Today's real estate market in the Chicago area resembles a candy shop for people with money, says real estate broker Fran Dugo, owner of Your Choice Real Estate Services in West Dundee.
"We just have to educate the public, specifically people who have money to invest, so that they can start buying and get this market moving," she said.
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"Right now you can get houses in Elgin and Carpentersville for $40,000 and most of them are in decent shape. And the rental market is hot. So why aren't investors buying these houses, fixing them up and renting them out to people who need a place to live?"
And for those who want to buy a house and live in it themselves, the federal Department of Housing and Urban Development is offering buying incentives on houses they have foreclosed upon.
"And these aren't all small, inexpensive houses," Dugo said. "One of them was featured on the Cavalcade of Homes held in Elgin a few years ago. It originally listed for $1.9 million and is now down to $486,000."
Dugo said the market remains slow.
"We had a spurt of activity in March and April when the weather broke, but the market has died down again since then," she said. "We have lots of listings; the banks are still reluctant to negotiate on short sales; and young buyers are still scared to commit."
However, low-income immigrant families do seem to be buying homes, she said.
What are you seeing in the current Chicago area real estate market?
"Home values here are continuing to drop, unfortunately. A recent national survey revealed Illinois is one of the top five states when it comes to have no buyers in the market. We have lost a lot of jobs here due to consolidation of workforces and the trades being out of work. And we are losing people who are moving to warmer climates and better job opportunities."
Rentals, on the other hand, are very hot, Dugo said, because of all the people displaced by foreclosures and short sales competing in the traditional rental market for places to live.
"In order for your house to sell in this market, it has to be in tiptop shape and priced right because there are 90 other houses out there for people to buy in any given market.
"The other big problem is that the asset managers for banks are not yet putting most of their foreclosed properties on the market."
How does the Chicago market compare to the suburban market?
"There are so many foreclosures on the market in the city that conventional, non-foreclosure listings are toast. The market there has just been inundated with foreclosures.
"You know, the old-timers believed in paying off their houses and if we had all done that instead of keeping the mortgages for tax-deductions, we wouldn't be in this predicament as a country."
Are you seeing more movement in any particular segment of the market?
"Multifamily units like townhouses and condominiums are suffering more than single-family homes. If people feel that they can get a single-family home without an association fee for the same price as a townhouse with an association fee, then they are buying the single-family house."
Baby boomers who want to downsize are also not buying those condominiums and townhouses because they don't want to sell their current homes at severe losses.
"They know that prices will never go back to where they were at one time, but they hope to recoup some of their investment if they hold on to the house for awhile longer. Their attitude is 'why throw it away?' -- especially if they have put a lot of time and money into the home."
Are high gas prices affecting where people buy a home?
"Younger buyers are still willing to buy far out from the city in order to get a larger home, which they can pick up for pennies on the dollar. They don't mind driving a long distance, especially if they have one of those little, gas-saving cars.
"Older people are tending to move to the closer-in suburbs."
What needs to be done for the residential real estate market here to permanently rebound?
"The government needs to throw first-time buyers just a small incentive 'bone' to get them to jump into the market and buy a home, and banks need to better educate the staffs of their short-sale departments. These negotiators, in my experience, generally have very cavalier attitudes about their jobs and think that if they say 'no' to every deal, they are saving the bank money. But the truth is everyone loses when a house goes into foreclosure and the bank loses an average of $50,000 to $60,000 per foreclosure."
Dugo's office handled between 60 and 80 short sales (both sides of the deal) during the first six months of this year and 30 foreclosures during the same period. Ninety-eight percent of the short sales received bank approval within three to four months, while some took as long as six months or as short as one week.
"We have completed very few conventional sales this year."
What are you doing to help homebuyer and sellers?
"We are offering seminars on short sales; explaining what they are, how they are better than foreclosure and how they are not something shameful. Ninety-nine percent of these people didn't take out crazy loans. They just bought at the wrong time and then lost their job or suffered some other misfortune."
Dugo and her office are also bringing in a speaker later this summer from Equity Trust in New York. The speaker will discuss how you can legally use the money locked up in an IRA or 401(k) to purchase "real property" and become a real estate investor.
The agency is compiling a guest list for the speaker. Call (847) 426-7899 or visit www.yourchoicehomes.us to be put on the guest list.
Dugo has also started The Golden Bridge Foundation, a charitable organization that is raising money to buy foreclosed homes around northern Illinois, fix them up and rent them out to people at a reasonable price. Counseling is part of the deal.
"We need to get our people back on their feet," she said.