There has never been a better time for people with good credit ratings to buy a home, Ed Prodehl believes.
"Prices are at historic lows. They really can't fall much more and you can get a 4 percent interest rate on a 30-year mortgage. When those rates start to go up -- and they will -- you will have missed an amazing opportunity," said Prodehl, president and owner of Coldwell Banker Honig-Bell.
Contact information ( * required )
Honig-Bell has 36 offices serving the suburbs of Chicago, as well as Joliet, Peoria, Springfield, Pekin, Champaign and many other central Illinois towns.
Prodehl says smart home buyers should be snapping up housing bargains right now, just as cagey stock market investors are purchasing good companies that took a beating during the recent wild fluctuations on Wall Street.
What are you seeing in the current Illinois real estate market?
"The conditions today vary widely depending on the community.
"Peoria is very strong because of Caterpillar; and you don't see any empty shopping centers in Champaign. Overall, central Illinois is not huge on short sales because houses there weren't as expensive to begin with, so people didn't find themselves hundreds of thousands of dollars under water. So they weren't as apt to throw in the towel and walk away from their houses."
Even within the Chicago market, the conditions vary. Joliet and Plainfield Township, for instance, saw explosive growth right before the recession when prices were at their peak, so they have been particularly hard hit by this downturn, he says.
"We are seeing a tremendous rental market now in Plainfield Township because people can't sell their homes, so they are renting them."
In the suburban Chicago area, Prodehl's agency is handling the sale of many foreclosures and bank-owned properties.
How has your company been weathering the storm?
"We are continuing to grow the company in both area and footprint, making strategic expansion and consolidation moves when others are pulling back."
Honig-Bell is the No. 1 Coldwell Banker franchise in Illinois and the third largest franchise in the country.
"We now cover a great share of the state with 950 agents, and since we are the new guy in so many places, we are able to tell landlords that their office rents are nonsustainable and are getting better deals from them. In addition, we own a lot of our own buildings.
"We are watching our money very closely to survive, but we have not laid anyone off and maintain a good relationship with our agents. We have kept our experienced teams in place in each market and we are providing as much support to our offices as possible by helping them respond immediately to Internet leads, offering training and even providing QR bar codes for use with smartphones.
"We are constantly asking ourselves 'What do our agents and offices need today that they didn't need three years ago?' and are moving immediately to provide those things."
Nevertheless, he adds: "The market is extremely difficult today. We sold 827 homes during July, but that was spread out over 36 offices. So we sold 20 to 25 homes per office last month with some offices doing better than they did last year.
"The problem is that the values of homes have dropped 30 to 40 percent and, along with that, the commissions we are paid have dropped 30 to 40 percent. So the profits of the company have dropped by the same percentage.
"Fortunately, we had the good fortune to be in business during the greatest time for real estate, starting in 1971. So we were able to create strong banking relationships and put aside reserves that have allowed us to weather this storm.
"We are also a member of Cartus, the largest relocation company in the country. We have a relocation staff of six full-time people and we handle relocations for 35 or 36 corporations, so that has also helped."
What needs to be done for the residential real estate market here to permanently rebound?
"First of all, we need to create more jobs. People need to go back to work."
Prodehl also advocates no more extensions to unemployment compensation. "We need to tighten the guidelines so that people go back to work and start paying taxes into the system again, even if they are getting less money than they once made. Too many people are not taking lower-paid jobs because they don't want to lose their unemployment payments."
Prodehl also believes Congress needs to be lobbied to pass a law that no longer allows banks and appraisal companies to use foreclosures and short sales in their calculations to determine the value of nearby homes for loan purposes. He feels this practice is simply continuing to depress home values.
Home lenders also need to stop requiring down payments of 20 percent.
"It takes the average homeowner 14 years to save a 20 percent down payment and that would just destroy the market. We can't let that happen."