North Shore Views

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What's Ahead for North Shore Real Estate?

Predicting the future is popular at this time of year and, when it comes to real estate, there is no shortage of opinions about what’s ahead for 2010. Some economists, like Lawrence Yun of the National Association of Realtors, are fairly optimistic about the housing market’s prospects. Others, like Mark Zandi of Moody’s Economy.com, are downright pessimistic. Since real estate is my livelihood, I would like to believe Lawrence Yun, but unfortunately his track record hasn’t been all that great, so his predictions need to be taken with a grain of salt (or two).

Having read the economists’ and other experts’ reports and scrutinized the local market data, I’ve come to my own conclusions about how the North Shore will or won’t reflect what’s going on nationally:

1. On a national level, sales will continue the positive momentum begun in mid 2009, at least through May, as buyers take advantage of the tax credits, low interest rates and attractive prices. This will hold true for the North Shore of Chicago too, but much of the activity in our area will be at the lower end of the market (<$800,000). And once the tax credit expires this summer, the market will probably stall again,  at least temporarily.

2. Based on recent trends, I think that prices will decline another 2-3% over the next three to six months, before stabilizing. So, if potential sellers are waiting to see if prices will rebound before listing their homes, they are in for a long wait. It will take at least five years (and probably more) before we see prices anywhere near 2006 levels.

3. The Fed will do its darnedest keep interest rates low for as long as it can to avoid sabotaging the recovery;  but we should expect rates to rise somewhat, probably to around 6%, later in 2010.

4. Foreclosures have not been as big a problem on the North Shore as elsewhere, but we are not out of the woods yet. We will likely see an increase in short sales and foreclosures as adjustable rate mortgages reset and those who took bigger risks when the market was good find themselves unable to refinance now. Unemployment in the neighborhood of 10% will continue to plague us at least through mid-year, putting a further drag on the housing recovery.

5. New construction of spec homes will be at a virtual standstill until existing inventory works its way through the system. Builders just can’t compete with the discounted prices of distressed properties and will be unwilling to build without a buyer lined up in advance.

6. The shift away from McMansions towards smaller, more efficient and greener homes will accelerate, driven by first time buyers and downsizing empty nesters.

I certainly hope that my predictions turn out to have been too pessimistic. That is,  except the one about the McMansions. I, for one, would be happy never to see another McMansion built again.

Tags: Home prices North Shore, North Shore market data, North Shore real estate market predictions, North Shore real estate trends

Why You Shouldn't Wait 'til Spring to List Your Home

Typically the real estate market is pretty dead between Thanksgiving and February, so people planning to sell in the new year usually wait until after Super Bowl Sunday to put their houses on the market. But this year will likely be different. Here’s why you should get your property listed as early as you can:

1. The extension of the first time buyer tax credit and the expansion of the tax credit to existing homeowners until April 30 means that there will be a continued influx of buyers into the market during the first quarter of 2010. Buyers who want to take advantage of the tax credit will begin looking for a new home earlier, to make sure they can find a home, arrange financing and close before the June 30 deadline. Here’s a good chart outlining the rules of the tax credit.
2. Interest rates are at or near 40 year lows right now, further stimulating buyer demand. But these rates are not likely to hold for long. While there probably won’t be a big increase in rates this year, they will start to   drift upward somewhat in the next 3-6 months.
3. Because many people will follow traditional wisdom and wait to list until later in the spring, you will have less competition if you can get a jump on them. People who are willing to brave single digit temps to look at houses are SERIOUS buyers.

If you’re thinking and hoping that prices might improve  if you wait a little longer, forget it. There’s a good chance that prices still have a little bit farther to fall before stabilizing.  And, even if prices are at or near the bottom, it is unlikely that we will see any upward movement in prices until later in the year. Real estate prices don’t tend to rebound in a “V” shape but rather in a  “U” shape with a wide trough before slowly starting to climb again.

Tags: home buyer tax credit, home selling tips, when to list your home for sale

How Move-Up Buyers Can Profit from a Down Market

I have some clients who want to buy a new home in the worst way. They see some great buys on the market, houses that have  the features they really want. And their earnings enable them to qualify for a bigger mortgage. But, after looking and dreaming, reality sets in, because they are saddled with their existing home, which they would need to sell before they can buy.  And they realize that they can’t sell their current home without taking a hit.  Like many other people who bought when the market was up, they have a house that’s worth less today than it was three years ago and the thought of selling it for less than they paid makes them cringe.

When I tell them that if they really do want to move, they can actually come out ahead, they look at me like I have three heads. But I’m serious. Because, while their house has decreased in value, so have the other houses, and if they are moving up, they can save more than they lose.

Let’s take their house as an example. Today, based on comps, I would list their house somewhere right around $700,000, which is about 21% less than it was worth back in 2006 ($885,000). One of the houses they are interested in buying is listed at $1,200,000, which is also 21% less than it was worth in 2006 ($1,519,000). Now, let’s say they sell their house for $630,000 or about 90% of the list price of $700,000. And let’s say they can negotiate a deal for $1,080,000 for their dream house, also 90% of asking.

They’ve “lost” $256,000 on the sale of their current house (vs. the market high in 2006), but they’ve “saved” $439,000 on the new house vs. its high price in 2006, a net gain of $183,000.

When you do the math, you see that the current market conditions CAN work in your favor in some situations. Not only can my clients afford a house that they could not have afforded at the 2006 prices, but interest rates are near historic lows, making this a great time to buy. Of course I would NOT advise them to run right out and put an offer on their dream house UNTIL they have sold their current home. If they are serious about moving, they should price their house to sell and then, once they have a contract, negotiate hard for their dream house. Once they have sold they will be in the driver’s seat and have the leverage to negotiate a very attractive deal for themselves on the buy side.

Tags: home buying tips, move-up buyer strategies

5 Reasons to Keep Your Home Listed During the Holidays

You’re busy, you’re stressed, you’re way behind on your holiday shopping. Keeping the house neat 24/7  is taking its toll. The last thing you want to be bothered with is keeping the house show-ready for potential buyers when you’re trying to cook, clean,  decorate, entertain, shop and wrap for the holidays.

“Can’t we just take a break for a couple of weeks?” clients always ask me. “Surely no one is actually looking at real estate in December. Do I really need to keep my home on the market over the holidays?”

The answer I always give is: “How badly do you want to sell?” Because here’s the thing. It’s true there are fewer buyers at this time of year. No one in their right mind wants to look for real estate during the holidays. Unless, that is, they HAVE to buy, and buy SOON. So that brings me to reason #1 for keeping your house on the market:

1. If people are looking at real estate in December, they are SERIOUS  buyers and not the lookie-loos who have been traipsing through your house for the last few months. If you can gut it out for the next few weeks you might actually get an offer when you least expect it. Wouldn’t that be a nice Christmas present?
2. The corollary to reason #1 is that many sellers do go ahead and take their homes off the market over the holidays, which means there is less inventory on the market. Which means you have less competition for those few SERIOUS BUYERS.
3. Although it’s stressful for you to keep the house tidy with so much else going on, the fact is that your house will probably show better now, with holiday decorations up, than it will during the bleak months of January, February and March. Plus, all the warmth and cheer evoked by (appropriate) holiday decorating can strike an emotional chord with your buyer, subliminally conveying the wonderful lifestyle they will enjoy in this home. Just make sure you decorate the right way to evoke those positive emotions.
4. Think about this: if you are able to sell your home now and plan to buy another, you’ll be able to take your pick of the vast inventory of homes that will hit the MLS in the spring. In all likelihood, interest rates will still be low early in the year so you’ll win on the financing end too.
5. If the first four reasons didn’t convince you, just remember:  It won’t sell if it’s not on.

Tags: home selling tips, Real estate, selling my home over the holidays

Selling Your Home This Holiday Season? Decorating Dos and Don'ts

To decorate or not to decorate…it can be a real dilemma for home sellers.

Your real estate agent has probably told you to make your house as neutral as possible so it will appeal to the greatest number of potential buyers. On the other hand, you want to make your home feel warm and inviting so that buyers can picture themselves living there. With those two things in mind, here are some dos and don’ts for keeping your house show-ready during the holidays:

Do decorate, but think seasonal vs. holiday. Seasonal wreaths, garlands and greenery will make your house feel festive and inviting, without being too reflective of your personal taste. Red poinsettias in baskets also add a nice punch of color and can liven up a room during dreary winter months. Just make sure to throw them out when they start to get leggy and lose their leaves. Dying plants are a big no-no.

Don’t display religious items like nativity scenes, menorahs, etc. These can be a turn off to buyers who do not share your family’s faith traditions.

Do keep pots or planters outside the front entry updated with seasonal plants: mums in fall, evergreens in winter, and pansies in early spring. Don’t leave them empty and forgotten just because it’s cold out. They may be the only bright spot in an otherwise bleak landscape.

Don’t go crazy with outdoor decorations. Give your rooftop Santa and reindeer a year off and settle for some simple white lights (non-blinking, please!) on the bushes or a tree. Leave the icicle lights in storage.

Do have a Christmas tree if your family celebrates Christmas and you have children in the house. But you may want to lighten up on Sally and Tommy’s handmade decorations this year and stick with more generic ornaments. Take the tree down the day after Christmas.

Don’t put presents under the tree as that will make the space look smaller and feel cluttered.

Do put several indoor lights on timers to go on as soon as it gets dark (especially in the front rooms of the house). The house will give off a warm glow and provide added curb appeal to buyers who drive by in the evening. And make sure the porch or entry lights are working and turned on when the sun goes down.

Don’t have your marketing photos taken when holiday decorations are up. If your house lingers on the market into the spring, you don’t want to have to take new photos.

Tags: holiday decorating, home selling tips, preparing your home to sell, Real estate

Top ROI Home Improvements for Sellers

HomeGain just released the results from the annual survey of Realtors on which home improvements yield the highest return on investment for sellers.

According to the survey, the top ten low cost (<$5,000) home improvements that real estate agents recommend to their clients to get their homes sold faster and for higher prices are:

1. Cleaning and de-cluttering
2. Home staging
3. Lightening and brightening
4. Landscaping
5. Repairing plumbing
6. Updating electrical
7. Replacing or cleaning carpeting
8. Painting interior walls
9. Repairing damaged floors
10. Painting the exterior

Click on the icon to the right and find out the likely cost of each improvement and its projected return on investment in your specific area by entering your zipcode. Answer “no” to all questions.

A word of caution: if you are selling, you want to make your home show better than the competition, but be careful not to over-improve.  Some expenditures may not pay out in the short term, like a big  bathroom or kitchen remodel. Often a handful of smaller and less expensive changes and improvements can have a major impact. Ask your Realtor to recommend a good home stager. They are trained to get the maximum impact with minimum cost.

Tags: home selling tips, preparing your home to sell

5 Things to Do Now to Sell Your House in 2010

If you are thinking of putting your house on the market next spring, don’t wait until then to start getting it ready to list. Traditionally, Super Bowl Sunday marks the beginning of the spring selling season in real estate, which means you’ve only got about three months to get your house in shape. Start now so that you can take advantage of the surge in buyer interest come next February.

Here are five things you can do right now to get ahead of the curve and ensure your home is ready to hit the MLS next spring:

1. Cut the clutter:

If you’re like most people, you’ve accumulated a lot of stuff over the years. Moving provides a great incentive to finally get rid of the junk you’ve been hoarding. Starting now will give you ample time to take that trip down memory lane as you go through old papers, letters, photographs and other mementos. If you set aside a couple hours to do this each weekend, by February you will have weeded out a lot and moving will be much less stressful.

2.  Improve curb appeal:

Your yard will still be frozen on Super Bowl Sunday, so it makes sense to get some of those outdoor chores done now, while it’s still relatively mild out. Clean up the yard, edge the beds, fertilize the lawn and plant clusters of bulbs for a show of color in the spring. Make sure your front entry is as inviting as possible. Give the door and door frame a new coat of paint, polish the door knocker and make sure the house numbers, mailbox and porch lights are in a consistent style. In addition to making the house more attractive to future home buyers, you’ll also impress your holiday guests.

3.  Paint the interior:

Nothing will give you more bang for the home improvement buck than a fresh coat of paint. Keep your potential buyer in mind and go for a neutral palette. Using the same color family in adjoining rooms will improve the flow of the house and tie everything together. And remember, neutral does not necessarily mean white or beige. In fact, white can be quite stark and cold, while beige can be boring and blah. Go for warmer tones in the main living areas to make the rooms more inviting.

4. Donate to a good cause:

This is the time to edit your wardrobe. Take everything out of the closet and force yourself to let go of those 80’s outfits and anything else you haven’t worn in a year. Be ruthless about what you get rid of. You will thank yourself when it comes time to move. This is also a great time to collect all the winter coats, boots and gloves your family has outgrown and donate them to the needy. Several organizations do winter coat drives for the homeless this time of year and would be thrilled to have your cast-offs.

5. Make a list of needed repairs:

Go through your house, inside and out, and look at it objectively, as a buyer would. Write down everything that needs fixing. These are things you simply must take care of before listing your house. Otherwise, buyers will see small problems and wonder what bigger problems await them. Call a handyman and get those repairs done of by the end of January.

There will be lots more to do when your listing date gets closer, but taking care of these things now should make the whole process less stressful.

Tags: Home staging, preparing your home to sell, Real estate, selling your home