Industry Insider: Persin and Krettler

Housing inventory has been shrinking over the past year throughout the Chicago area, both city and suburbs. In the West suburbs, where Jack Persin is the president and managing broker of Naperville's Ryan Hill Realty, inventory is at its lowest point in four years because home sales have been rising.

“Sales in the Naperville market are up 20 percent over last year and during October, home values were even up 1.4 percent over October of last year. So, we are starting to see an improvement in home values, too,” Persin said.

Tom Krettler, broker associate with RE/MAX Unlimited Northwest in Palatine and a specialist in bank-owned foreclosures, agrees.

“The market has stabilized somewhat and so have prices in my market, too, which includes Palatine, Arlington Heights, Schaumburg, Roselle and the communities surrounding them,” Krettler said.

“I don't anticipate anymore huge price drops. If a home is priced right and in good condition, it will sell,” he said. “Even if it is in poor condition, it will sell if it is priced right. But the buyers need cash or good credit in order to buy and they can afford to be particular. The cash buyers out there are very picky and they are getting good deals.”

Persin and Krettler are co-presidents of the Mainstreet Organization of Realtors, the largest local Realtor association in Illinois and the fourth largest such association in the nation with 16,000 members operating in nearly 200 suburban Chicago communities, from the Wisconsin border to Indiana. This gives Persin and Krettler a nearly unparalleled view into the local marketplace.

What are you seeing in the current Chicago area market?Krettler: #8220;Right now we are in a situation where you can buy a property and have a monthly mortgage payment, including principal, interest and property taxes, that is less than it would cost to pay rent for a comparable property.#8221;It is a great time to buy if you are able, he said. If you are a cash buyer, you can purchase a two-bedroom condominium in the Northwest suburbs, rent it out and earn money on the investment. But most banks won't loan money on condominiums right now because so many of them have problems with homeowner association delinquencies and foreclosures. Therefore, only cash buyers can take advantage of these bargains.There has been a tremendous pendulum effect where credit was once too easy, but now it is too hard to obtain, he added.#8220;But I am encouraged about the market because our sales in the Northwest suburbs have been up significantly this year over last year. In the Chicago area, we are lucky. Some places grew fast and then were hit badly. Here we are more steady, so the dips aren't as bad.#8221;Persin: #8220;We see opportunity for growth again. We have been faring well as we compare each quarter of 2011 to the same quarter of 2010.#8221;How has the business of real estate changed?Persin: #8220;In this environment, Realtors are more important to buyers and sellers than ever before. With three types of sales out there #8212; traditional, foreclosures and short sales #8212; it is very important to buyers and sellers to have experienced Realtors helping them navigate the minefield.#8221;Krettler: Banks are being a bit more willing to work with distressed homeowners on loan modifications or short sales in order to avoid foreclosure procedures, he said.#8220;But they want to make sure that if they do modify a loan by lowering the principal or payments, or both, that the homeowner can afford to continue to live in the property. So they are being careful about whom they work with.#8221;On the flip side, banks seem to be holding onto their foreclosure properties longer and not putting them on the market. That so-called #8220;shadow inventory#8221; is an unknown factor that is always lurking in the background and no one knows what impact those homes will have, he said.#8220;It all depends on how the banks roll those out and over what period of time.#8221;Why is real estate important to the economy?Persin: #8220;Every time a home is sold in Illinois it generates $28,500 in auxiliary expenditures by the buyer and seller, like hiring movers, buying furniture and appliances, hiring painters and so forth. That stimulates the economy #8212; something we desperately need to do.#8221;What needs to happen for the real estate market to stabilize again?Persin: #8220;We have a huge real estate sale going on right now in the Chicago area, reminiscent of the Black Friday sales in the stores. But there is still some reluctance to jump in on the part of the buyers. They are still worried about where they will stand financially three years from now, even though every economic indicator currently looks positive.#8220;More job stability is needed. Buyers have a hard time choosing to buy a house when they are worried about their job.#8221;Strides have been made, however, thanks to the federal government instituting some programs to encourage homeownership. For instance, the law to phase out mortgage interest deductions was tabled and never voted on. In addition, last month the U.S. House of Representatives voted to re-establish more attainable Federal Housing Administration home loan limits.#8220;The banks had taken the original FHA loan limits and reduced them and now the House voted to put them back up to earlier levels. By raising them again, they eased the qualifiers for getting a mortgage. That was a huge win.#8220;If we want the housing market to come back we have to work on and strive for less rigorous qualifiers for getting a mortgage.#8221;