MARKET CRASH - RATES SURGE - HOUSING PRICES PLUMMET

How's that for a headline. (I could almost write for the Chicago Tribune.) Doom and gloom. It sells papers and gets eyeballs on broadcast. Here's the reality - properties are selling. People are moving up and down to new houses. The real estate market has not come to a complete grinding halt.

Truely, properties are selling IF, and that's a big if, they are priced right. Mindy and I have been in multiple bid situations on our listings (representing our Sellers) three times this year and, representing buyers, twice. Here are a few things to think about:

Affordability - if you've visited this site before you know this term is near and dear to my heart. Why? I think it's the critical underlying dynamic in the real estate market. In 2004, 2005 and 2006, when a person/a buyer found a property they liked, they bought it. Interest rates were at historic lows; mortgage brokers had multiple mortgage products to finance buyers, and appraisers were able to put a price on the property that the bankers liked. Now, in 2008, after rates have increased to over 6.25% (or higher), buyers do the simple math before bankers see a mortgage application. They do "back of the envelope" math on whether they can afford to pay a mortgage that's 35% higher than what they would have paid two years ago. For many buyers, it is that simple. They question the price, the challenge the method used to price a home, they discard "comps" if they closed more than 90 days ago.

It's a new perspective that is actually quite rationale. The key is buyers are hugely wary of over-extending themselves.

Economics Rule - If you remember your college econ classes, the laws of Supply and Demand dictate that as demand lessens (or, as the pool of buyers shrinks) prices need to adjust ... downward. That's what's happening. The savvy seller recognizes this and prices the house accordingly. Those are the Sellers who are selling their homes and usually quickly.

Topic 2: Real Estate Taxes

The Cook County Board of Review has opened Evanston Township for appeals of property assessments. New Trier Township is not far behind. Why is this important? The assessments that triggered big property tax increases for many residents were based on two years of terrific increases and only 12 months of downward trending prices. 2008 has continued that downward trend and people are hurting. Fortunately the Cook County Assessor recognizes this and is allowing residents to file appeals.

We guided many clients last year to a reduction in their assessments. Almost 95% of our clients who participated realized a reduction. We are working with more clients this Fall and helping them structure their appeals case. It is important for people to take advantage of this rare opportunity to challenge their assessment with strong market data and a supportive Assessors Office. If you have any questions or want more info on how we're doing this, call me. 847-425-3848. I'd be glad to help.


DS