The Chicago 77

Luxury Homes in Chicago Have Seen Price Fall 28% From Last Year

matt — Fri, 13 Nov 2009 16:38:58 +0000

13 November 2009 – Price reductions continue to drive the real estate market. According to Trulia, 25% of homes for sale this year have seen a price drop of 10% off the original listing price. Luxury homes only make up 2% of the listing inventory but they continue to be one of the hardest hit segments of the real estate market. Upper bracket homes, those over $2 million, have had their prices slashed about 25%. The aggregate total loss in value for these homes is more than $28.1 billion. While some neighborhoods have held their own in pricing, others have been affected by greater inventories of luxury and/or distressed properties. Home prices will continue to be pressured by foreclosures, short sales, and tight credit markets for a while.

Condo Investors See A Bottom to the Chicago Housing Market

John McGeown — Thu, 12 Nov 2009 17:57:39 +0000

Apartment Investors Give Chicago a Much Needed Nod

We all know the Chicago rental market has been less than ideal. Prices have fallen and vacancy rates have risen. Couple that with staggering unemployment statistics, and a slew of other national (and local) financial problems and the result is a dreary, almost hopeless housing outlook for 2009.

But wait! Today in Crain’s, the “biggest downtown real estate deal of the year” just so happens to be the 480-unit Cityfront Place at 400 N. McClurg Court. Miami-based luxury high-rise developers Crescent Heights (30 E. Huron, Park Place Tower and Regent’s Park) put Cityfront Place under contract for $83 million and the deal is supposed to close this month. According to the article, this acquisition is the first downtown apartment building to sell in over two years which is a good indicator that the rental market might rebound before any other division in the housing market.

Known at “Condo Converters”

Crescent Heights is known in Chicago primarily as condo converters. One could easily assume that the apartment building was bought for conversion, but Tomer Bitton, a Partner at Crescent Heights noted that “The condo market is dead. The rental market is at the bottom and is beginning to improve.” It seems likely that Crescent Heights will keep the 39 story Cityfront Place as a rental building until the housing market and condo prices improve.

I see this as very positive news for the Chicago rental market. This kind of investment activity may seem counterintuitive given the current unemployment rate for Illinois stands at 10.5%. However, the Regional Economics Applications Laboratory at the University of Illinois predicts the state’s workforce will shrink by 4.15% to about 5.4 million jobs by September of 2010. Larger investors can take this information and speculate that they can see the bottom, which gives them a reasonable basis for projections and “worse case scenarios” that they were unable to see before.

We would like to thank kern.justin for sharing today’s photo via the Creative Commons License.

Bank of America Accused of Overcharging on Interest

Stacy Braack — Thu, 12 Nov 2009 17:22:17 +0000

12 November 2009 –

Bank of America seems to have its hands on many troubled Chicago real estate developments, including Block 37 and the Chicago Spire. Most recently, the developer of the Spire, Shelbourne Development Group, has accused the bank of using a faulty method for calculating interest on their loans. It is fairly standard practice to use a 360 day, rather than a 365 day, year to calculate interest in commercial loans. Shelbourne, however, is accusing the lender of “intentionally and deceptively” using “contradictory or ambiguous language” in the loan agreement. Construction of the building has been stalled at the foundation level, and completion of the project will depend on resolution of these financial issues. Shelbourne is currently facing eviction from its $10 million sales center in the NBC Tower, yet another indicator of the project’s difficulties.

Death and the Gold Coast: Columbarium Suggested for the Exclusive Chicago Neighborhood

Nancy Gaspadarek — Wed, 11 Nov 2009 16:15:35 +0000

11 November 2009 – The Three Arts Building located at 1300 N. Dearborn may be turned into what some are calling the Midwest’s largest columbarium. Don’t’ have a dictionary handy? This columbarium will have enough space to store the ashes of up to 15,000 dearly departed residents. Built in the early 1900’s, and designated a Chicago landmark in 1981, this four story building was designed by architect Jim Holabird and features a Byzantine-style entrance, beautiful ornate mosaics and a central courtyard. Back in the day, it served as a residence for young woman studying music, drama and painting. For between $1,000 and $10,000, the dearly departed can spend eternity in Chicago’s most expensive neighborhood. That may seem like a lot of money for a cubby hole, but compared to Bill Wrigley Jr’s 13,200 square foot penthouse around the corner at 65 E. Goethe, listed for $14 million, maybe it’s not so bad after all! Creepy? Yeah! Inappropriate? Maybe. But, don’t get too worked up just yet. Although this type of use is permitted by zoning, any changes to a Landmark building must be approved by the city. So there is a chance these uber-quiet neighbors may spend eternity elsewhere.

Fannie Mae to Become National Landlord? New Policy Allows Home Owners to Rent

Katie Anderson — Tue, 10 Nov 2009 21:19:37 +0000

10 November 2009 –Fannie Mae is primed to become a landlord on a national scale. Last Thursday, Fannie Mae announced a new program that would allow current home owners in foreclosure to stay in their homes by signing a 1-year rental agreement. After the lease expires, homeowners could then enter a month-to-month lease. This would make Fannie Mae the largest property manager in the country. While this program may keep some foreclosed homeowners from going homeless, the policy may also depress local property values. The announcement comes on the heals of Fannie Mae asking the federal government for another $15 billion in bailout money. So, who do the tenants call when the heat goes out or when a water main bursts?

Today’s Mortgage Rates; MBIA Stock Struggles

Chris DePaepe — Tue, 10 Nov 2009 19:06:04 +0000

10 November 2009 –Bonds are currently at a day change of up 9bps after opening up slightly higher than yesterday. The $40 billion auction of 3-year notes yesterday was successful in strengthening mortgage bonds and the much maligned dollar. Strengthening the dollar has been the focus of foreign and domestic investors who hope to limit its decline and then use its improved standing to aid an economic recovery. There will be another auction today, starting at 1 pm EST, for $25 billion in 10-Year notes. The market, after its incredible rally yesterday, has been relatively quiet today and is currently hovering near break-even status. It has been hampered by struggling financials, including MBIA, whose shares have drop nearly 20% today. It will be interesting to see how the stock market plays out the rest of the week as investors await Ben Bernanke’s address concerning monetary policy next Monday. Mortgage rates remain strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

Gold Soars as the Dollar Continues to Decline

matt — Mon, 09 Nov 2009 19:48:42 +0000

9 November 2009 –Bonds opened today at 6bps and have moved to a current day change of up 6bps. The upcoming week may not provide the same market-changing events such as the first-time home buyer tax credit extension and unemployment figures did last week. Notably, the Treasury will auction off $40 billion in 3-year notes at 1PM ET today. This auction will play a significant role in determining how pricing will shape up for the rest of the day and throughout the week. The weekend layoff did not slow down the stock market, as the Dow, Nasdaq and S&P 500 are all up nearly 1.5% during trading today. The dollar reached a 15-month low after a G-20 meeting reported that the dollar’s strength is wavering towards a medium equilibrium. Naturally, gold soared above the $1100 plateau and is showing no signs of slowing down as it and other commodities continue to be the hot picks of investors. Expect the market to continue its upward trend as more and more companies continue to report 3Q earnings. Many looming company acquisitions, such as Google’s purchase of technology provider AdMob, may help the market as well. Mortgage rates remain strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

Obama Signs Tax Credit Extension for Home Buyers

Robert John Anderson — Mon, 09 Nov 2009 19:07:19 +0000

On Friday, President Obama signed into law an extension and expansion of the home buyer tax credit.

A tax credit of $8,000 currently exists for first-time homebuyers who will close on a home by November 30, 2009. This credit was set to expire on December 1, but because of a continued weak economy and the efforts of Realtors, it will now remain in effect through the end of June 2010. To qualify, buyers must sign a contract before April 30, 2010 and close on the property by June 30, 2010. This opens up several new possibilities for buyers and sellers for the upcoming winter and spring seasons. It continues to be a buyer’s market even though the housing market has improved significantly since October 2008.

Additionally and perhaps of even greater consequence, the signed law offers a new $6,500 tax credit for current homeowners looking to buy up. This new credit is intended to reach those who have patiently waited for the right time to buy. Those who have used their home as their primary residence for five consecutive years our of the last eight can claim the credit. They must also close by the end of June, 2010. Coupled with the extension of the first-time home buyers’ credit, this additional provision should boost the real estate market in ways beneficial to buyers, sellers, and the real estate industry.

Congress substantially increased the income limits on the tax breaks as well. Individuals earning less than $125,000 will now be eligible (currently $75,000), and married couples with income less than $225,000 who file jointly are eligible (up from $150,000). One item to note, the tax credit can only be used to purchase homes that cost less than $800,000. Here’s a video to explain the details.

The National Association of Realtors (NAR) also breaks down the new law in a concise and simple way.

If you have already purchased a home and intend to use the tax credit, don’t forget to file. Visit www.irs.gov to find the necessary forms to receive the tax credit.

We would like to thank rutlo for sharing today’s photo via the Creative Commons License.

Unemployment Report Sends Bonds Soaring

Chris DePaepe — Fri, 06 Nov 2009 18:25:26 +0000

6 November 2009 –Bonds opened up 12bps and have trended upwards to an impressive day change of up 31bps. The Labor Department announced that unemployment rose higher than expected. The 10.2% unemployment rate for October exceeded analysts’ predictions of a 9.9% rate. This is the first time in 26 years that unemployment has topped the 10% threshold. That figure has certainly added to the strength of mortgage bonds today. With this announcement in mind, the stock market showed signs of heading into the red, but it has quickly recovered on the strength of company earnings and gold commodities, once again. Washington continues to take a strong stance on improving the housing sector as seen by the Fed keeping interest rates low and with Congress recently renewing the first-time homebuyer credit and the Mortgage Backed Securities program. We will look for news over the weekend to see how Bonds and the stock market will open on Monday. Mortgage Rates are still strong with 4.750% (4.799% apr) on the 30 year and 4.25% (4.334% apr) on the 15 year.

Tax Credit Extended and Expanded

Andrea Geller — Fri, 06 Nov 2009 15:52:25 +0000

6 November 2009 –As home buyers, sellers, Realtors® and affiliated professions await the signing of the expanded Home Buyer Tax Credit by the President, buyer options continue to narrow. According to the regional MLS, MRED LLC, there are 26% fewer homes under $800,000 on the market today than in October of 2007. While single family homes sales in Chicago have increased by 46% in this two year time frame, condo sales have seen a 15% decline over the same period. The added benefits of the housing credit include an increase in income limits and purchase prices as well as a $6,500 tax credit for current homeowners who are in the market to buy. To receive the credit, those homeowners must have lived in their current homes for five of the last eight years.