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Cook County Property Tax Assessments Shock Commercial Property Owners

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Cook County commercial, industrial and apartment properties owners may have noticed some significant changes in their property assessments that were recently released by Assessor Fritz Kaegi.  A shocking increase of more than 74% in valuations have caught the attention of area business owners.

According to an article published by the Chicago Tribune,  “…the result may be a significant shift in how the property tax burden is divided up — with homeowners paying less and business owners paying more. A Tribune analysis shows that if Kaegi’s initial property values stand, businesses would pick up 44% of the combined taxes in those suburbs next year, up from 34% this year. That would shift 10 percent of the property tax burden from homeowners to businesses.”

However, business owners are concerned that the result will cause a slowdown in the sales of these types of properties in Cook County.  In fact, some business owners have threatened, if the assessments stand, to relocate out of Cook County.  “Even as business owners experience assessment sticker shock, Kaegi explained that it’s his job to accurately determine the current market value of properties so each owner is facing his or her fair share of taxes, under rules set by the state and county” according to reporter Hal Dardick,

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Experts Make Predictions for the 2020 Real Estate Market

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As 2019 comes to a close, the trends of the real estate market for the past year are being reviewed an analyzed.  However, just as it is with all new beginnings, there is also much anticipation and speculation about what 2020 will bring for real estate professionals, home owners and potential homeowners.  Unfortunately, some real estate experts are not seeing much change in the low housing inventory trend in the coming year.

In an article published by Forbes, written by Aly J Yale, Yale states, “…According to the 2020 National Housing Forecast from Realtor.com, the national housing shortage will continue in the New Year, possibly reaching “a historic low level.”  Inventory growth is absent in nine out of ten markets, down from a much more optimistic two of three markets seeing growth at the beginning of 2019.

Contributing to the problem, homeowners are remaining in their homes longer, averaging 13 years.  Additionally, although home construction has seen growth, most of the new homes are “upper-tier” homes.  This leaves entry home buyers little supply in contrast to the large demand.  With homes for sale in the lowest price tier down 10 percent through 2019.

Some positive news to look forward to are the anticipation of mortgage rates remaining low and home prices remaining steady, maybe declining in some markets. 

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Photo Credit: Mark Moz

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Home Prices are Increasing- Are Homes Less Affordable?

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Real Estate professionals and publications have recently began to educate home owners and potential home buyers with current market trends.  The common message is that there is an increase in home buyers but the supply of homes for sale is declining.  The natural consequence of this low supply and high demand situation is for home prices to increase.   The projected home values are continuing to increase, in fact experts have even adjusted their projections based on current market reports.  According to an article published in The Patch, “CoreLogic increased their 12-month projection for home values from 4.5% to 5.6% over the last few months.”

Naturally, buyers become concerned that home prices are causing them to be priced out of a home or a neighborhood.  However, the increase in home prices can’t be analyzed in a bubble.  Other factors must be taken into account to determine whether or not increasing home prices are really making homes unaffordable. 

In the article, written by Keith Kreis, other factors that should also be taken into consideration are discussed.  For example, mortgage interest rates have dropped since the beginning of 2019 which has increased home affordability by almost 10 percent.  Additionally, American workers are seeing wage growth by as much as 1.5% since last fall.  By taking these additional economic factors into consideration, one might argue that, at this point in time, buying a home is more affordable than its been.

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Real Estate Experts Weigh In on Cause of Low Housing Inventory

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Real Estate professionals and analysts have continued to look into why there continues to be a decrease in housing inventory along with rising home prices.  Redfin has determined that more Americans are deciding to stay exactly where they are instead of moving on to another home.  In fact, they have found that, “the typical American homeowner is now staying in their home for five years longer than they did just nine years ago.”

In an article published by Housing Wire, reporter Julia Falcon states that the average homeowner in the U.S. is staying in their home for about 13 years instead of only 8 years as they did in 2010.  There are U.S. cities that blow those statistics out of the water with homeowners deciding to stay in their homes for 20 years or more.  Cities such as Salt Lake City, Houston, San Antonio, and Dallas are in Texas see home owners that have stayed in their homes since the 1950s. 

According to the article, “Redfin agent Christopher Dillard states ‘Because prices have been going up, and folks are gaining more and more equity, it’s hard to justify selling when there aren’t many if any affordable options.’”

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How Do Homeowners Really Feel About Trying To Sell?

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The idea of moving to a new house can be exciting.  Perhaps its to a new town full of possibilities, maybe it’s a bigger house in the suburbs allowing kids to play in a big back yard and have their own bedrooms, it may even be a smaller, easier to maintain house allowing more free time to do the things people love instead of home repairs and yard work.  However, for many Americans, they must first sell their current home before moving on to their next dream home. This phase of the real estate process is the source of angst for many homeowners.

The 2019 Zillow Group Consumer Housing Trend Report revealed many aspects of the home selling process cause stress for the homeowner trying to sell their home.  In an article published by MBA Newslink, it was summarized that, “not knowing if a home will sell within the desired time frame is the largest source of stress for sellers, with 56% calling it a stressful experience. Meanwhile, 53% of sellers worry about not being able to sell their home for the price they want; and 52% were stressed about an offer falling through.”

Sellers worry that they won’t sell their current home in time to comfortably purchase their next home, while others worry that they won’t be able to keep the house in the desired condition to sell the home, and still other homeowners find the idea of leaving their home for showings and open houses a stressful situation.  Home buyers can be so overwhelmed, their stress matches or exceeds the prospect of planning a wedding or getting fired from a job. 

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Real Estate Expert’s Grim Outlook on the Housing Market

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Some real estate experts are concerned about the future of the real estate market and their conclusions about the real estate market may make some homeowners take pause.

In an article published by DSNews.com, titled “Residential Real Estate on ‘Shaky Ground’”, an interview with real estate analyst Keith Jurow is summarized.  The article states he doesn’t believe there was really any real estate recovery, In fact, according to Jurow, “the “illusion” stems from lenders and mortgage services not putting foreclosed properties on the market.” 

The market is at risk of due to factors such as subprime mortgages, poor home sales and mortgage defaults, despite many mortgages being modified.  Shockingly, the article notes, “There are currently $800 billion of subprime mortgages still outstanding, many of which have not been paid at all in the last five years.”

Jurow’s alarming conclusion is homeowners considering selling before the market gets much worse.  Read the entire article.

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Will Technology Change the Role of Real Estate Agent?

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Technology has impacted the way people find homes, research neighborhoods, and compare prices; in essence, buyers are able to get much of the initial legwork done by sitting at their computer or scrolling on their smart phone.  Nevertheless, when it comes to actually buying a home, about 90% of buyers still use a hired real estate agent to help them with the actual offer and contract negotiations according to a report released by the National Association of Realtors.

In an article published by Forbes, its noted that “… buyers and sellers can get to the “one yard line” without much help. But deals rarely get done unless an agent is acting as middleman.”  Real estate agents, without a doubt, add value with their professional expertise and negotiating experience.  However, the sticking point for many is the large piece of the sale that the agents get for their commission.  In many cases, the seller pays a total of 6%, with the buying and selling agent getting 3% each. 

The concept of direct sales, hasn’t yet taken over the real estate market and certainly hasn’t made real estate agents obsolete; in fact, realtors may skip showing homes whose sellers aren’t willing to pay the 3% commission.  Yet, technologically based real estate companies are still searching for ways to compete with the current real estate agent.

Case in point, companies such as Opendoor, you simply “type your address into Opendoor’s website, submit a few photos, and it will make you an offer within a couple of days. No open houses, negotiation, or waiting months for the buyer to come up with the money. In fact, the average closing time from the first offer is less than 20 days,”  according to the article written by Stephen McBride. Some experts believe this type of business could change the way people buy and sell houses and the agent’s role in the transaction.

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Could the First Week Of Fall be the Best Time to Buy a House?

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Buyers often wonder which the time of year it is best to purchase a home.  Many know that the spring market is when many homes come on the market and buyers begin looking in order to purchase homes before the start of the next school year.  However, as far as deciding when to buy a home based on getting the best deal, it turn out that the time is now! 

In an article published by Forbes, the week of September 22-28 has been identified, by Realtor.com as the “best week of the year to buy a house”.  In the analysis, it was found that the number of listings increase by more than 6% on average this week and the home on the market are just over 2% more affordable as price cuts close around 6% trend this week of the year. 

Overall, buyers will see less competition this week as the summer has come to a close and a number of buyers have exited the market for the year. Nationally, the competition is down by a quarter, with some local areas seeing a decrease in buyers close to 40%. 

Sellers can look forward to some positive news regarding this first week of fall, “…buyers have a more serious mindset and they are focused on making a purchase before the end of the year.”  Perhaps this unlikely time of the year to buy a home will be a win-win for sellers wanting to close the deal before the end of the year as well.

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Why Would a Real Estate Broker Publish Agent Commissions?

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At the start of September 2019, real estate firm Redfin made a change to the way they communicate with their customers and potential customers.   They have made the decision to provide more information on the homes they have listed for sale, specifically detailing how much the buyer’s agent will make upon the sale of the listed home.

According to an article published by Forbes, “…nearly 40% of recent home buyers don’t understand how their real estate agent was paid,”  while 13% indicated they had “no idea” how much or how the agent was paid upon closing.  With the recent announcement of the Northwest Multiple Listing Service, allowing brokers to share details of the commission deals, Redfin decided to get out in front of the trend sure to spread to other regional areas.

Perhaps buyers have become more interested in the ways commissions are negotiated after a few law suits alleging “….collusion, inflated commissions, and price-fixing, among other things.” To head off any concerns and to satisfy buyer’s desire for transparency, some agents feel that this up-front approach helps ease the minds of their customers.  As one Redfin broker, Paul Reid of Boise, ID,  stated, “Showing consumers the commission a seller is offering a buyer’s agent is a great win for making real estate more transparent. When a buyer has a better understanding of how his agent is being paid and the costs the seller is incurring, he can make a more informed decision on what to offer.”

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How Has the First Time Home Buyer Profile Changed Over Time?

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If asked to describe the profile of the average “first-time home buyer”, many Americans may use descriptions such as young, newly married, young children or children on the way.  There is an idea that many have about who these would-be buyers are, what stage of life they are in and it appears it is an out-of-date perception. 

Researcher at Harvard completed a study of first time home buyers over a span of 20 years, from 1997-2017 and found some significant changes in the demographics of first time home buyers over those years.  In the paper detailing the study findings, it was stated, “While discussions of first-time home buying often tie home ownership entry to life-stage changes like marriage and the birth of a first child, a growing share of first-time home buyers do not fit this profile”.

An article published by The Wire summarizes the most telling comparison of how many first-buyers were unmarried in 1997, which was 23% of all first time home buyers, compared to a 12% increase by the time 2017 rolled around.  That year, 35% of first time home buyers had never been married.  Married home buyers made up 61% of the first time home buyers in 1997, but only 52% of first-time home buyers in 2017 were married. 

What hasn’t changed much in the span of the study, the age of first time home buyers which decreased from 34 to 32 between 1997 and 2017.  The findings reveal facts that, “suggest that there may be a fundamental shift in the way that young households are approaching first-time home purchases, such as an increased willingness to purchase homes individually or with unmarried partners”. 

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