middle Class people can afford $500,000-700,000 mortgages?? That's news to me. The note on $500,000 @ 7.3% = $3,427.85! $700,000 = $4,799.00! What is Middle Class anymore? To qualify for a $500,000 loan in the traditional model, a family would need a income of $166,666.66. That's over 80g's per parent.

Anyway, this move by Wells Fargo (and others to follow?) will cause asking prices to drop. According to Realtor.com, there are 8,706 SFR, condos, townhomes, and MFRs in the Chicago city limits that are above $450,000. There are a total of 41,555 units for sale right now in Chicago! The jumbos are 20% of the market. And guess where those units are? The Middle Class and better neighborhoods. Anyone that bought a jumbo loaned house in the last 2 years are, as of now, underwater.

Take This Survey

2007-08-05T00:33:00.000-06:00

CNBC.com has a survey for Wall St. and Main St. Take a look at it, and give your opinion.

Econ-Recon Survey

Cramer Says So

2007-08-01T13:06:00.000-06:00

Cramer: No really, dump your house

I know that this clip has been all of the HP blog-o-sphere. I think it bears repeating. However, if you do not remember, the law deciders changed the bankruptcy laws.

Just becareful.

Housing Panic has a good thread about this.

Chicago RE at Risk

2007-07-31T10:19:00.000-06:00

Forbes Magazine has us at #9 for Riskiest U.S. Housing Markets.

9. Chicago, Ill.

Chicago is a traditionally stable market, but is currently under pressure. Its 2.3% vacancy rate isn't unmanageable, nor is its price-to-earnings ratio, which is the 12th highest nationally. Chicago's problem is a very high share of adjustable-rate mortgages (45%) and a middle-of-the-road share of mortgages with loan-to-value ratios above 90%. Having a high share of one is sustainable if there's a low share of the other, but in a scenario like this, both lenders and borrowers have elevated risk.

These numbers spell trouble for Chicago. We are in the foreclosure nightmare cross-hairs. With almost half of all mortgages as ARMs just shows that many Chicagoans could not afford the house they bought with out the teaser loan rate. Once these loans adjust, they really will not be able to afford them. Soon the loanowners will walk the keys right into foreclosure. With such high LTV, many of the foreclosures will be passed by on the action block. Crain's describes the formula quite well here:

ADDING TO GLUT

That's bad news for the city's housing market. Foreclosed properties that don't sell at auction revert back to the banks, which pass them off to a real estate agent to sell, exacerbating Chicago's glut of unsold homes and threatening to push down home values.

Ya, I'd say we are at risk, too.

Mikey DOSEN'T Like it!!

2007-07-26T23:34:00.000-06:00

China shying from shaky US mortgage market

By Olivia Chung

HONG KONG - While China is eager to invest a portion of its US$1.33 trillion foreign-exchange reserve overseas, it is unlikely to take a chance on buying additional US mortgage-backed securities (MBS) as they are now considered too risky, Chinese economists said.

During a recent trip to Beijing, US Department of Housing and Urban Development (HUD) Secretary Alphonso Jackson tried to sell China on the idea of buying more MBS. Investing in MBS Offers better returns for China than US Treasury bonds, and at the same level of risk, Jackson claimed.

[ Ya, good luck! Poor guy....]

...

However, it promises to be a tough sell for Jackson. The Chinese government may decline the offer given the current surge in mortgage defaults in the US, Chinese economists said. Moreover, China has invested most of its foreign reserve funds in US-dollar assets and wants to diversify its investment.
[I bet!]

...

Yi Xianrong, a senior economist and finance professor with the Chinese Academy of Social Sciences, a central government think-tank, attributed the previous surge of mortgage-backed securities bought by Chinese companies to inexperience in conducting risk assessments and their miscalculation of the US property market.
[He basically says here that the previous purchases of U.S. Mortgage Backed Securities were a mistake.]
...

Economist Shi Weigan echoed Yi's comments. "With a possible burst in the housing bubble in the US, it's not the right choice for Beijing to spend foreign-exchange reserve funds on the US mortgage-backed securities," Shi said.
[Thank you, but no thank you.]

Americans are so eager to buy Chinese crap, but the Chinese are not so eager to buy American crap. What does this tell Americans about the current status of the housing bubble? Wait for us to try to sweeten the pot.

That's One Way to Handle It

2007-07-17T10:22:00.000-06:00

Metro briefs

EVERGREEN PARK:

Home fires suspicious
A home under construction in Evergreen Park was burned down over the weekend in a suspicious fire -- the latest of several such blazes in the southwest suburb. Last summer, several other homes under construction in Evergreen Park were set on fire, officials said. The latest fire, which occurred early Sunday, also damaged two adjacent homes.

I think we will see allot more of this stuff in the coming years. In an earlier post, I wrote about Naperville Fires. Seems like they are spreading!

The Logical Progression

2007-07-09T16:44:00.000-06:00

The silver lining

SLUMP IS GOOD | Wannabe homebuyers see happy ending in dropping prices

July 8, 2007
BY ALEX VEIGA
Kurt Montufar isn't stressing over the housing slump. He's actually hoping things get worse.

Like many wannabe homebuyers who were priced out of the market during the last boom, Montufar spends time these days scanning real estate ads and news reports to determine if it's time to take the plunge and buy.

...

Meanwhile, price gains of just 1.4 percent or less were reported in New York, Chicago and Washington.

Those numbers have left many people trying to ''time'' the market to take advantage of the slump. But experts said that can be risky because there is little consensus on how long the current doldrums might last.

In addition, the market forces that helped drive the housing boom -- affordable financing and the alluring prospect of escalating home values -- are no longer a given. Potential price breaks could be wiped out if interest rates rise any higher.

...

Even if prices fall further, it could be tough for buyers to find affordable financing if interest rates increase much more.

In addition, lenders have tightened standards in response to a surge in defaults by subprime borrowers, and a number of subprime lenders have gone out of business altogether.

A number of wannabe buyers are pinning their hopes on foreclosures, which some studies predict will explode during the next two years as adjustable mortgages reset to higher interest rates.

Foreclosure activity jumped 62 percent nationwide in April from the year-ago period, according to Irvine-based RealtyTrac Inc. Among the states with the highest foreclosure rates were Nevada, Colorado, Connecticut, Florida and California.

Gino Barragan of La Puente, Calif., a lifelong renter, was among the hundreds of people who attended a recent auction looking for a good deal on a foreclosed home.

Barragan, 34, was hoping to find a condo costing less than $300,000. He found only one that he liked within his price range.

''I am willing to wait, but I'm keeping my eyes open,'' said Barragan, a teacher.

I like how they try to tag him a "wannabe" homeowner! Like, he's a dork because he didn't screw up the biggest financial decision of his life! What a LOSER!!!

"Best" Market?

2007-07-06T17:09:00.000-06:00

Best Markets for Buyers

Best market? Until prices drop enough to line up with the Rent/Own Ratio and Median Home Price/Median Income Ratio, this market is far from best. The housing bubble should have popped two years ago. However, to keep things going, mortgage lenders started handing out toxic adjustable rate mortgages. And like consumption addicted hypes that they are, the American populace continued to buy far past their purchasing power. Now the chickens are coming home to roost and foreclosures are up.

By Matt Woolsey, Forbes.com
June 25, 2007

...

The easiest way to judge our list is to examine the area's housing supply vs. demand. A good measurement? Take the current rate of sales and figure out how long it would take to burn off the excess inventory at that rate.

...

Likewise, Chicago, at No. 5, has felt the effects of a housing supply growing in excess of demand. Brokers there say it's been a slow year thus far, and Moody's data supports that. Chicago ranked seventh worst for listings outpacing sales and fifth worst for the tightening rate of the market.

Because prices are still too high, the market is in a standstill. What will start the fall?

Not Just the South Side

2007-07-03T23:08:00.000-06:00

Foreclosures are not just hitting the lower level of the economic spectrum.

New Developments in the Foreclosure Trend: The Rise of Middle-Class Foreclosures

While foreclosures are typically considered to occur mainly to low income homeowners, new data shows that the foreclosure surge is spreading into middle class areas as well. Exploring the causes for this can help buyers better understand the foreclosure trend.

Miami Beach, FL (PRWEB) June 18, 2007 -- As the housing market continues to move along sluggishly in the wake of falling home values, ForeclosureDataBank.com, a leading foreclosure information provider, has noticed a new trend emerging in the rising rate of foreclosures. Whereas the past few years saw the booming foreclosure rate mainly affecting borrowers with lower income, the analysts at ForeclosureDataBank.com are now predicting a drastic increase in foreclosures on middle class American homes all over the country.

The reason this new trend is so noticeably interesting is two fold. For starters, the statistics themselves don't lie. Recently, the Chicago Defender revealed some telling statistics about this popular city's foreclosure situation. During 2006, the state of Illinois experienced a 55% increase in its rate of foreclosure, with a great deal of homes in the Chicago area accounting for the hike. While foreclosures in poorer neighborhoods have been high during the past few years, it seems that in 2006 some of the biggest jumps came in traditionally middle class areas of the city. These include locations such as the Jefferson Park area, which saw a 90% increase, and the Bridgeport area on the southern side of the city, which experienced an incredible 112% increase in its rate of foreclosure.

Another interesting fact is that three neighborhoods that average close to the median income for Illinois residents ($48,000), Roseland, Gresham and Lawn-Gage Park, all currently have foreclosure rates that are seven times the national average.

Ouch! Those adjustible rate loans are staring to hurt.

Chicago So. Suburbs High on a List

2007-07-03T18:50:00.000-06:00

But, it's not a good list.

4 suburbs on U.S. foreclosure list

Sunday, July 1, 2007 12:12 AM CDT
Post a Comment | Email this story | Print this story

BY KIRSTEN SRINIVASAN
kirsten.srinivasan@nwitimes.com
219.933.4158

Some south suburban ZIP codes rank high for foreclosures, but officials say they are part of a larger regional and national trend.

CNNMoney.com recently ranked Chicago Heights, Harvey, Calumet City, and Dolton ZIP codes among its top 500 ZIP codes for foreclosure filings nationwide. The problem is more widespread, said Ed Paesel, executive director of the South Suburban Mayors and Managers Association.

"Traditionally, (these communities) have had fairly high foreclosure rates," he said, but the increase in foreclosures is actually a lower percentage compared to other Chicago areas in the last two years. "It's not only a south suburban problem anymore."

Communities across the Chicago area have had "a large jump in foreclosures" in the last two years, said Beth Devers, housing director of Metropolitan Mayors Caucus.

So much for "The Ownership Society". Wait until the banks get over-loaded with these foreclosures. When they finally drop them like a cold potato, the local comps will destroy what is left of the Chicago Housing Bubble.

Starting to Get the Hint

2007-06-27T12:14:00.000-06:00

Housing Bulletin — Marking Down House Price

Dennis Rodkin
Call it a wave of price cuts or a market adjustment, but there is no way to mask the fact that people selling residential real estate locally have been dropping their asking prices in droves. Deal Estate combed through data from the Multiple Listing Service of Northern Illinois and found that one out of three single-family homes sold in the Chicago area so far this month were bought only after the initial asking price dropped at least once.

...

Solid data for comparisons to past years is not available, but several real-estate agents who have made sales this month agree that price cuts are unusually common right now. “What’s happening is that people who priced their homes in early spring are coming down now anywhere from 5 to 10 percent,” says Mary Duncan, the sales manager at Prudential Elite Realtors in Naperville.

...

One home belongs to a couple that transferred here two years ago; now, having been transferred once again, they are essentially asking what they paid for the place back then. The second residence is a newly constructed house that has a twin next door, which sold, in 2005, for $299,900. After listing the newer house last fall at $334,900, Fields has dropped the asking price—to $299,900.

Keep going! Keep going! There is so much more "fluff" out there.

The fact of the matter is that some people are going to get screwed. When the music stops, someone will be without a chair. I'm just surprised it has kept it up as long as it has.

Renting Can Be Good

2007-06-22T13:45:00.000-06:00

For retirees, renting can be a savvy move

For retirees, renting can be a savvy move

By SCOTT BURNS
Universal Press Syndicate

Q: Our townhome will be paid for in two years. My husband and I will both be 61. If we sold at that time, we would probably walk away with $400,000 to $450,000. The townhome will be about 15 years old. I am sure there will need to be some repairs — new roof, siding, etc.— because of the age of the building.

Why would it not be better to invest the money in a CD at 5 percent interest? That would yield about $20,000 a year without ever touching the principal. Then we could rent rather than own. I realize homeownership may eventually gain income, but homes also take a lot of money to maintain.

...

A: Very good idea. And ahead of the crowd. You are likely to find that the rent and utilities will be less than the operating cost of your house. And since you'll no longer have equity tied up in a house, you can put it to work to pay your rental expenses.

SEE?!

Not So Fast

2007-06-21T12:00:00.000-06:00

Is That Gain on Your Home Really So Big?

Tuesday June 19, 9:54 am ET

By Selena Maranjian

Here's a not-so-uncommon scenario these days: You bought your lovely home, be it a castle, bungalow or yurt, for $200,000 five years ago. Today, it's worth about $300,000. That's a tidy 50% total gain, or 8.5% on a compound annual basis. Right?

Not so fast -- you've probably oversimplified matters. For example, think about what you've put into the home over the years. Some of those purported profits probably went to businesses like Home Depot (NYSE: HD - News), Lowe's (NYSE: LOW - News), or home-building supplier USG (NYSE: USG - News).

But, but, but....... I thought I was supposed to be a millionaire!?

You Mean We've Been Here Before?

2007-06-20T18:14:00.000-06:00

Rate Rise Pushes Housing, Economy to `Blood Bath'

By Kathleen M. Howley

June 20 (Bloomberg) -- The worst is yet to come for the U.S. housing market.

The jump in 30-year mortgage rates by more than a half a percentage point to 6.74 percent in the past five weeks is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. The national median home price is poised for its first annual decline since the Great Depression, and the supply of unsold homes is at a record 4.2 million, the National Association of Realtors reported.

``It's a blood bath,'' said Mark Kiesel, executive vice president of Newport Beach, California-based Pacific Investment Management Co., the manager of $668 billion in bond funds. ``We're talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.''

...

The primary cause of the 1990 to 1991 recession was a real estate boom and bust similar to the past seven years, Roubini said. A real estate ``bubble'' in the mid-1980s led to speculative buying and lower credit standards that resulted in widespread foreclosures, he said. The defaults triggered a credit crunch that turned into an economic recession in the spring of 1990, said Roubini, who is an economics professor at New York University's Stern School of Business.

He put the chance of a recession this year at ``50-50,'' above former Fed chief Greenspan's 33 percent estimate. A recession is a decline in gross domestic product for two consecutive quarters.

...

Housing Chain
Making it harder for those people to buy houses is going to create trouble all the way up the housing chain as people who own starter homes find it more difficult to sell their real estate and buy bigger properties, said Neal Soss, chief economist at Credit Suisse Holdings USA Inc. in New York.

``The subprime market has changed character dramatically, and that takes a number of entry-level buyers out of the picture,'' said Soss, who was an adviser to former Fed Chairman Paul Volcker.

Gee, it kind of sounds like there was a housing bubble before.

As you can see the bubbles in the 1970's and 1980's both came back to were they started. If the current ones follows the historic trend, there will be some VERY sad people.

Hello Chicago??

2007-06-18T15:17:00.001-06:00

Chicago is not Florida..........yet. But give it enough time and this housing slump will turn into a bust. Let us take note of our older brother-in-bubble, Florida.

Price it right and it will sell

Home sellers coming down on sale prices

Carlton Proctor
cproctor@pnj.com

There's nothing wrong with the Pensacola Bay Area real estate market that several thousand more stories like Greg Chapman's won't cure.

Chapman put his East Hill home on the market in November 2005 at a time when residential prices were approaching post-Hurricane Ivan highs.

But it also was a time when the inventory of unsold homes was starting to climb rapidly.

Over the next three months Chapman got only three half-hearted inquiries about his three-bedroom brick home, listed originally at $193,600.

Frustrated and disillusioned by the process, he pulled his home off the market, deciding to bide his time and wait for the market to strengthen.

...

Harrod convinced Chapman to price the house at what he considered a fair market rate for that section of East Hill.

The result: the house sold the first day on the market at a price -- $165,000 -- Chapman said made him "extremely happy."

So happy, in fact, he proposed to his girlfriend that same day, and she accepted.

"Fair" means within reach.

I know everyone want to be a millionaire. But you cannot see ANY gains if you don't sell your wares first. The reason the market has hit the wall is because prices have far out reached the average home buyer.

Time to take a look around.

Time for a reality check.

Time to look to Florida.

The Housing Market is Silly, Silly I Say!

2007-06-09T11:48:00.000-06:00

Look for it real close. The first time I read it, I missed it. Daley admits the housing market is in trouble.

Mayor Daley admits to housing slow down

It's designed to raise $1.1 million to help plug a $10 million hole in Mayor Daley's 2007 budget caused by weather-related overtime and lower-than-anticipated tax revenue tied to the housing slowdown. Daley has also cut off non-emergency overtime and suspended hiring unrelated to public safety.

...

Earlier this week, Daley declined to rule out a post-election tax increase. "We don't know yet. . . . It's a critical time. The economy has slowed down. Housing has slowed down. The [real estate] transfer tax has slowed down. You start making decisions much earlier than later," he said.

Having watched the housing market unravel in the last year plus, there is one problem. Sellers' expectations are too high. The boom years are past and gone. Maybe if people were not so greedy, and lowered their prices commerce could commence!

Where Will They Go?

2007-06-05T00:40:00.000-06:00

Housing slump, job losses conflict

Immigrant workers often go uncounted

By Bob Willis, Bloomberg News: Alexandre Tanzi in Washington and Valerie Rota in Mexico City contributed to this story
Published June 4, 2007

The slump in home building, the deepest since 1990, has taken only a modest toll on the U.S. job market. Workers like Francisco Leon may be part of the explanation.

Two years ago, Leon, an undocumented immigrant from Guatemala, had little trouble finding construction work five days a week in northern Virginia. Nowadays, the 22-year-old mainly does odd jobs, often only two days a week.

As Congress debates whether to provide a path to citizenship for undocumented immigrants, workers like Leon, hired off the books for day labor, are among the first to lose their jobs as home building falters. Such workers often go uncounted as well, meaning official labor statistics don't fully reflect the decline in construction-related jobs.

Will the illegal immigrants stay when the jobs, the reason they came, are gone?

Where is His Cut?

2007-05-30T09:16:00.000-06:00

Cook County Board President Todd Stroger might have the politician gene, but he lacks other ones.

Toddler and Property Taxes

Breaking with his father's avoidance of property tax increases and his own campaign promise not to impose them, Cook County Board President Todd Stroger made it clear over the weekend that he thinks a property tax hike is one way to balance the 2008 county budget. Stroger made the comment in an interview that aired on "Fox Chicago Sunday." In response to a question by hosts Dane Placko and Jack Conaty about how he planned to balance the budget, Stroger replied, "For years, we haven't taken any of the natural growth [in property values]. We should go to the next level that we can."

Foreclosures still raging

Chicago-area foreclosures, which set a record last year, are projected to reach full-blown crisis levels in 2007.

Cook County is on pace to record at least 30,000 and as many as 36,000 foreclosure filings this year, according to Cook County Circuit Court Judge Dorothy Kinnaird, who presides over the Chancery Division, which handles foreclosures. That would mean a 35% to 62% increase from 2006, when 22,248 filings were easily the highest in county history after having risen 36% from the previous year. (The court combines both commercial and home foreclosures, but residential mortgages comprise the vast majority of its cases.)

The driving force behind the foreclosures: adjustable-rate mortgages, which proliferated during the housing boom, according to a new report by the National Training and Information Center, a Chicago affordable-housing advocacy group. The mortgages offered low interest rates for a limited period and often let buyers skip down payments and get approval without showing proof of income, or both. Many buyers landed in trouble when their interest rates — and their monthly payments — adjusted upward, the NTIC said.

Chicago and Cook County is not the only place that is suffering problems. A wise political leader would look out side the walls of his fiefdom to gain some fore-sight to the problems he might occur one day. Just like Chicago is oblivious to the housing crash all around her, Toddler is oblivious to his own problems.

Property Tax Dilemma

Kevin Depew in Tuesday's Five Things wrote about the Property Tax Dilemma.

The Florida legislature plans to convene a special session in mid-June that could result in more than $30 billion in property-tax relief over the next five years, the Wall Street Journal reported.

*Thanks to the housing boom, the average annual property-tax bill in the U.S. was $1,132 per person in 2005, up 13% from 2000 in inflation-adjusted terms, according to data from the Commerce Department.
*The boom was so strong that in many areas housing prices rose too fast for local tax assessors to keep up, the WSJ said.
*Now, tax assessments are catching up just as market prices are declining, a double whammy for homeowners facing increasing mortgage payments due to resets, or homeowners now trapped in residents with property tax bills edging them out of their comfort zone.
*But that's the homeowners problem.
*Here is the dilemma for states: Reducing property-tax revenues threatens budgets of cities and counties. However, a property-tax cut could stimulate the economy by leaving homeowners with a bit more money in their pockets.
*Florida doesn't have a personal income tax, and its cities and counties depend heavily on property taxes to pay for services such as police and firefighters, the Journal noted.

I have read that the County's plan is to line up existing home tax assessments to new construction. Existing home have already been assessed. The taxes are based on those older numbers. There was a cap on how much they can go up: 7%. New construction is different. The County assigns taxes based on the SALES PRICE of the unit. Look in my right side Links for the CC Assessors and CC Treasurers web sites. You can find yours and everyone taxes.

The County's logic is that if you bought that N.W. Side bungalow for $500,000 then they will tax you at $500,000. Sounds fair right? Not to the Jones' that are pushing the edge of foreclosure with that 1/2 Million dollar note, just to "live the American Dream". With a steep hike in takes, the Jones' might go over the edge. Florida is learning that higher taxes can lead to more foreclosures, and more foreclosures mean less taxes coming in.

When will Toddler learn?

That's What I Thought

2007-05-27T11:25:00.000-06:00

Average salaries lower than past generation's

The Associated Press

WASHINGTON - The part of the American dream that says children will be better off than their parents were has become a dream, not reality, according to an analysis of Census data released Friday.
A generation ago, American men in their thirties had median annual incomes of about $40,000, compared with men of the same age who now make about $35,000 a year, when adjusted for inflation.

That's a 12.5 percent drop between 1974 and 2004, according to data from the Pew Charitable Trusts' Economic Mobility Project.

Household incomes rose during the same period, though the main reason is that there are more full-time working women, a new report on the project said.

We get paid less, but you are supposed to dump more of our income on a mortgage.

This is what some authors call the Revolution of Lowered Expectations. Do more, get less; pay more, receive less. It starts with a, "HEY! Wait a minute." And shortly becomes a, "Eh, what do you expect?"

Not in the Top 100

2007-05-22T12:16:00.000-06:00

Chicago was not in the MONEY Magazine Top 100 cities. This is not a surprise if you consider the numbers:

Chicago, IL Population: 2,873,790

Median family income
(per year) $46,748

Median home price $254,500

Sales tax 9.00%

Job growth %
(2000-2005) 0.70%

Test scores reading
(% +/- state average) -24.8%
Test scores math
(% +/- state average) -35.6%

Personal crime risk
(100 is nat'l average; lower is better) 351

It does not look good.

How does the median income family afford a median priced house?? The banks would have to loan out 5.4x the income for those people to qualify such a house!

Fun with math time: Per month, the principle and interest on a $254,500 home loan at 6.25% for 30 years = $1,567.00. A $46,478 year income / 12 (I'm being so nice, I'm not even taking out taxes!) = $3,895.66 a month. The Chicago median incomer in 2006 is spending 40.22% on his median priced home loan! If I add $300 a month for median taxes and insurance, the percentage would equal 47.92%!! Just short of one half of a median incomer's not yet taxed income is going to keeping him in his house!

I am suspicious of the Median home price. I believe that number is too low. Considering a 1 bed condo at Lincoln / Foster starts at $263,000!

Here is 115 homes for sale in Chicago for the $250,000 median price. As you will see, either it's a tiny condo, which taxes and condo assessments will chip further into your income, or it's in the ghetto.

Have fun!

Books to Read

2007-05-04T11:40:00.000-06:00

I have read these books, and found them very informative.

America's Bubble Economy, Weidemer

Empire of Debt, Bonner

The Comming Economic Collapse, Leeb

The Two-Income Trap, Warren

When Corruption Was King, Cooley

Home Town Words

2007-04-28T22:49:00.000-06:00

Chicago RE reporting is very propagandized.

In the height of the bubble, there were many many stories about how great it is here. The Trib and Suntimes RE sections were exploding with get rich stories and hot neighborhoods. Now the sections are thinned out. On the cover is an expose on the newest energy efficient light bulb that will save you 3 cents a month. Like that will save you from your lair-loan ARM explosion! But inside are still allot of the same over-priced houses and condos that have not sold in a year.

NO IS TALKING ABOUT THE BUST THAT IS OCCURRING ALL AROUND US!

No one but this guy. But I have to read about it in a New York publication.

For shame.

Spending May Take a Hit as U.S. Home Prices Decline (Update2)

By Bob Willis

April 27 (Bloomberg) -- Carol Francis says her customers are less likely to make big furniture purchases these days than they were at the height of the housing boom two years ago.

``The housing market right now is affecting everybody's spending,'' said Francis, a design consultant at Thomasville Home Furnishings in Woodbridge, Virginia, 25 miles south of Washington. Before, ``I had people who would buy two and three bedrooms of furniture. Now many come in and just buy one piece at a time.''

With home prices in danger of falling this year for the first time in at least four decades, Americans are turning wary about borrowing against their houses to pay for vacations, education or remodeling projects. In a reversal of the ``wealth effect,'' people who once viewed soaring home values as a rationalization for higher spending appear to be pulling back.

``We're in a housing recession; it's not over and it's going to spread to other parts of the economy, mainly consumer spending,'' said Paul Kasriel, director of economic research at Northern Trust Securities in Chicago. ``House prices are going to continue to fall, and that's going to play havoc with consumers because it means the home ATM is now draining, it's no longer filling.''

VERY interesting.....

2007-04-25T01:12:00.000-06:00

It seems that Illinois Senator and Democratic Presidential candidate Barak Obama has a problem. Like many other Chicago area Democrats he is buddy-buddy with Antoin 'Tony' Rezko. Rezko's slumlord status may hinder Obama's rep as a Man of The People.

But there is more.

Here, is a detailed map of Rezko's properties. I find it VERY coincidental that Rezko has all these properties around the area of Washington Park! As any astute Chicago resident would know, Washington Park is planned to be one of the corner stones of Chicago's 2016 Olympic bid!

Oh what a tangled web we weave....

Don't rely on the City

2007-04-20T10:11:00.000-06:00

City inspects for safety only, not quality

This really should not surprise you. But, in case you did not know.

Beware home buyers: Illinois does not require developers to be licensed, and city inspectors are not assessing the construction quality of the residence. The inspectors are responsible only for citing public-safety hazards such as an insufficient number of fire escapes.

"In Illinois, you have 'Wall Street' developers who drive cars and talk on phones and hire subcontractors. They don't build anything," said Nick Gromicko, founder of the National Association of Certified Home Inspectors, based in Boulder, Colo.

"Most states have very minimal or no licensing of developers and contractors," he said.

...

City inspectors, or any other government inspector, will check only for safety issues on new construction.

"A leaking window is something [government inspectors] wouldn't even catch," Gromicko said.<

Scales said city building inspectors review basic life-safety issues such as proper ventilation and lighting, and properly installed electrical and plumbing systems.

"They're not able to measure the quality of construction," Scales said.

The developer is responsible for correcting any problems.

It's best to watch the construction in person throughout its many phases.

Finally, Some Recognition!

2007-04-18T12:02:00.000-06:00

Condo Market Shakes Out

from CNBC.COM

By Tara Siegel Bernard News Editor | 13 Apr 2007 | 07:26

It's a great time to look for a condo -- but it's likely to get better in the months ahead.

...

Builders won’t be the only ones looking to sell. Speculators who rushed in and bought condos by the handful in hopes of flipping for a hefty profit later on will also be looking for buyers, as will many of the lenders themselves. Foreclosures are on the rise because many individuals bought homes when credit came easy, often with enticingly low introductory interest rates or little money down.

“The poster children for excess construction generally reside on the coasts in markets where home price appreciation have boomed,” said Suzanne Mulvee, senior real estate economist with Property & Portfolio Research, a Boston-based real estate research firm, which expects further price declines throughout 2007. “That includes Florida - especially Tampa, Miami and Orlando - Chicago, Las Vegas, Palm Beach and San Diego.”

Finally some RE brainiac admits that Chicago is running with the big boys...to the end of the cliff. Break out the champagne!

Say NO to the Sub-prime Bail Out!

2007-04-15T11:00:00.000-06:00

Schumer calls for subprime bailout

New York Democrat wants funds to help subprime borrowers.
April 11 2007: 3:35 PM EDT

NEW YORK (Reuters) -- The federal government should offer troubled borrowers hundreds of millions of dollars to bail them out of subprime mortgage loans, several leading Democratic lawmakers said on Wednesday.

"The federal government can send in an infusion of [money] to prevent foreclosure," said Charles Schumer, a New York Democrat.

The cash infusion is needed right away and should go to both help fund community groups aiding troubled borrowers and to directly fund bailouts, Schumer said.

In the beginning of 2006, I almost bought an over-priced townhome. However, I did a budget and the remainder of my dollars would have been too thin to do anything else but sit in the townhome. I could have BOUGHT the place, but I could not have AFFORDED it. So I begrudgingly passed on it. I was sad and every time I drive pass the place I shake my head thinking about what could have been. Soon after I learned that new construction is taxed differently than pre-existing homes. This difference would have sunk me. Now there are 3 units for re-sale asking 50 grand more than the price I passed on. They are just rotting away.

There are many sites and blogs online that detail the problems that a bail out would cause. I will not get into those details here. My opinion is very straight-forward: I used my brain and did not get caught in the trap. Therefore, I will say that certain people should not be bailed out by MY TAX MONEY. Those people are:

* Anyone that LIED about their income or employment on a home loan application.
* Anyone that GAMBLED with the ARM because they wanted to 'Flip that House'.
* Anyone that was too DUMB to realize that you can't afford a $500,000 house on 50k income.

Those people SHOULD NOT GET BAILED OUT. Tough bananas! The Market needs to take them over its knee and give them a royal spanking. Then send them on their way.

Below are links to elected officials in the area. If you also believe that these people should not get a free pass, click on these links. Inform your rep's that you also do not want liars, gamblers and degenerates to be bailed out.

Contact President George W. Bush

Contact Senator Dick Durbin

Contact Senator Barak Obama

Contact Senator Charles Schumer

Click here to find your US Rep

Thank you.

The REAL Losers

2007-04-14T11:07:00.000-06:00

Many victims of subprime crisis

April 9, 2007

TERRY SAVAGE savage@suntimes.com

It's the loans that are subprime -- not the borrowers! Let's stop blaming the people who took the bait (and switch), and thought they'd landed their piece of the American Dream. Home ownership has been a goal of most Americans, or those who landed on our shores as immigrants.
The offer to make that dream affordable was irresistible.

Essentially, that's what happened to millions of families who make up a significant portion of the $1.3 billion subprime mortgages outstanding today.

...

Who's to blame?
Sure, some of those loans were taken out by scam artists who had no intention of owning the homes for long. Others figured on "flipping" the property at a higher price to the next dreamer.

But when the dust settles and all the blame is cast, it's very likely that the real losers will be the families who were attracted by ads run in newspapers and on local radio by mortgage brokers who promised low monthly payments, no money down and a chance to buy the dream house financed only by dreams.

Ms. Savage carries on about the poor victims. But The REAL Losers are the smart people. The savers. The sold-at-the-top-crowd. The couples that saw the outrageous prices and knew that the limit was the sky, not that the sky was the limit, and choose to sit on the sidelines. The Real Losers are the people that actually budget their income.

If The Real Losers now have to use their own tax money to bail out the greedy, the dumb, the lairs, and the gamblers, then there is no justice.

Shame on all of us!

ARMs Affecting Chicago

2007-04-11T17:49:00.000-06:00

Homeowners Stuck As Lenders Cinch Standards

Source: USA TODAY
Publication date: March 5, 2007

By Noelle Knox
Edward Booker is one of nearly 3 million homeowners with adjustable-rate mortgages who've had trouble paying their bills. And, like Booker, many of them won't be able to refinance their loans once the interest rates start rising. At that point, they'll have to tighten their belts, sell their homes or lose them through foreclosure.

This month, the mortgage payment on Booker's Chicago home rose $200, to about $1,300. It'll go up again in September. He wants to refinance, but he fell behind on payments after his wife died of cancer in 2005, so no lender wants to take the risk.

"I'm just trying to hold onto my house until I can figure out something else to do," says Booker, 58, a former rail-car inspector who's on disability.

Lots of people got greedy. They listened to their buddies, the guy down the block, the late night infomercials, the real estate agents, the mortgage agents, and not that little voice in their heads warning them...

IF YOU CAN'T AFFORD IT, DON'T BUY IT!

Nothing goes up forever. Schemes are schemes and bubbles are bubbles. The next few years will be very hard on some people. At least they can say they once owned a home, right?

Chicagoans Facing Foreclosure

2007-03-09T14:30:00.000-06:00

54,000 Chicagoans caught in perfect storm

March 9, 2007

BY SALLY DUROS Real Estate and Homelife Editor

More than 54,000 homeowners in the Chicago area were 60 days behind on their mortgage payments and in serious danger of going into default as of Dec. 31, 2006. That's 14.5 percent of an estimated 374,000 subprime loans in the greater Chicago standard metropolitan area, said Bob Visini, vice president-marketing, for LoanPerformance, a California-based subsidiary of First American Real Estate Solutions.

In Chicago the numbers of these early warning defaults increased 56 percent between year-end 2005 and year-end 2006, a higher percentage increase than posted nationwide, Visini said.

...

"If you don't have the money, someone has to come and break your legs," Visini said. "It really is a perfect storm."

Ahhhhhhhhhhh, the ol' "Chicago-way"....

New term: "Naperville Fire"

2007-02-13T22:19:00.000-06:00

Fire hits another house as it's under construction

Published February 13, 2007

NAPERVILLE -- Naperville firefighters are investigating the cause of an early Monday blaze that damaged a home under construction.

The fire was the third of a home under construction or rehabilitation in the Naperville area in about a month.

For some, foreclosure is not an option. They are not the first to go to arson to solve their problems. However, if they were dumb enough to get caught in this housing ponzi scheme, they will get caught in the criminal investigation. That will have a higher toll on their finances and credit scores.

This Effects All of Us

2007-02-13T09:14:00.000-06:00

Very well done!

Guilty plea in mortgage scam

February 13, 2007

BY MARY WISNIEWSKI Business Reporter

Mohammad "Mike" Taghie Kakvand, the ringleader in a mortgage scheme that resulted in abandoned Chicago apartment buildings, pleaded guilty in federal court Monday.

Kakvand bought 33 apartment buildings in Rogers Park and on Chicago's South Side, but didn't renovate them, according to the indictment. Units were sold as rehabbed condos at inflated prices, using straw buyers who defaulted on $29 million in loans. The plot displaced renters and left decaying, crime-plagued buildings, according to community leaders.

"There is no punishment too severe for Michael Kakvand," said Ald. Joe A. Moore (49th). "He preyed on our neighborhood, he took advantage of people, and the damage he did took years to unravel."

The Lastest Numbers Are In

2007-01-26T00:00:00.000-06:00

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

2007-01-25T14:13:00.000-06:00

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?!

2007-01-20T16:02:00.000-06:00

...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?]

E-mail this story
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

2007-01-11T23:33:00.000-06:00

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!!!!

2007-01-11T00:28:00.000-06:00

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

2007-01-04T14:15:00.000-06:00

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!

2007-01-02T19:31:00.000-06:00

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

2007-01-02T11:36:00.000-06:00

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

2007-01-02T01:00:00.000-06:00

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

2007-01-01T15:49:00.000-06:00

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.