September 23, 2008
In addition to having the highest sales tax in the UNITED STATES OF AMERICA (thank you, Mr. Stroger and The Chicago City Council), Chicago residential homeowners are now shouldering almost the same tax burden as business property owner. As Crain’s Chicago Business recently reported [Click Here For Article] Commercial property owners pay about 1.87% of market value in property taxes annually (down from 4.61% as recently as two years ago). Chicago homeowners are now paying 1.29% of market value in property taxes annually. And believe it or not, that’s even MORE than the 1.24% that industrial property pays!
There are some sound, logical explanations for this — The soaring prices of residential have far outpaced commercial or industrial prices. That notwithstanding, typically commercial properties pay MULTIPLES OF residential rates, not the same rate! As we slide into the ever worsening mess surrounding the mortgage and financial crises in America, homeowners are already looking at a $700 Billion bailout affecting their tax bill. Perhaps re-distributing the property tax burden is in order!
September 20, 2008
Well, the entire country has finally inherited the mortgage/finance/real estate bubble debacle. For those of us Chicagoans who haven’t connected the dots, here it is in one sentence – We, the people, are bailing ourselves out with our own tax dollars. To borrow from one of Illinois native sons (OK he’s from Kentucky, but he split most of his rails here), maybe the best approach is “with malice toward none, with charity for all.” Let’s stop blaming, because there’s enough of it to go around and almost everyone played a role — The rich CEOs, the lenient loan officers, the greedy flippers, etc. etc. etc……
The good news was that yesterday at noon the 30 year rate from Rubloff-Wells Fargo mortage was still a low low 6%. The better news is that I received an email an hour later stating that the rate had further dropped to 5.75%. Money is still available, for those with good credit and the ability to repay and the forsight to save 20% before buying. That’s not a bad thing – having good credit, being reliabe and consistently saving. At least it wasn’t back in the day.
So it is the bleary eyed morning after, and the hangover is going to last as long (or longer) than the party did. Most of us learned that in our youth, so it shouldn’t be much of a surprise.
September 19, 2008
New Flash, Chicago – Today’s mortgage rate on a 30 year, fixed rate mortgage is 6.0% with Wells Fargo. Fed Chairman, Ben Bernacke decided not to change the Federal Reserve rate this week. He fears both the dollar value getting weaker and inflation. The sky has not fallen….
The sky has not fallen
Within the past few years, the stretch of Southport between Belmont and Irving Park has experienced tremendous growth both with the emergence of upscale boutiques and a boom in new construction. Formerly “West Lakeview,” the area has now been dubbed with the more appropriate title of “The Southport Corridor.” In addition to some of the pioneers who first opened boutiques on Southport, two familiar names have recently moved in. The cosmetic giant, Benefit, and the ever-so urban Anthropogie are the street’s newest residents. If shopping is not your thing and you prefer the movies, walk over to the Music Box to catch a great Independent or Foreign film. After a full day, the street’s dinner options are endless. Head on over to one of the great pubs such as Cullen’s for authentic Irish pub grub and a pint or if you are in the mood for something more romantic, grab a bottle of wine at Que Syrah and opt for Tango Sur, a truly spectacular Argentine grill. With so much to offer, Southport is at the top of my list.
As RISMEDIA noted in today’s article entitled “Real Estate Leaders Convene at LeadingRE International Symposium in Rome” Click Here to Read the Full Article the powerhouse Leading Real Estate Companies of the World (sm) network, the most successful real estate services network in the world, brought many of their Chicago staff to the eternal city for three days of networking and discussion on the economy and its affect on the real estate market in general and the luxury real estate market in particular.
Chicago was one of the better represented cities at the conference — The entire leadership team of Leading RE, including Paul Boomsma, Ruth Ann Pepple, and CEO Pam O’Connor all hail from the Windy City.
In addition, two of Chicago’s most powerful independent brokers were represented. Stephen Baird of Baird and Warner sits on the Board of Directors for Leading RE, and your humble blogger John D’Ambrogio, represents the interests of the membership as the chair of the Leading RE Advisory Council. Leading RE has company representatives in 38 countries and is growing every day.
Sessions included a panel on luxury lifestyle developments including representatives of properties in the Dominical Republic, Portugal, and Chicago’s own Ritz Carlton Residences, the luxury Michigan Ave. development represented by Rubloff. The Ritz also was a sponsor of the event.
The feeling I took away, after hearing my colleagues from around the globe speak, is that Europe is certainly faring better than the U.S. in terms of real estate (or immobliare, as the Italians would say). Chicago, however, along with New York and select other markets, is doing much better than the rest of the county. That is, if you measure “better” by the phrase “not as bad.”
Real Estate is hotly debated topic in today’s turbulent economy.
For more information on the Leading RE broker network, visit www.LeadingRE.com.
September 13, 2008
What’s new in downtown Chicago’s condo market? Well, not a lot of sales. Appraisal Research Counselors recently reported a whopping 73% drop in new home sales for the first half of this year. And what saved those numbers from being even worse? The 150 story (proposed) Spire, which contributed over half the sales.
By all accounts this trend will continue into next year, and a full recovery may not come until 2010’s spring market. That’s great news for buyers relocating into Chicago. Especially those looking for luxury at a bargain, the deals are out there, since supply outpaces demand at an unprecedented pace. It seems one of the few things helping the supply/demand flow are some of the recent transformations of buildings from condos to apartments, which took the off the roles of the unsold, and put the on the roles of the unrented!!
And what does this mean for sellers in Chicago? Pricing is crucial. If you don’t grab your market in the first 30 days, you’ll be chasing it. And the road to a sale is a long one when you’re chasing a falling market.
Welcome to the Windy City! City of neighborhoods, City of Broad Shoulders….City with the highest sales tax in the NATION. Speaking of taxes (and legal tax avoidance)… Lots of people are excited about the new housing bill’s tax advantages for first time buyers (See Tax Code Change) for more information on that. I personally think the jury is still out on how that will actually help our market. Regardless, if you’re transferring to Chicago you may want to brush up on good old Internal Revenue Code Section 217. This code allows deductions for a number of specific moving expenses if you’re doing the move on your own. Two very specific requirements must be met, however: The Distance Test. The new Primary workplace has to be at least 50 miles farther from your former residence than the old primary work location was. It’s very specific – For example if your old workplace was 15 miles away from your former residence, your new workplace must be an additional 65 miles further away from your old work place (that’s 50 plus 15). If you are relocating without leaving a job (i.e. you had no former employer), this new job has to be 50 miles away from your former home.
The Time Test. You must be a full time worker for at least 39 weeks during the first 12-month period after arriving in the locale of your new job. This test does NOT apply if you die (not a good way to avoid the test) are disabled (ditto), have an “involuntary separation, or are transferred for the direct benefit of your new employer.
If you meet both the distance and time tests, you are allowed deductions for reasonable moving costs
• Storage and transport of household goods
• Moving Expenses – i. e. transportation costs
You may want to speak to your accountant for details, but these are some deductions that are not to be missed! As someone more famous than me once said – Tax evasion may be illegal, but legal tax avoidance is a God given right!
September 10, 2008
Well, after 48 hours it’s old news that the feds are bailing out, with our tax money, our friends at Freddie Mac and Fannie Mae. What does that mean for someone transferring into or out of Chicago? In the short run, a few short term gains — If you’re in the thick of it, rates took a quick dive, but are likely to inch back up soon. So if you’re already to pull the trigger this is a good week. For those staying put (who wouldn’t be reading this blog anyway), those with delinquent loans have a fighting chance of modifying loan terms and ending up with some lower fixed payments.
The bottom line is we don’t know, at all, what the real long term ramifications are for Chicago’s market in particular, and the mortgage market in general.
To those of us complaining about our tax dollars going to the bailout – You’re welcome to complain, but the truth is we’re better off with this program than watching Fannie and Freddie go into full cardiac arrest. If you think we spent a lot on this, imagine what that debacle would’ve cost you. And at the end of the day, the government (i.e. “we”) will get our money back, so it may be better than a lot of other government programs out there! I’m still glad I’m not a major shareholder in Fannie or Freddie.
For a less rosy outlook, check out the NY Times article.
September 8, 2008
Inman ran an interesting article recently on Realogy’s AMAZING $27MM net loss in the second quarter of 2008.
That included a 21% decline in home-sale transaction sides for it franchises and 19% for company owned locations. Quite a drop! The only thing that went up was its REO (bank owned) properties. Their transaction volume doubled to approximately 10,000 units. How does this affect anyone considering a relo into or out of Chicago? It shouldn’t reflect negatively on Realogy – As the market goes so they go. They’re a good example because given their size their numbers reflect the reality of the market.
The good news is Chicago’s Real Estate numbers aren’t nearly as bad. We have a strong local economy and prices never skyrocketed like they did in many other markets. But by definition, you have to move from SOMEWHERE ELSE when you relocate, so the trickle down effect has hit the Chicago relocation market, to some extent. With an 11 month supply in many areas of the city (three to six is considered a stable market), sellers are still going to have to price their homes competitively in popular areas like The Goldcoast and Lincoln Park if they want to stay ahead of the market and get their places sold. That’s why pricing is more crucial than ever these days, in Chicago as in everywhere else!
September 3, 2008
Welcome to www.chicagorelocationblog.com – A forum to discuss relocation issues involving the windy city.
In addition to other responsibilities at Rubloff Residential Properties in Chicago, I oversee the relocation team. We’ve seen thousands of transferees come through our doors and find a home throughout the years. Many of them were sponsored and guided directly by their companies (or their third party relocation company vendor); many were referred by other brokers in The Leading Real Estate Companies of the World ™ network, formerly knows as RELO. I currently serve as chair of Leading RE’s Advisory Council. Regardless, they all had similar needs: