The economic stimulus package--proposed last week by congress and the President--would seek to raise the limit on loans available for purchase by the government (Fannie May & Freddie Mac.) The current limit for such loans is $417,ooo. The plan seeks to raise that cap to $625,000.
This is important in a high priced market like Chicago's. Loans that can't be backed by the federal government (those currently above the $417K cap,) carry a higher interest rate than those that can--often more than a 1% difference. This move will make it easier and cheaper for Chicago buyers to get affordable loans. In a city where a 2 bedroom condo can easily run at $400 and above, this should help get buyers buying again. That, of course, if great news for sellers in those markets.
Monday, January 28, 2008
Friday, January 18, 2008
Monthly To-Do Checklist
The Tribune ran a wonderful article in Thursday's Your Place section. It featured a monthly "to-do" list for homeowners. Staying on top of the regular maintenance is so critical to protecting your investment.
Click here to view the entire calendar of routine, easy maintenance items.
Click here to view the entire calendar of routine, easy maintenance items.
Thursday, January 10, 2008
Timing the market
I've had a number of people--both active clients and casual acquaintances--express an interest in buying but also trepidation about purchasing a home in an unstable market. Their reasoning is centered around two ideas: 1) housing prices may continue to fall so they will lose money on their investment and 2) if they wait just a while longer, prices will fall and they could get a better "deal." On the surface, this line of thought might appear sound, if not prudent. However, there are several holes in these theories--at least as they apply to the Chicago market.
First, for those concerned about their investment: real estate is a flexible market and while we are currently seeing a dip in yearly appreciation, the long term prospects of investing in a home are good. Neighborhoods throughout the city have seen wonderful appreciation rates over the past 5 and 10 year periods. Unless you are planning on selling your new home in the next 1-3 years, you will most likely see it appreciate a respectable amount: at least enough to not lose money on your initial investment.
Secondly, trying to "time" the market can be a risky proposition. Remember that your monthly mortgage amount is determined by your interest rates as much--or more than--the purchase price. If rates begin to rise in the spring (as they typically do,) they could offset any price reductions offered by sellers. Quite literally, a seller might decrease his asking price by $10,000 but if rates rise even 1/2 a point the buyer's monthly payment actually increases. It can be a lose/lose proposition that leaves neither party happy.
First, for those concerned about their investment: real estate is a flexible market and while we are currently seeing a dip in yearly appreciation, the long term prospects of investing in a home are good. Neighborhoods throughout the city have seen wonderful appreciation rates over the past 5 and 10 year periods. Unless you are planning on selling your new home in the next 1-3 years, you will most likely see it appreciate a respectable amount: at least enough to not lose money on your initial investment.
Secondly, trying to "time" the market can be a risky proposition. Remember that your monthly mortgage amount is determined by your interest rates as much--or more than--the purchase price. If rates begin to rise in the spring (as they typically do,) they could offset any price reductions offered by sellers. Quite literally, a seller might decrease his asking price by $10,000 but if rates rise even 1/2 a point the buyer's monthly payment actually increases. It can be a lose/lose proposition that leaves neither party happy.
Wednesday, January 2, 2008
When does remodeling make sense?
Many of today's homeowners are choosing to stay in their homes for a few more years rather than try to sell in a slower market. Quite a few of those homeowners are considering remodeling their current home with two goals in mind: make the home more accommodating for the next few years and add value that will be recouped when they do sell down the road. An extensive survey from Remodeling Magazine offers some insight as to which remodeling projects reap the most reward in resale value.
The survey is broken down regionally so, for our purposes I will look at the East North Central region where Chicago sits.
Here are some of the most common additions in a mid-range price, along with the percentage of cost recouped in a resale of the home:
Bathroom 68.2%
Deck (wood) 85.6
2nd story 78.3
As for remodeling, here is how some of the most popular projects recouped their expenses:
Bathroom 80.9%
Major Kitchen 79.3
Minor Kitchen 82.7
Basement 80.9
And finally, here are some numbers for replacement projects:
New Roof 61.9%
Siding 85.5
Windows 77.8
The old adage is that home buyers look at "kitchens and bathrooms." This evidence suggests that the cost of updating these rooms tends to be money well spent. Of course, each situation is different and professional consultation is highly recommended. If you have questions about a remodeling project you are considering and how it will affect your home's value, don't hesitate to contact me.
The survey is broken down regionally so, for our purposes I will look at the East North Central region where Chicago sits.
Here are some of the most common additions in a mid-range price, along with the percentage of cost recouped in a resale of the home:
Bathroom 68.2%
Deck (wood) 85.6
2nd story 78.3
As for remodeling, here is how some of the most popular projects recouped their expenses:
Bathroom 80.9%
Major Kitchen 79.3
Minor Kitchen 82.7
Basement 80.9
And finally, here are some numbers for replacement projects:
New Roof 61.9%
Siding 85.5
Windows 77.8
The old adage is that home buyers look at "kitchens and bathrooms." This evidence suggests that the cost of updating these rooms tends to be money well spent. Of course, each situation is different and professional consultation is highly recommended. If you have questions about a remodeling project you are considering and how it will affect your home's value, don't hesitate to contact me.
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