'Tis the season - Halloween Decorating

The previous topics have been a bit heavy so I desperately wanted to post on a light topic. And I heard on the news that this year, Halloween moved into first place for the holiday that Americans decorate the most for. Who knew?

Daley Plaza, downtown Chicago.

Owner occupied two-flat at Honore and Barry. If you look carefully, you'll see the windows lined with topical chotchke's in greater numbers than you can count. Every holiday is equally celebrated.

On Logan Boulevard just east of California. This house is a destination drive as the over-the-top decorating brings lookers from miles away.

On Damen at Barry near Hamlin Park. Note the careful application of TWO colors of fake spider webbing on the front bushes.

My own research on the latest sales figures

Yesterday's post was compiled from news items reported in various media outlets based on information provided by the National Association of Realtors and the Illinois Association of Realtors. I wanted to verify what has been happening in our local market areas.

The data in the graphs below are compiled from our Multiple Listing Service, looking at data in the City of Chicago, for property types 1 (single family homes) and 2 (condos and townhomes.)

The above graph shows pending sales - properties that have gone under contract but not yet closed. Comparing September 2005 to September 2007, the number of pending properties are down 40 percent.

This one shows properties that have sold and closed. The number of homes sold in September 2007 is down 45 percent from September 2005.

Look for graphs in the coming days examining the same data for popular neighborhoods.

Painful reality: Home sales in a slump with no end in sight

Today's headline that Neumann Homes is filing for Chapter 11 Bankruptcy protection is quite a shock. It can't be totally unexpected, however.

Neumann Homes is the fourth-largest home builder in northern Illinois, and the 59th largest in the U.S. On Monday, Neumann closed all of its sales, production and customer service offices and laid off most of its 600 employees. Neumann is developing 15 subdivisions in Illinois. The company is trying to arrange for the completion of homes already under construction and promised to refund earnest money deposits on homes not yet started.

Your guides could not have predicted this outcome for Neumann Homes, but it seemed inevitable that one, if not more, home builders would meet this unfortunate fate.

Recent statistics show that new home sales are down anywhere from 30% to 40% in different suburbs. In the city of Chicago, sales of existing homes fell 36% in August from a year ago, and the stats for September are equally dismal.

Residential sales for the third quarter, 2007, are down 34% from the year-ago period, according to Schaumburg-based Tracy Cross & Associates Inc. On a seasonally adjusted, annualized basis, sales totaled 15,296 units, down 40% from last year and their lowest level since 1994.

Though the downturn is deeper and longer than most observers expected, sales are so low that they can’t drop much further, Mr. Cross says. Only 77 of the 817 condo and townhome developments the firm tracks had eight or more sales during the quarter, and 327 either logged no sales at all or suffered a net loss of sales as buyers canceled their contracts.

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Update on Thursday: Figures released by the National Association of Realtors show a 7 percent decline in the number of home sales from August to September in the midwest region. Slow sales have caused a 4 percent decline in prices in the same short period of time.

And from a study undertaken by the Illinois Association of Realtors and the University of Illinois:

Over the last three months, the Illinois housing market has witnessed an increasingly sharp decrease in sales compared to the same month a year ago, culminating on a drop of almost 23% for September 2007 sales compared to September 2006. For the Chicago metropolitan economy, the decreases have been even larger; the September decline was 27%. On a month to month basis, the declines are 27% for Illinois and 30% for Chicago.

I hadn't meant to post on this topic, but...

It seems Chicagoans are in the middle of a perfect storm of tax increases. I had not meant to post on this topic as the subject has been covered quite thoroughly in all our local media outlets. But a couple of items have caught my attention and I wish to bring them to yours.

Between the City of Chicago, Cook County, and the CTA, lawmakers and taxing bodies are looking for approximately $1.2-billion in new revenue.

Mayor Daley wants a $293-million in new taxes for Chicago. Of course, he can't be bothered to explain why other than to attack critics as being against Libraries.

Cook County cannot afford to maintain the new hospitals complex that it just finished building and has slashed community services in the last 18 months. County President Todd Stroger proposes $888-million in new taxes.

The Chicago Transit Authority can not function as a viable transit agency without funding from the State of Illinois. It never has. Mind you - no transit system in the world can function without subsidy. But the budget for the CTA in the State of Illinois' budget is zero. The budget deficit to make ends meet is $158-million.

Both Mayor Daley and County President Todd Stroger both proclaim that there is no more fat left in the system to be trimmed. No more waste can be eliminated. No more patronage contracts can be routed out to benefit taxpayers.

Right.

In Chicago, trash collectors still patrol the city's alleys with trucks manned by three man crews. Every single private collection firm in Chicagoland manages to collect trash with a trash truck manned by one guy. In Chicago, however, it seems that one man must drive and cannot get out of the truck, and two men are required to pick up the trash.

Also, tradesmen who work for the City have just been granted 10-year contract extensions guaranteeing a health, benefit, pension package that is the envy of anyone who works in the private sector, and the "prevailing wage" paid to counterparts in the private sector. Never mind that those employees in the private sector are not guaranteed a 40-hour work week and are not granted such generous insurance, pension and early retirement.

In Cook County, administrators discovered a loophole in the application process for Federal Funding for expansion and administration of vital resident services in the late 1990's. This loophole was exploited to fund the construction and expansion of the massive Cook County Hospital and community health services. The Federal Government took notice early in the New Millennium and closed the loophole. What had been a quarter-billion-dollar-a-year torrent of Federal cash has slowed to a trickle and is now nearly shut off.

Other than this massive boondoggle, Cook County government has actually been contracting. Over the past several years, the County has frozen hiring and retired or laid off nearly 1,200 employees.

Unfortunately, since it was clear that a tax increase would be required to maintain the new hospital and health service complex, County President Stroger figured he may as well restore all the slashed positions in the same maneuver.

It is clear that Cook County cannot afford to maintain the massive health complex. I only wish someone in the elected government would be willing to admit that the County is stretched way beyond its means and either privatize or otherwise abandon some of these enormous burdens.

Perhaps surprising to you, your guides support funding for the CTA. Any reader that has experienced the convenience of the Paris Metro, the London Tube, or even the gritty yet efficient New York Subway knows what a benefit to a city their transportation system is. In college urban planning classes, the CTA was studied as a model of an ideal transit system. The economic benefit to Chicago is so great that to ignore it could lead to a collapse of the business climate in Chicago. Politicians beware - killing the CTA by choking off funds to keep it running could cause a collapse of Chicago's economy.

Some thoughts:

A sizable chunk of Chicago's revenue comes from the City's real-estate-transfer tax. The tax is $7.50 per thousand - or $750 per $100,000 - on the sale price for each property sale in Chicago. One tax increase proposal is to double the transfer tax on real estate. Keep in mind that the transfer tax on a fairly typical $500,000 condo or townhouse would double from $3,750 to $7,500. Just in case there isn't enough of a chill on the city's housing market.

Did you know that there are still some states out there that do not have state income tax? You can give yourself a 5% to 10% pay raise by simply moving to one of these states. Like Texas. Or Washington.

Just in case your reaction to this fact is to blame tax-and-spend Democrats, Illinois' income tax was enacted by Republican Governor James Ogilvie in 1969. Republican Governor James Thompson raised the state income tax several times. Republican Jim Edgar was elected even though he favored making temporary tax raises permanent and his Democratic rival opposed it.

Elections for Cook County Board, the Mayor of Chicago and the Illinois Legislature all took place in 2006. As there are not elections for another several years, politicians are betting Illinoisans have a short memory.

They may be right: A recent study found that legislators who backed major tax hikes were returned to office 90 percent of the time. Those numbers suggest that Stroger, Daley, commissioners and aldermen can back tax measures with minimal political risk.

Is there any chance we can prove them wrong?

Sunny and warm Saturday in October

We've posted before lamenting Chicago's un-seasonal weather. Usually to complain. But we're working on our third Indian Summer here in Chicago this weekend with sunny skies and temps in the mid-70's. Check out Chicagoans enjoying these last days of late-summer.

Julius Meinl at Southport and Addison

Southport Lanes at Southport and Roscoe

Wiggly Field - one of Chicago's most famous dog-friendly parks.

A tale of two markets

There was an interesting discussion at the office today about the existence of two distinct markets. The first market is the market everyone is familiar with today. the market of depressed property value. The market of ever-increasing market times. The market of never-ending price-reductions.

The second market seems to be the golden market. Properties lucky enough to be in the golden market seem to be those that are perfect in every way. The perfect location. Perfect finishes. Perfect condition. Perfect decorating. Perfect presentation.

The perfect properties are the ones in good locations, of course, but you could say that about nearly any north-side property. But the perfect property is the one in the preferred tier; with the preferred view. Or the one that doesn't look out the back-side. The perfect properties are the ones that have been meticulously de-cluttered, perhaps even staged. The perfect properties are the ones that buyers walk through and don't see any issues.

Issues that used to be easily overcome are now quite challenging. There are so many properties available for buyers to choose from today that it is a simple matter to move on to a different property rather than having to deal with issues in a property that would have been good enough in the past.

We have experienced this phenomenon in action this year. Some of our inventory flew off the market in quick fashion, and some lingers with us after months upon months. From this experience, here are some tips for making sure your property comes across as perfect.

No burned out light bulbs. It seems odd to have to actually write this out in black and white, but we have a listing that has been on the market for 8 months and we just can't seem to get the owner to change the light bulb in the overhead light in front of the kids bedroom. It's in a hallway with a tall ceiling and it's a recessed light - so not such an easy task, but would have been much easier while the owners lived in the home before moving away with their ladder.

Pull the weeds in front. We had one listing that lingered on the market this year and the owners asked us over and over again for any tips and suggestions on how to prepare their home for more positive perception with buyers. Each time, we recommended taking some time to tending the front of the home; pulling weeds and picking up blowing trash. The owners kept the inside of their homes as clean as could be, but since they always came and went through the rear garage, never paid any attention to the front of the home. It did go under contract, but only after 7 months on the market.

Paint. In this market, today's price seems to be last years price minus five percent. On a $600,000 property, that's $30,000 less than we could have received at the beginning of this year. A professional paint job will probably cost between $2,500 and $4,500 for a home like this. But a fresh and contemporary paint scheme is the most reliably solid way to make a home feel like it's brand new and ready for move-in. Experiences with owners this year have ranged from walls that look splotchy from touching up with the wrong paint color, to stained ceilings from long-ago repaired roof leaks. Both of these items cost our owners months of market time.

Check out this Virtual Tour of a listing that went pending in Lakeview in 22 days. I would be surprised to learn that someone even lives here. It's so perfectly staged. A buyer is presented with a perfect home that appears to be ready for immediate occupance - and even more importantly - enjoyment.

Then look at this Virtual Tour of another condo in Lakeview in the same price range. These units are similar in size, in age, and in a similar type of building. But this home lays all its issues out on display for any prospective visitor. The television in front of the window and the giant rack of A/V equiptment tells prospects that the living room is too small for their stuff. The exercise equipment in the master bedroom causes the buyers to be confused as to the purpose of the room. It certainly doesn't lend to the feeling that the master suite is a sanctuary or retreat. Even the outside space comes across feeling cheap because of the out-of-character patio furniture squeezed awkwardly into the corner.

Even the most minor issue can send buyers looking elsewhere in today's market. Sellers, address all your decorating and maintenance issues immediately. Each delay seems to be compounding exponentially in our experience adding weeks and months onto your market time.

Tour: Not frequently visited - the Calumet River Area

Your guides spent a few hours moving the boat from its harbor near Downtown Chicago to its winter storage location in the heart of the South Side of Chicago on the Calumet River. You won't find many real estate articles or photographic essays on the Calumet River area, but some of our photos are quite starkly artistic.

From the National Weather Service, Lake Michigan Forecast:

THIS AFTERNOON...NORTH WINDS 10 TO 15 KNOTS BECOMING NORTHWEST. CHANCE OF SHOWERS. WAVES 5 TO 8 FEET SUBSIDING TO 4 TO 6 FEET.

A bumpy ride.

The Calumet Harbor area and the Calumet River are tributaries serving heavy industry in most literal sense of the word. Steel mills, electricity generating plants, auto manufacturaing, barge traffic are the inhabitants of this stretch of the south side. Just south of the river, the modest homes of Hegewisch serve the factory workers. Homes in Hegewisch can be found from $89,900 to $450,000, although most homes top out around $250,000.

The Norfolk Southern Railroad Bridge is an ancient vertical lift bridge that features the operator's shack on top of the bridge offering the additional benefit to the operator of being lifted 60 feet in the air every time the bridge moves.

It's a theme: concrete and gas.

Bypassing the entire region, you can see the Chicago Skyway towering above the river in the photo above. The Chicago Skyway Bridge is a 7.8-mile toll road built in 1958 to connect the Dan Ryan Expressway to the Indiana Tollway - because - of course - you do NOT want to drive through this neighborhood.

More Calumet River photos on FLICKR.

A brief walking tour of Lincoln Avenue

I was inspired to take a walk over to the Citizens State Bank of Chicago condo conversion today because driving by it yesterday, I saw some progress on the development. The living room windows of the corner units overlooking Lincoln Ave. and Melrose seem to be cantelievered out over the sidewalk. Lincoln Avenue could be pretty noisy at this location, but these rooms look pretty dramatic nonetheless.

As long as I was out walking the neighborhood, and my doctor told me to lose 15 pounds, I turned this excursion into a mini tour. Join us as we walk along Lincoln Avenue from Melrose - about 3300 north - up to Addison.

Brush up on your photography and browse photos for sale by local photographers at the Chicago Photography Center. Located at the corner of School Street and Lincoln, the shop is located in one of the neighborhood's first loft condo conversions. Condos inside feature original wood floors - uneven and creaky - and funky floor plans owing to the sliver shape of the building.

It's hard to see from the photo, but the Chicago Music Center is wall-to-wall guitars and amplifiers.

Dinkels Bakery - halfway between School and Roscoe - had been a neighborhood staple since 1922. Dinkel’s history reads like a storybook; the bakery was founded in 1922 by Joseph Dinkel, one of a long line of master bakers in his native Dinkelsbuhl in Bavaria. The European bent beats on in this Lakeview shop, as do the original recipes, including one for Dinkel’s famous stollen. The Old World formula includes a mix of toasted cashews, almonds, pineapple and golden raisins, all dipped in rum and brandy before baking. For a slightly different taste, try the cinnamon stollen. Strudels are another no-fail choice; choose from varieties like poppyseed, cherry cheese and almond and apricot.

Frasca is a new pizza place in the spot of an old tavern. Upscale brick oven pizzas, a great wine list and delicious appetizers are the highlights of this new neighborhood attraction.

Fernando's is one small step above a hole-in-the-wall, but offers quite yummy Mexican fare. Nothing adventurous here, but the standbys are all good. This place is swamped on weekend evenings - especially in the summer as nearby residents are out walking the neighborhood in search of good casual food.

The Pleasure Chest caused quite a commotion in the neighborhood when it relocated from a spot closer to Broadway a year ago. Nearby residents seemed to decry the nature of the boutique as not fitting in with the "Family-Friendly" atmosphere. From the photo - this establishment looks considerably less exciting than a bank drive-through. Or Fernando's mexican restaurant.

Across the street at Cornelia and Lincoln you'll find the Paulina Meat Market. We hear that gourmands drive for hours to purchase the finest cuts of meat from the Paulina Meat Market, and we're fortunate to be within walking distance. From their website:

Sigmund Lekan began sausage making and smoking meats in 1949 at the Paulina Market. Lincoln Avenue was Germantown Chicago then. Using recipes and traditions brought from European old world butcher shops, Paulina Market gained loyal, satisfied customers from the Lincoln Avenue neighborhood and beyond. As time passed, most of the small shops on the avenue closed their doors, while Paulina Market grew and remained steadfast to the highest standards of quality and freshness to this day.

Check out these locations on our FLICKR map.

Worldwide press invited to view sales office at Chicago Spire

From the Chicago Sun Times in an article on Friday, October 5:

And so the units in the Chicago Spire, the planned supertall condo tower designed by the Spanish architect Santiago Calatrava, are going to be rather nice.

As members of the international media were shown last week in a tour of the Spire's impressive new 20,000-square-foot sales center in the NBC Tower, the 1,193 units are to feature 10-foot ceilings, lots of blond maple wood, herringbone-patterned floors and marble bathrooms.

What's your Starbucks Quotient?

From the Chicago Sun Times:

Want another way to figure out if your hood is hot? Count how many Starbucks -- the '07 community status symbol -- call your ZIP code home

There're five Starbucks per 10,000 residents in Streeterville. And about two Starbucks for every 10,000 residents in the Lincoln Park and the Gold Coast ZIP codes.

What does a hood's SBQ say about the people who live there?

Well, parts of town with the most Starbucks are home to rich, white families who take home more than $60,000 a year, according to people who keep track of those things.

Less sophisticated Starbucks researchers use the company's store locator to find out how many Starbucks you can find in a five-mile radius -- which some blogger in 2005 dubbed "Starbucks Density."

Back then, the greatest Starbucks Density in the world -- if you believe everything you read on a blog -- was found in London, which boasted 170 Starbucks locations in a five-mile radius.

It would make sense that people living in a high-SBQ neighborhood would feel important, but most folks don't take it that seriously.

In Lakeview (zip codes 60657 and 60613) I counted 10 Starbucks stores and a total of 29 within a 2 mile radius of zip code 60657.