RW Perspectives

Rw Real Estate Advisors and Metrostudy Merge in Chicago

2011-07-07T11:34:00.000-07:00

In case you missed the big announcement, RW Real Estate Advisors and Metrostudy have merged their services in the Chicagoland area. Lance Ramella is now the Director of Consulting for Metrostudy's midwest division while Chris Huecksteadt is the Director.

This merger will expand Metrostudy's services to include in-depth market studies for a variety of product types, including rental, commercial, resort, hotel and all residential categories.

We look forward to serving our existing client base and providing our expanded services to new clients.

Please do not hesitate to call Lance or Chris at (847)214-5291.

Status Quo or Housing is Back?

2011-04-29T08:43:00.000-07:00

Earlier this week, David Crowe, The National Association of Home Builders' chief economist, reduced his previous forecast for 2011 single-family housing starts. Crowe now predicts 2011 will show no change over the 471,000 recorded starts from 2010. In fact, he also reduced his 2012 predictions by 19%, now saying that he expects 698,000 single-family starts (down from his 860,000 previous prediction). Crowe based his revisions on the conflicting economies of normalizing housing prices, historically low mortgage rates and housing affordability versus high oil prices, a weak US dollar, and the still high unemployment rate.

On the opposite side of the spectrum, 3 weeks ago in Fortune Magazine, Mike Castleman, Founder and CEO of Metrostudy, said "America needs to build a lot more houses. And in most markets the price of new homes is fixin' to rise, not fall." Metrostudy collects housing data across 41 markets in the US, including new housing starts, lot inventory, resale homes for sale and the number of months it takes to sell them. With current inventory levels of for sale, vacant and new construction homes totaling less than 1/4 of what they were in 2006, Castleman says we'd sell out in 2.5 months. He says we're heading for an incredible shortage of housing. To read the complete story from Fortune magazine, click here.

Last month's data for the Chicago MSA improved slightly as the unemployment rate dropped for a second month to 8.7. , inventory of existing homes decreased 10.8 percent from last year and our median home sales price increased to $158,000. We don't expect huge improvements overall in 2011, but it seems we're moving in the right direction. We'd like to think Mike Castlman's outlook is correct, and that next year at this time, we'll be talking about the severe shortage of housing.

Did We Miss The Spring Selling Season Again?

2011-03-21T11:05:00.000-07:00

Illinois saw existing home sales increase 1.3 percent in February over the prior year, according to the Association of Realtors, which released the February sales and median price statistics today. Unfortunately for the Chicago Primary Metropolitan Statistical Area (PMSA), February brought a decline in sales of 8.8 percent compared to last February. As a nation, we saw a 9.6 percent drop in home sales for February.

We should be reminded that last year's numbers reflect the homebuyer tax credit that inflated sales by up to 16.5 percent. We expect to see an increase over the next couple of months in our median existing home price as it typically increases as we head through the Spring. As of now, the median existing home price is $152,500, which is the lowest level since the early 2000's.

The good news is that employment continues to strengthen, both nationally and locally. Illinois added over 64,000 jobs in 2010 and 2011 got off to a good start. We expect the state to add at least 100,000 new jobs this year. Eventually, this will lead to housing growth.

Spring officially arrived yesterday, and we've heard from some industry colleagues that traffic and sales are inconsistent in February and the first half of March. With inventory, pricing and mortgage rates at all time lows, will this be the spring that pulls us out of the hole? Stay tuned, we hope so.

We're Not Alone

2011-02-01T12:11:00.000-08:00

Looking at how 2010 ended in the Chicago real estate market is not that bad, but it isn't great either. Our December median home sales price was $167,850, down 7.8 percent from the same month a year ago. You'll see the Zillow.com data in the picture, that many markets across the country lost a higher percentage than us in the 4th quarter of 2010.

Sales in December were actually up 15 percent from November, which is a little a-typical for the end of the year. However, the 5,204 sales in December were 9.5 percent below the tax-credit driven sales from the same month a year ago.

Many industry experts are talking about inventory, and ours is the lowest in at least three years, at 45,257 units in December. That's 7.1 percent below December of last year, and equates to 8.7 months of supply. That's almost unchanged from last December's 8.5 months of supply. In a balanced housing market, we typically see 4-6 months of supply.

Surprisingly, our December unemployment for Chicago decreased to 8.6 from 8.9 the two previous months. Compared to the 10.6 unemployment rate from the same month last year, we're in better shape. The bad news is that our foreclosure activity picked up again, and we really don't know how long it will take the banks to catch up on previously delayed foreclosure proceedings.

We don't have high hopes for 2011, but we think we'll see modest movement in a positive direction.

2011 Will Be An Improving Year

2010-12-28T10:06:00.000-08:00

Happy New Year! As 2010 draws to a close this week, Chicago's housing market ended in what can be described as a "stable" state. Our unemployment held steady at 8.9 for the second month in a row, while the existing home median price decreased to $175,000 from the previous month's $177,000. The definition of the word stable is "the strength to stand or endure." We believe that our market will continue to stabilize as we head in to 2011, which is good. But today we read that some investors and industry executives are actually forecasting a much better future for us. Here are some morsels that may give you reason to break open a bottle of bubbly this weekend.

Charles Lieberman, chief investment officer at Advisors Capital Management LLC, says home construction will definitely improve in 2011 due to the increasing US population. This rise in homebuilding will lead to an increase in jobs related to construction and industries supplying stoves and sinks that go into new homes. Lieberman forecasts jobs will rise by an average of 200,000 a month next year. "The housing market is going to shock people," said Lieberman, former head of the monetary analysis at the Fed Bank of New York. "Once we get the ball rolling, it becomes easy to roll."

Douglas Yearly, the chief of index-member Toll Brothers Inc., said he believes the worst is over for housing. "The recovery is here to stay. I think 2011 will be an improving year, but I think 2012 will be a big year for us." To read the entire Dec. 28 Bloomberg article, click here.

Billionaire investor Warren Buffet also said recently he predicts the real estate slump would end by 2011. He's been personally investing in many building product manufacturing companies, getting ready for a big rebound in construction.

Let's hope they are correct and we can all enjoy a prosperous future. We wish you a Happy New Year and a 2011 filled with much joy, good health and happiness!

Navigating the Chicago Real Estate Market

2010-12-10T09:06:00.000-08:00

We're pleased to report that our 4th Navigating the Chicago Real Estate Market seminar was a success with all three expert panels sharing a common message. The message is that we as developers, builders, attorneys, consultants, investors, etc. need to help educate our municipalities and provide well documented explanations of what they need from the municipality in order to get developments moving forward again. The fact that banks and land owners are giving potential buyers a very short due diligence window needs to be explained to the municipalities, so they understand that "demands" aren't being made to them, but rather, there are stricter constraints being placed on potential buyers today. In addition, cost structures have changed for everyone, including the end-user, and we all need to be more flexible. The more all sides can work together to share some benefits of a proposed project, the more likely the municipality will be willing to change their current processes to assist the buyers.

If you missed the event, we have placed the presentation slides here on our blog, under the Navigating the Chicago Real Estate section on the left tool bar.

Thanks to all the panelists, moderators and attendees. It was a half day of exceptional insight, real market examples and great conversation. Happy Holidays and we'll see you in the spring at the next real estate seminar.

Fewer Households For Now

2010-10-28T11:36:00.000-07:00

We've all heard the continued bad news in the housing market this month. Housing starts and permits remain weak, foreclosures continue to rise, new jobs are non-existent and according the US Census Bureau, we've added the least amount of households since 1947 (March 2009 - March 2010).

Common knowledge also tell us that families are still forming, kids are still graduating from college and some couples are unfortunately divorcing. A recent article covering last week's ULI conference in Washington D.C. reminded me that we're also experiencing a unique situation with our population. Baby boomers (age 45-65) and their offspring, Gen Y (age 18-32) together account for half the U.S. population (150 million people). These two groups are at opposite ends of the home buying cycle. During a briefing at the conference last week, Maureen McAvey, ULI's executive vice president of initiatives said, "Both of these groups represent a lifestyle change, and those lifestyle shifts will spark demand for alternative types of housing. Both groups embody market preferences that break from recent past and pre-recession expenditures." To read the entire article "ULI Fellows Identify Forces Shaping the New Normal for Real Estate" from Builderonline.com click here.

There currently is pent up demand for housing, along with new, alternative demands for housing. We just need to continue to be patient, and our industry will come creeping back with a fresh new look built on its foundation of delivering quality products to all market segments.

Any Good News in Chicago?

2010-09-29T09:37:00.000-07:00

Other than the surprising 3-0 start from the Bears this season, there has been little good news in Chicago, especially when it comes to housing. In fact, researching economists' updates on the housing market the last couple of days has been downright depressing.

The quick summary:

Consumer confidence numbers this week revealed a seven-month low in September after having improved in August
Although Standard & Poor's/Case-Shiller index of 20 metropolitan areas showed that prices of previously owned, single family homes rose 0.6% in July from June and 3.2% over July 2009, most economists expect weaker growth in housing the remainder of this year
Celia Chen, a housing economist for Moody's Economy.com, said she expects prices to fall as more banks step up their repossession of homes through foreclosure and put those homes back on the market. "So we are in for weakness," Chen said
There has been little to no job creation or stability in Illinois to help drive a healthier local economy

That said, we did head out this month to visit William Ryan Homes Decorated Model Grand Opening at Highland Woods in Elgin. With 10 unique single family home floorplans starting at $239,990, we found that there are buyers out there closing on new homes in an improving market at competitive pricing.

William Ryan Homes, along with several other builders in the Chicago market, are proving that strong product in the right location with the correct marketing program can still sell, even in these challenging times.

Double Dip in Housing

2010-08-25T13:48:00.000-07:00

Yesterday's grim housing numbers had the media and the market in a frenzy. But as industry insiders, didn't we see it coming? We knew the tax credit was going to pull forward many of our summer/fall home sales. And that's exactly what happened. July Chicago home sales fell by 25.1 percent from July 2009. Life after the tax credit boasts high unemployment, slow and/or no job growth, and tight credit.

Mark Zandi, Moody's Analytics chief economist told CNBC Monday that the US housing market is already in a double-dip recession. "Tomorrow we are going to get an existing home sales number that I think is going to be very, very weak, closer to 4 million units, which I think would be a new low in this cycle. We probably, almost assuredly, will experience more house price declines. By those two criteria, I think that would qualify as a double-dip."

We've said for many months now that until we start creating jobs, our local and national housing markets can't recover. Camels store water to last long distances through the desert. Hopefully our stored up demand for housing will carry us through until new jobs can bring us some much needed relief.

What's Wrong with Chicago?

2010-06-30T10:11:00.000-07:00

An industry colleague from the west coast asked me this question yesterday, and as any Chicagoan might answer, I said, "What do you mean? Blagojevich? The Cubs?"

Here is some of our dialogue about the current Chicago housing market.

You are a blue state and "labor rules."

Actually, the “labor rule” competitiveness will be declining as it relates to construction. Typically, most large homebuilders have had to use union labor for the construction of their units. However, in the last 2 or 3 years we have seen a shift away from the powerful unions to non-union labor (merit shops) which has resulted in a reduction in construction costs by as much as 25% per unit. Most builders are now bidding out jobs to both union and merit shops and the best price wins.

Employment has been "hit hard."

The overall unemployment rate in Chicago is now at 10.4 percent (May 2010). While this is not good, it has come down for five consecutive months (from a peak of 11.5 percent in January 2010). Chicago is a heavy manufacturing town and we are seeing some positive job growth in this sector (Ford just added a third shift to its south Chicago plant and Navistar just announced that they will be adding an additional 1,700 jobs in the Western Suburbs this year and next). Construction jobs are way down, however, they are a smaller percentage of the workforce than places like Las Vegas, Phoenix and Florida.

Cornerstones of demand are "weak."

Yes, this is true. Household formations are very weak and immigration is down because of the job market.

Supply is still a problem: I hear that there are 75,000 lots that are finished or partially finished. Also, foreclosures are a major problem since Chicago was a major subprime market (but FL, LV and PHX get more attention about it).

There are approximately 60,000 finished lots in the Chicago market. We think that about 15,000 of these lots are actually desirable and will get absorbed by investors/builders by the end of 2010 (we are currently working on several studies for investors and/or builders looking to acquire well located lots). The remaining 45,000 lots will sit in places like Plano, Yorkville and McHenry for a long time.

Foreclosures are a huge problem in Chicago. They are concentrated in lower income areas such as the south and west sides of Chicago as well as some formerly fast growing exurbs.

Chicago is a massive economic engine but the short run looks bleak. Job growth will help but the supply side will take some time to correct.

I equate the Chicago economy to a mile long freight train. It takes a long time to slow down and a long time to pick up steam. We didn’t really slow down in Chicago until late 2007 (other markets hit the brakes on 2006 or early 2007) and this market will eventually get back to its steady growth, it’s just going to take a while.

New Home Sales Forecast

2010-06-03T08:51:00.000-07:00

Now that the tax credit has officially expired, what will happen the remainder of the year with home sales? As we expected, April sales for existing homes continued to improve by 12 percent over March and 49 percent over April of 2009. Although we don't expect great things for the remainder of 2010, there are a couple of positive indicators for the new home market. First, most new home communities seem to have figured out "where" the market is in regard to price. "Finding" the market is a big step toward sustainable sales volume. We also have seen new home inventory levels at record setting lows. With resale home supply at 7.8 months this April, we're almost at a balanced level of supply. Another positive sign for Chicago was the addition of 35,000 jobs in April, which lowered our unemployment rate from 11.2 to 10.7, although we do expect this to flatten out in the coming months, job growth is inevitable through 2011.

A couple of new home builders in the area said that sales in April and May have been "up" versus last year. The numbers aren't mind blowing, but positive sales each month over last year show that we are making progress and have begun the slow and steady climb to a recovery.

One Last Word on Impact Fees

2010-04-27T08:59:00.001-07:00

For those of you who attended the Navigating The Chicago Real Estate Market Symposium on April 22nd, you will recall that there was much discussion regarding municipal impact fees and their affect on local development. The one piece to the puzzle that was missing from the seminar was the willingness of school districts to re-evaluate their fees and land cash values as well. Ironically, the same day as the seminar, the weekly Oswego newspaper, Ledger-Sentinel, ran two articles addressing this very topic. The headlines of the articles, "Schools advised to stand-by land-cash values" and "School board wants to maintain developer fees" tells most of the story. However, the attorney for the Oswego School District did instruct the board not to lower fees, but advised the school board to "let developers ask you to lower their land values." The implication was that if the developer asks for lower land-cash values, and can justify the lower values, then you should perhaps lower your values. The underlying message here is that if school districts are willing to negotiate their fees and land-cash values, almost all other municipal fees are open to negotiation (at least open for discussion).

Unfortunately, the Ledger-Sentinel does not post all of its news stories on its website (did I mention that this is a weekly newspaper?), however, we have scanned the articles and you can find the "Schools advised to stand-by land-cash values" article here and the "School board wants to maintain developer fees" article here.

Another Great Event

2010-04-22T12:42:00.000-07:00

Thank you to everyone who attended the Navigating the Chicago Real Estate Market in 2010 event on Thursday, April 22nd. The turnout was great, as usual. The Grotto always does a fantastic job hosting us and the three panels were the best we have had.

This event was a little more upbeat than our previous sessions, and for good reason. Existing home sales continued their steady improvement and we think that the existing home median sales price has finally reached the bottom. Anecdotally, we had many conversations with attendees who told us that sales seem to be better than they were last Spring. Of course, everyone is holding their breath as the $8,000 and $6,500 tax credits expire at the end of next week.

Our next event will be held in the Fall with the exact time and place yet to be determined, so keep your eyes out for our announcements.

Thanks again for making this another successful event!

Tale of Two Villages

2010-04-16T08:23:00.000-07:00

In case you missed it, Mary Ellen Podmolik from the Chicago Tribune wrote an interesting article about the different strategies that the neighboring villages of Plainfield and Shorewood are using to lure builders and developers back into their respective communities. Plainfield has essentially reduced impact fees by $9,000 in an attempt to make it more palpable for a developer to acquire and develop land within the village limits. Shorewood has decided to not to extend a temporary reduction in impact fees, essentially because no one was taking advantage of the reduction.

Another neighboring community to Plainfield, the Village of Oswego, recently voted to increase their sewer and water tap-on fees by $1,000 per lot. This increase was approved only after the board rejected a proposal to double their sewer and water tap-on fees.

It is interesting to follow the divergent paths that the municipalities are taking to either entice development back into their communities or discourage it.

To hear more about what municipalities are doing to entice development back into their communities, please attend the Navigating the Chicago Real Estate Market Seminar on April 22, 2010 at The Grotto in Oakbrook. For registration information, please click here.

To read the Tribune article, please click here.

Job Growth is Coming (according to Brian Wesbury)

2010-03-23T11:51:00.001-07:00

Earlier this month our favorite economist, Brian Wesbury from First Trust Advisors, predicted that the U.S. economy would add 300,000 jobs in March. While this may seem unbelievable given the poor performance of the economy during the past 18 months, he does make a pretty compelling case. He points out that even without the hundreds of thousands of workers being hired by the U.S. Census Department, we are still poised to add significant jobs this month and for months going forward.

We have been saying for over 18 months that the housing market WILL NOT improve until we have significant job growth. With the Chicago area median price at five year lows, interest still at or below 5 percent and actual job growth (yes, even in Chicago), we will finally see the housing market begin to recover in the second half of 2010.

To see Brian's job growth video, please click here.

Jobs or No Jobs?

2010-03-11T09:40:00.000-08:00

This week there were two news stories about Chicago’s employment picture that made the headlines. One announced the worst unemployment numbers for Chicago in years, 11.6 percent in January, up from 10.6 percent in December. The second news story, on the same day, forecasted an uptick in jobs in Chicago Q2 this year, according to a survey by employment services firm Manpower, Inc.

Unanimously both articles stated that the pace of layoffs is easing, and Chicago actually added 26,000 jobs in January, the first increase in almost two years.

Some additional positive news for our market; “Focused on job creation, leaders in biotechnology and life sciences will convene in Chicago this spring to evaluate the role of biotechnology parks in the economic recovery. The Association of University Research Parks’ (AURP) BioParks 2010 will bring together executives from research and science parks around the world to learn the latest on building communities of biotechnology innovation.” Hopefully the mayor and the convention bosses found a way to give AURP a good deal on their convention, and we suggest some tax incentives to bring their new biotech parks to our suburbs.

Also, Ford Motor Company recently announced that it will be adding a second shift to the Chicago Assembly Plant, creating 1,200 new jobs on the south side of Chicago.

These are encouraging and welcome signs for a decimated job market.

Big Builder Magazine - 10 Most Critical Factors Affecting Homebuilding in 2010

2010-02-11T09:05:00.000-08:00

John McManus, Editorial Director of Big Builder Magazine, wrote an interesting blog this week about the 10 most critical factors that will affect homebuilding in 2010 (read the entire blog here).

One item on John's list caught my attention, "fence-sitters - wavering as to whether they'd be fools to buy now." Shouldn't this say "wavering as to whether they'd be fools NOT to buy

now?" Has there ever been a better time to buy a new home? Interest are still historically low, but should be on the increase later this year. Prices are at their lowest levels in years. Somehow, we need to get this message across as quickly as possible.

Which brings me to another excellent point that John makes: "Marketing: Stimulus (aka home buyer tax credits) doesn't make more buyers; it changes the timetable of buyers from later to sooner. More buyers is the only thing that makes more buyers. Excitement, a unique value, an exclusive deal, an offer that can't be refused are the ways to get there. They're what changes psychology from happily sitting on the sidelines to entering the arena."

I think the underlying point in the statements above is that we are back to fundamentals. Location is the ultimate difference maker. Product and a unique value are a close second. If we pay attention to these fundamentals, we should have a successful spring selling season.

RW Predictions for 2010

2009-12-30T08:34:00.001-08:00

It's that time of year when we are bombarded with Top 10 lists, who died lists and predictions for the upcoming year. Since we didn't want to be left out of all of this fun, here is our list of predictions for the homebuilding industry in 2010.

The extension of the $8,000 first time homebuyer tax credit (and the new $6,500 tax credit) will get extended again. However, this time, the amount of the credit will be reduced and eventually phased out when the housing market really recovers in 2011.
Speaking of the housing market recovering, we don't see a real recovery happening until 2011. However, we do see some improvement in 2010.
Both finished lots and raw, entitled land is beginning to sell at much reduced prices and this will continue throughout 2010. Units on these lots will begin to hit the market by mid-2010 with much lower sales prices. These low base prices, coupled with the tax credits and low interest rates will continue to drive the new home market throughout the next year.
Some municipalities will "adjust" their impact and building permit fees in order to jump start homebuilding in their communities. However, incredibly, most cities and villages will maintain their status quo with fees stating that their budgets are built around builders and developers paying "their fair share."
Fundamentals will be the key. Great location, great product design and great value have always been the keys to a successful project, that is until the mid-2000's, when just about everything sold. Fundamentals are back.... in a big way.
The buzzword for 2010 is stability. The job market will eventually stabilize, the housing market will stabilize and the national economy will stabilize. Remember, we need to stabilize before we can grow. 2011 will be the year of growth.

We hope everyone has a happy new year and a successful 2010!

A Great Event

2009-12-10T09:48:00.000-08:00

For those of you who attended the Navigating the Chicago Real Estate Market in 2010 event at the Mid America Club, thank you for attending and we hope you enjoyed the event. For those of you who missed it, here is a brief recap. The first panel discussed the changing landscape of both land and product design. The slides from the first panel presentation can be downloaded from the left side of this website. If you have further questions about the topics of this panel, please contact Lance Ramella from RW Real Estate Advisors at (630)571-6616.

The second panel discussed the legal ramifications of foreclosures properties, what to do about existing SSA's, etc. If you would like to discuss these issues further, please contact Bruce Goldsmith from Dykema at (630) 577-2811.

The third panel had a wide ranging discussion covering everything from how banks are dealing with assets, what are the pitfalls you should look for when working a project out, to an insiders view of why some municipalities are not willing to decrease their permit fees. To find out more about these topics, please contact Carl Peterson from Encap at (815) 899-1621.

We are planning on having another seminar this Spring with all new panels and topics, so if you couldn't make it last week, please plan on attending in April.

Things to be Thankful For

2009-11-17T12:59:00.000-08:00

With Thanksgiving around the corner, and the toughest economic times our industry has seen in decades, we thought it might be a good time to put together a Top 10 List of Things to be Thankful For in the Chicago Housing Market. There are regional benefits of why the Midwest is a great place to live, like the fact that the Great Lakes account for 20% of the world’s fresh water supply and that global warming has extended our growing season by weeks. And if you hang around long enough, the Midwest will be the most desirable retirement region to live in because the south will be too hot!

Things have changed a bit in the last few months in our market, so join us in looking at what we can be thankful for:

Looks like the Chicago housing market hit bottom in August of this year
Home sales increased for the 4th consecutive month compared to the same months in 2008
First time homebuyer tax credit of $8,000 was extended until Jun 2010, and existing homebuyers can receive a tax credit of $6,500
Developers, investors and builders are back in the Chicago market buying land
Months of supply is currently at 7.8, down from a January 2009 high of 17 months
Home prices seem to be stabilizing
New construction homes are selling at 3-5 units per month at some west suburban projects
Interest rates remain historically low
"Only" 900 condo units are expected to be completed in the City of Chicago in 2010, far below the 4,155 and 4,061 condo units completed in 2008 and 2009 respectively
There remains pent-up demand that will come out of the woodwork in our market to help spur sales in 2010 and beyond

Happy Thanksgiving! We look forward to seeing you at Navigating the Chicago Real Estate Market in 2010 on December 3rd at 8am. For more information on the event, click here.

Are Finished Lot Transactions on the Horizon?

2009-10-20T12:43:00.000-07:00

It appears as though finished lots are again in heavy demand in some Western housing markets. According to a Builderonline.com article (which can be read here), finished lots are selling for between 35 and 40 percent of their pre-2007 prices in places like Phoenix, Las Vegas and the Inland Empire. The buyers are typically national or large regional builders, which makes sense since they are the only builders with easy access to capital.

Of course, this begs the question, if lots are being snapped up in these markets, how long before we see significant lot transactions taking place in the Chicago region? By our estimate, there are nearly 65,000 finished lots in the 7--County metro area (excluding the City of Chicago). Our guess is that we will see some transactions occur before the end of this year, but we will not see buyers flock back into the land market until mid-2010. Of course, most available lots are either owned or controlled by banks and the banks have been very hesitant to sell lots at a tremendous discount. Another issue that builders will have to consider when acquiring finished lots are the building permit and impact fees in the community where the lots are located. Many municipalities are contemplating offering builders "incentive programs" of reduced fees, while many communities will do nothing to assist the development and homebuilding industries, stating that "development must pay its own way."

The bottom line is that lots will begin moving again in the near term, but an assist from the banks and municipalities will determine where the transactions take place.

Social Networking?

2009-10-01T08:55:00.000-07:00

We were fortunate to be able to attend a Social Networking seminar (Social Real Estate Chicago) geared toward real estate professionals in Chicago earlier this week, which opened our eyes. It is clear that many (and by "many", I mean millions and millions) people are migrating to this new (at least new to us) form of communicating. It is clear that if you are trying to reach consumers you must have a blog, a Facebook page and be twittering, but what if you are trying to reach other businesses? This is where our confusion comes from. Are our clients and potential clients really spending time on Facebook? Do they really read their "tweets" all day long? Do we really want to spend our time "tweeting?" We have already figured out that blogging is an important part of our world. It allows us to get out information, opinions and thoughts in a non intrusive manner. Facebook and Twitter are completely different animals. They take time each day in order to keep them up-to-date and, again, were not sure who is reading them.

This is where we would like your help. Please tell us what you think of this "new" form of communication. Do you tweet? Do you have a professional Facebook page? Please leave us a comment below or even contact us directly.

We look forward to your response.

Back to the Future

2009-09-17T11:39:00.001-07:00

As we contemplate the pending revival of the housing market, it is interesting to go back in time and review what the so-called experts were saying about the upcoming economic slowdown and the ever expanding housing bubble. While most prognosticators predicted that we would see a gradual slowdown in the housing market and a subsequent slowdown in the overall economy, very few accurately predicted the depths to which we would fall. We did find one group that accurately (almost eerily) predicted the predicament that are currently in. The economy tracking and predicting website iTulip.com published an article on January 20, 2005 with the following statement "Housing bubbles don't collapse suddenly. They go through a long series of self-reinforcing deflationary stages that typically last five to seven years. Given the extreme and unprecedented nature of the current housing bubble, I expect a 10 to 15 year downturn to follow this boom. The government will step in with all manner of supports and bailouts along the way, similar to those that created the bubble in the first place, so the exact trajectory of the decline is impossible to predict." While we don't believe the iTulip.com prediction of a 10 to 15 year recovery, their foresight was right on.

Further, the article (remember, this is from January 2005) went on to state "As transaction volumes continue to fall, demand for housing-related employment will decline too. The first signs of labor market distress will start to show up, as more and more of that 43% of the private sector who found jobs in the housing industry are no longer needed. Coincidentally, major employers - such as the U.S. auto industry - will be going through major restructuring, adding pressures on housing prices in some areas." This is pretty heady stuff considering it was written three to four years before the ultimate collapse of the auto industry. The iTulip.com article is basically a step-by-step account of what was about to happen to the housing market and overall economy.

As we mentioned previously, we think that the housing industry is in the early stages of recovery and don't buy the 10 to 15 year recovery time that iTulip is predicting, but it is interesting to go back to the future and review some accurate fortune tellers. You can review the entire iTuplip.com article from January 20, 2005 here.

Someone We Should All Get to Know

2009-09-09T12:14:00.000-07:00

As we all know by now, the $8,000 first time homebuyer tax credit is set to expire on November 30. In all practicality, the tax credit has already expired for homebuilders who don't have any specs to sell as it will take longer than the three remaining months of the credit to build a new home. The man in this photo is Johnny Isakson (R-GA) and he is fighting like crazy to not only extend, but expand the bill. He has introduced a new bill in the Senate that will extend the tax credit through 2010, open the bill to all homebuyers, regardless of income and expand the bill to $15,000. You see, Senator Isakson understands that real estate and homebuilding will lead this country out of recession. He gets the fact that between 300,000 and 350,000 home sales can be directly attributed to the $8,000 tax credit and that each sale generates approximately $63,000 in downstream revenue elsewhere in the economy (furnishings, landscaping, appliances, moving expenses, etc.).

If this amount of sales and revenue can be attributed to a measly $8,000 tax credit available only to first time homebuyers, imagine what a $15,000 credit open to all buyers will do for the housing market and overall economy in 2010. Yes, Senator Isakson (along with co-sponsor Christopher Dodd, D-Conn) could probably use our help in convincing our local Senators and Congressman that extending and expanding the homebuyer tax credit is probably a good idea. You can reach Senator Isakson's website by clicking here.

Now is the Time to Buy a Home (According to the WSJ)

2009-09-02T10:55:00.000-07:00

The Wall Street Journal Online posted an article this morning about how NOW is the time to buy a home, and they make some very good points. Prices appear to have bottomed out, both nationally and in Chicago, according the the Case/Schiller Price Index. If you look closely at the Chicago MLS numbers, this region reached its price bottom in February and has steadily increased each month since then. Conversely, sales activity has also picked up in the same time frame and has now reached the same levels that we were at for the same month last year. So it appears that buyers are getting the message and realizing that now might be the best opportunity in their lifetime to buy a home. Of course, many of these buyers are rushing to take advantage of the $8,000 tax credit before it expires on November 30.

As prices continue to inch upward, more and more buyers will finally jump off the fence and back into the real estate market. It will take a little longer for buyers to return to the new home market since new units are typically priced a little higher than resale units, but they will return none the less.

All of the Chicago facts and figures are highlighted in our Chicago Perspectives Newsletter which is available on the left side of this blog. Below is an excerpt of the Wall Street Journal Online article. To read the entire story, click here

Passing through the Fort Myers, Fla., airport a few weeks ago, I noticed people eagerly signing up for a free bus tour of foreclosed real estate—with all properties offering water views. During the ride to my hotel, the young driver volunteered that he had just bought his first house, paying $65,000 for a foreclosed property in nearby Cape Coral that last sold for over $250,000. He said he had never expected to be able to buy anything on a driver's salary, let alone something that nice.

Last week, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.