Brighter News From Residential Market: Pace Of Sales Decline Eased In Chicago Real Estate Area During Third Quarter

The outlook for residential Chicago real estate brightened somewhat during the third quarter of 2008 even as the number of homes changing hands continued to decline. Sales of all attached and detached homes, meaning single-family homes, townhouses and condominium apartments, were 23.5 percent lower for the third quarter than during the same quarter in 2007. However, that represented an improvement from the results for the first half of this year when home sales fell 29.2 percent compared to the first half of 2007.

The slowing of the sales decline can be attributed primarily to stronger activity in the Chicago real estate market for detached homes. Sales in that segment fell 16.5 percent in the third quarter compared to the same period in 2007, but that contrasts favorably with a 26.8 percent decline during the first half of 2008. For the entire January-September period, the decline from prior year sales was 23.1 percent.

The improved activity level among detached homes was most pronounced in Chicago, where third-quarter sales declined only 8.3 percent from the 2007 level. For the first six months of this year, sales of detached homes in Chicago fell 25.2 percent.

Transaction data is supplied by Midwest Real Estate Data, LLC, (MRED) and analyzed by RE/MAX Northern Illinois. The Chicago-area data includes Cook, DuPage, Kane, Kendall, Lake, McHenry and Will counties.

The average sales price for all homes sold during the third quarter was $309,429, which was 5.3 percent less than the average price in the third quarter of last year. The average sales price of an attached home rose 1 percent to $288,408 when compared to the third quarter of 2007. In contrast, the average price of a detached home fell 10 percent to $322,526.

For the nine-month period, 54,180 homes changed hands, versus 74,595 during the January-September period last year. In all but one of the seven counties, the pace of sales improved during the third quarter when compared to the first half of 2008. The most significant improvements were in Will County (3.8 percent), Lake County (2.9 percent) and DuPage County (2 percent). Only in Kane County was the pace of sales for the July-September period slower than during the first six months of the year.

“It seems the Chicago-area residential market was beginning to firm up during the third quarter. However, given what happened on Wall Street in October, it is difficult to say if that trend will continue in the fourth quarter,” said Jim Merrion, regional director of the RE/MAX network in northern Illinois. “It wouldn’t surprise me if market activity slowed until the end of the year as people digest the situation. But assuming that we work through the financial crisis and banks start lending more normally again, we anticipate that the market rebound will resume during the first half of 2009.

“The lower prices now evident, especially for single-family homes, seem to be drawing buyers back into the market, and a good number of those buyers are investors who see opportunity in foreclosure properties.”

Elsewhere in the metropolitan area, sales of single-family homes during the first nine months of the year were down 17.7 percent in Kendall County, 21 percent in DuPage County, 22 percent in Cook County, 24.3 percent in Lake and Will counties, 25.6 percent in McHenry County and 27 percent in Kane County. Sales of townhouses and condominiums were off 37.1 percent in the suburbs and 31.1 percent in Chicago.

Only a few individual communities showed strong sales increases over 2007 levels at the end of the nine months. In the city, the Near South Side saw sales rise 32.5 percent to 971 units, and West Englewood has seen 156 units change hands, an 18 percent gain. The strongest suburban performances through the first nine months of the year were turned in by Merrionette Park (up 66 percent) and Western Springs (up 16 percent).

“We are moving into a period in which homebuyers will find outstanding opportunities awaiting them,” said Merrion. “The selection of homes available this winter will be exceptional, and the owners of many of these properties are anxious to consummate a sale. November and December are the months when most folks don’t go out looking for a home, but this year might be the right time to take a different tack if your economic situation permits because there are good values to be found.”

RE/MAX Network Keeps Growing, Adds More Than 500 Franchises Through First Nine Months Of 2008

RE/MAX International Inc., one of the leading real estate brands in the world, recently announced that it has added more than 500 new franchises to its global network in the first three quarters of 2008. RE/MAX is represented in 69 countries with more than 105,000 sales associates and is also aggressively working on expansions into countries such as Brazil, India, Uruguay, and Egypt.

Notwithstanding the current economic conditions, RE/MAX continues to sell franchises and expand in the United States and Canada, with more than 200 new franchises sold during the first nine months of this year. Many of the sales were made to existing real estate offices that chose to join the RE/MAX network.

“New franchisees are joining RE/MAX because of our worldwide brand recognition, cost effective training, outstanding Web presence and excellent lead generation for agents, free of charge,” said Peter Gilmour, senior vice president for Franchise Sales & Brokerage Operations at RE/MAX International. “What sets us apart from our competition is our unique value proposition designed to help sales associates and broker/owners succeed in the current market."

In the most recent Entrepreneur Franchise 500 survey, RE/MAX is among the Top 10 franchise organizations in four different categories and has been the highest ranked real estate franchisor for eight of the last 10 years.

Jim Merrion, regional director of RE/MAX Northern Illinois, reports that the same trends RE/MAX is seeing worldwide are impacting the industry in the Chicago real estate area and other parts of Illinois.

“We’re seeing an increase in inquiries from many independent Chicago real estate offices about joining our local network,” Merrion said. “We’re especially interested in adding offices in the City of Chicago, and we think there are ample opportunities to do that with quality companies in the months ahead.”

Renting Can Be An Excellent Option If Home Lingers On Chicago Real Estate Market

It isn’t unusual to see a home for sale in the Chicago real estate market linger on the market for months, and if that situation continues long enough, many sellers wonder whether renting the property is a sensible alternative.

In the Chicago real estate market, homes that sold during the third quarter of this year were on the market for an average of 153 days, or about five months. However, a substantial number of homes take even longer to sell, according to Jim Merrion, regional director of the RE/MAX network in northern Illinois.

“When homeowners must move out of a home, whether the reason is a job transfer, a financial problem or something else, a growing number are choosing to rent rather than continue reducing the price of the property until it sells,” said Merrion. “It is not a risk-free strategy, but if a seller thinks it is likely that home prices will rebound in the next year or two, it can be an effective way to deal with a difficult situation even if the monthly costs of continued ownership (mortgage, taxes and insurance) are more than the rent received. One caveat, however, applies to condominium units. Approval from the condo association may be needed in order to rent any condo, so check the association bylaws first.”

As an example of how a rental might work, assume a home purchased three years ago for $460,000 has a current market value of $410,000, and the homeowner’s monthly cost is $3,300. If the home can command just $2,200 a month in rent, the owner would have to pay $26,400 out of his or her own pocket over a 24-month rental period.

However, if the homeowner believes the market will rebound so that the home will be worth at least $440,000 in two years, the out-of-pocket costs of renting can be recaptured when the home is sold. Moreover, because the mortgage principal will continue to be paid down while the house is rented, the balance due to the mortgage lender will decrease meaningfully over the rental period, allowing the seller to keep more of the sale proceeds.

“If monthly rent covers the cost of the real estate taxes, insurance and mortgage interest, and the seller is just chipping in the monthly mortgage principal payment, that seller is well positioned,” said Merrion. “If the seller has to spend more than that to make a rental work, it is certainly possible that a modest improvement in home prices will allow for eventual recovery of the added costs. So renting can be an excellent alternative, which is why many RE/MAX agents are actively working with owners to rent properties, as well as with those seeking a home to rent.”

Another good reason to consider renting, according to Carol Ficarra-Harczak of RE/MAX All Stars in Niles, Ill., is that leaving a home unoccupied, especially in winter, can be expensive and risky.

“Energy costs are up substantially this year, and even a vacant home must be heated in winter,” she points out. “However, if you rent the home, the tenant pays the heat. Plus, there is the security of knowing someone is in the home looking after things. Unoccupied homes are a risk in cold weather. If the furnace fails and the pipes freeze, it can be extremely costly. It happened to one of my neighbors, and repairs were $50,000.”

Renting your home can also be a way to get it sold, reports Alisha Raudonis of RE/MAX Professional Advantage in Byron, IL.

“In the last year, we’ve seen an increase in the number of folks who want to buy but aren’t prepared to do so right now because they don’t have the needed down payment or need to improve their credit score,” she said. “So they are looking for homes they can rent immediately and then purchase in a year. Agreeing to a lease with an option to purchase can be a good alternative for sellers who have listed their home for six months or so and find it hasn’t sold.” Such agreements typically provide that some portion of the rent will be applied to the purchase price, which helps the buyer build up the required down payment.

Raudonis recommends that in such situations the seller negotiate for a non-refundable down payment of at least 5 percent of the purchase price, which the buyer will forfeit if the sale isn’t completed at the end of the rental period. At the same time, she urges sellers considering a “lease to own” agreement to check with the renter/buyer’s lender to make sure the eventual purchase is feasible.

“The lease-to-own arrangement is much less complicated than the traditional contract sale, which most mortgages don’t allow,” noted Jose Molina of RE/MAX In Motion in Chicago’s Hermosa, Illinois neighborhood. “I’ll advise a client who wants to sell on a lease-to-own basis to credit as much as $500 a month toward the purchase, but I don’t want them to go higher than that. They still have to cover their costs of ownership.”

Molina also recommends that sellers who want to rent their vacated home but have moved a significant distance away from it should retain the services of a property manager to look after things.

“Especially if you are living in another state, the smallest things quickly become big problems. Let the professionals screen the tenants and take care of the maintenance. Just make sure they rent it at a realistic price,” he advises. “Professional management of that type usually costs 10 percent of the rent, and the owner also must cover any repairs or other expenses.”
A major reason many owners don’t try to rent the home they can’t seem to sell, according to Kathy Knoll of RE/MAX Advisors in Deer Park, Ill., is that they are afraid of renters.

“They really shouldn’t be,” says Knoll. “Especially today, many renters are folks who own a home in another market that they haven’t been able to sell, so they can’t buy here and need to rent. But even if someone has been through bankruptcy, it doesn’t make sense to just eliminate them as potential renters arbitrarily. Many bankruptcies are cause by extraordinary circumstances, such as excessive medical bills. I feel strongly that an owner should evaluate every renter individually.”

Knoll also urges those who are considering turning their home into a rental to be realistic about the amount they can charge.

“In these situations, owners often insist that the rent covers all their out-of-pocket costs, but that isn’t always possible. It is important to understand the local market before determining the appropriate rent,” she said. “Remember, half a loaf usually is better than none.”

Eight Chicago-Area Golfers Earn A Shot In RE/MAX World Long Drive Championship Finals

Eight Chicago area residents will be among 272 competitors participating in the 2008 RE/MAX World Long Drive Championship (WLDC) finals Oct. 20 to 25 at the Palms Golf Club in Mesquite, Nev.

The RE/MAX WLDC finals involve competition in five divisions: Open, Women, Senior (men 45 and up), Super Senior (men 53 and up) and Grand Champion (men 61 and up). At stake are shares of a $600,000 prize purse. Here is a list of Chicago-area competitors grouped by division:

Open
Ryan Schultz – Bolingbrook, IL
Jason Becker – Joliet, Ill.
Steve Nickison – Medinah, Illinois
Jason Tijerina – West Chicago, IL

Women
Lisa Joyce – Elmwood Park, Ill.

Senior
Dan Scardina – Bartlett, Illinois

Super Senior
Mark Kaiser – Glenview, IL
Rick Tijerina – West Chicago, IL

Now in its 12th year, the RE/MAX WLDC attracts competitors from Canada, the United States, Europe, Africa and Asia. It is the largest long-drive competition in the world.

REMAX.COM Remains Most Popular Real Estate Brokerage Web Site For Consumers

The http://www.remax.com/ Web site continues to rank as the most visited Internet destination among all real estate brokerage brands, earning a Hitwise Top 10 Award for the July-September quarter of 2008. Hitwise is a leading online competitive intelligence service that looks at how Web sites are used.

The RE/MAX site ranked fifth in online traffic among all real estate related sites during the quarter and was the top ranked brokerage site, averaging more than 2 million unique visitors each month.

“The strong showing http://www.remax.com/ consistently achieves in the Hitwise monthly ranking of real estate Web sites confirms that consumers think of RE/MAX as synonymous with ‘real estate,’ and it is a brand they trust,” said Jim Merrion, regional director of the RE/MAX Northern Illinos network, the Chicago real estate leader.“Using http://www.remax.comg/ gives Chicago real estate consumers access to 95 percent of multiple listing services in the United States, as well as property listings in more than 60 other nations. It allows buyers to search listings all across the country and provides sellers with valuable data about neighborhood property values,” he said. “What’s more, in today’s market, a growing number of property owners and families are turning to RE/MAX agents to help them rent homes they own or find homes to rent.”

Agents From Sterling, Rockford, Morris, Viola, Byron, Geneseo, Aledo And Rochelle Earn Top Spots In Northern Illinos Real Estate Market

Based on sales completed during the first nine months of 2008, James Cesarek of RE/MAX Sauk Valley in Sterling, Ill., retained the top spot among RE/MAX agents in northern Illinois real estate market outside the Chicago metropolitan area. Cesarek also ranked first in sales at the end of the first half of the year.

This quarterly ranking reflects the sales performance of both individual RE/MAX agents and RE/MAX sales teams based in the Illinois real estate counties of Boone, Bureau, Carroll, DeKalb, Grundy, Henry, Jo Daviess, Lee, Mercer, Ogle, Rock Island, Stephenson, Whiteside and Winnebago. Teams involve the efforts of two or more licensed individuals. Rankings are based on commissions earned.

The Top 10 Non-Metro agents and teams for the January-September period this year are:

1. James Cesarek (team), RE/MAX Sauk Valley, Sterling;
2. Tina Eisler, RE/MAX Property Source, Rockford, Ill.;
3. Vicki Geiger (team), RE/MAX Top Properties, Morris, IL.;
4. Sharon Esslinger, RE/MAX Country Crossroads, Viola, Illinois;
5. Robert Nieman (team), RE/MAX Property Source, Rockford;
6. Kitty Moring (team), RE/MAX Professional Advantage, Byron, IL.;
7. Jean Pritchard, RE/MAX Hometown Advantage, Geneseo, Ill.;
8. Starr Zook, RE/MAX On Track, Aledo, Illinois;
9. Debbie Maxvold, RE/MAX Accord, Rockford;
10. John Bearrows, RE/MAX Hub City, Rochelle, Ill.

“We congratulate these outstanding agents on their continued success. Their skills and commitment to providing outstanding service embody the highest standards of our business,” said Jim Merrion, regional director of the RE/MAX network in northern Illinois. “Top quality agents are what make RE/MAX the real estate leader across northern Illinois and around the world.”