As we move further into the new year, buyers, sellers and realtors alike are keeping a close eye on end-of-2012 numbers and what is projected for 2013.
The Wall St. Journal reported last week that U.S. existing-home sales rose to their highest annual level in 2012 (the highest in five years), marking the largest annual increase since 2004. The report is the latest indication that lower-than-low interest rates and high demand from investors lead housing markets to hit bottom last year.
So what does that mean for 2013? The market is anticipated to be stronger. I am already having clients and potential buyers call me to ask to start the process of looking for property. And there is still great opportunity for those interested in buying Chicago real estate. Mortgage rates in December stood at an average of 3.35% for a 30-year fixed-rate loan. If you are able to make a down payment and have a healthy FICO score, there’s never been a better time to obtain a home loan.
The latest numbers could also be a good projection that this year’s real estate will be different. If the inventory of homes for sale continues to decline, this could quickly turn into a seller’s market, as they will have the upper hand if buyers don’t have much to choose from.
Chicago Real Estate Buyers Should Take Action
Chicago real estate and the market in general is not unlike the stock market—impossible to predict when the just-right moment will arrive. By all indications, we’re still in a great window to purchase property, but that could change swiftly. Once the “just-right” time has revealed itself, it’s often because it has already passed by.
If you’re looking to purchase Chicago real estate in 2013, I have a few recommendations:
1. Look at recent sales. Whether you’re looking to buy a single-family home or a condo, it’s important to find similar properties that have recently sold—homes that have similar features, amenities, location, etc. See how these align with your budget to get a better idea of what you can expect to find for a particular price.
2. The sooner, the better. As I said, the real estate market is as difficult to predict as the stock market. With still-low inventory and signs pointing to 2013 as a year of recovery, the market could quickly become more advantageous for sellers, with the ideal opportunity for a buyer having passed by.
3. Have your finances in order. Lending standards are still on the conservative side, so buyers should have all of their “ducks in a row” when it comes to a down payment, at least 10% if the loan is conforming or 20% if it is a jumbo one (over $417,000)) and good FICO scores. Remember it is an excellent idea to obtain a pre-approval letter from a mortage broker or a bank when you are ready to start the search with a realtor for that chicago luxury condo or home. And as always, cash is king when it comes to getting a good deal. Especially with the number of investors shopping the market as well, buying a home with cash typically trumps a buyer looking to obtain a mortgage.
This year seems well-poised for an even greater recovery than we say in 2012, which makes it a key time for potential buyers to start the process of making a home purchase. To take a closer look at the Chicago market and its role in the overall health of the economy, give me a call at (312) 498-5080 or email me at [email protected]
Lake Point Tower, at right, is one of many buildings along Lake Shore Drive that offer incredible views of Lake Michigan. Image via Chris Walker/Chicago Tribune