Nationally home prices slip. Chicago prices still climbing

The headlines on the front page of the business sections report the first decline in home prices in 13 years. Home prices dipped 0.4 percent neationwide in teh July to September period, compared to the previous quarter, the Office of Federal Houseing Enterprise Oversight said.

Interestingly, compared with the third quarter of 2006, prices rose 1.8 percent, but this is the smallest year-to-year increase in 12 years.

To get a local perspective, we drilled down into the data for a couple Chicago neighborhoods as well as the city as a whole.

In Lincoln Park, you can see that prices have risen 42% since October, 2005. Comparing October, 2006 to October, 2007, prices are up 11%. Figures are for closed properties, all property types, both re-sale and new construction, from MLSNI figures.

In Lakeview, the two year trend is upward with prices up 13 percent. Comparing October, 2006 to October, 2007, however, it is interesting to note that prices declined from $383,000 to $334,000. The data shows that October, 2006, was the peak month for prices in the two year period.

This caught me by surprise as most properties, even in Lakeview, are still experiencing appreciation. Digging through the closings that occurred in October, 2006, were two massive properties near the lakefront. One closed for $2-million and the other for $2.45-million. These were large estates - the likes of which rarely change hands in close-in neighborhoods like Lakeview and likely were sold as development parcels. Close examination of the remaining house sales and condo/townhome sales did not reveal any out-of-the-ordinary events. The data for 2-3-4 flats showed a decline from $839,000 to $664,000 - but in the neighborhood, only two closings occurred in October, 2007, and three in October, 2006. Land prices also dropped, but, again, hardly any parcels closed in October of each year compared to the hundreds of condominiums in each of the months.

Pay close attention to condo & townhome prices as there appears to be a bit of softness in this market at the present time.

Citywide, the trend is clearly upward. October, 2007, however, recorded prices lower than the two months before as well as a miniscule decline from October, 2006. This appears to be due to a slowdown in all real estate activity during the late summer and early fall months when media reporting of the real estate downturn brought much business to a standstill. The number of properties sold in October, 2006, was 3,040 compared to 2,246 in October, 2007 - a 26% drop.

Also today is a report that the economy's growth is the best seen in four years for the period July through September, 2007. It should be very interesting to see if the strong economy can lift up the real estate market, or, rather, if real estate will bring down the economy. Stay tuned...

New construction techniques to be examined in Chicago

I do not get out to the country too often. Travelling west of Sacramento (the street - for out-of-town readers) seems like a cross-country journey to me. But last weekend, your guide had the opportunity to visit old friends in Iowa City, Iowa, for a birthday celebration.

One friend recently moved into a new construction home that was completed approximately a year ago. While stumbling around the lower-level searching for a bathroom, I came upon a couple of the utility closets containing the electrical junction boxes, the gas main into the house, and the water distribution for the house. I was nearly floored when I saw the water distribution connections.

The water enters the house through copper pipe, and runs into and out of the water heater through copper, but then is fed to a series of plastic pipes that run to all the plumbing fixtures throughout the house.

After my initial shock, I though this was a brilliant invention. Can you imagine how much more quickly and easily plumbing can be run through walls and floors of a new home? The cost of the materials are dramatically more efficient compared to copper - nothwithstanding the enormous labor involved with installing copper plumbing by hand with soldering and torches. The old way almosts seems primitive after reading about the new techniques.

Copper Prices Put Plastic Water Piping on the Rise

The next photo shows both electrical distribution and gas distribution. Electrical wiring not installed inside metal conduit has been common outside Chicago for many years, but check out the flexible gas pipe running along with the electrical wiring.

The stuff is called Corrugated Stainless Steel Tubing (CSST) for Gas Distribution. Again, this would appear to be a milestone invention affording greater efficiency in constructing new homes.

The Chicago Association of Realtors is planning to address the adoption of modern building materials and techniques with the City of Chicago. Your guides wish them the best of luck. Many building codes date back to shortly after the Great Chicago Fire and have been solidified by patronage armies of unionized tradesmen who weild considerable clout in Chicago.

Here in Chicago, despite the adoption by the international building code, using modern flexible wiring for electrical systems is strictly prohibited and old-fashioned wire must be installed inside rigid conduit. Water supply plumbing must be copper pipe. Only two and three story buildings can have waste plumbing made from PVC pipe. Taller structures must use cast iron waste pipe. And gas distribution throughout the walls of a building must be black iron pipe. The only flexible pipe allowed is the part that connects an appliance to the wall.

The reduction in construction costs is a high priority here in Chicago as the minimum price for construction before land aquisition has climbed to around $125 per square foot and has not budged downward in ten years. Reducing this cost is perceived to be a major avenue for invigorating the market that provides new yet affordable housing for Chicagoans.

Chicago Gang Information

Here is an interesting site I stumbled across. Have you ever been curious at to what street gang controls your neighborhood?

Then check out www.chicagogangs.org

There is an amazing amount of information here. Not just about stats, symbols and turf but also history and their origins.

Little did I know that the local gang in my neighborhood, the Insane Deuces, used to be two gangs that began in the 1950’s and merged together in the early to mid 1960's. Two gangs into one - thus the Deuces. They also have a branch office in Aurora.

Wow - a merger and a branch office - How corporate of them.

No Fat to Cut?!

Here’s my rant for the day.

My taxes are going up. Not just property, but sales taxes, vehicle registration, etc. At the same time, city, state and county services are being cut. The powers that be want more of my money to do less and less for me and my neighbors.

All levels of government complain that there is no more fat to cut. Their only choice to keep “moving forward” is to raise existing taxes and invent new ones.

Add to that I’m stressed about global warming.

How can we help fix both at the same time? I got it!

We can start by having these four City of Chicago vehicles that have been sitting in front of my house with 9 city employees standing around doing nothing for the past two hours, idling and burning EXPENSIVE fuel do two simple things: 1) Turn off the darn engines when just sitting for more than a few minutes; and 2) Stop paying employees who sit around doing nothing. It is the old one guy working while four supervise.

Hmmmm…..No fat to cut?

Broker Open Tuesday

Your guides had the opportunity to tour a magnificent property today ~ I'd say our best voyeuristic opportunity in many weeks. A new mid-rise building was completed in East Lakeview about a year ago located at 550 West Wellington - one door east of Broadway. This location puts the building within steps of a wonderful array of shops, restaurants and entertainment opportunities; and just two blocks off the lake.

Apartment #7W is one floor below the penthouse level, is half the entire floor and features two beds plus den and two baths. This unit was decked out with upgrades by the homeowner who designed his dream home. Little did he know he'd grow to dislike Chicago and has decided to move back to more familiar territory - Seattle, Washington.

Custom features such as this flat-screen wall-unit, all the other attached flat-screen TV's, light fixtures and some of the artwork all stay with the condominium.

Here's a photo of the kitchen. Just because it looks so good.

Market for Hand Made Items in Wicker Park

Check out Chicago's Hand Made Market for a cool and funky array of jewelry, glass pendants, knitted items, clothing, handbags and more. What caught your guide's eyes were a selection of handmade baby clothing offered by one of the vendors. The Hand Made Market is held on the second Saturday of every month from noon to 4:30 at the Empty Bottle, 1035 N. Western.

Check out some of the vendors: Bachomp and celticaztec designs for hand made jewelry, clothespin for urban baby "wears", huntsberger for blank books for journals or albums, viva nova for decoupage boxes and candles, plus many more.

Shop Local!

Broker Open Tuesday

Located just off Broadway and Bryn Mawr are the Catalpa Gardens Condo's - aka the purple and yellow high rises. The distinctive colors notwithstanding, the condo's feature some nice features and a location convenient to shops, transportation and the lakefront.

Actually three high rises in a row, from the street you're only presented with one entrance and the other two buildings are arranged behind the first one. The arrangement of the three towers affords all three buildings views of the lake from the east, north and southern units. The western views are nothing to sneeze at, either.

To travel from the front building to the other two behind, you can walk through the garage on the ground floor, but the buildings are connected by a cool glass walkway that offers floor-to-ceiling views of the western city and the lake to the east.

The model is tricked out with nearly every upgrade imaginable which makes a visit a visual delight. It is still available for purchase for $399,000. I'd go for this one. The kitchen features a great upgraded appliance package and next to the dining area is a bar with wine refrigerator. The master bathroom catches your eye with a very stylish double bowl vanity with a blue-hued granite top. Very sharp.

A 10th floor two bedroom was also open in order to show off the views of the lake, but the weather completely conspired against the agents today and we couldn't see farther than two blocks in the soupy rain. This unit was finished with all standard materials and showed itself a bit plainly. Perhaps, also, because there was not furniture or paint. The baths and the kitchen seemed like small punctuation marks in vast empty rooms, but perhaps this is a testament to the large room sizes and the tall ceilings on the 10th floor.

The area around Broadway and Bryn Mawr has historically had more than its fair share of problems. You can plainly see that the neighborhood is desperately trying to break out from its rough past with the addition of national retailers such as Strabucks, Bank of America along with some pretty cool cafes and restaurants. We'd have to say that it will take a few more cycles of redevelopment to get rid of some of the undesirable liquor stores, currency exchanges and SRO-style apartment buildings, but each day there are clear signs of improvement.

Snooping public records to find property information

Have a cook county address (and that’s all you have) and want to know all about it? Who owns it? What did they pay for it? How leveraged are they? What other properties does that guy own?

Well there are several pay Internet sites where you can go to do some research and get what you want. But you don’t want to pay someone for the info? Well, with a little computer “leg work” you can find it all on your own for free. Ok, maybe you can’t get all of it. But you can get much of it - as long as those bits of information have been recorded in the public records. You can also make some educated guesses based on what you find. All in the public domain.

Easy as 1-2-3.

For example: Let’s say you are in the market to buy a three flat. One day while driving down Oakdale Street you see one that appears to be vacant. You could call your agent if there was a “for Sale” sign on it. But there isn’t. You peek in the windows (without getting arrested) and now you’re really intrigued because you see potential. You want to find out who owns it. Maybe see it. And maybe, just maybe, make an offer on it. You at least want find out what’s going on with the property.

So let’s go:

Step 1: Get the address. 838 W. George – check.

Step 2: Go to Cook County Assessors website and search by the address to find the PIN. While you are there take note of the past few years assessed valuations. And just as important - the property description of how many units.

Here is what you come up with:

Step 3: Go to the Cook County Recorders Website. This is a goldmine of information about a property’s history, and the parties involved.

Entering the PIN number you found at the Assessor’s website into the PIN number search we find – D’oh! The property sold on June 28th. How do I know this? A deed was recorded on July 3rd.

Click on the hyperlink to the recording document of the warranty and we can see that it was conveyed on 6/28 with a sales price of $865,000 from Martin O’Brien as trustee to James Varga. Keep clicking on hyperlinks on document numbers and names and you can view reams of information that has been recorded against the property.

Click on the mortgage and you can see that Mr. Varga bought the property with $792,000 loan. He probably paid the balance in cash. Hey, 92% financing in this day and age – not bad.

What else has Mr. Varga bought and sold?

Click on his name and you’ll see that he has over the years been the grantor 13 times and the grantee 10 times.

Click on Grantor and you see various transactions of sales and mortgages. You see that not only has Mr. Varga bought and mortgaged the property we were curious about in June of 2007, in October 2006 he took out a mortgage of $338,500 on a property.

With PIN provided for that transaction, you head back to the Assessor’s website and look up the address and find that it is a condo at 828 Wolfram.

If you really want to creep yourself out about what people can find out about you – keep digging: Go to the Cook County Treasure’s website and you can see that his condo us Unit A. You can plainly see that Mr.Varga is getting the homeowner’s exemption and his current tax bill of $2,223.38 is not paid yet.

What about the original property that we were curious about? Well, he hasn’t paid those taxes either. And he’s getting a killer break on the taxes with a homeowners’ exemption, a senior citizen exemption and a senior tax freeze. Yikes, he’s gonna get whacked next year when all those tax breaks vanish into thin air…

Anyway I digress - a great set of free tools to help you learn more about a property. And perhaps make an informed buying decision. Use these three websites and their cross referencing information and amaze yourself with how much information you can dig up.

Electricity comes to Chicago

Read the yard sign carefully and you'll find that this home is "Fully Wired." In West Lakeview / Hamlin Park listed for $1,199,999.

How do you buy bank owned property in Chicago?

A customer wrote last night and asked:

How do you buy bank owned property in Chicago? Do you know a REO agent and how do you contact them?

Lots of ways.

Many banks list their homes with Real Estate agents for sale. Lots of those properties DO make it into the MLS. Experienced agents know what brokerages specialize in the sale of bank owned properties. I know that I keep a prospecting search for properties that come on the market from these agencies so I can get quick notice of properties that come up for sale.

For example, the most recent property to catch my attention was a new listing that I received notice of this morning. It's a single family home in the West Loop - three beds with one bath - listed for $149,900. Before being taken back by the bank, this house was listed for $325,000. Could be a great deal if it's not in too bad condition.

A year ago, I sold a condo owned by Chase Bank to a home buyer in a well known high rise in Edgewater. This condo was purchased by a rehabber who ran out of money and couldn't make the payments on the condo. My client bought the condo for a nice discount and renovated it completely and he has a spectacular and comfortable home in a desirable lakefront location now.

These homes are not always a bargain, however. But careful examination of the listing data and a tour of the property will usually reveal a few diamonds in the rough. Do hire an experienced agent to guide you. A good agent will be able to sift through the mountains of data and suggest properties that represent good values as well as point out the pitfalls that may be present in other properties.

Keep in mind that the foreclosure process takes a long time. By the time a bank actually owns a property, it could have been neglected for many months. Some properties are in good condition, but others are waiting their date with the wrecking ball.

The process of bidding on a foreclosed home takes guidance and patience. Many levels of bureaucracy can be involved in the sale of a bank owned property. If you submit a bid on a property, the paperwork goes through a maze of bank departments and mid-level administrators before a decision can be made. It often takes weeks to hear about the status of an offer. These nerve-wracking waits are not for the faint of heart.

One last reference for the determined do it your selfer: Check out the Chicago Foreclosure Report at http://www.chicagoforeclosurereport.com. This website offers a web and magazine subscription to properties that are just entering the foreclosure process. You'll be doing all the legwork yourself, however. No experts are guiding you here, so be very careful. But if you can get a jump on a property before everyone else does, the effort could be worth it. Lots of Realtors read the foreclosure report, too, because it's a great prospecting tool. Properties listed in the Foreclosure Report are not yet bank owned and are often still in good condition. The owners usually still live in the properties. Smart sellers who are in financial trouble are wise to list their homes for sale with a broker at this stage in order to perhaps sell the property at full retail price.

Property tax bills are out and due December 3

Property taxpayers should be on the lookout for their property tax bills shortly. Most tax bills hit the U.S.Post Office on Monday and were delivered yesterday. The due date for your payment is Monday, December 3rd.

Does your mortgage company pay your taxes automatically? If so, be on the lookout for an ominous letter from your mortgage company or escrow company telling you to forward your original letter to them or face penalties. The Cook County Treasurer's office started charging a new fee to pay taxes electronically. (Insane, I know.) Your mortgage company may be trying to avoid paying this new fee by asking you for your original tax bill so they can mail in a paper check rather than transmitting your payment.

If you feel like being a helpful customer, feel free to forward your bill to your escrow company, but you are under no obligation to do so. Your mortgage company receives your bill electronically in a large download and is supposed to make your payment in a bulk electronic payment transmittal. They are simply hoping to avoid the fee by sending out these scary-sounding letters. Also, if your escrow company fails to make your payment on time, you are not liable for the extra penalties the County Treasurer imposes for late payments.

Are you missing your tax bill? Your guides are amazed when the original developer of the townhome complex where we reside forwards us a sizable stack of un-deliverable tax bills to us. This occurs because residents still have not changed their address with the Cook County Treasurer's office and therefore the bills are sent off to the most recent known taxpayer of record - namely the developer.

Check out the Cook County Treasurer's website where you can look up your bill, change your name and billing address if you need to, and check out a bunch of other helpful features. The Treasurer's website is www.cookcountytreasurer.com.

Please note: other important services are offered in the treasurer's doppleganger office - the Cook County Assessor. Use the Assessor's office website to locate your Property Tax ID Number if you only know your address. Download the forms to apply for your Home Owner's Exemption, your Senior Citizen's Exemption at the Assessor's office. The Assessor's office is where you will start the process of a Tax Appeal if you feel your property is assessed too high. The Assessor's website is www.cookcountyassessor.com.

Broker Open Tuesday

Tuesdays in Chicago is Broker Tour day. Realtors that want to increase their exposure to other brokers in the area all hold their listings open on Tuesday around Lunchtime. In addition to getting fed, this is a great opportunity to snoop, check out the competition or live vicariously - depending on your mood.

In our neighborhood, a developer has sandwiched eleven ultra-luxurious single family homes in between the back of the Office Max and the McDonald's drive through. Mind you - across the street, the neighborhood is tranquil and residential - it's just that these are literally on the wrong side of street.

In any case, The Estates at Columbia Place had their first Broker Tour today and offered tours inside three of the eleven homes. Each house was about the same size - approximately 6,000 square feet. Each featured 11 rooms, six bedrooms and five-and-a-half baths. The pricing - $2,425,000, $2,525,000, and $2,595,000 - differs only with the level of finishes that each home contains. The most expensive one with an elevator.

Something you don't see very often in Chicago is a clubhouse dedicated to the use of just the eleven homes in the development. Promotional materials indicate there will be an indoor pool, a deckside whirlpool and a fitness equipment room. We snuck inside for a quick peek.

By our estimate, the three homes that were open for viewing today could be ready for occupancy in a matter of a couple weeks. We will be looking forward to seeing whether the homes that are rumored to be sold will have new residents moving in, or whether they are sold to speculators who may have a bit of a wait before new buyers come into the picture.

Looking to buy something listed a bit over my budget...

This morning, a customer posed this question:

After a couple of weeks of searching, I have just found a stunning condo right in downtown Chicago. It seems to be priced correctly, but has been on the market since mid-July, and the seller has yet to lower the original list price. How agressive can my offer be if I hope to stay within reason?

Right now, you're in the driver's seat. A seller should be extremely grateful if you were to formulate a reasonable offer on their property. A reasonable offer is one that takes into consideration comparable sales information as well as a thoughtful presentation of your ideas on other market considerations.

For example, in my in-box this morning was an update from Bank of America with the results of its monthly survey of real estate agents in major markets. Here in Chicago, buyer traffic remained very weak for the month of October. Agents say that sellers have become a bit more realistic, but prices have not dropped far enough to entice buyers.

You could frame your argument around the fact that it has become obvious that buyers are clearly aware that prices are continuing to fall and are postponing decisions accordingly. Striking a deal with you now could be a positive alternative to waiting for several more months and some severe price reductions.

Other statistics from today's report: Nationally, the supply of inventory is just about to pass 10.5 months worth of supply. Here in Chicago, the numbers are nearly identical as more and more inventory comes on the market with very few contracts being written.

If you are at all hesitant about negotiating so aggressively for your new home, you definitely should employ the services of an experienced agent. An agent will be able to present your case in a factual and non-threatening fashion while getting the point across that selling to you today will be far better than selling at a discount six months from now.

Is it smart to buy a studio?

A customer posed the question a couple days ago:

I live simply and am highly organized so I am looking into purchasing a 600 sq ft studio. Assesments are under 300, garage parking is included, w/d in unit, fireplace, balcony. My concern is resale? On average, do studios tend to take a lot longer to sell and will I be somewhat limited re: appreciation value? Am I better off with a small 1 BDR?

Traditionalists will tell you that it's not a good idea to buy a studio or a one bedroom condo, and they're right in 90% of the country. But we have a different dynamic here in Chicago.

Studios are frequently the most affordable way for a single professional to own a home in a city like Chicago. Demand for affordable housing can be quite strong in urban settings such as near the Loop and the near north side.

Homes priced on the more affordable end of the scale can often appreciate at a greater rate than more expensive ones. In the Loop, Near North and throughout Lincoln Park, the appreciation rate for studios is higher than the appreciation rate for two bedrooms.

If the studio you are considering is close to downtown or other major employment center like a hospital campus, demand will be strong for an affordable studio.

Amenities like the ones you mentioned in your question are also in great demand. Selecting a smaller condo with more amenities such as the laundry in unit, the garage parking, the fireplace and the balcony will all add to the salability of your condo in the future.

It sounds like you've selected a winner.