Keep your head up!

To listen to the news, one would think that the end is near.  Indeed, one newspaper recently featured a cartoon with a downtrodden soul carrying such a banner. “The End Is Near” it read.  Next to him in the cartoon, a trader from Wall Street, is labeling the doom and gloomer an “Optimist”!

One motif that our current economic situation is given is “as bad as the Great Depression”.  Lets look at a few facts about our current situation and the Great Depression.

The unemployment rate in the US during the Depression reached 25%.  Even at the end of the 1930’s, unemployment was close to 15%.  As October 24th, our current unemployment rate measured 6.1% (source: Dept of Labor).  As of January, 1934, 43.8% of all owner occupied homes in the US that had a first mortgage were in default on that loan.  As of the end of June, 2008, 2.75% of loans were in the foreclosure process (notice of default, auction sale notice,or bank repo).  An additional 6.41% were at least 1 month delinquent (source: Mortgage Bankers Association).  Fully 40% of US banks failed during the 5 years from 1929 to 1933.  Today, only 15 of the 8,451 banks backed by the FDIC have been taken over by the FDIC, or less than 0.2% (source: FDIC).

You may have heard that the credit markets are “frozen”.  But when it comes to housing, FHA, Fannie Mae and Freddie Mac are open for business.  These 3 entities are accounting for over 90% of the loans in the US mortgage market.  FHA alone is insuring over 100,000 new loans a month.  HUD Secretary Steve Preston says that these 3 have “kept liquidity alive” for home buyers.  “There is no credit crisis” for individual home buyers who have at least 3% to put down, documentable employment, and at least a moderately good credit record, said Preston.  Preston and HUD are playing key roles in the widely publicized $700 billion financial system bailout.

Also in the works on Capital Hill: A new economic stimulus package aimed at increasing employment and adding billions of dollars into key segments of the economy.  One version of the proposal includes a large federal tax credit for all purchasers of homes.  Currently, the federal goverment has a $7500 tax credit available to first time buyers, which has to be paid back over time.  The new credit amounts being pushed by housing industry lobbyists are up to $12,000, available to all home purchasers, and would not have to be repaid.

So, keep your head up!  Times are tough, but have been tougher.  Interest rates are still good, gas and heating oil prices are down.  We get what we focus on. Don’t let the mainstream media determine YOUR focus!

Greens the theme!

With elections on our minds, and all over the press, green is a word that floats easily off the tongue of our want to be leaders.  Green has advanced from being the name of a political party, to a major plank in the platforms of all the political parties.  It has also become an important part of the home buyers decision making process.  Concerns and wants run the gamut from the obvious, (like Energy Star rated appliances), to the nearly invisible (low V.O.C paints).  Even our “already elected” officials see the political usefulness, and hopefully the actual value of going green.  This is evidenced in the creation and extension of many tax credits that are a part of the so called bailout plan.

Indeed, the government has extended the credits for solar and alternative energy features in commercial and multifamily applications.  It also removed a $2000 cap for the credit in residential solar applications.  Other alternative energy sources given new, or having their credits extended include geothermal heat pumps, fuel cells, and wind energy.  Add to that even more credits for “building green” and meeting certain energy efficient ratings.  These cover green building materials, lighting, air conditioning and appliances.

So what are the current top trends and technologies for energy efficiency in new homes,and in your remodel of an existing home?  According to PATH (Partnership for Advancing Technology in Housing), top techniques include:

Air sealing using sprayed foam and fiber insulations.

HVAC sizing, estimating heating and cooling loads more accurately and then properly equipping homes for more efficient energy use.

High efficiency toilets, saving 20% more water than a standard 1.6 gallon per flush toilet.  This equates to over 8700 gallons per year savings for a family of four.

Compact Flourescent lighting, which are up to 4 times more efficient than incandescent bulbs, and can last up to 10 times longer.

Tubular skylights, using the sun to light interiors, but without many of the drawbacks of conventional sky lights.

The list is endless, and the savings great.  Many of the mentioned technologies can be used in new construction, or added to your existing home to start enjoying the benefits now.  And, adding to your homes value later…

Illinois Second Quarter Home Sales Off from Last Year

Welcome to “The Local Economist” and information regarding Illinois Real Estate. Our purpose is to bring you accurate information about the market on both a local and regional level. The following excerpt is from Illinoia Association of Realtors. Please feel fre to add any comments and or suggestions you may have.

SPRINGFIELD, Ill. – Illinois home sales in the second quarter improved from the first quarter of 2008 yet were lower compared to the same period a year ago. According to the Illinois Association of REALTORS® (IAR) second quarter report, total home sales (which include single-family homes and condominiums) were 32,414 in the second quarter, down 25.4 percent from a year ago when 43,438 home sales were reported in the second quarter. The second quarter median home sale price was $192,500, down 6.8 percent from $206,500 in 2007. The median is a typical market price where half the homes sold for more, half sold for less.

“While sales certainly have picked up across Illinois during the early spring and summer months, some buyers and sellers seem to be waiting for the all-clear signal to make a move in this market as economic and consumer confidence indicators remain weak,” said REALTOR® Kay Wirth, president of the Illinois Association of REALTORS®. “Our Illinois housing market has been resilient given these pressures with prices registering modest losses and many regions still posting gains since sales peaked during the boom in the third quarter of 2005. It is a good market, especially for buyers who now have many choices. The new first-time buyer tax credit and foreclosure rescue program enacted by the Housing and Economic Recovery Act should help stabilize the housing market.”

The second-quarter commitment rate for a 30-year, fixed-rate mortgage for the North Central Region averaged 6.12 percent, according to the Federal Home Loan Mortgage Corporation. It was down 0.28 from 6.40 percent a year ago in the second quarter of 2007, while up 0.21 percent from 5.91 percent in the first quarter of 2008.

In the Chicagoland Primary Metropolitan Statistical Area (PMSA), total home sales (including single-family and condominiums) were down 28.9 percent in the second quarter to 20,679, compared to 29,092 home sales in the second quarter of 2007. The median home sale price in the Chicagoland PMSA was off 2.3 percent to $250,000 in the second quarter of 2008 compared to $256,000 in the same period one year ago.

Second quarter condo sales across the state were down 34.2 percent to 9,141 condos sold compared to 13,897 units sold in the same period for 2007. The median price for a condominium in Illinois in the second quarter of 2008 was $232,000, up 4.0 percent from $223,000 a year ago.

In the Chicago PMSA, condo sales were down 33.6 percent to 8,828 units sold during the second quarter of 2008, compared to 13,289 condo sales in second quarter 2007. The second quarter condo median price was $238,260, up 4.0 percent from $229,000 in the second quarter of 2007.

Sales and price information is generated from a survey of Multiple Listing Service sales reported by 35 participating Illinois REALTOR® local boards and associations. The Chicagoland PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

The Illinois Association of REALTORS® is a voluntary trade association whose 55,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, the Illinois Association of REALTORS® works to protect the rights of private property owners in the state by recommending and promoting legislation that safeguards and advances the interest of real property ownership.