Home Buying in Chicago>Question Details

Anne Kowalcz…, Home Buyer in Chicago, IL

Is it a good time to buy a house in Chicago or will the market continue to decline?

Asked by Anne Kowalczyk, Chicago, IL Thu Jan 21, 2010

My husband and I are trying to decide if we should buy a house this summer, or wait another year or so until we have a little more money saved. If it's going to save us money (interest % price), then we would like to buy this year but if not we may wait a little longer.

Help the community by answering this question:


PS.............Kudos to all you IL Realtors - everyone was thoughtful and respectful in their responses, even when under attack......you do your state proud!
2 votes Thank Flag Link Wed Jan 27, 2010
The time to SELL was Fall 2005. If someone would have told you that then, would you have believed them? Probably not, so choose your poison. The time to sell in 2010 is NOW - Here's why:

Typically the Chicago Spring real estate market starts after Super Bowl Weekend. During this time the amount of inventory and buyer traffic begins its seasonal upswing. However, the last few years have been anything but typical and we are recommending to clients that the time to list will be sooner than in previous years. We see a few factors that will affect the ability to purchase and sell a home this year.

Federal Reserve $1.25 trillion mortgage-backed securities purchase program will end at the end of March.
How this impacts my clients: Prior to the financial crisis mortgage-backed
securities were an attractive investment option for large scale investment houses which helped keep rates low. Now that the government will stop purchasing mortgages the anticipation is that rates may climb to 6%.

The Federal Housing Administration will tighten underwriting standards in April
How this impacts my clients: There is discussion that the FHA may require buyers to bring more cash to the closing, raise minimum credit scores for qualification, and reduce seller contributions by half. This will result in fewer buyers qualifying for a loan.

The End of the Housing Stimulus Package
How this impacts my clients: Those who qualify for a tax credit will need to be under contract by April 30th and close by June 30th in order receive their tax credit.

It is wise to get in front of these restrictions and sell sooner rather than later before changes in policy could limit a buyer’s ability to purchase your home. Don’t wait for increased levels of available properties on the market to dilute your efforts to sell.
Web Reference: http://www.wilsonliving.com
2 votes Thank Flag Link Sun Jan 24, 2010

I've bit my lip all through the 28 post here and have read your comments carefully, acknowledging that you are entitled to your opinions. With all due respect, you seem convinced that you know what's going through people's heads and are very comfortable speaking for the general masses in your commentary.

Homeownership is about more than investing. It's about communities. If you believe that everyone who is upside down is upset about buying the place they call home, you're putting a lot of burden on the "investment" component of homeownership. During the boom too many people view their homes as investments, exacerbating the foreclosure mess. Remember, those 25% of upside down homeowners are only upside down IF they sell their home in THIS market.

Many of those homeowners are enjoying their homes, neighbors, neighborhoods, school districts and lifestyles just fine.

Thanks for playing devil's advocate to the Realtor huffing and I can appreciate some of your angst, but really... It takes more than just one profession to run an economy off a cliff. I am proud to do what I do and call myself a Realtor, so please stop throwing mud with rash generalizations. No one here so far has won an award for saving the economy yet, so let's get down to the important business of putting our communities back together, one home at a time.

Wayne Beals
Keller Williams Chicago Consulting Group
2 votes Thank Flag Link Sun Jan 24, 2010
Hi Anna,

Have you been looking? If so, where? And if so, at what price point?

There are several factors that earlier respondents accurately have pointed to: interest rates and inventory being among them. Rates are low, affording capable buyers with right-sized credit scores to get loans to make purchases with comfortable monthly terms. Those who wait to make purchases will, by mid-year this year, face higher rates that will impact monthly budgets adversely. In other words you will pay more for the money that you borrow to make your purchase.

I guess the point I am after is that it is all relative. While Case Schiller points to a bell curve that associates current market values to those of 2005-2006 those who criticize Case rightly point out that it does not factor in all elements that comprise a market like new construction and condos.

And guess what, condos make up a significant part of the Chicago market. I know you are not buying a condo, but to skip them while establishing an analysis of an overall market constitutes, in my mind, a faulty argument if not outright deviousness. Not to say that prices have not fallen - they have. But as you attempt to gain insights as to tomorrow and the day after it may be reasonable to leaven your assessment not so much with pricing models that are more apropos for suburban milieus but with connect the dot analyses of those specific locations that appeal to you.

And so if your predilection is Andersonville, expect to pay more, perhaps twice as much, than if you like Jefferson Park. And Jefferson Park is double or more than Chatham. At the end of the day a very salient feature of the market is that it is extremely local. That's why we see more and more web wizards bandying about language like "going granular." This is simply new semantics for what has always been the truth in real estate - it is very, very localized.

Back to your original question - is now a good time to buy? The answer - it depends. Do you have a down payment, a credit score for a good rate, where do you want to live and what do you want. As rates go up your buying power not only goes down - it goes way down. While prices may not have reached the basement, they seem to be close save for that part of the inventory that is inspired by defaults and foreclosures.

Finally, one pithy quote I like is that the only clear perception of the bottom of the market is when we see it fading in the distance in our rear view mirrors.

I wish you the best of luck in finding a real estate professional to work with that assists you to better understand the market you wish to understand and to help you find the best match for your wants at the best price.

Tom McCarey
The Real Estate Lounge Chicago with @properties
Expertise in Negotiation, Buyers' Representation and Luxury Home Marketing
2 votes Thank Flag Link Thu Jan 21, 2010
Hi, Anne! There are many factors to consider in answering your question...first of all, can you get financing, or do you have the cash? There is that tax credit, which supposedly will expire April 30, which is a pretty big deal if you can take advantage of it. Then, there are houses and there are houses. Many are priced so attractively right now, either because they are a short sale, a foreclosure, or because the sellers are being realistic about pricing their home to compete with the foreclosures and short sales. Conversely, I read an article yesterday in Crain's Chicago Business that quotes Tracy Cross in saying the market in Chicago will not recover until 2013! So, to hedge your investment, you should be sure you can stay in the home for 3-5 years. Buy the worst house in the best neighborhood you can afford. Buy close to public transportation, which is always helpful in selling or renting a house. Be careful if the home needs repair. Be sure you can afford to fix the place up if it needs it before you have to sell. If you are thoughtful this can be the very best time to buy a home. But if you don't have good credit, or if you might have to move before 2013-15, or if you buy the "wrong" house, buying a home now could be tricky. Get a good realtor to help you find the right place. And call me if you want to talk about it, I've worked for 35 years in Chicago-area real estate!
1 vote Thank Flag Link Tue Feb 2, 2010
Daniel: " I'm glad that Anne started this little teapot tempest. It's enabled me to get some stuff off of my chest"
Daniel if this served as a therapy session for you so that you could vent and get "stuff" off your chest, then I am sure everyone here is pleased to have helped.
If sharing your grandiose generalizations was theraputic.........then it was worth having to read through them all.........No need to thank everyone for taking the time to do so!
Daniel: "I must have touched a raw nerve ....."...
No, Daniel, you didn't hit any raw nerves. You simply made numerous inflamatory statements that anyone would take issue with.

Not sure why you seem to have such animosity directed at realtors.

Anne - I just came across this thread and read through all the posts. I must say, objectively speaking, I thought you received very thoughtful and honest responses (hence, I sprinkled a lot of thumbs ups around!!).

No one waved a flag and told you to run out and buy a home.The general consensus was that if the time is right for you....then buy - it's a personal decision. The pros and cons of buying now or waiting a year were carefully laid out for you....... If you buy now, prices may still fall....if you wait a year, interest rates may be higher..

I thought you expressed your feelings quite well, too, and have put a lot of thought into this already. From what you said, I do think you are ready to buy a home, and I want to wish you much success with whatever you decide. You are going into this with your eyes wide open..............you accept the risk that the prices may depreciate further............and, your plans include remaining in your home for the long term.
All good reasons to move forward with this.

Best wishes..................enjoy your house hunting!

Debbie Rose
Prudential NJ Properties
1 vote Thank Flag Link Wed Jan 27, 2010
Danyel - you give yourself way too much credit.
1 vote Thank Flag Link Mon Jan 25, 2010
Alan May, Real Estate Pro in Evanston, IL
"Of course most realtors will tell anyone who is listening that this is a great time to buy."
Daniel, I take issue with this statement.... you have no idea what "most" Realtors will tell their clients. Take my comment for example (first comment in the list)... did I say "great time to buy"?... I did not.

I also take issue with your statement:
"if any of them feels bad for the clients that they worked with and who ended up buying at the peak of the market or in the run-up years to the peak? Do you feel totally blameless for your part in this?"
Yes, of course I feel bad when my clients end up upside down... but I don't accept any "blame". I help people who come to me looking to buy homes, and looking to sell their homes.... I don't go our and corral them... I don't hijack people who weren't considering selling, and force them to sell... and I don't talk people into buying or selling.

Your generalizations, from the perspective of a home inspector are just that... generalizations, and without foundation. I could make generalizations about inspectors who make statements like "wonder if I was tough enough in the defect recognition"... (which makes it sound as though you weren't "honest" in your report... or are suggesting that maybe you should have "exaggerated" in your report in order to affect your own agenda, instead of that of your paying client??).

Most Realtors (as well as most inspectors) are responsible, hard-working honest people who are just trying to make a living, and are not out "forcing" people to buy and sell homes against their will, and are no more responsible for this down economy than the average citizen.

... and real estate is NOT what tore the economy asunder... there were many reasons... and the bundling of "credit default swaps" with high risk mortgages was a major cause. There's not a single real estate agent, or Realtor who sold a single one of those.
1 vote Thank Flag Link Sun Jan 24, 2010
Alan May, Real Estate Pro in Evanston, IL
Wayne, the problem with the current economy comes from the tech bubble and the policies put in place by the federal government.

"Homeownership is about more than investing. It's about communities."
When I buy a house I am not buying it to sell it later. I am not buying a house to create or improve a community. I do not believe that me buying (or not) a house will make any difference to anyone but me.
I am buying a house to live in. I do NOT see it as an investment. I see buying a house as getting something that will be there for me now and long into the future. Anyone who buys a house as an investment should buy anything else instead. A community is built by the people in them. SInce we are told the average person moves every 5-7 years communities are very short lived at best.

During the boom too many people view their homes as investments, exacerbating the foreclosure mess.
Agreed. To many people also bought more house than they could really afford. Beyond that aspect, people bought houses that were really worth a lot less than what was paid for them. A house is a roof to keep you warm. It is not and never should have been considered an investment.

"Remember, those 25% of upside down homeowners are only upside down IF they sell their home in THIS market."
True enough. In tomorrows market they could be (and likely will be) even more under water. As long as anyone likes the house they bought they should stay in it and make their payments.

My concern here is simple. Every person who buys anything (even a house) should look at it to make sure they are not overpaying. If we can see that there is a force coming that can save people from wasting a large amount of money it makes sense to wait until the sale prices arrive.

If anyone would buy a house today and see the price drop by $35k and need to sell before it goes back up, they could be unable to handle that loss. At 5 years just going through the amortization table buying is not any advantage over renting.
1 vote Thank Flag Link Sun Jan 24, 2010
Very well put! Thanks!
Marge Ruff
1 vote Thank Flag Link Sun Jan 24, 2010
Many people bought during the peak of the market that had no business buying a house. They had the carrot dangled infront of their face with low interest rates, no doc. loans and creative financing. The opportunities were there without much guidance.

No one can say for sure what the market is going to do. What you have to look at is can you afford to buy without strapping yourself should something happen to you or your job. If you are in a position to buy, plan on being there for awhile and are not doubling your monthly payments, then maybe now is the time to buy for you. If interest rates go up, then your buying power will go down. What you could afford at todays interest rate may not be what you can afford if rates go up. This is an unprecidented market, so it's too hard to say what will happen with any certainty.

This is a finacial decision and only you can decide if it is right for you. I have had seveal first time home buyers that have purchased in 2009. They are all in a sound financial position and decided now was a good time for them. Some of the property values have gone down a little since they bought, but they are ok with that. They don't plan on moving anytime soon and for them, getting out of an apt. paying rent and having their own place was worth it. Best of luck to you.
1 vote Thank Flag Link Sun Jan 24, 2010

Best of Luck. The right time to buy a home is not when the market hits the bottom....it's when you need a home!

Wayne Beals
Keller Williams Chicago Consulting Group
1 vote Thank Flag Link Sun Jan 24, 2010
Very well said!!!!!
Marge Ruff
1 vote Thank Flag Link Sun Jan 24, 2010
To the home inspector,

Well, here's the thing. I really want to buy a house. I hate living in an apartment with my 1 year and my husband surrounded by a bunch of noisy tenants where I pay just as much if not more rent than I would owning my own place. That makes little to no sense at all to me to continue to do that for any length of time if I can help it. So, here's my dilemma: I want to buy at the best time that I can. If interested rates have the potential to go up in the next 6 months, then I want to buy soon because I will be able to live in a better house that I could afford to if the interest rates go back up to 6%.

That is really one of the things I was wondering. And a lot of people seem to agree that in the areas that are worth buying in things most likely aren't going to get a whole lot cheaper than they are right now. Maybe they will go down a little, if the interest rates go up, but then I'm back in the same dilemma except I'm paying more on interest then I am in principal because home prices went down and interest rates went up.

I know that things will come back around, at some point. It may be 7-10 years before that happens, but I don't want to wait around spending $15,000 in rent per year when I could be owning a home and getting a tax break. As long as I know what I can afford, even if the banks tell me I can afford more, I know what my budget is. It is actually kind of suprising that anyone would discourage anyone from home ownership if they can afford to do so, because the benefits financially as well as personally are astronomically better than renting and paying someone else's mortgage.

That is my $.02 on the matter, and I appreciate everyone's input!

1 vote Thank Flag Link Sun Jan 24, 2010
Thank you Marge. I also love my job. I enjoy helping people and their well being is my first concern. Some of the negative comments I find on this site are very disappointing. Although being a realist I know there are some bad eggs out there...as in any profession. I am proud of the work I do.

And Daniel, it is a shame that you think of yourself as a "lowly home inspector". I have great respect for good home inspectors.

Sandra Matson
Baird & Warner
1 vote Thank Flag Link Sat Jan 23, 2010
Hope you weren't trying to generate any business with those sunny answers!! And FYI, I love my job. I love matching people up with their dream homes! I love it!! Is that such a terrible thing??

Marge Ruff
Web Reference: http://homesbuyruff.com
1 vote Thank Flag Link Sat Jan 23, 2010
Daniel, I am not a pro. I did give a reply that was not all sunshine and lollipops below.
1 vote Thank Flag Link Sat Jan 23, 2010
Let's start with the fact that no one can tell the future. That said, there have been quite a few good thoughts and perspectives laid out in the previous answers.

With inventories being as high as they are, I find it hard to believe that we aren't going to continue to see a decrease in value. There's a lot of artificial influences (tax credit, low rates, down payment assistance) shoring up the market right now, so that adds to the concern.

That said. You have to look at the local market you are purchasing in to better determine your best move. To determine the best move for you, you have to consider quite a few variables:

1. How long are you going to stay in the home? In the long term, a modest further decline in value may not have an appreciable impact. Historically, Real Estate does well overall with periods of appreciation and decline.
2. Would your current educational/transportation/lifestyle expenses go up or down with the move? This can vary by school district and area walkability.
3. Are any of the properties you would consider less expensive to purchase rather than rent? How about after considering the Tax Implications?
4. How mortgageable are you?

These are only a few questions to ask. If you were asking strictly for investment purposes, I would pose different questions. The one thing that everyone needs to remember when they're shopping for a home, is that they're not just looking for an investment, they're building a life within a community. The sense of permanence that comes with being able to call a place yours is worth more than money. I like many others bought my current home at much higher values than it would be worth today. I have no regrets given the roots we have established and would not really change anything. It's only a loss if we have to sell, today.

Best of Luck in making your decision.

Wayne Beals
Keller Williams CCG
1 vote Thank Flag Link Fri Jan 22, 2010

Like everyone else I am going to say that is a very good question. A post to my blog this week was entitled "Have You Read the Market Predictions for 2010?". A link for that post is below.

Sandra Matson
Baird & Warner
Accredited Buyer's Representative
Certified Residential Speicalist
Direct: 312.981.2315
1 vote Thank Flag Link Thu Jan 21, 2010
After talking with some bankers and reading about the new changes with FHA qualifications plus the tighter restrictions on the banks from the Feds I'd say that inventory will remain high and prices will continue to fall. I know that in the Park Ridge market the prices have not bottomed out yet.

That said, if interest rates climb you would be wise to find a home now and settle in to a 30 year fixed mortgage as soon as you can.
1 vote Thank Flag Link Thu Jan 21, 2010
On the mortgage calculator below put in $125,000 purchase price. 20% down. on the taxes and insurance line say no. That gives you a $100,000 loan with nothing but mortgage being considered.

I wrote an easy way to look at the cost benefit analysis of renting verses buying. See how your numbers look running them yourself.
Below is another blog. I tried to show some valid reasons to wait to buy. I could be right, I could be wrong. It is just another thing to consider in making your decision.

If you like those blogs I have others talking about more of the house buying decision and process. Put your mouse over my picture. click on profile. seeing blogs will be possible.
Whatever you decide, I wish you well.
1 vote Thank Flag Link Thu Jan 21, 2010
Here is one prediction.
Chicago home prices are forecast to deflate an average of 10.2% in 2010.

Keep in mind, predictions are not always right.

One other thing to consider. interest rates.
The federal reserve will stop buying MBS (Mortgage Backed Securities)come march. That will increase interest rates at least 1/2%. Some say 1%. At the same time we have the federal government trying to sell $100 billion each week of their new debt. That is highly likely to increase interest rates by itself. Add the two things together, what does it do? If inflation starts to get bad the federal reserve will have no choice but to increase interest rates. It could be hard and fast considering all the extra new unbacked money it just printed.

Consider the effective buying power as interest rates go up.
starting at an even 5% interest rate.
6% you lost 11% buying power
7% you lost 24% buying power.

a small 2% increase in interest rates and housing just lost 1/4 of its value if monthly incomes and payments remain constant. Interesting isn't it?
Prove it yourself. Look below
Take the monthly payment at 5% which is $536.82
Take the monthly payment at 7% which is $665.30
subtract 536 from 665. $128.48 is the difference Divide 128.48 into 536.82 and you get .2393 (24% or close enough) what does a 24% decrease in buying ability do? Think about it.

The other aspect is you get 10% of purchase price up to $8,000 back if you buy before april 30 2010. But will it only lower prices later on? I see that as likely. If monthly payments and ability remain constant when interest rates go up, prices have to go down. It is the only way to have the ability to buy remain.
1 vote Thank Flag Link Thu Jan 21, 2010
Hi Anne,

You know about the tax incentives. Here's my point of view on where the market is heading:

Interest rates will remain artificially low until early April. Once the Fed shuts down its Mortgage Purchase Facility, rates will become increasingly subject to market forces. While prices are likely to remain either stagnant or even decline further, now is the time to lock in the great financing. Once rates are free to float based on the market in the Spring, I do expect them to rise significantly. I do not expect fair market prices to slide nearly as much as they already have, however; they should remain under pressure due to rising interest rates. Location, type, and condition of the property you chose will factor in how well it weathers the rest of the storm.

We are also expecting to work through the remainder of the Distressed Market this year as well There will always be distressed property on the market, but after 2010/2011, we should return to normal levels, rather than the elevated inventory of this type that we're currently seeing.

My Bottom Line: Buy now. In my opinion, the money you save in interest over time FAR outweighs, the potential for prices to decline further. Bottoms are generally called well after they have already passed.

Best of luck,
John Astorina
Keller Williams Realty
Chicago, IL
1 vote Thank Flag Link Thu Jan 21, 2010
Anne - nobody can give you a definitive answer to this question.

Some feel that we've "touched" the bottom and are bouncing (hard) along, and can expect a lot of little "ups and downs" for the next year or two.

Others feel that we haven't yet touched bottom, and can expect further declines for the next several years.

And Chicago is a large place... different communities and different suburbs have had different rates of decline, and recovery.

All I can tell you, is that right now... interest rates are low, inventory is high, and prices are depressed. I don't know if prices will continue to fall, but if they do... will interest rates remain low?... I just don't know.
1 vote Thank Flag Link Thu Jan 21, 2010
Alan May, Real Estate Pro in Evanston, IL
Here's something from a great site for folks considering buying a home.

The site is: http://www.irvinehousingblog.com/

Here's part of a recent article on real estate agents who talk about 'the time to buy'.

“People are frequently buying for the wrong reasons,” says Frank LLosa, a real estate agent working in northern Virginia. In most cases, he says, they think that they are getting an income tax break or that their home is an investment.

He points out that a buyer of a $300,000 home would have to see the house appreciate $18,000 just to cover the commission and closing costs. Then figure in the predictable costs of maintenance, the opportunity costs of the mortgage down payment and the amount one could have saved by renting a similar place more cheaply.

Mr. LLosa thinks that many people — including him — would be better off renting. People ought to buy a house for what he calls “warm and fuzzy feelings,” but they shouldn’t try to predict home prices. Nor should real estate agents, who aren’t much wiser.

“I don’t think real estate professionals should be in the business of telling people when it is a great time to buy,” he said.

Well said, Mr. Llosa! Just take the nice folks out for a ride and show them the houses. Leave the prognostications to the Ouija board!
0 votes Thank Flag Link Sat Mar 20, 2010

More info for folks thinking of jumping in to the home buying arena.
0 votes Thank Flag Link Wed Mar 10, 2010

Every market is different!!!

Wonder what the vaunted economist Larry Yun is spouting of late?
0 votes Thank Flag Link Thu Feb 25, 2010

Come on in....the water's fine!!

Of course 'every market is different' and 'no one can predict a bottom' and 'interest rates are at historic lows' and 'the unicorns are pooting rainbows'!!
0 votes Thank Flag Link Wed Feb 24, 2010
Hi Anne,

It is difficult to ever call the 'bottom'. We have seen a tremendous drop in prices & the market will eventually turn, but I don't think anyone can predict exactly when. What you need to determine is if purchasing a home makes sense now. It is possible the values could decline, but what is your alternative as you have to live somewhere. Renting makes sense for a lot of people, but for others it would benefit them more to own a home.

I think we have a lot of buyers sitting on the fence which is understandable, but instead of trying to time the market I think the purchase should be based on your needs.]
0 votes Thank Flag Link Tue Feb 2, 2010
Next time I’m in Chicago, we’ll have to have a beer and swap trial and tribulations of our respective professions. For me it really resolves down into an issue isn’t settled until the nurse is blamed and she has a new form to do during her lunch hour. Nursing gave up the ideas of bathroom/coffee breaks years ago or the powers that be would want even more forms from us. (laugh) Speaking of forms, any one else who almost aspirated their coffee over the new GFE forms?

Anyway, everyone talks about good deal vs. bad deals. After the involvement of two realtors, two lawyers, a home inspector, a mortgage broker, three contractors and five hundred associated family, colleagues, friends and Trulia subscribers, I made an informed deal--only time will tell if it was a good or bad deal. It looks like we’ll buy under market, but that is anyone’s guess as the appraiser is out tomorrow. Got a good locked interest rate, but interest rates have fallen .2% since we locked in. But I’m thinking in 5 years, this interest rate is going to a steal, and at that time I’m thinking that inflation and market value will kick-in to give me a double boost to my property value. Anne sound like she is on the same informed path to her purchase, and I say good for her.
0 votes Thank Flag Link Wed Jan 27, 2010
Hi Tim,

I'm glad to hear you found a place that works for you. There certainly are a lot of good deals out in the real estate market right now. For myself, the key is to buy under current market price and to buy something to which you can add value. That gives you, the buyer, some extra protection against further price drops.

The 'skunk at the garden party' remark refers to how the real estate agents, especially the seller's agents, look at my role in the transaction. I apologize if I'm repeating myself but I've had a seller's agent throw my inspection bag out of the front door and then lock me out of the house while I was attempting to explain some defects to my client, i.e. the buyer. I've had a number of seller's agents try to blacklist me by sending emails to their colleagues regarding me 'deal-killer' nature. Once, as I was walking around a new construction home that I was inspecting I overheard the following as the project manager was speaking to a contractor, "The inspector should be here pretty soon... the realtor says he's a real as***le!" I chimed in with, "Yeah, I heard that too and here I am!" Needless to say my client got an extra thorough inspection that day.

So that's a little glimpse at some of the minor tribulations in the life of a home inspector. It's a great job, I get to help people, tell the truth, and it's something different every day.

Like I've already said, THERE ARE A LOT OF GREAT R.E. AGENTS OUT THERE WHO ADD A LOT OF VALUE TO THE TRANSACTION AND WHO DO A GREAT JOB OF PROTECTING THEIR CLIENTS. Those are the type of agents that recommend our services to their clients.

I don't have any animosity to realtors in general but after hearing so many of them lie blatantly to my clients and to me I may be just a bit jaundiced about the profession. Some of the out and out lies I've heard are:

"There are no termites north of Devon Avenue."

"My seller had a handyman come out and he said that window sill is fine." (My screwdriver poked right through to the sub-sill.)

"There's nothing wrong with having a furnace in the bathroom!"

"The city inspector passed it so it must be okay!"

"You don't have to worry about lead-based paint....just don't let your kid chew on the windowsill!"

Those are just few that stuck in my mind. I really should start writing them down as I hear them.

Well, this is getting a little bit off topic and I apologize for that.

Hug your kids!
0 votes Thank Flag Link Wed Jan 27, 2010
@Daniel: skunk in the garden party? Before my home inspection my mind thought of my inspector as “The Destroyer of Dreams?” and in my minds eye I even dressed my home inspector in battle armor a la “Doom” but he ended up being a great guy, and I plan on using him if my 203K renovation loan comes through.

@Wayne: I, for one, appreciated Daniel’s comments. I like see a bit of discourse in opinions when I’m making the biggest purchase of my life. The ‘rosy’ aspect of the latest bubble probably did more to keep me out of the market more than the fact that I would not bring myself to afford a modest home at 4-5 times my yearly income. Then again, maybe I have a suspicious mind, but if all the professionals were lined up telling me that now is the perfect time to buy, I probably would not be buying. I’ll leave tactless to other people because as a nurse my standards in that aspect are not as strict as others.

@Anne: You passed my own personal qualifications for buying. I heard it about a year or so ago, from Suzy Orman. Her advice was that if one could get a monthly mortgage payment that is equivalent to their rent and they were planning to keep the home for 10+ years to ride out the current market, then it is a good time to buy. Mortgage rates are low now. Nobody can say how soon they will rise, but they will go up sooner rather than later, decreasing purchasing power. I’ve kept an eye on the forecast of home prices, and hopefully I’m within 10% of the bottom. But as it was mentioned before, we won’t know where the actual bottom is until well after it has passed, especially in this economy where even a small jolt to the economy will have big impacts to consumer confidence.

My advice is hope for the best, but plan for the worst. And my decision was to buy.
0 votes Thank Flag Link Wed Jan 27, 2010
A note to Debbie-

Thank you! Your comments to Daniel and your summary to Anne were right on. i could not have said it better.

Sandra Matson
Baird & Warner

Direct: 312.981.2315
0 votes Thank Flag Link Wed Jan 27, 2010
Hi Allen,

Thanks for the favor of your response. I do have an idea regarding what 'most realtors' do and say. I've worked with them on a daily basis for 12 years.

I know a whole bunch of realtors who are highly ethical and completely client focused. I give them kudos whenever I can. I have observed realtors closely for a long time....I know what a tough job you all have....that's why I am so amazed at some of the great ones I've worked with over the years.

It's a really tough balancing act and something I would never have the tact for.....but you probably already guessed that.

I must have touched a raw nerve when I simply asked if any of you felt blame for some of the upside down clients you've sold to over the years. I'm sure very few if any realtors TRIED to put a client into a home that was over-priced and a sure loser. But I know plenty of realtors who were not as client focused as they should have been and were, instead, more focused on getting them to the closing table.

I'm glad that Anne started this little teapot tempest. It's enabled me to get some stuff off of my chest. I hope you all keep an open mind and I wish you all the best in the New Year.

0 votes Thank Flag Link Sun Jan 24, 2010
Hi Wayne,

There's no need to bite your lip. Speak freely and speak the truth. That's all I'm trying to do. I agree that home ownership can be a good thing on a personal level and for an entire economy..... but not always and not for everyone.

Of course most realtors will tell anyone who is listening that this is a great time to buy. So will any automobile salesman, appliance salesman, etc. That's why I could never be a good salesman. I couldn't dish out self-serving pap to consumers in order to line my pockets. Deciding to buy or rent is not easy and it's up to the consumer to make that decision based on a wide multitude of factors. Some of the factors are quantifiable and some are more ephemeral.

Here's a good article from Time magazine on the subject. I don't have 'a dog in this fight' about home ownership. Like I said before, I make money when folks buy homes and our business is booming. Whether Anne buys a house or not is of no concern to me. Like you, I would like to see our economy 'put back together'. As we all know, real estate is what tore it asunder. We should be more careful next time.

0 votes Thank Flag Link Sun Jan 24, 2010
Hi Anne,
Thanks for the update on your thoughts. I am not discouraging anyone from buying. That is not the intent of my answers nor, if you read them carefully, what I said. The rent vs. buy question is more complicated than you may know. There are many more factors that go into making a good decision. Did you know that the mortgage interest tax deduction may be taken away? There is serious talk in Washington on that issue. Many people feel that the mtge tax deduction has been a big factor in the housing bubble and collapse. Only the U.S. and the U.K., among industrial countries have such a break for homeowners.

As I said before I don't have any special insights but I do like to read about the subject. I hope you have fun finding a good house for you and your family. I just caution you against drinking the realtor kool-aid. The American dream of home ownership has turned out to be a nightmare for millions. I think the latest estimates are that one quarter of all mortgagees are underwater on their homes. 25% of all home-debtors, also known as loan-owners, owe more to the bank or mortgage company than their house is worth. I bet most of them wish they had been renting!
0 votes Thank Flag Link Sun Jan 24, 2010
Oh well.....as a home inspector I am used to being 'the skunk at the garden party' so I may as well throw this in. Again, it's a quote from someone a lot smarter than me. I guess that doesn't narrow the field down much!

"The current rebound of the S&P/Case-Schiller Index is short-lived. The Schiller Index will drop more than 15% in 2010, below 120. Residential real estate faces tremendous pressure due to growing ARM resets from 2010 to 2012. The real estate crash spreads into commercial properties, and large scale commercial development projects fail left and right next year, like fireworks in the sky. The worst news is that both the residential and commercial real estate markets will look to take at least a decade or two to recover, thanks to Wall St.'s financial engineering for over a decade."
0 votes Thank Flag Link Thu Jan 21, 2010
I've yet to hear any of the real estate professionals say, "Why don't you hang out on the sidelines for a bit Anne and see what happens with the spring market."

Perhaps that's because:

It is difficult to get a man to understand something when his job depends on not understanding it.
Upton Sinclair (1878 - 1968)

Just a thought.

Let me take that back a bit. Chris Michaelson's response was thoughtful, well reasoned, and ungreedy. Good job Chris!
0 votes Thank Flag Link Thu Jan 21, 2010

Go on in, the water's fine! Don't mind the dorsal fins!

I wish I could tell you that this is the perfect time to buy a home Anne. When people buy homes, I make money. Unfortunately, the knife may still be falling and you might get cut. Be careful.
0 votes Thank Flag Link Thu Jan 21, 2010
Rents are falling and home prices are still falling. Those 2 factors would seem to tilt the decision toward not buying. The R.E. folks are correctly pointing out that rates are low and that you have the $8k 1st time buyer credit. However, if rates do go up (and most economists think they will) then prices will fall also to take that reduced purchasing power into account. As a matter of fact, the factors that the R.E. people point to are double-edged swords. The end of the 1st time buyer credit, stricter mortgage guidelines, increasing foreclosure rates (we have not seen the worst yet) and rising interest rates will all work to reduce the pool of buyers. We all know what happens when a product with a glut of inventory (our housing market) has a large number of it's buyers removed from the equation.......prices will tend to fall. This may or may not be a good time to buy, we do know just by looking at the 'For Rent' signs as we drive around the city, that this IS a good time to rent. We are living in interesting times!
0 votes Thank Flag Link Thu Jan 21, 2010
I had to chuckle at your question Anne....isn't it a bit like asking a school of sharks if this is a good time for a swim?

Seriously, as you well know, no one can tell the future and you did not post your question to a website of Psychics or Fortune Tellers.

Most serious students of the residential real estate industry predict that prices still have some room to fall. The gentlemen that publish the Case-Shiller Index believe another 10% or more price drop is likely before prices stabilize.

I'm NOT a real estate agent/broker but I do a bit of reading about the industry. The best place to find the answer you are looking for is here:


Do your homework now so you don't regret the decisions you make about buying versus renting. Best of luck to you in your search.
0 votes Thank Flag Link Thu Jan 21, 2010
Good Q. The prices are going to continue to come down. How much more? I have no idea. If any of us could tell the future we would all kick our feet up and bet on sports.

What I can tell you is if you plan on living at your place for at least the next 3 years, I think now is a great time to buy. You have low interest rates, vast inventory, tax credits, and low prices. Will you have all these factors next year?

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
0 votes Thank Flag Link Thu Jan 21, 2010
Hi Anne,
Great question! And I am sure plenty of people are asking themself the same thing!! While nobody has a crystal ball, I would say that all signs are pointing to buying right now. The 3 main reasons being that interest rates are at an all time low! And if you don't take advantage of them soon, you will be stuck with a higher rate in the near future. And if you add up a higher rate over 30 years, it is quite a large amount!! Another great reason is the tax credit!!! If you are able to take advantage of this free money, then do it before your time runs out too! And don't forget the great inventory (and low home prices) that is out there! In my opinion, this is a great time to buy. But in the end, you are the only one that really knows your own finances. My advice would be to talk to a mortgage broker and find out how much home you can actually afford. Then take it from there. Wishing you all the best in your decision!
And whe you feel ready to go out and look (or if you have any questions), don't hesitate to give me a call, or e-mail me!
Good Luck!
Marge Ruff
Century 21 McMullen, Chicago
(708) 275-7102
Web Reference: http://homesbuyruff.com
0 votes Thank Flag Link Thu Jan 21, 2010
Home prices are still coming down. And will for a while. A few areas seem to hit rock bottom. but other areas are still coming down. The thing i worry about is the interest rate. I have a feeling it could go up. The way our goverment is spending money and giving the banks and wall street bail out money. If you are going to live in your home for a while. I would buy now when the rates are low. 5% is better than 21%.
Just workout a good deal with the home price.
0 votes Thank Flag Link Thu Jan 21, 2010

I think the general consensus among mortgage brokers on this board will be that interest rates are expected to remain low until March 31, due to the Federal Reserve's "Mortgage Backed Security" program that is ending on that date. Rates are then expected to rise, although it's anybody's guess as to how high and how quickly they will rise.

Of course, there is also the $8,000 first-time homebuyer tax credit and the $6,500 tax credit for current homebuyers that are "trading up" and meet other specific criteria.

With regard to real estate prices, there are many that believe that real estate prices could potentially fall further as more foreclosures are unloaded onto the market and as adjustable rate mortgages start to reset and payments on those loans start to increase. These are valid concerns, although I strongly believe that the popular and desirable areas of the city will continue to weather the storm quite well, as there are always buyers looking to enter into those markets. I believe that prices in these areas will remain largely flat over the next couple years and then will start to recover, albeit slowly.

If you have a short-term horizon for living in a potential new home, buying now (or at anytime, for that matter) is probably not the best financial decision. However, if you are looking long-term (at least 5-10 years), I think right now (or at least locking in your mortgage rate by March 31) is a fantastic time to purchase a new home. You'll be able to get a great price, a rock bottom mortgage rate, and possibly a tax credit as well.

I've debated this question with many people and, although it is impossible to accurately predict the future of any market, I think you stand to do quite well in this market if you're happy in Chicago and don't mind staying put for a while. I, for one, am acting on my own advice and looking to get a great deal right now, even though I won't qualify for either tax credit.

Feel free to contact me directly if you have any other questions.

Yours truly,

Chris Michaelson
Web Reference: http://www.312agent.com
0 votes Thank Flag Link Thu Jan 21, 2010
My response to this question is that we can only make decisions based on what is happening today. The important thing to remember is that interest rates are low and the higher the purchase price the more influence interest rates have on a buyer's decision. In fact, I would argue that if you are financing the property interest rates are just as important as purchase price. Many people buy based on what they can afford and their monthly payment can go up tremendously. I personally think that inflationary pressures will push prices higher, but it is only an opinion. I would be happy to talk to you in detail about your situation and assist in making an educated decision.

Mark Malave
American International Realty
p- 773-435-1605
Web Reference: http://www.markmalave.com
0 votes Thank Flag Link Thu Jan 21, 2010
For the first time, I feel totally comfortable going on the record and saying that THE TIME IS NOW. The rates are low, but poised for increases. The prices are low, but are stabilizing. More importantly, I'm currently working with several savvy buyers and/or investors. If these people are buying, to me its a clear signal that its the right time. I think they are ahead of the curve. Is it a good time to buy? ABSOLUTELY. Is the time right for YOU? That is the question.
0 votes Thank Flag Link Thu Jan 21, 2010
I agree with Alan nobody can predict what is going to happen, but the truth is pricing has gone down quite a bit. I would contact a Realtor start looking at listings in the area you like and see if you can find the right deal. What area are you looking at I can send you some area statistic if you would like.

Simir Shah
0 votes Thank Flag Link Thu Jan 21, 2010
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