The National Association of Realtors (NAR) predicted on Monday, December 11, that sales of existing homes and condos would continue to fall in 2007.

Existing home sales will likely decline as much as 17.7 percent this year, and an additional 9.4 percent next year, according to the NAR.

However, the Association’s chief economist, David Lereah, is also forecasting a late-year recovery in 2007 home sales. He says that roughly 75% of the country will see a slow expansion of existing home sales by the end of next year, when compared with the fourth quarter of 2006.

Lereah added that “general gains in [home] value next year will be modest by historic standards.”

From July to September of this year, the rate of home price appreciation stood at 3.5 percent–a dramatic drop from the 12 percent rate the nation saw in the fourth quarter of 2005.

Lereah also predicted that 30-year mortgage rates would be up to 6.7 percent by September of 2007. Those rates were at 6.11 percent last week, according to mortgage finance company Freddie Mac.

[tags]Chicago Homes, Chicago Real Estate Market, Chicago Condo sales[/tags]

[dels]Chicago Homes, Chicago Real Estate Market, Chicago Condo sales[/dels]

Freddie Mac’s weekly survey showed rates for the benchmark 30-year loan near its yearly low as of Thursday, December 13th.

Nationally, the 30-year fixed-rate loan averaged 6.12% for the week, up from 6.11% in the week prior. The mortgage’s low point was Jan. 19, when it hit 6.1%. At this time last year the loan averaged 6.3%.

15-year loans, popular with homeowners looking to refinance, rose from 5.84% to 5.86% . At this time last year the 15-year averaged 5.85%.

The 1-year Treasury-indexed adjustable rate went up from 5.43% to 5.45% (compared with 5.15% a year ago), while the 5-year hybrid ARM held steady at 5.92% (compared with 5.77% a year ago).

Reports of increased job growth and November retail sales that exceeded expectations were offset by weaker wage growth and lower consumer confidence in December. According to Freddie Mac chief economist Frank Nothaft, these mixed economic reports prevented any drastic changes in mortgage rates this week.

The Mortgage Bankers Association said Wednesday that applications for mortgages, particularly applications for refinancing, have increased in recent weeks due to mortgage rates’ stabilizing at comparatively low levels.

With rates remaining around their lowest levels for 2006, many borrowers who relied on exotic mortgages like subprime ARMS to purchase high-priced homes are now seeking safety in a fixed-rate loan, said Richard Powers, general manager of the online-mortgage lender Ditech.com.

However, borrowers are increasingly failing to keep up with their mortgage payments. According to the MBA, mortgage delinquencies spiked upward during the third quarter for all types of loans, but especially for subprime ARMs.

[tags]Chicago Mortgages, Interest Rates, Chicago ARMs[/tags]

[dels]Chicago Mortgages, Interest Rates, Chicago ARMs[/dels]

Although condo prices across the midwest fell in the third quarter of 2006, median condo prices in Chicago actually rose 4.3%.  This is good news for sellers, as investors across the country fear that the overabundance of houses on the market will lower prices further.  According to the Chicago Tribune, new housing developments have undergone a record seven-month long decline, which may be a reason that Chicago’s condo market is remaining somewhat stable – new developments have slowed in a market with a glut of housing.

However, sellers accross the city have still reported difficulty in unloading homes – even those who have slashed prices as much as 20% or more.   Perhaps this rise in condo prices reflects the myriad of new condo developments in Chicago coming onto the market.

[tags]Chicago condos, Chicago real estate market[/tags]

[dels]Chicago condos, Chicago real estate market[/dels]

Crews will break ground in 2007 for the proposed twisting, “drill bit” skyscraper at 400 N. Lake Shore Drive–but the building that rises there will look substantially different from its designer’s original vision.

Dublin-based developer Garrett Kelleher has supervised a complete redesign of the original plan to make it economically feasible. The previous plans included a broadcast antenna at the building’s top and a 150-room hotel at its base, both of which have been scrapped. The tower is taller (150 stories) and wider now, with a total of 3 million square feet–1.8 million of them sellable space.

The tower’s footprint has also been adjusted slightly to the north, putting it just north of North Water Street. That change makes room for a circular drive south of the tower, as well as a grand plaza at the end of the riverfront promenade leading to Lake Michigan from Michigan Avenue.

Santiago Calatrava confirmed that he has signed a contract with Kelleher for full design and construction supervision services.

The building’s revised design has a simplified top, with metal “fins” protruding slightly above the roof. It has also been given a less twisty shape, with a total rotation of only 270 degrees compared to the original’s full 360.

To avoid ruining the tower’s looks, a planned six-story parking garage will be replaced with seven levels of underground parking.
[tag]Chicago real estate, Chicago condos, luxury condos, Lake Shore Drive condos, Streeterville[/tag]

A spokesman for Garrett Kelleher, the developer of the proposed 124-story spire on the lakefront, revealed Wednesday that the residential building will be marketed to the world’s wealthiest buyers. Kelleher is executive chairman of Shelbourne Development Ltd. in Dublin.

Chicago attorney Thomas Murphy, speaking for Kelleher, said the building should command condominium prices far above the Chicago market’s upper limits.

Last July, Garrett Kelleher spent $64 million on the rights to the spire project’s site at 400 N. Lake Shore Drive. The renowned Spanish architect Santiago Calatrava has agreed to continue as the lead architect after starting work on the building for a previous developer. The Chicago firm Perkins & Will will direct the architecture locally.

Many experts have judged the narrow, twisting Chicago Spire to be prohibitively expensive to build. Murphy said the building will need to set condominium asking prices far above the Chicago market’s current limits.

He would not provide a range, but did not argue an interviewer’s suggestion that the developer might ask $2,000 a square foot. The top current prices in Chicago range from just above $1,000 a square foot for residences to about $1,200 a square foot for hotel rooms sold as condos.

“We are looking at raising the bar quite a bit,” Murphy said, adding that construction is slated to begin before June 2007.

The building would reach 2,000 feet in height, replacing the Sears Tower as the tallest in Chicago and, for now, the United States.

One Chicago developer with experience in high-rise construction doubted Kelleher would be able to sell units at prices that are, in his words, “off the planet.” When told about the comment, Murphy replied, “They’re not off the planet. They may be off the continent.”

Murphy said Chicago prices seem amazingly cheap to buyers from Europe. Kelleher, who spent a decade living here, plans to market Chicago as a good place for jet-setters to invest in a second home.

Murphy backed off from previous estimates setting the building’s cost at about $1.2 billion. Kelleher is committed to it regardless of the final amount, Murphy said.

[tag]Chicago real estate, Chicago condos, luxury condos[/tag]

Buyer-incentive programs have become the norm in new-construction real estate. As the market has continued to soften, developers have been offering everything from free parking to free appliance upgrades to plasma TVs in an effort to jack up flagging sales.

The rise in the number of these incentive offers is due to developers pricing their homes beyond what the market is willing to pay says Tracy Cross, housing analyst with Tracy Cross & Associates.

According to Cross, builders are trying to avoid lowering prices in their developments–but the incentive programs won’t stop the slowdown in real-estate sales.

Buyers who are waiting for more and more attractive incentive programs–like the rare and elusive 0% financing offer–will most likely be disappointed, Cross added.

“[The deals] will begin to abate rather steeply beginning early next year [2007],” he said. “The reason is that most incentives were applied to units under construction, and they were the result of builders getting ahead of themselves.”

Cross predicted that deals might still be available in the southwest suburbs, but only in markets where builders had originally overpriced their homes. Deals will be rare or absent in the north and northwest suburbs.

Whatever the future of incentive programs might be, if you’re currently in the market for a Chicago home you might want to look into some of the incentive deals available right now:

Van Buren Lofts (1224 W. Van Buren Street) has 1, 2 and 3BR condos and penthouses for sale from the $250s to the $560s. The developer is promising buyers a free washer and dryer, paid closing costs, no assessments for one year, $3,500 in upgrade credits and free rate buydowns.

- University Commons (1000 W 15th Street) is unconditionally offering free parking to buyers of its 1BR and 2BR lofts (priced from the $250s to $350s).

- 1555 Wabash (1555 S. Wabash Ave.) is guaranteeing that–until the end of 2006–the interest rates buyers lock into will not increase more than 1% from contract-signing until closing. The development offers 1BR, 2BR, and penthouse condos from the mid-$200s to the low $600s.

- Lexington Park (2128 S. Indiana Ave.) has 1BR & 2BR condos from the low $200s, and is now giving buyers a free home-entertainment package that includes a 42-inch plasma TV, an iPod docking station and two speakers.
[tag]Chicago condos, Chicago real estate, builder incentives[/tag]

Applications for mortgages–both for new homes and refinancing–at big U.S. banks dipped 3.9% last week compared with the previous week. The applications were down 1.6% year-over-year.

ARMS made up only 24.5% of last week’s applications, their smallest percentage in three years. The average interest rate for ARMs slipped from 5.88% to 5.87%.

Applications for loans to buy a home rose 1.3% over the last week, but are down roughly 14.6% from last year. Applications for loans to refinance existing loans sank 9.6% in the past week, but are up about 18% from the previous year.

[tags]real estate, real estate market, mortgages, home loans, ARMs, refinance, refinancing[/tags]

The biggest drop in existing home prices ever recorded was posted in October, at the end of a three-month slump. The National Association of Realtors said Tuesday that it expects weakness in pricing to drag on into next year.

The previous record drop was a 2.1 percent decline in November 1990, the real estate group said.

Condo prices have fallen even more steeply and steadily. They fell 5.3 percent in October, the fifth straight year-over-year decline. The median condo price is now down 7.5 percent from the high reached in June 2005.

The weakness in home prices probably won’t disappear soon, according to Realtors spokesman Walter Molony. “We do expect we’ll see prices stay below year-ago levels through the end of this year, and pick up in the first quarter of 2007,” he said.

The drop in prices illustrates a sharp change in the market. Median home prices peaked at a record high $230,000 just last July. Last year, existing home sale prices were 16.8 percent above October 2004 levels–the fourth-largest year-over-year increase in prices the NAR had ever recorded.

“Certainly the astronomical price appreciation seen over the last few years is a thing of the past,” said Wachovia economist Phillip Neuhart. “Much of the decline in median prices over the last few months can be attributed to the changing mix of homes sold as cautious buyers, seeing a weakening housing market, are less likely to buy up into a more expensive home.”

The huge increases in home prices a year ago caused a new-construction monsoon, flooding the market with new homes and leading in part to the current downturn, despite historically low mortgage rates and low unemployment, two conditions that normally build further price appreciation.

Not only did developers build homes in record numbers last year, but many were bought by speculators looking for quick profits, rather than places to live. Those buyers are now looking to sell the homes.

The existing home sales report comes the day before the government reading on new home sales, which showed a 9.7 percent year-over-year drop in median new home prices in the September report.

Many major builders, including Pulte Home, Centex, D.R. Horton, Lennar, KB Home and Toll Brothers have seen sales and earnings plummet as a result of the housing slowdown, and are warning that the housing market hasn’t bottomed out . . . yet.

Still, last year’s strong price gains have left most buyers who stayed in their homes for a year or more with more valuable homes, even allowing for recent declines in prices.

[tags]Chicago Real Estate market, Chicago Condos, Chicago Home prices[/tags]

@ 7:30 p.m. at the East Bank Club, 500 N. Kingsbury, for 17 condominiums located at Huron Street Lofts in River North.  Open houses will be held on November 29th from 5-7 p.m., and December 3rd from Noon-2 p.m.  They’re 1 & 2 bedroom condo lofts that feature timber construction and original exposed brick walls.  There’s also a building sundeck. These loft condos were previously priced at $389,000, but are going to go on absolute auction, which means that there is no reserve price – these could go really cheap, but the suggested opening bid is $125,000.  Rick Levin & Associates, Inc. will be leading the auction.

[tags]Chicago condos, Chicago loft condos, Chicago real estate auction[/tags]

It’s not exactly what I’ve been hearing on TV, radio, or in the newspaper, but…

“There’s a huge condo market with a lot of opportunity, we’re still seeing the market as very strong,” says Jim McLean, Executive Vice President of Tishman Construction Co., which is planning to finish construction on the $28M Park View East soon.  The 140-unit condominium project is located in Lakeview at 828 W. Grace Street, and includes over 4,000 square feet of retail space on the ground floor, which used to be a building that housed the community-favorite Marigold Bowl.  Most of the units in the building include spacious balconies, and all have red oak hardwood flooring.  Unit prices vary from around $300,000 for “typical units” to $340,000 for “premier units”, most of which have already been sold.  None of the penthouse units are available.

[tags]Chicago condos, Park View East, Lakeview[/tags]