How to Survive The Real Estate Apocalypse – Challenging the Media

Before we consider the latest economic forecasts, let’s start by separating Fact from Fiction. Here are some of the FICTIONS born from the buzz about today’s Real Estate Market:

• It is impossible to sell a home today and make a profit.
• Property values have stopped increasing and started decreasing throughout the Chicago Suburbs.
• Your home won’t sell unless it’s under-priced.

Here are some of the FACTS we’re facing in today’s Real Estate Market.

• Specific areas in the Chicago Suburbs are still seeing property values steadily rise, though not as rapidly as in recent years. 
• The most competitively priced properties are selling first – at a faster pace and with more appreciation in Chicagoland compared to many cities throughout the country.
• Today’s buyers are passing up on properties that are not in pristine condition or are priced for yesterday’s market.
• Market times are rising. The number of detached single-family homes listed for sale in October was enough to last 10½ months at the current sales rate. (National Association of REALTORS.)
• Existing home sales are nearing 5.67 Million for 2007, the 5th highest on record. That’s down from 6.48 Million in 2006, 7.08 Million in 2005, 6.78 Million in 2004, 6.18 Million in 2003 and about on par with the 5.63 Million sold in 2004. (National Association of REALTORS.)
• Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier – the biggest year-to-year decline since April of 1991. However, the same study shows that home prices in Chicago (as a whole) are only down 3.2%. (S&P/Case-Shiller home-price indexes.)

In the Standard & Poor’s Home Prices report that was just released, researchers looked at recent home sale prices in 20 cities. They included statistics from the Chicago real estate market in their analysis. The GOOD NEWS is that Chicago (which saw a -3.2% change from 2006 to 2007) did NOT top the list of cities where property values have dropped the most. That unfortunate distinction goes to cities like Miami (-12.4%), Tampa (-11.8%), Detroit (-11.2%), San Diego (11.1%), Las Vegas (-10.7%) and Phoenix (-10.6%). The BAD NEWS comes in the form of a quote, which is attached to the report. Yale economist and creator of the home price indexes, Robert J. Shiller says, “No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim.” The chart below shows how Chicago compares and illustrates an interesting and important point.

Single Family Home Appreciation Comparison by City
(Source: Standard & Poor’s Data Through October, 2007)

Do you see Chicago? It’s the green line kind of close to the middle that doesn’t spike very high or very low. Since 2000, Chicago’s line increases steadily, with a relatively mild turn in 2007. The Chicago line mirrors that of our nice and stable Midwestern region, as a whole, which has been spared the extremes seen in the real estate markets that led the housing boom, like California, Florida and Arizona. And what about the cities that are in the best shape, according to this study, like Charlotte (+4.3%), Seattle (+2.2%) and Portland (+1.9%)? Home prices are still up from a year ago in these cities, but we don’t hear much about the places where the real estate market is steady and strong.

Having spent ten years as a journalist, I understand all too well what’s happening here. It has more to do with what reporters choose to highlight and what the media chooses to focus on. Speaking from experience, the worst or saddest news of the day is typically the lead story, especially when people are suffering.

We understand that these times are difficult for home owners who can’t afford their adjusting mortgages and are losing their homes due to foreclosure. We have clients whose homes are taking much longer than “normal” to sell and, like you, we’re taking a concerned look at how all of this impacts our own personal homes and investments. The tides are turning and the market is in the thick of a necessary and overdue correction. But we believe the media’s “one-size-fits-all” mode of reporting has contributed a great deal to the problem.

Just consider these headlines, excerpts, quotes and key words from some recent real estate news stories: “War? Disaster? Nuclear ambitions? What could derail the housing market?” “Falling House Prices are the Number 1 Danger to the Economy,” “Few are Optimistic,” “Brace Yourself for Real Estate Aftershock” “Mortgage Meltdown” and “Collateral Damage” top the list. Even economist Robert Shiller has said that “the collapse in home prices might turn out to be the most severe since the Great Depression.” Yet just last week the government reported that consumer spending in November grew at the fastest pace in 3½ years. Maybe we’re just too short sighted to panic about what the media might call the impending Armageddon here. We have definitely seen a change in the pace of appreciation. We can’t ignore the rising market times. We have conversations with frustrated sellers daily. But if our business is any indication, real estate remains a sage and steady investment for Chicago Suburban home buyers and sellers.

Looking back, real estate events in 2007 were, without argument from us, “unprecedented.” Many areas of the country saw declining house prices as buyer demand decreased and housing inventory increased to the highest level nationally in 22 years. Additionally, chaos in the mortgage industry resulted in lower home sales and a rise in foreclosures, compounding the market’s underperformance. It is likely that many of the problems plaguing 2007 will continue into 2008. However, as December draws to a close, we are optimistic that 2008 will be slightly improved with market conditions stabilizing and home sales regaining strength.

According to Lawrence Yun, the National Association of Realtor’s chief economist, “The worst of the credit crunch has already worked its way through the data and the strength of the Midwest market which is affordable and possibly even undervalued, will help raise the national median existing home price slightly in 2008.” Existing home sales for 2007 will most likely total 5.67 million, the 5th highest on record, and rise to 5.70 million in 2008, in contrast to 6.48 million in 2006. The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates. Recent forecasts of a recession are tempered by a look at today’s unemployment rates, currently at 4.6 percent for 2007, unchanged from last year. Economists predict the rates will rise, though slightly, to 5.0 percent for 2008. Inflation as measured by the Consumer Price Index will likely be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. And as more home owners default on their loans, throughout the country, many are going back to renting. The home ownership rate in the third quarter stood at 68.2% of households, down from a peak of 69.2% in 2004. It’s a bitter pill for this group of home owners, but a trend to watch for those in the business of buying investment or rental properties.

Although the economy is fundamentally sound, unemployment relatively low and jobs gaining, our real estate outlook for 2008 is guarded. We agree that buying a home continues to be the single best long-term investment people can make. The fact that housing prices having adjusted downward over the past 18 months and interest rates remain relatively low bode well for a gradual recovery in the home sale activity beginning in 2008.

Written by Suzanne & Liz Luby
Coldwell Banker Residential Brokerage
303 East Main Street Suite 100
Barrington, IL 60010
Suzanne’s Cell: 847-922-7773
Liz’s Cell: 847-691-3150
Website: TheLubyGroup.com

Tags: Chicago Northwest Suburbs, Barrington, Inverness, Illinois, Real Estate, Homes For Sale, Market Trends, Real Estate Forecast for 2008, Appreciation Rates, Home Sale Prices, National Comparison, The Luby Group, Suzanne and Liz Luby, REALTORS

What to Say to a Group of REALTORS About Internet Marketing? – “Blogs in Plain English” to the Rescue

 I just received an all-office email from our office administrator, Sandy.  Here was her first point:

1. Tomorrow, Friday, December 14, Liz Luby will be talking to the “Build a Better Agent” group regarding E-marketing.  All are invited!!

***** Excuse my while I freak out. *****

I used to be a wanna-be actress appearing in plays and musicals.  I tested my skills on the Lincoln-Douglas Debate team in High School.  (Boy was that a disaster!)  I attended summer school at Northwestern University to learn the art of extemporaneous speaking.  (You would be embarrassed for me if you saw the fruits of that labor, but I did learn to twirl my pencil around my thumb.)  I graduated from College with a Broadcast Journalism degree, spent almost ten years as a radio DJ, TV news reporter and even took a job as an “Anchor Person” for a few years in a small Iowa market.  (One of these days I’ll dig out and dust off my blooper tapes or my fascinating report about that two headed pig.)  But something funny has happened to me since then.  I can’t explain how it started, but somewhere along the line I caught this horrible case of stage fright.  Today I tremble and lose sleep over the thought of speaking in front of people.  When our manager asked me to discuss internet marketing strategies with the other agents in our office I thought, ok, why not?  It’s nice of him to ask.  I haven’t been blogging for very long, but I can speak with some authority about websites and marketing properties online.  I can at least talk about the stuff I’m learning, right? Well, I guess we’ll find out tomorrow.  I understand there will be a few hecklers in the room, thanks to my dear mother, and business partner, Suzanne.  Will I survive?  Probably.  Will I freeze, say “duh” or run out of the room?  It could happen.  Will I speak in tongues or start to swear?  It’s quite possible. I’m not going to let my phobias interfere here, but I do know that I have an emergency escape plan.  It’s like a little YouTube parachute. When the beads of sweat show up, I’ll just play Common Craft’s video explaining Blogs in Plain English.  The video is about three minutes long. I’m hopeful that will be enough time for me to get a grip.

Click on the center arrow to play the “Blogs in Plain English” Video:

Ice Surrender in Cuba Marsh

I was on Cuba Road driving to a client’s house in Deer Park today to deliver a key and a Christmas gift. On the way, I unexpectedly traveled through a glistening crystal forest. The sunlight was illuminating the remnants of yesterday’s rain, skipping through the treetops. For a moment, I felt like a trespasser in this fragile, foreign yet familiar land. The wheels of my car turned and crunched their way into Cuba Marsh. The air was as sharp as my icy steps as I stomped through snow and jagged frozen weeds to get closer. Every living thing I found had been shocked into submission and buried beneath layers of wintry glass. I hurried, with my camera, knowing that the passing minutes plus the heat of the sun would melt away this temporary place. Surrounded by cracks and splashes of disappearing ice, I jumped back into my car, cranked the heat and continued on my way. I think I’ll return in the Spring to catch up with this new neighbor.

Tags: Lake County, Barrington, Deer Park, Illinois, Cuba Road, Cuba Marsh, Winter Weather, Ice Trees, The Luby Group, Liz Luby, Photography

SOLD – Luxury Living in Lisle, IL – 60532

2001 Hitchcock – Lisle, IL – 60532

List Price:  $849,900

Gorgeous, immaculate and like-new home on 2/3 acre across from wooded park & minutes to the train and I88. Volume ceilings, gourmet kitchen with maple cabinets, granite counters & stainless steel appliances. First floor study, beautiful built-ins & detailed moldings. Luxurious master suite & 2nd family room upstairs also functions as large home office.  Beautiful finished lower level with rec room, game room, wet bar, full bath & fifth Bedroom or Exercise Room. VERY VERSITILE! Call Suzanne at 847-922-7773 or Liz at 847-691-3150 for more information or to schedule a private showing. For more photos & virtual tours, please visit TheLubyGroup.com.

Directions: Yackley (between Ogden & Maple) to Hitchcock West

Click Here for the List Price and Property Details

Click Here for Virtual Tours and Additional Photos

Proudly Listed by The Luby Group – Suzanne & Liz Luby
Coldwell Banker Residential Brokerage – Licensed in Illinois
Suzanne’s Cell: 847-922-7773 Liz’s Cell: 847-691-3150