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Disappointing News for Many Chicago Homeowners

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Many American home owners have been relieved to see the real estate market, and their home value, rebound from the real estate collapse which began more than ten years ago.  At the height of the real estate market crash, many homeowners found that their homes were worth less than they owed on the home.  In a recent report from Zillow, the percentage of homeowners “underwater” on their mortgage has finally fallen below ten percent, the first time the number has been this low since the collapse.

However, according to an article published in the Chicago Tribune, by Darcel Rockett, Chicago homeowners may not be feeling the same market rebound.  In fact,  Rockett states, “According to Zillow’s 2017 Q4 Negative Equity report, the city has the most homes with negative equity of all the metro areas in the country.”   A little over 15% of Chicago metro homeowners are underwater on their mortgage.  More alarming, about 20% of these homeowners with negative equity owe two times as much as their home value.

Homeowners are faced with limited options when they owe more than their house is worth.  They can wait out the market until their home value returns to a value that matches what they owe.  However, some homeowners may choose to cut their losses and sell their homes at the current value.  Fournier Law Firm can assist homeowners with the process of a short sale.  Contact us at 630-792-1000 or info@fournierlawfirmltd.com

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Photo Credit: ANNA SZLACHTA

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Surprising New Trends Revealed in Recent Home Mortgage Data

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Freddie Mac recently released data on mortgage trends for the first quarter of 2018.  One figure that may surprise many:  almost half of new mortgages in the first quarter of 2018 were secured by first time home buyers.

According to the National Association of Realtors, the age of these first time home buyers is around 32 years old.  It would, therefore, seem that these first time home buyers are, in fact, millennials.  A generation entering the economy with student debt, rising home prices, rising interest rates and a shortage of homes for sale, many would not have expected them to account for 46 percent of the new mortgages.

According to an article written by Phashant Gopal published by Bloomberg, with the improving job market and access to easier credit regulations, this group has been moving out of the rental market and becoming home owners.  These young adults are aware that mortgage rates and home prices are increasing and have decided to enter the home ownership ranks before they are priced out.

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Real Estate Experts Provide Advice for Investors

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Real Estate is a popular investment vehicle for American investors.  In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate.  In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.

One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase.  Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.

Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later.  The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection.  It can also make the buyer aware of repair expenses they should plan for later.  A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.

The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.

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Photo Credit: Antonio Carlos Cascatrina

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Before Listing Your Home: Real Estate Myths Debunked

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Low housing inventory coupled with low interest rates has helped encourage home owners to finally consider putting their home on the market.  There are many considerations to take into account before listing a home.  Being able to determine what home selling advice is based on fact versus myth is vital for a successful and profitable transaction.  An article published in U.S. News and World Report, written by Teresa Mears, helps homeowners navigate the process by debunking some of the rumors and myths.

One home selling myth is that home owners should list the home at a price above what they actually expect to get for the home.  According to Mears, “That’s because shoppers and their real estate agents often don’t even look at homes that are priced above market value.”  Even if a homeowner lowers the price after a few weeks, the fact that it sat on the market for 3 weeks or more makes prospective buyers suspicious about issues with the home.

Sellers might often be tempted to sell a house on their own, without the use of a real estate professional, in order to save money.  The value real estate professionals add to the process comes in the form of marketing to buyers and their agents, negotiating the sales price and sales contract and helping navigate any issues that come up after the inspection.  When you hire and pay a real estate professional, you are able to take advantage of their experience and expertise from previous sales transactions.

Additional myths touched on include which home renovations home owners can expect to see a return on investment, and which renovations should not be done just to sell a home, whether open houses benefit the home owner and what your expectation for future market prices should be.  Read the entire article.

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Could 2018 Be The Right Time to Sell Your Home?

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If you have been waiting for the right time to sell your home, there are many reasons experts are saying that the time has come.  In an article written by Devon Thorsby, published by U.S. News and World Report, the reasons that 2018 might prove to be a good time to sell a home are listed.

First and foremost, the past few years of low inventory of homes for sale has left prospective home buyers more than ready to scoop up the perfect house.  Their frustration with available homes has led many house hunters to begin their search earlier than normal with the hopes of purchasing a home before other buyers make their offer.

Additionally, interest rates are still relatively low.  They have been slowly creeping up and are expected increase to 5 percent in 2019.  Many home buyers are motivated to purchase a home sooner rather than later in order to secure a lower interest rate.

Thorsby details additional rationale for putting that “For Sale” sign up this year.  Read the entire article here.

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Disappointing Sales Figures for New Homes Reported

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In many parts of the U.S., sales of new homes continued to have a downward trend in February, falling .6 percent from January.  This, according to an article published by CNBC, is the third month in a row that the sales of new homes dropped.

In the article, the details of regional new home sales were provided.  Bringing the U.S. average down were the Midwest with a 3.7 percent decrease in sales as well as the west, with a drop of almost 18 percent.  The south and northeast regions of the U.S., however, saw increases in new home sales of 19.4 percent and 9 percent respectively.

An overall slow-down in sales is being attributed to a shortage of homes, specifically lower priced homes.  As a result, the prices are being driven up, the median price of new homes is up almost 10 percent from last year.  Couple this with rising mortgage interest rates, many first time homebuyers may have a difficult time entering the real estate market.

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How Do Chicago Residents Feel About Rent Control?

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If you have ever rented or try to rent real estate in Chicago, you have seen first-hand how rental rates have increased.  Pricing many, wishing to rent property, out of desirable neighborhoods.   What you may not be familiar with is the 1997 Illinois state law, prohibiting rent control in the state, has allowed landlords to significantly raise rental prices and create  “rent-burdened” residents.

However, changes to this law could be considered soon.  If a recent advisory referendum vote is an accurate indicator of how most Chicago residents feel about rent control, ending the ban on rent control will be welcome by Chicagoans.

According to an article published by Crain’s Chicago Business, written by Dennis Rodkin, the advisory referendum was placed on almost 80 precincts’ ballots.  The result was that in each of the 76 precincts, “at least 60 percent of the votes cast were in favor of lifting the ban, and in most the figure was above 75 percent.”  Its seems that lifting the ban is widely supported.  Only time will tell if change to this ban will come as a result.

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Will the New Tax Law Affect Your Home’s Value?

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Many read and listened to news reports at the end of 2017 detailing the new tax laws signed by President Trump.  There were many people and news outlets scrambling to understand the changes that were introduced.  Of course, there was much speculation about the impact of the changes.

Recently, CNN published an article detailing how the new tax laws will slowly begin to impact the value of homes across the United States.  In the article, written by Kathryn Vasel, some specific effects are detailed.

For one, the new tax law reduced the amount of interest on mortgage debt eligible for deductions from $1 million to $750, 000.  Vasel explains that many buyers in the market for high-end, high priced homes might be more likely to negotiate a lower price in order to compensate for the smaller tax break.   Purchasing homes might also be less attractive to buyers because they aren’t able to deduct as much of their real estate taxes.  The tax law reduced the cap to $10,000; in many high-cost markets, home owners pay significantly more than $10, 000 in property taxes.

The financial impact of the tax cuts might result in increased interest rates and, subsequently mortgage rates.  An increase in mortgage rates could keep some buyers out of the market and force home sellers to reduce prices in order to attract buyers.

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Tips for Protecting Real Estate Consumers from Costly Scams and Fraud

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If you were to ask a room full real estate professionals if any of their clients were victims of wire fraud during a real estate transaction, chances are there would be many who might raise their hands.  In fact, according to an article published by Realtor Mag, “The Threat of Wire Fraud is Real”, “Wire fraud topped the list as a sophisticated scam causing consumers to lose millions of dollars each year”.  As alarming as that idea may be, real estate professionals can put some simple safe guards in place to help protect their clients.

In the article, written by Erica Christoffer and Graham Wood, a number of suggestions are touched upon.  For example, “If you or your agents do engage in a wire transfer with a client, call them on the phone immediately prior to the transfer of funds so they know they’re sending money to the legitimate source.”  Additionally, make your clients aware that you do no discuss personal financial information over e-mail and review with them what your communication practices are.  Hopefully, with this mutual understanding between you and your client, if they receive questionable e-mails, a red flag will be raised immediately before any sensitive financial information is shared.

Clients should also be reminded to not only use strong passwords, but update them regularly.  Perhaps even updating a password just before any wire instructions are sent.  As a real estate professional, you should also follow these guidelines for strong and updated passwords.

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Photo Credit: Blogtrepreneur

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What Impact with Automation have on Real Estate Needs?

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As the age of automation descends upon us, experts analyze its vast and far reaching economic impacts.  One fairly obvious and direct impact is upon employment, as robots and automation eliminate the need for people to complete certain types of work.

Bisnow.com published an article on September 6, 2017 describing some of the findings of a recent report by Carl Benedikt Frey and Citigroup.   Specifically, the article notes that retail jobs will be severely impacted by automation, with Frey suggesting that the retail industry employment is “likely to vanish”.  The impact of this is broader than the elimination of jobs such as manufacturing, which are geographically concentrated.  Frey indicates, “the downfall of retail employment will affect every city and region”.

As these changes begin to take place, a notable effect is a decrease of a need for retail space, resulting in empty storefronts and malls across the United States.  However, what may not have been anticipated was the increased demand for warehouse space.  It is estimated that more than 2.3 billion square feet of new space will be needed for warehousing between now and 2035.  This could require more “mixed-use development, which normally means residential sitting alongside retail or sometimes offices…” according to the article.

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Photo Credit: Seth Werkheiser

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