In the first four months of this year, powered by foreclosures, short sales and government subsidies, condo sales have dramatically increased compared to 2009.

According to figures generated for ChicagoCondosOnline.com by MRED, the regional MLS, year-to-date sales of Chicago condos through April 2010 are:

* Up 48% in total dollar volume, to $988 million
* Up 55% in units closed, to 3,110
* Down 7% in median sales price, to $260,000
* Down 4% in average market time, to 152 days.

Comparing April sales to March:

* Units closed were up 12%, from 923 to 1,030 closings
* Dollar volume was up 13%, from $290 million to $328 million
* Median sales price was up 4%, from $259,000 to $270,000
* Average market time was down 4%, from 161 days to 154 days

For details on month-over-month and year-over-year: click here.

If you would like information more relevant to your specific property or your property search, please email or call me 312.981.2315.   I would be happy to answer any questions and/or provide more detail.   Or to have a real time market report emailed to you for your specific area, visit ChicagoRealEstateData.   The report is emailed within minutes.

The above information is provided with permission from Chicago Condos Online.

Is America downsizing?   Housing statistics state that the average square footage of new homes is becoming smaller.   Many people are moving in with relatives.   In the past week I have come across a few articles about smaller homes.   The home on the left was an illustration in an USA Today article, “Are You Downsizing? Has the Economy Prompted a Shift?”.

Caption for the photo:   “Gregory Johnson shakes rugs from the porch of his 140 square foot home in Iowa City, Iowa in 2006.   He’s lived there since 2003 and is writing a book to promote his minimalist lifestyle.”   This is certainly taking downsizing to the extreme.

A New York Times article, Converting a Garage Outside Seattle into a Tiny Home, shows a very clever use of 250 square feet.   Don’t miss the slideshow of the house.

Space definitely seems to be a common topic these days and what actually prompted this post was a video I had seen regarding a Hong Kong apartment that was designed by the owner-architect.   It is a very clever design that creates 24 rooms in 330 square feet.   Check out the video.   This home is amazing!

Photo by Jim Slosiarek, AP

I certainly feel priviledged to live with my small dog in 900 square feet.   Of course, I wish I had another room.   What about you?   Are you happy with your space?   Could you live comfortably in less space?   Do you actually use all of your space?

Spring has arrived in Chicago and the summer activities are about to begin.   The following are a few of Chicago’s May activities.

May 7 – 9   Cinco de Mayo Festival in the Little Village Neighborhood.   Featuring plenty of live music, food, arts & crafts, activitites for children and families and much more.

May 8 – 9 The 14th annual Celtic Fest   is FREE in Millennium Park.   Expect live celtic music, dance, entertainment and vendors.

May 21 – 23   The 17th annual Chicago Mayfest in Lakeview.   Headlining banks, food and crafts.   Converts to a giant playground for kids on Saturday and there is a pet parade on Sunday.   Check out the details here.

May 29 – 30   The Belmont-Sheffield Festival is in its 26th year.   Music, arts, crafts, fashion, food and drink.   More details including the music schedule is here.

May 29 – 30   The Randolph Street Market (formerly known as the Chicago Antique Market) is in its 7th year.   This European-style indoor/outdoor fair showcases, antiques, vintage collectibles and Indie designer apparel. Food, drinks and music are also available.   An entry fee applies.   For more info check out the website.

May 30   A favorite amongst cyclists is Bike the Drive. Lake Shore Drive is shut down to auto traffice for 5 hours starting at 5:30a.   More information can be found here.

I would love for you to contribute to this monthly posting.   If you have an event you would like to add, please email the details to me a couple of days before the first of the month.

Key components of an offer are:

• Price
• Earnest Money (Escrow)
• Mortgage Contingency
• Closing Date
• Possession
• Inclusions/Exclusions

When preparing or receiving an offer buyers and sellers both tend to focus on price.   While price is certainly a major factor in the purchase of a home, the other key components can play an important role in the offer.

Earnest Money:   In my market 10% of purchase price used to be the norm.   Today it tends to be 5%.   In some markets it is $1,000 or even a promissory note.   Sellers like to see more money held in escrow as it is gives them some assurance that the buyer will not back out of the contract.

Mortgage Contingency: The mortgage contingency is for the safety of the buyers.   If for some reason they are unable to get a mortgage, they will be able to cancel the contract and get their Earnest Money back.   What the seller will look for is as short a contingency period as possible so the property is not off the market too long.

Closing Date: In my market it is typical for the seller to be moved prior to closing.   That is not the case in all markets. Today many sellers are selling their homes before looking for a new one.   In this case they might want a longer time period before closing.   If the buyer has a lease and needs a short time frame, this could be a significant issue in negotiations.

Possession: As mentioned previously in my market the seller moves prior to closing.   In that case the buyer has possession immediately after closing.   In other markets the sellers might move after closing.   In those cases an arrangement is made between the buyer and seller for date of possession and an amount to be paid to the buyer for each day that the seller remains in the home after closing.   The amount is usually a bit higher than the daily rate of principal, interest, taxes and insurance.

Inclusions/Exclusions: Well, this can be a difficult one.   It is important that all personal property that is to remain be included on the offer/contract.   And conversely it is important that any exclusions be outlined in the offer/contract.   Often sellers wish to exclude certain items that would be expected to stay.   Window treatments and light fixtures are the most common items.   If these things are not clear on the contract, it can become an issue at the closing table.

While these items may not seem very important I can assure you they can be.   Be sure that there is a clear understanding when you sign that offer. If you would like more detail on this matter, please feel free to contact me via email or call 312.981.2315.

Great art for a great cause was the title in Molly Boren‘s newsletter that caught my attention.   Molly was referring to Project Onward.   From their website:   Project Onward supports the creative growth of visual artists with mental and developmental disabilities.   Project Onward provides studio space, art supplies and professional guidance to emerging artists in a communal workshop environment.

Project Onward‘s workshop and exhibits are located in the Chicago Cultural Center.   You can find more information about the project, the artists and the artwork on the website. There are several examples of the artist’s work.   Some works are primitive, others very detailed and many quite colorful.   The photo to the right is just one example of a work by George Zuniga.

So if you are looking for original affordable art, consider Project Onward.   You will be buying great art and suppporting a great cause.

Thank you to Molly Boren for bringing this to my attention.

Sellers, beware of the taxman if you are considering a short sale, foreclosure or a mortgage-principal-reduction-program.   Many people considering one of these procedures are not aware that there are tax implications.

The IRS gets involved because the Federal Tax Code generally treats any forgiveness of debt over $600 as ordinary income to the taxpayer.   When your lender forgives all or part of your mortgage balance they are required to issue a 1099-C which is a cancellation of debt notice.

The good news is you might be exempt from the tax as the result of legislation in 2007.   To learn more about this issue read “IRS Tells Homeowners How to Get Tax Relief if a Lender Forgives Part of Their Debt“.

Links to IRS information and form:

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

IRS Form 982   Reduction of Tax Attributes Due to Discharge of Indebtedness

If you have more questions regarding this matter, I recommend you speak with your accountant or attorney.   If you have real estate questions, email or call me at 312.981.2315.   I love to talk real estate.

Yes.   95% financing is alive and well. If you are a potential homebuyer that does not have 10 – 20% down, you may have options…95% financing or FHA financing.

Larry Steinway of Baird & Warner Financial Services has provided the following Pros and Cons of these two mortgage options.

FHA Pros:

¢      Allows for higher debt to income ratios.   In some cases up to 55%
¢      Allows for lower credit scores, down to 620
¢      Allows a borrower to put 3.5% down
¢      The entire down payment can be a gift

FHA Cons:

¢      Condo buildings must be HUD approved.   (see: FHA Financing for Condominiums)
¢      More documentation required from borrower

5% Conventional Pros

¢      Condo buildings do NOT have to be HUD approved
¢      Less documentation required
¢      No upfront mortgage insurance required

5% Conventional Cons:

¢      Debt to income ratio must not be greater than 41%
¢      Down payment must come from borrowers own funds
¢      Must have at least a 680 FICO score

Not all lenders are qualified to do FHA financing or have 95% financing available.   If your lender does not carry these products, feel free to contact me via email or phone 312.981.2315.   I am happy to give you a couple of referrals.

Other posts that may be of interest:

Fannie Mae and Freddie Mac – Who Are They?

FHA Loans: Basic Facts

FHA Financing For Condominiums

Two months into the new year, condo sales are off to a strong start compared to 2009.   Year-to-date units closed is up 41% over 2009.

According to figures generated for ChicagoCondosOnline.com by MRED, the regional MLS,year-to-date sales of Chicago condos for the first two months of 2010 are:

* Up 30% in total dollar volume, to $356 million
* Up 41% in units closed, to 1,097
* Down 12% in median sales price, to $255,000
* Down 8% in average market time, to 143 days.

Comparing February sales to January:

* Units closed were down only 1%, from 549 to 543 closings
* Dollar volume was down 13%, from $190 million to $165 million
* Median sales price was down 11%, from $270,000 to $239,000, the lowest since March 2003
* Average market time was up 4%, from 140 days to 146 days

For details on month-over-month and year-over-year statistics check out Market Review. Previous market reports are found at the ChicagoCondosOnline blog.

If you would like information more relevant to your specific property or your property search, please email or call me 312.981.2315.   I would be happy to answer any questions and/or provide more detail.   Or to have a real time market report emailed to you for your specific area, visit ChicagoRealEstateData.   The report is emailed within minutes.

The above information is provided with permission from ChicagoCondosOnline.

What is your walk score?   Or are you asking what is a walk score?   From Walk Score’s website:

Walk Score calculates the walkability of an address based on the distance from your house to nearby amenities. Walk Score measures how easy it is to live a car-lite lifestyle”not how pretty the area is for walking.

The following is a sample of what you would see.   Just put your address in…or an address you might be considering to buy or rent and it will give you a walk score, map and list of amenities.

Again from Walk Score’s website:

Your Walk Score is a number between 0 and 100. Here are general guidelines for interpreting your score:

• 90“100 = Walkers’ Paradise: Most errands can be accomplished on foot and many people get by without owning a car.
• 70“89 = Very Walkable: It’s possible to get by without owning a car.
• 50“69 = Somewhat Walkable: Some stores and amenities are within walking distance, but many everyday trips still require a bike, public transportation, or car.
• 25“49 = Car-Dependent: Only a few destinations are within easy walking range. For most errands, driving or public transportation is a must.
• 0“24 = Car-Dependent (Driving Only): Virtually no neighborhood destinations within walking range. You can walk from your house to your car!

Simple to use and a good way to gauge your neighborhood or a possible new neighborhood.   Feel free to contact me if you have any questions about real estate in your neighborhood or a new neighborhood.   I am always happy to talk real estate.

FHA financing for condominiums can be challenging…but not impossible.   FHA stands for Federal Housing Administration and it is a United States government agency.   The FHA was created in 1934 during the great depression and was part of the restructuring of the banking system. The FHA does not provide loans but simply insures them.   Wikipedia gives more details on the history and basics of FHA loans.

The purpose of this post is to outline the special FHA requirements for condominiums.   The first thing any condo association should know is that at this time they will not qualify for FHA financing if they have a right-of-first-refusal.   Changing this requirement is currently being debated…but personally I would not hold my breath on anything happening with that anytime soon.   Meanwhile other requirements for condos to meet FHA requirements follow: (provided by Larry Steinway of Baird & Warner Financial Services)

It is imperative that Condominium Associations understand and follow these new guidelines (as of February 1, 2010) for their members and prospective purchasers in order to be eligible for these loans.

FHA INSURED LOANS

Though the FHA does not make loans directly, it insures loans made by private lenders and is the largest government insurer of mortgages in the world. While during better economic times the percentage of loans which were FHA insured were minimal, recent data suggests that approximately 30% of the current loans being issued nationwide are FHA loans.

As of February 1, 2010, Condominium Associations need full project approval through the FHA prior to an FHA insured loan being issued. Once obtained, the FHA approval is good for two years. The approval is obtained by submitting the required application and documentation through your local HUD office, and there are companies which will process those applications for you. The project approval process is only one step and it is incumbent on the Association to compile the necessary application documents to be submitted to HUD. It is estimated to be two to four weeks for the approval process. After February 1, 2010, unless a Condominium is on the approved list by the FHA, insured loans may not be funded in such Condominiums.

Eligibility requirements for obtaining FHA insured loans differ for new and existing Condominiums. Requirements for existing Condominiums include:
¢                 The Association must have a completed questionnaire
¢                 At least 50% of the units must be owner occupied and 100% of the common facilities be completed
¢                 FHA will only insure 50% of loans in a particular Condominium until December 31, 2010. Then it will decrease its ratio to 30%
¢                 The insurance premiums and deductibles of the Association must be contained within the Association budget
¢                 Fidelity coverage must be obtained in an amount equal to three (3) months aggregate assessments plus reserve funds
¢                 The Association’s insurance must cover 100% of the replacement cost exclusive of land
¢                 Not more than 15% of the units may be delinquent more than thirty (30) days on the payment of their assessments
¢                 There may not be any litigation, other than assessment collection, but the FHA will entertain exemptions for this issue on a case by case basis
¢                 Condominium hotels, timeshares and projects not deemed to be used primarily for residential purposes are not eligible for FHA insured loans

Associations should be proactive and take the initiative in obtaining the necessary FHA approval, rather than wait for the initial buyer and seller to potentially lose a sale over such a delay. Associations should also account for the cost of the project approval to be several thousand dollars depending upon the approval company and whether issues come up during the project approval process.

The reason a condo association would want to be FHA approved is to increase the number of buyers that would qualify to buy in the building. FHA loan requirements are more lenient than conventional loan requirements.   Watch for more information on this in the near future. If you live in a condominium building, you might inquire of your manager about your FHA status.     If you would like to pursue getting your building approved, feel free to email or call 312.981.2315.

You might be interested in these posts:

FHA Loans:   Basic Facts

Fannie Mae and Freddie Mac – Who are they?