Mortgage rates for American homes are headed toward an all-time low, according to Freddie Mac’s latest Primary Mortgage Market Survey. The recent survey showed astoundingly low rates across the board, making home buying affordable for consumers across the country. In fact, the average 30-year fixed-rate mortgage is under 4.00 percent and has been for the past month and a half.

This time last year the 30-year fixed-rate mortgage averaged 4.71 percent, which is an amazing interest rate to get on a home loan. But now the average has dropped even further, as the recent survey reveals, to 3.89 percent. This same trend holds for the 15-year FRM. It currently sits at 3.16 percent, whereas this time last year it averaged 4.08 percent. As mentioned before, these rates reflect an affordability for homebuyers that was all but unheard of before.

In addition to these numbers, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) recently averaged 2.8 percent (down almost a whole percentage point from its average of 3.72 percent in last year). Likewise the 1-year Treasury-indexed ARM  recently averaged 2.76 percent, which is a significant drop from the same time last year when it was 3.23 percent.

How can we explain the recent dip in mortgage rates?

“Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” says Frank Nothaft, the vice president and chief economist of Freddie Mac. “Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated.”

Armed with this data, how can you take advantage as a home buyer in the current housing market?

According to the senior vice president of Single-Family Sourcing and Securitization for Freddie Mac, there are four steps that every potential home buyer must take before trying to secure financing for the purhcase of a new home…

• Find out current credit score and history. This way you know exactly where you stand and can avoid any potential pitfalls down the road. If there are credit issues from the past or you have no credit history to speak of, it’s imperative to contact a HUD-approved housing counselor for advice on how to build and maintain a healthy credit score.
• Get the appropriate documentation together. Lenders are going to be looking for the proper documentation to verify income (e.g. W-2 forms, tax returns, employment history), credit history and assets (e.g. banks statements, other financial accounts).
• Coordinate with your lender to review your situation. Review income, expenses and financial goals to determine which mortgage optioins you will qualify for. The biggest question that needs to be answered is whether you’ll be best served with a fixed- or adjustable-rate mortgage. Know your options.
• Get a pre-approval letter. Talk with your lender about applying for a mortgage and getting proof of pre-approval. This letter can be submitted with any offer you put on a home to show the sellers you are a serious buyer with the financial backing to purchase their property.

This is a buyers’ market but one still has to practice due dilligence. Make sure to do your research, consult the appropriate professionals, work within your budget and get your finances in order. There are great deals on the market and interest rates have never been more favorable. So it is a great time to buy in Chicago or anywhere else you are looking to purchase a home.

The National Association of Realtors recently released a new report stating that pending home sales rose again during the month of November. The report also revealed that the number of pending home sales has reached its highest level in 19 months. The projected index number is 100.1 for November 2011 which is 5.9 percent higher than a year ago.
The Pending Home Sales Index (PHSI) is one of the leading tools in indicating housing market activity. The index relies on information from Multiple Listing Services and large brokers in order to predict future home-sales activity.

In April 2010 the index reached 111.5 with potential buyers scrambling to take advantage of the home buyer tax credit. Of course the date represents contracts signed as opposed to actual closings. But an increase of activity without government intervention is an encouraging sign, nonetheless.

Lawrence Yun, National Association of Realtors chief economist, responded to the report by saying, “November is doing reasonably well in comparison with the year past. The sustained rise in contract activity suggests that closed existing-home sales, which are important final economic figures, should continue to improve in the months ahead.”
The recently published reconfiguration of existing-home sales doesn’t affect pending home sales. PHSI uses a different tactic that relies directly on contract signings, and is also adjusted for seasonality.

The PHSI rose in all four U.S. regions during the month of November. However, the Northeast, which rose 8.1 percent, slightly lagged behind its 2010 figures. While the Midwest, South and West regions all surpassed their respected numbers from 2010.
What can consumers read into these positive signs of life in the market? What factors are leading to this upswing in numbers?

“Housing affordability conditions are at a record high and there is pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with a mortgage,” explained Yun.

While the Pending Home Sales Index is an excellent indicator for the housing sector, it must be clarified that the numbers are based on pending sales of existing homes. A pending sale is constituted once a contract has been signed even though the transaction hasn’t been seen through to fruition. Sales generally finalize within a few months after the signing.

The index uses a sizable national sample generally representing about 20 percent of transactions for existing-home sales. The PHSI has consistently demonstrated that monthly sales contract activity parallels the level of closed existing home sales.

According to a recent survey performed by Realtor.com, selling one’s Chicago condo can be ideal during the holiday season. Many real estate experts are advocates of condo and home owners listing their places during this time of year for the primary reason that buyers tend to be more serious when looking. Competition tends to be low during the holiday months as well. So, if you’re thinking about putting your Chicago condo on the market, what are you waiting for? The holidays are already in full swing!

The survey by Realtor.com was conducted between October 26 and November 8 and included 429 real estate executives. For the survey, the term “holiday season” was defined as November 23 to January 2nd. Sixty percent of participants were noted to advise sellers to list their homes during this time because “it’s a good time to sell.” A little less than a third said they would advise homeowners to sell if they felt strongly about doing so. Only 1% of survey participants believed the holidays were not a good time to sell a home. Nearly 80% said buyers were more serious during this time and 61% noted less competition was an added benefit.

As for winter weather, only 17% stated that the welcoming warmth of a home helped sell homes in cold climates, such as Chicago. Thirty-nine percent believed winter weather created the greatest difficulties for holiday house sellers. Equally noted were the high number of vacation and celebratory scheduling conflicts. Additionally, the largest challenge (mentioned by 63% of participants) is keeping homes clean and ready for open house viewings during the holiday season. Despite visitors, wrapping paper and extra decorations, it’s important to keep your Chicago condo neat and tidy if you’re going to try to sell right now.

Further results of the study found that selling a property during the holidays necessitates a unique plan of action as compared to other times of the year. Over 8 out of 10 participants in the survey agreed that listing photos online is absolutely essential for advertising homes during the holidays because buyers may not be able to attend many open houses due to busy schedules and/or weather.

Almost three-fourths of real estate professionals polled felt pricing made a huge impact during the holidays and that properties should be priced to sell. Forty percent stated that staging and decorating the home was even more important. For sellers to maintain flexibility in regards to contractual terms (such as move-in dates and the like) was notably significant to one third of the survey panel.

In regards to staging a home for sale, nearly all survey participants felt seasonal decorations—even religious ones—are helpful. However, not all respondents agreed on what kind of decorations were most appropriate. Thirty-seven percent believed nonreligious holiday decorations were best, while 28% thought any and all decorations were fine to use. Over a quarter of those surveyed felt non-holiday specific decorations were most inviting for buyers and 8% felt staging the home without any decorations was the way to go. Eighty percent of poll participants suggested building a fire in the hearth is a good form of staging as long as the seller or listing agent is present for showings, and 62% encouraged ample outdoor lighting due to shortened daylight during this time of year.

No matter what time of year you want to sell your Chicago condo, it is a smart idea to enlist the assistance of a professional real estate agent. A realtor knows the market inside and out; summer, winter, fall and spring – so they can help you best position your property for a smooth and successful sale.

Seeing specific examples of real estate activity in Chicago can help paint a picture of what’s happening on a larger scale. Here’s a look at what types of luxury Chicago homes have sold recently, as well as those that are up for sale in the Gold Coast, Lake Forest, Winnetka and other affluent areas of Northern Illinois. These examples come from an article on Chicagorealestatedaily.com that was posted in November.

Gold Coast

A landmark Gold Coast greystone, built in 1881, has been listed for $3.95 million. The Chicago home for sale includes 7,500 square feet, seven bedrooms and sits on an extra-wide lot. The Romanesque-style Bellevue Place Chicago home was listed by Randy McGhee of Koenig & Strey Real Living and includes four fireplaces, five en suite bedrooms and a four-car garage.

Lake Forest Home

A five-bedroom home in Lake Forest recently sold for less than its 2007 price – 15% less. Mark Grube, a managing director at a health care consulting firm, purchased the Estate Lane Colonial for $1.63 million from Jay and Joy Lenstrom in October 2011. The Lenstroms purchased the home for $1.91 million in 2007.

Lake Forest Estate

An eighteen-room historic, English Manor estate in Lake Forest sold for $6.39 million. The estate is located on Green Bay Road and has seen bedrooms and eight full bathrooms. The seller, Lake Forest Landmark Development, purchased the home for $2.4 million in January 2008. The hundred-year-old home has been completely restored and details such as the original hardwood floors, ceiling molding, and staircase handrail have been preserved. The estate sits on 2.5 acres and the buyer purchased an adjacent one-acre lot. The home includes a four-car heated garage, an attic that has been remodeled into a third floor, a finished lower level, and a detached gardener’s cottage with a kitchen, two bedrooms and two full bathrooms.

Winnetka

A 5,000-squre-foot home in Winnetka, containing six bedrooms and 4.5 baths, sold to a personal injury lawyer, Jeffrey Sussman, for $1.7 million. The Grove Street home resides on half an acre and includes a pool. The original owners purchased the home for $1.95 million in 2000.

South Barrington

A 6,100 square-foot, six-bedroom home in South Barrington sold for around $1.63 million. Chief financial officer of Sirva Inc., Thomas Oberdorf purchased the Wescott Lane home. The seller originally purchased the house in 1995 for $825,000.

Northfield

A Cape Cod-style home in Northfield sold for around $1.43 million to Thomas Melzl, the regional VP of sales for Redwood Shores, California-based Oracle Corporation. The Laurie Lane home contains six bedrooms and four and a half bathrooms, and was purchased by the original owners for $1.33 million in 1998.

If you’re keeping tabs on Chicago’s celebrity home and high-end real estate sales you may be interested in a couple of transactions reported on by the Chicago Tribune’s Luxury Real Estate section this week.

Vintage Chicago Condo

Mark Saxenmeyer, a former WFLD-Channel 32 special projects reporter recently listed his two-bedroom Chicago condo for $339,000. Saxenmeyer left the television station in December 2010 after working there for 17 years. He now lives in St. Paul, Minnesota and has decided to sell his designer piece of Chicago real estate.

The 45-year-old, current KSTP-TV reporter listed his Chicago condo on November 1^st for $359,000 – $20,000 less than what he purchased it for in 2005. He originally bought the three-level, six-room residence after he “fell in love” with the classic flatiron-style architecture and unique, non-cookie-cutter feel.

The Chicago home is located in the city’s North Side Lincoln Park neighborhood and was built in 1883. The 1,200-square-foot property contains a 12-foot-tall tin ceiling, a lofted den, three large picture windows that overlook a park, original wood floors, refurbished doors with solid oak finishes, a rooftop deck, a storage room and an attached one-car garage.

Lincoln Park Mega-Mansion

A four-story mansion is being developed across three city lots in Lincoln Park. The Chicago home is a contemporary mansion with marble and slate exterior, built by Joseph Sacchetti, in partnership with Wolverine Trading.

Sacchetti is one of many Chicagoans who has used multiple lots to create on big property in Lincoln Park, demolishing existing homes to construct a mansion. In recent years, others who have done the same include Richard Parrillo, John Bucksbaum, Penny Pritzker, Sara Crown Star and Donald R. Wilson Jr.

Sacchetti spent $2.6 million for two of the lots in 2007. In June 2010, he paid an additional $1.4 million for the third lot.  He has since demolished two buildings on the lots to prepare for the new Chicago home’s development.

In 2008, Sacchetti applied for a building permit to begin construction of the Chicago home, at an estimated construction cost of $4.3 million. After purchasing the third lot in 2010, Sacchetti won approval to expand the garage, which will now be spacious enough to hold four cars in all.

Two real estate developers, Optima (with DeBartolo Development, LLC) and Habitat Co., have received financing to build two new Chicago apartments in downtown—one high-rise in the Streeterville neighborhood (near Navy Pier) and another in the River North neighborhood just north of the Chicago Loop. In 2011, due to rising occupancy rates and rents, there has been a new wave of development of Chicago apartments.

According to a November article in Crain’s, the new rental developments will add 775 more units to the already escalating number of Chicago housing options available for lease. With seven other projects that are under construction downtown, these developments will test the market’s vitality in about two years’ time. The developments will add around 5,600 new Chicago apartments to the downtown market by 2014, estimates Appraisal Research Counselors, a Chicago-based source cited in a recent post on Crain’s Chicago Real Estate Daily.com.

Optima Inc., based in Glencoe, IL, secured a construction loan from PNC Financial Services Group Inc. and HSBC Holdings PLC. The Chicago apartments are part of a joint venture including Optima and DeBartolo Development LLC, located in Tampa, FL. The project is a 42-story, 325-unit tower on the northeast corner of Illinois and St. Clair streets. The project is financed with a preferred equity investment from LaSalle Investment Management, a subdivision of Jones Lang LaSalle, Inc. Senior VP of Draper & Kramer Inc., William Barry, arranged the financing.

Habitat Co. is developing Chicago apartments at 360 W. Hubbard Street in the River North neighborhood. Habitat Co. received its financing from Bentall Kennedy L.P., a pension-fund adviser based out of Seattle. The building will contain 450 units.

Industry researchers reported that Chicago will see a softening of rents in 2013 but reassured that the increase in supply right now is in balance with the demand. Some of the other seven downtown developments that will house new Chicago apartments include: K2, a 496-unit project in River West; Coast, a 499-unit tower in the East Loop; and a development in River North containing 409 units.

The Midwest region of the U.S., particularly Chicago, has some of the strongest markets in the real estate world in recent times. And now, a new Case Shiller report has revealed that the Chicago-area is in the middle of a four-month run of price increases—for both detached homes and Chicago condo units.

While those who purchased Chicago real estate during the height of the housing bubble have definitely lost value (around 29.2% for a single-family homes and 28.2% for Chicago condos), there has been a notable improvement in prices as of late, according to Case Shiller’s home price data list released in August 2011.

Case Shiller’s August index shows the price of single-family Chicago homes is on a 4-month bounce, rising 8.4% over the period and 1.4% since July. Chicago condos have also demonstrated a short-term recovery with five months straight of price increases that totaled a 12.6% gain (however, up just 0.6% from July to August). Still, there is skepticism whether Chicago home prices have truly bottomed out or not. Many real estate experts are hesitant to declare a stabilization of values since the housing market has experienced this type of month-to-month improvement before.

The Illinois Association of Realtors released data in September that showed Chicago home sales rose 13.3% for the month for a total of 6,035 properties sold. However, the median price of $160,000 was an 8.6% decrease from the $175,000 documented last year. With the exception of DeKalb, all nine Chicago-area counties had similar findings: sales increases and lower median prices. The price decline was 5.3% in Cook County.

The third quarter is generally a robust quarter for Chicago homes, especially in neighborhoods containing a lot of families (since people like to settle into their new homes before the start of the new school year). The 2011 third quarter was remarkably strong, however, despite the growing jobless rate over the past eight months. There has been a spike in Chicago home sales, including single-family units and Chicago condos, according to housing data collected for July through September 2011.

According to recent data released by Lakeshore Analytics, sales velocity of Chicago homes improved 31% in the 3rd quarter over the 2nd quarter and had a 1.7% jump from the previous year’s 3rd quarter sales. Sales velocity for Chicago condos surpassed the last quarter by 25% and did 5% better than the 3rd quarter last year. The price of Chicago homes for sale has increased as well: 13% for Chicago condos and 14% for houses.

This news marks the third consecutive quarter of increasing selling prices and sales velocity among Chicago condos. It was the second biggest jump in sales velocity over the past five years for Chicago homes. The largest occurred after a catastrophic first quarter in 2009. This is good news for buyers, as there is a range of homes to choose from. But investors are quick to bid on the best foreclosures, so Chicago condo and home buyers may want to act fast.

The rise in sales velocity in Chicago real estate over the third quarter coincides with a recent dip in inventory. But more Chicago homes have entered the foreclosure process as of late and as these properties become bank-owned they will eventually be relisted on the market. According to economists, this trend could end the dip in previous inventory, which has been the lowest it has been since April 2010.

One senior economist for Moody’s Economy.com explains, “The decline in inventory is just a symptom of the overall anticipation by homeowners that the next two to three quarters are not going to be good,” Andre Carbacho-Burgos said. “It stretches out the amount of time it will take to (deal with) the housing inventory. The good news is by mid-2012, we will have prices rise slowly.” However, as with many things related to the real estate market, Carbacho-Burgos believes the decline in foreclosure properties that has occurred in the past couple months will be short-lived.

Those who have hesitated to purchase Chicago homes in the past may be able to move forward now. Many Chicago homes for sale that were well over $300,000 five years ago have lowered their prices due to the recent housing downturn. People who were in the military or in jobs that required travel may have stayed away from the long-term mortgage commitment. Due to the recent change in the housing market, though, many are rethinking their choice.

According to a current article in the Chicago Tribune, many developers of Chicago real estate are changing home designs and prices due to the increasing number of foreclosures and resale properties. Now that the prices have dropped and one gets more for the money, Chicagoans are more actively pursuing these purchases.

The National Association of Home Builders recently stated that Chicago homes for sale are among the Midwest homes that are averaging a $232,800 sale price. Developers are adding nicer interiors to attract buyers yet the prices are remaining low.

For those who live in the city, Chicago lofts for sale such as the historic Van Buren Lofts are on the market for a mere $239,000. These lofts have the additional amenities of a gym and a deck on the roof.

However, the low prices aren’t limited to city-dwellers. The suburban Chicago condos and homes are a deal, as well. For example, the Palatine R. Franczak & Associates development “The Heritage of Palatine” offers suburban Chicago condos, which run in the $200,000 range with such amenities as hardwood floors, granite countertops, and heated indoor parking. The penthouse is also selling for under $300,000, which is a steal.

The Villas at Fox Run, by Epcon Communities in Plainfield, consists of ranch-style homes selling in the $170,000 – $250,000 range. The development’s single-story homes with clubhouse and community swimming pool mirrors developments common in the western United States.

Chicago real estate suitable for the senior buyer includes Belle Plaine Commons. These stunning Chicago condos are selling to buyers 55 and older for under $200,000 for a unit with a high-ceiling, brand new appliances, and garage space.

For those who choose to leave Chicago apartments or townhomes behind to venture into the greener, single-family home pastures, affordable options are available. If one is having issues with selling the old townhouse, for example, purchasing from a developer like William Ryan Homes may provide an out. The company partners with property managers, which enable the buyer to purchase a new home while renting out the old one.

Sales of Chicago condos showed an improvement in September, as did sales of all existing homes in the city. According to an October 20^th article in the Chicago Tribune, new reports on the local housing market revealed year-over-year gains in residential real estate sales—for both attached properties and single-family homes. There were a total of 1,498 homes sold in the city this September, which is a 6.8% gain from September of last year.

Condo sales in the city reached 855 for the month, which is 6.5% higher than what was sold during September of 2010. Home price is doing well as compared to last year, too. Median price for the entire residential real estate market in the city of Chicago rose 5.6% in September. However, if you look at just condos, median price went down slightly from September ’10 to $235,000 in September ’11. That is only a 2.1% dip, year-over-year.

If you look at the first three quarters of the year, price for condos and townhomes in the city are steadily climbing. According to data from Lakeshore Analytics, Chicago had its third straight quarter of rising selling prices for attached properties. Median price almost hit $300,000 during the three-month period of July, August and September—a 13% jump from the second quarter selling price. Sales volume of condos and townhomes in Chicago is also on the rise.

A typically slower fourth quarter could result in a slip in Chicago’s current upward movement, which is bucking the national housing trend. Chicago is supposed to have an especially tough winter this year, one on par with 2010’s Snowpocalypse. Severe weather would further amplify the normal decrease in buyer activity that usually occurs during October, November and December. Plus, people often get busy with holiday plans and push buying a new condo or home back until after the New Year.

Another factor that will likely affect Chicago condo sales in the near future is the impending wave of foreclosures awaiting processing. As banks work their way through the backlog of foreclosed homes, there will be an influx of REO properties re-entering the local housing market. That could pose an issue for home sellers as it may bring down median price again.