Chicago makes biggest gain in key home price index

Chicago makes biggest gain in key home price index

By Mary Ellen PodmolikTribune staff reporter

10:48 a.m. CDT, July 31, 2012

Home prices in the Chicago area jumped an average of 4.5 percent in May, turning in the best one-month performance of the 20 metropolitan areas included in a widely watched housing index.

It was the greatest one-month percentage gain for the local home price index since S&P/Case-Shilller began charting it in January 1987. Despite the improvement, home prices are down almost 36 percent since the Chicago-area market peaked in September 2006 and stand at a level not widely seen since February 2001.

On an annualized basis, Chicago-area home prices in May were down 3 percent from a year ago.

Nationally, S&P/Case-Shiller said average home prices rose 2.2 percent in May over April and on an annualized basis were down 1 percent for the 10-city index and 0.7 percent for the 20 cities studied. Only Boston, Charlotte and Detroit saw their annualized home prices worsen in May.

"We thought we saw the bottom in 2009. We thought we saw the bottom in 2010. We thought we saw the bottom in 2011," said Maureen Maitland, vice president at S&P Dow Jones Indices. "Yes, there's no doubt these numbers were good. It's all good news, but it is two months of data."

Real estate web site Zillow said this month that the nation's housing market had bottomed, and Chicago-area home prices bottomed out in February.

Considering that in the spring of 2011, the nation's housing market saw five months of improvement before turning down again, Maitland said she'd like to see six to eight months of improvement in home prices as well as job growth, an increase in housing starts and other positive numbers for the economy and consumer confidence.

On Tuesday, the Conference Board reported a better-than expected uptick in consumer confidence.

May's 4.5 percent price gain from April was the second month-over-month improvement for the Chicago-area housing market, after a 1.2 percent uptick in April from March. Before these two months of improvement, home prices as measured by the index had been falling since August 2011.

All segments of the markets fared better on a month-over-month basis in May, but the greatest percentage gain was in homes that sold for between $147,048 and $249,933. Those average home prices rose 4.1 percent.

Condominium values rose an average of 4.7 percent in May, from April.

Last month, the Illinois Association of Realtors said that the median price of a home sold in the Chicago area in May rose 0.1 percent, the first uptick after 49 months of decline.

While the trade group calculates its prices using raw sales numbers, the S&P-Case Shiller index tracks the changing value of individual homes sold over time.

mepodmolik@tribune.com | Twitter @mepodmolik

Elite Street: Oprah sells Streeterville co-op for $2.75M

Elite Street: Oprah sells Streeterville co-op for $2.75M

By Bob GoldsboroughSpecial to the Tribune

10:50 p.m. CDT, July 18, 2012

Media giant Oprah Winfrey's Chicago-area real estate portfolio is a bit lighter these days.

On Tuesday, Winfrey finally unloaded her eight-room, 4,607-square-foot Streeterville co-op unit for $2.75 million, closing the chapter on an unusual real estate odyssey. Winfrey, who ended her long-running Chicago-based talk show in May 2011 in favor of overseeing the launch of her own network, actually had never occupied the three-bedroom unit, which is in the building at 199 E. Lake Shore Drive. She paid $5.6 million in 2006 for the sixth-floor space but had a change of heart after buying it, and she decided to remain in her massive duplex condominium in a different building a few blocks away.

The talk-show queen had listed the unit from June 2008 until January 2009 for $6 million with no takers. She then placed it up for rent late last year for $15,000 a month.

Winfrey, who now spends much of her time in Southern California and Hawaii, re-listed the unit in May for $2.8 million, and it almost immediately went under contract. Her duplex condo in Streeterville remains off the market.

The buyer of the co-op unit has not yet been identified.

"It was a very pleasant transaction," listing agent Colette Connelly of Rubloff said via email.

The unit that Winfrey sold is one of 13 apartments in a Beaux Arts-style building that was built in 1913 and designed by architect Benjamin Marshall. It has three full baths, two half-baths, 10-foot ceilings, two fireplaces, an inner foyer, a library, a solarium, a formal dining room, a butler's pantry, a wine room, a custom eat-in kitchen, a 1,241-square-foot master bedroom with his and hers bathrooms and an en suite guest bedroom.

Winfrey owns several other pieces of residential real estate in the Chicago area, including a house in Elmwood Park that she purchased in 2001 for $298,000 and a house in Merrillville, Ind. Her primary residence is her estate in Montecito, Calif., which she purchased in 2001 for a reported $50 million.

Flying away

A former United Continental executive is selling his North Shore mansion.

The airline company's former chief financial officer, Zane Rowe, who left the airline in April to become a vice president of sales at Apple, has a contract to sell his 16-room Georgian-style mansion in Kenilworth, which is listed for $3.795 million.

Through a trust, Rowe paid $3.635 million for the three-story mansion in early 2011. Built in 1924, the six-bedroom mansion has 7 1/2 baths, grand rooms, a gourmet kitchen, a lower level with a wine cellar, a three-car garage and a coach house, all on a half-acre lot. The mansion went under contract July 12.

Zillow names Chicago the best buyer's market in U.S.

Zillow names Chicago the best buyer's market in U.S.

By Mary Ellen PodmolikTribune staff reporter

12:34 p.m. CDT, July 10, 2012

Chicago may be the second city but it's No. 1 for homebuyers looking for a good deal.

Of the 50 largest metropolitan markets, the Chicago area is the top buyer's market, according to real estate site Zillow, meaning buyers have bargaining power because there are plenty of properties available for sale with steep price cuts and homes that sit on the market longer.

Within the Chicago market, Downers Grove, Northbrook, Palatine, Buffalo Grove and Orland Park were considered the top five communities for buyers.

Which communities in the Chicago area are the best for sellers? Of the top five, three -- Crown Point, Valparaiso and Munster -- are in Indiana. Bolinbrook and Aurora round out the list.

Zillow's calculations looked at sale-to-list price ratios, the number of days a property spent on Zillow and the percentage of homes on the market with a price cut.

Other buyers' markets nationally were Milwaukee, Cleveland, New York City, Philadelphia, Jacksonville, Fla., Providence, R.I., Cincinnati, Hartford, Conn., and Houston.

The top sellers' market was San Jose, Calif., followed by San Francisco, Las Vegas, Sacramento, Phoenix, Riverside, Calif., Washington, D.C., Los Angeles, Salt Lake City and Austin, Texas. Some of the interest in those markets is driven by investors buying properties in bulk and turning them into rentals, Zillow said.

Confidence rebuilding in Chicago housing market

Confidence rebuilding in Chicago housing market

Mary Ellen PodmolikThe Home Front

2:01 p.m. CDT, June 28, 2012

Homebuilders haven't been a particularly confident bunch the past few years, and who can blame them?

But that appears to be changing. While it won't mean an abundance of homes coming to a new subdivision near you immediately, it may mean that 2013 could be a busy year for earth-moving equipment and concrete trucks at new-home construction sites.

Last month, a national measure of homebuilder confidence rose again, bringing it to the highest level since May 2007 amid expectations that the single-family new construction market will maintain a gradually improving pace.

• MARY ELLEN PODMOLIK
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Homebuilder Jamie Bigelow is confident, too, but he's no longer placing his bets on the Chicago market. Two months ago, he set up shop full time in Austin, Texas, in effect mothballing his suburban Chicago operation.

When he started dabbling in Texas six years ago, it was his third division. Now it's his primary division.

Last year, he sold 36 homes in the Austin market. This year, he expects to sell 56. By current definitions, he says that equates to success. Meanwhile, it's been two years since he built a house in Chicago's market.

Others continue to turn over dirt in the Chicago area. Ryland Homes is marketing homes in the partially completed Lakewood Crossing project in Hampshire. Hovnanian Enterprises reported that during its second quarter, net contracts in the Chicago market were up 98 percent from a year ago. And in Chicago, Belgravia Group has started marketing $1 million single-family row homes in Chicago's Lincoln Park neighborhood.

More is on the drawing board.

"I've got eight market studies under way and that's the first sign of homebuilder confidence," said Lance Ramella, Midwest director of consulting for housing data provider Metrostudy. "I'm doing work for companies that are looking to develop raw land and it's private builders, not just public builders. They clearly think we're either at the bottom or bouncing along the bottom or just off the bottom."

The most recent report on existing-home sales may give a little credence to that thinking. The median price of an already-built home sold in the nine-county Chicago area in May broke through a psychological barrier, posting a $100 gain after 49 straight months of year-over-year median price declines.

Brian Brunhofer, president and owner of Meritus Homes, said he's seeing a greater level of optimism from consumers as well. Brian and his wife, Karen Brunhofer, launched Meritus in mid-2010 and are doing the planning for their third, fourth and fifth developments, in St. Charles and Naperville.

"We're starting to hear from more buyers with a higher level of confidence," Brunhofer said. "People want to get on with things as opposed to sitting around."

He also finds it safer to concentrate on stable submarkets and to target move-up and move-down buyers, rather than first-timers.

"Both those buyer groups, they have more equity in their homes than most and they have the ability to get financing," Brunhofer said.

As for Bigelow, he still controls 50 developed lots in Aurora. "We think the market is going to come back one day," Bigelow said. "It's not worth enough right now to sell it and we're not looking to give it back to the bank.

"When the phones start ringing, that's when we'll come back," he said. "(Chicago) is my home. I love it, but you've got to make a living."

Foreclosure review update. The federal government has extended again — now to Sept. 30 — the deadline for eligible borrowers who think they were wronged in a mortgage foreclosure action in 2009 or 2010 and want their cases reviewed to see if they are due any financial settlement.

Consumers who feel they suffered financially from errors made in their foreclosure actions could be eligible for lump sum payments of $500 to, in the most egregious cases, more than $125,000, according to newly released guidelines from the Federal Reserve and the Office of the Comptroller of the Currency.

The review process and settlement funds were the result of an April 2011 settlement between banking regulators and 14 mortgage servicers to fix their mortgage servicing process. More information is available at independentforeclosurereview.com.

A surge in housing demand

A surge in housing demand

By Alejandro Lazo, Tribune Newspapers

9:35 p.m. CDT, June 21, 2012

The newest problem for the slowly improving housing market isn't a shortage of serious buyers, it's a shortage of good homes.

Would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. Bidding wars are erupting. And real estate agents are vying fiercely to represent the few sellers that do exist.

Housing inventory has sunk to levels not seen since the bubble years. The number of American homes with a "for sale" sign hit 2.5 million in April, the lowest number for an April since 2006, according to the National Association of Realtors.

David Dennick, who lives in Los Angeles and works as a television editor, has been searching for a home with his wife, Denise, for about two months. The couple have already bid on three properties. They are hoping to find a home for less than $525,000, which is $25,000 more than they originally had hoped to spend.

"It is much more competitive than we thought," said Dennick, standing in the entrance of an open house on a recent Sunday. "It is just frustrating because we thought we would really be able to buy a house; we are a middle-class family."

Rock-bottom interest rates and the sharp drop in inventory have helped stabilize even some of the hardest-hit markets, including Southern California, Las Vegas, Phoenix and Miami. Some real estate professionals are concerned that the lack of inventory might turn off potential buyers, stifling the recent recovery in home sales.

The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized. Fewer borrowers are entering default, and banks are better managing the properties they do have on their books.

In addition, professional investors bankrolled by private equity firms and hedge funds are pouncing on bank-owned homes, often turning them into rentals.

A dearth of new construction also is constraining supply.

In April — the most recent month for which figures are available — the number of completed new single-family homes available for sale stood at 46,000, the lowest level since the Census Bureau began keeping track in 1973. Some 70,000 were under construction, also near historic lows.

The inventory problem has been exacerbated by the plunge in home prices since the go-go years. Many people who bought at the top of the cycle are so deeply underwater that they can't get the price they need to sell and are therefore not bothering to put their homes on the market.

"We know negative equity holds back home sales, but it also holds back the listing of sales," said Sam Khater, an economist with CoreLogic, a company that tracks the mortgage market. "Today it is holding the market back."

The lack of available homes is maddening for those consumers who thought 2012 would be the year to buy.

Eddie David and his wife, Tiana Rezac, have felt the unexpected shortage firsthand. The two were sure they would buy a house this year until they tripped into the perplexing new housing reality. After being outbid on three different Los Angeles properties, they shelved the search.

"With the downturn, it seems like there are a lot of people who have been waiting in the wings to pounce, and because the rates are low, there is just a lot more competition," David said. "There were multiple offers. We tried to get in on a couple other homes, and even though it had been just a week or two weeks, it was just too late."

Alex Gruenberg and his wife, Kristina, lost out on a home that ended up going for $30,000 more than they offered. The recently married couple have new jobs in the area and are looking for a pedestrian-friendly neighborhood with decent dining options.

They are now trying to find homes before they are listed.

"We are really learning that there is sort of an inside element to that," Gruenberg said. "Things are going in days."

Glenn Kelman, chief executive of real estate website Redfin, said the recovery remains tentative but the market has grown competitive because sellers feel they have time on their side, while buyers feel a sense of urgency given low interest rates and relatively cheap prices compared with the bubble years.

"It is a precarious situation, but the real issue is that nobody wants to sell a house right now," Kelman said. "So now we have classes for our real estate agents on how to win a bidding war."

Kelman suggests trying to tour the home when the seller is present and working with a local lender who might know the listing agent personally.

Also important is having enough cash to make up the difference between the negotiated price and whatever the appraised value of the home turns out to be, he said. (Lenders won't provide a mortgage for more than a home's appraised value.) Many deals these days are falling apart because appraisals are coming in low, given how many recent comparable sales have been foreclosures or other distressed properties.

"The appraisal is blowing up the deal half the time," he said.

Mike Glickman, a Los Angeles real estate agent, has a strategy to win clients. He offers sellers a choice: He'll give them a $1,000 gift certificate to any store of their choice simply for listing a property with him or he will cut his commission to 0.5 percent instead of the more typical 6 percent.

"There is an incredible shortage of houses on the market right now, and I haven't seen a fever like this for houses in like maybe 10 years," Glickman said. "If anything priced within reason comes on the market, there are six or seven or 10 offers."

Frank Casarez, an agent with Coldwell Banker, said he is experiencing a crush of buyers for the foreclosed homes that he lists for banks.

"There is such a high buyer demand," Casarez said. "Even with the economy the way that it is, with job losses, there are quite a few people who thrive on this setting, who have been saving for a long time and have been saving to get a deal on the property."

Real estate agents are so eager for more homes on the market that they are enlisting members of Congress to push back against a federal plan to auction off huge pools of government-owned properties to be converted into rentals.

Phil Jones, a member of the California Association of Realtors' Distressed Property Task Force, said that bankers who meet with the group "have a very systematic plan to distribute these homes on the market."

Chicago home prices up in April after 7 months of decline

Chicago home prices up in April after 7 months of decline

Average home prices in the Chicago area rose 1.1 percent from March, compared to a 2.5 percent drop the previous month.

By Mary Ellen PodmolikTribune staff reporter

8:29 a.m. CDT, June 26, 2012

After seven consecutive months of decline, average home prices in Chicago posted a slight uptick in April, according to the widely watched S&P/Case-Shiller home price index, released Tuesday.

Average home prices in the Chicago area rose 1.1 percent from March, compared to a 2.5 percent drop the previous month. On an annual basis, local average home prices were down 5.6 percent, making it still one of the weaker markets. Of the 20 cities included in the index, only Atlanta, Las Vegas and Phoenix had greater declines in annual pricing.

Chicago-area average condo prices also showed some improvement, rising 0.7 percent from March.

It remains a long trek toward a local recovery. Average prices on homes are at their May 2000 level, while average prices on condos in the Chicago area are near where they were at during the fall of 1999.

Last week, the Illinois Association of Realtors reported that the median price of an existing, single-family home in the nine-county Chicago area rose by $100 in May, its first improvement in 50 months.

Nineteen of the 20 metropolitan areas included in the S&P/Case-Shiller index recorded average price gains from March. Detroit was the only city to show a decline from March, while that city and New York City were the only markets with year-over-year declines.

"It has been a long time since we enjoyed such broad-based gains," said David Blitzer, chairman of S&P Indices' index committee. "While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign."

Nationally, April home prices were down by 1.9 percent from April 2011 for the 20 cities included in the index. In March, home prices for the 20-city composite fell 2.6 percent on a year-over-year basis.

It pays to be proactive in a short sale

It pays to be proactive in a short sale

By Lew Sichelman, United Feature Syndicate

June 22, 2012

Under new guidelines set down by Fannie Mae and Freddie Mac, underwater borrowers who are seeking to sell their homes for less than what they owe must now receive decisions from their lenders within 60 business days. But if they are not careful, floundering borrowers can cause delays beyond the two-month deadline.

The new rules, which took effect June 15, apply only to loans owned or rolled into securities by Fannie and Freddie. But because the two mortgage giants are the main conduits between primary lenders and investors in mortgages, their precepts cut a wide swath.

More than 10 million homeowners are said to be underwater with their mortgages. Not all want to get out. Many are content with their current situations and have no intention of moving, at least for now. Others continue to hold on in hopes that values will start rising again.

Unfortunately, others need to go, and many of them would rather sell at a loss through a short sale — a loss their lenders would have to absorb — than have their homes taken away.

The new 60-day rule became necessary because lenders were taking an inordinate amount of time to make up their minds — eight months on average at one point, according to RealtyTrac, a foreclosure data firm. It took so long to receive an answer that many would-be buyers became tired of waiting for a decision and went elsewhere.

But borrowers need to realize that the rules cut both ways. While lenders are required to adhere to faster timelines, borrowers also must do their part. Otherwise, they can short-circuit their own short sale.

A decision can be delayed, for example, if all the paperwork the lender requires has not been supplied. If something as simple as a photocopy of a driver's license is missing, a borrower might have to start the process over, says Steven Horne of Wingspan Portfolio Advisors, a firm that services nonperforming loans.

Consequently, Horne and others agree that the most important thing a borrower can do is engage the services of a real estate professional or attorney who has experience in short sales, preferably with their particular lender. Not to bash rookies, but now is not the time to allow someone to cut his or her teeth on a deal.

"The way short sales are packaged and presented by real estate agents is more than half the battle," says Ed Delgado of WREN, the Wingspan affiliate that trains agents on how to package their short sales to speed up the process and gain approvals. "The more agents understand about how the process works, the fewer the delays and the faster the closings."

Matthew Vernon of Bank of America, which maintains a roster of experienced agents on its website (agentlocator.bankofamerica.com), agrees. "We get agents who are still learning the short-sale business, and that's never a good thing."

One good reason to have an agent who has a working familiarity with short sales is that, unlike a regular sale, the short sale is basically a two-step process. It's important to understand which step comes first.

Some lenders work the traditional way: Find a buyer, bring us the deal and we'll make a decision. But other lenders want borrowers to approach them first, come to an agreement on an acceptable price, and then find buyers at that figure.

"With some lenders, you can't just randomly list your house," Delgado says. The short sale can still be done, he says, but the timeline for closing is longer. "Usually people blame the lender for that, but often it's their own doing."

Complete and accurate financial information is critical, and the quicker a borrower completes the requested paperwork, the faster action can be taken.

It goes without saying that all forms should be filled out legibly, preferably typed. Pages get faxed back and forth several times, so if something is handwritten in pencil, it eventually will become illegible.

One key document is the hardship letter, in which the borrower states in his own words why he needs to sell at a price that undercuts the lender. "You don't need a novel," just a step-by-step explanation of how you got into financial difficulty, says Karen Mayfield, national sales manager at Bank of the West in San Francisco.

"Be precise; be clear," Mayfield advises. "Offer a bullet-point list in your own hand of the events that led to your hardship. If the lender can't understand how you got into trouble, he may close your file and move on to the next one. Or he may suspect you are trying to pull a fast one."

That leads to another important point: Make sure the hardship letter matches up with all the other documents provided. Those documents might include key medical records, a divorce decree or unemployment verification.

Other documents lenders may require include tax returns for the previous two years, bank statements for the previous two to six months, pay stubs for at least the previous 60 days, proof of residency in the form of a paid utility bill, a listing agreement and a third-party authorization allowing the lender to deal with the agent.

Gee Dunsten, a Salisbury, Md., agent and popular sales trainer, binds all these documents behind a cover letter and table of contents that "lets the lender know right away that everything it needs is included."

At some point in the short sale, borrowers have to justify the selling price, backing it up with a broker's price opinion or perhaps even an appraisal, a history of the listing that shows attempts to sell at a higher price, a report listing sales of other houses in the neighborhood, a sales contract with a preapproval letter from the buyer's lender and verification of his earnest money deposit and funds to close.

Dunsten likes to write a personal letter to his client's lender explaining the intricacies of the sale. "When it comes to short sales," he advises other agents, "the devil truly is in the details."