As spring rapidly approaches, the Chicagoland economic update is for housing to cost more for many new prospective home buyers. Higher mortgage rates, rising home prices and slow-to-moderate job and income growth threaten to combine for a less than stellar spring home buying season.

The end of 2016 saw home affordability reach its lowest point since 2009, and the home ownership rate dropped to historical lows across the U.S. Some economists feel a cure for the home affordability problem isn’t in the cards for 2017.

 As for the Chicagoland economic update, some economists feel a cure for the home affordability problem isn't in the cards for 2017.

According to a new report issued by Black Knight Financial Services, American homeowners have to pay 22.2% of their median income to meet their mortgage payments on a median priced single family residence. The data is based on a survey of borrowers who have a 30-year fixed rate mortgage. By comparison, the housing bubble of 2005-2006 saw roughly 36% of median incomes to afford a home. Keep in mind that home prices and mortgage interest rates were even higher during that time.

The differences between the housing bubble of slightly more than a decade ago and today’s market are fuel for the most recent Chicagoland economic update. Back in 2005, most borrowers didn’t take out 30-year fixed rate mortgages, preferring to utilize alternate lending programs featuring low- or no-down payments and very low introductory interest rates. In addition, many borrowers took advantage of negative amortization loans allowing the homeowner to postpone payments and add them to the overall loan balance. Many of these “creative” financing options contributed to the housing crash and, as a result, some of these type loans are no longer legally available.

The current 22.2% of median income that the average borrower has to pay today to meet his mortgage payment represents a 10% increase during the fourth quarter of 2016 – the result of a quick rise in post-election mortgage interest rates. The above-mentioned Black Knight report bases their comparisons on 30-year fixed rate mortgages today, making it a more appropriate “apples to apples” comparison if some factor in the mortgage market is responsible for a change in affordability. In 2005-2006 when the home affordability equation was grossly out of line, the mortgage programs available at that time artificially increased the homeowner's buying power and drove up home prices. In actuality, without the creative lending programs and products the housing affordability would be far from sustainable.

In a nutshell, here’s where the Chicagoland economic update has created a cause for concern: With home prices having risen steadily during 2016, they were 7.2% higher across the nation compared from December 2015. The national index at the end of 2016, according to a report from CoreLogic, was 3.9% below the peak housing price pace in April 2006. This year, CoreLogic’s projections are that the national index will rise 4.7% – putting housing prices at a new high level before the end of the year. In addition, other indices that are tracked show that in some regions of the country, prices are already higher than their previous peaks – higher than the last housing boom.

Economists say the central cause of higher prices these days is not solely restricted to low mortgage interest rates, but also to tighter home inventory and record demand from home buyers. The spring buying season is expected by many to be extremely tight. Home builders have increased the number of units under construction, but not by much. In addition, there is expected to be a huge increase in demand on the part of first-time home buyers, especially millennials who have been on the sidelines for the past few years.

As always, time will soon tell. The lower than expected housing inventory levels continue to plague a full-blown housing recovery. That is seen as one of the major culprits in creating and inflating home prices of the homes that are on the market – creating a short supply and a high demand – the very definition of a seller’s market. Ironically, while interest rates do play a factor in the challenges of the spring selling season and beyond, mortgage rates are not expect to rise much higher than the 4.5% level during 2017, a very affordable interest rate – if home prices weren’t expected to rise higher than in 2016. Remember, while interest rates were at all-time market lows for much of the past 12-18 months, even a slight increase to the 4.5%  – or even the 5% threshold is a very good bargain compared to where interest rates have been for much of the last decade.

Nationally, most homes in most real estate markets remain more affordable than those in the housing bubble days. However, the Chicagoland economic truth is that the housing market is currently feeling more pressure in terms of affordability since the recovery began in recent years.

You can find more articles pertaining to the Chicagoland economic update and outlook in the "Economy" section of articles just below Chicagoland Real Estate Categories in the column to your right.

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As a homeowner, no doubt you’re familiar with Chicagoland home improvement issues. Every home has those nagging problems that arise from time to time. Many times they are too minor to call in a professional, but they still require attention – and repair. The good news is you can easily tackle these and other issues all by yourself. Let’s take a look at how you can solve three well-known problems that can occur around the house.

Jammed or stuck garbage disposal

The first of the Chicagoland home improvement issues we should address is the jammed garbage disposal. You know the drill. You flip the switch and it makes a humming noise, but doesn’t turn on and do its job. That usually means it’s stuck, clogged or jammed with food (or something that’s not supposed to be in there, like a spoon for example.) Don’t force the situation and don’t reach down into the disposal with your hand! Follow these easy suggestions to remedy the problem:

  • Turn off the disposal or flip the electrical circuit that serves the appliance.
  • Using a flashlight, look into the disposal and “fish around” with a pair of pliers to pull out the item(s) that may be clogging it. Again, even with the power turned off or disconnected, never put your hand in the disposal. Hopefully, you’ll locate whatever’s jamming the disposal and can remove it easily. If that’s not the case, continue as follows.
  • If your disposal is equipped with a reversal feature, run cold tap water into it and put it in reverse. Usually, that dislodges whatever is causing the clog and it can be removed. If you don’t have a reversal feature, do the following instead:

Turn off the electrical power at the circuit breaker 

Chicagoland home improvement issues often include repairs, and this may mean a stuck or jammed garbage disposal.

Look beneath the sink and find the hole in the bottom of the disposal. Using an Allen wrench, insert it in the hole and twist it back and forth a few times in an effort to free the impeller blade, which could be stuck. If you can turn the wrench in a complete circle, the object will probably be freed… see step two above.

  • Try the reset button and run cold tap water into the disposal for a minute or so.
  • Turn the power back on to the disposal ad turn it back on.

Loose toilet seat Probably because it gets a fair amount of wear and tear, it’s not unusual for the toilet seat in your main bathroom or kid’s bathroom to become loose. It’s common among Chicagoland home improvement issues. Do this for a tighter toilet seat:

  • Take off the hinge bolt covers on the seat
  • Remove the nut holding the hinge bolt in place. Be sure to leave the hinge bolts in.
  • You’ll need a toilet seat tightening kit, available in Lowe’s or Home Depot. Using the tool in the kit, slide the washer from the kit onto the hinge bolt on the underside of the toilet. Then, slide the bolt up so that it’s secured tightly into the underside of the hinge bolt opening.
  • Replace the hinge bolt nut, then tighten.
  • Do the same thing on the other side of the toilet seat.

Misaligned or sticking door Another one of the Chicagoland home improvement issues facing homeowners is the nagging, recurring problem of an interior door that won’t close as it should. Remedies can range from inserting a piece of cardboard used as a shim to aid in realigning the door, to using a long screw in the door jamb to pull it in, to removing the door and planing the edge so it swings properly. Before you try any of those options, make sure to check the hinge screws to see if they’re loose. If they are, try this:

  • Take out the screws from the hinge and remove the hinge from the door or door jamb (depending on which side is loose.)
  • Place a drop or two of wood glue into each of the hinge screw holes.
  • Using wooden toothpicks or wooden matches, put one or more in each of the screw holes. Allow them to set for ten minutes, then break off the excess wood.
  • Re-install the door hinge with the screws. If everything goes well, the fit should be tight again.

These Chicagoland home improvement issues are just three of a number of common problems that every homeowner faces at one time or another. With a little patience and a few simple tools, these and other issues can be repaired with minimal expense. If you hit a snag or need additional information, Google it! In today’s information-rich age, many do-it-yourself solutions to Chicagoland home improvement issues are available on the internet – some complete with YouTube videos that show the step by step instructions.

Fixing these and other problems yourself will give you a greater degree of satisfaction and will save you time and money!

You can find more articles pertaining to Chicagoland home improvement issues and projects in the Chicagoland Home Improvements section of our site below Chicagoland Real Estate Categories in the column to your right.

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Making the Chicagoland real estate news outlook is the recent policy from the Trump administration that it had reversed one of the eleventh hour decisions made by the outgoing Secretary of Housing and Urban Development (HUD). The reversal involved the reinstatement of a cut in the Federal Housing Administration (FHA) annual insurance premium. The new administration stated the need to take a closer look at the premium reduction, saying the cut will increase the risk that U.S. taxpayers take on should there be a housing crisis like the one we saw nearly a decade ago. Detractors against the administration’s move say the FHA’s insurance fund is substantial and is positioned to provided mortgage borrowers a benefit by way of the premium reduction.

FHA borrowers usually are those who are the least flush with cash. As a result, the FHA program is tailor-made for homebuyers who are unable to afford more than a modest down payment – requiring the FHA’s mortgage insurance. With a qualifying FHA loan, a borrower can put down as little as 3.5%. Conventional lenders also offer low down payment lending programs requiring private mortgage insurance (PMI) and generally higher FICO credit scores than their FHA counterparts.

The Chicagoland real estate news outlook for 2017 is that it will cost you more this year than in the past.

The reversal of the premium reduction is expected to impact borrowers who already may be on the borderline of being able to qualify. The higher monthly payments created by not having the insurance premium cut will equate to approximately a .375% rate increase for prospective borrowers seeking FHA loans. That, coupled with the recent rise in interest rates after the presidential election will mean that the cost of buying a house – for many people – will increase slightly during the early spring of 2017.

In the Chicagoland real estate news outlook, while interest rates spiked as a result of the stock market’s rise post-election, they seem to have settled somewhat during the holidays – only to slightly rise again in recent weeks. While economists are split on whether rates will continue to rise throughout 2017 and by how much, most seem to agree that mortgage interest rates will not exceed 4.25% during the year. If that happens, although it will signal rates of slightly more than 1.25% higher than the all-time record lows experienced in much of the previous 12-18 months, the rate will still represent a relatively low interest rate for which to pay to purchase a home.

Of more concern than interest rates is the cost of the price of a newly-constructed home. In December, the Chicagoland real estate news outlook showed that the average price of a new home increased by over 7% compared to the same month last year. The prices reflect – for the most part – increased costs builders face in two key areas: the cost of land and the availability of labor. The cost of labor and the availability of labor are items which are less likely to improve during the new administration, as much of the homebuilder workforce is comprised of immigrants. In a recent survey by the National Association of Home Builders (NAHB) 78% of builders cited labor as their most pressing problem – and 82% felt it would be worse in 2017.

In addition, the other factors affecting the housing market as mentioned in the Chicagoland real estate news outlook recently has been the real estate market’s continued lack of sufficient inventory. The number of homes on the market for sale will likely mean the supply won't meet the demand again this year, making for another seller’s market in many of the more popular real estate markets throughout the U.S.

Lastly, as home values continue to appreciate – possibly not as rapidly as they did during 2016 – that means the number of homes on the market for sale will be priced at a premium. Real estate experts say the average appreciation rate of homes in the nation is expected to be in the 5% range, with some markets being higher and some lower. That’s slightly lower than what occurred in the 2015-2016 real estate markets, when housing values are at rates nearing 6% in some hotbeds, while averaging nearly 5.5% nationwide.

While the jury may still be out on factors such as interest rates, it does appear that the prevalent Chicagoland real estate news outlook for 2017 is that if you’re in the market to purchase a home, it’ll cost you more this year than in the past. However, the market appears to be poised and ready for what will probably be a good year for the real estate industry. The spring selling season will soon be here, giving buyers and sellers a much better idea of what to expect for the remainder of the year.

See more articles pertaining to the most current Chicagoland real estate news outlook in the section of articles on Chicagoland Real Estate News just below Chicagoland Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there as well.  

We’ve assembled a Chicagoland home buying checklist for people thinking of entering the real estate market, looking to buy a house. Let’s take a look at these seven important tips.

1 – Home buying should be for the long haul. Not too long ago, buying houses and turning around and selling them (or “flipping” them) was a popular way to make money. Today, we recommend considering planning to live in the home you buy for at least 7-10 years. Of course, there’s no hard and fast rule. People move where their jobs take them – whether it’s across town or across the country – but give consideration to whether you’ll likely move within the next few years before you decide to buy. For some people, it may be better to rent for a few years.

2 – Do some soul-searching before you decide to buy. Your Chicagoland home buying checklist should include asking yourself a series of tough questions to make sure your heart is in what you’re about to undertake. Buying a home is the single largest purchase most people will make in their lifetime – make sure you recognize that, and treat it importantly.

Chicagoland home buying checklist for prospective purchasers thinking about buying a house.

3 – Ask yourself these questions: Will you choose to start a family soon? Do your needs require a home with a large yard for a growing family or your pet(s)? How do you feel about yard work? Do you like the city better than the suburbs?

4 – Take your time before you buy. Most people tend to jump right into to the home buying pool without testing the water first. Take your time. There’s no hurry. While interest rates are fairly low, the temptation may be to act quickly, but experts say the rates are expected to remain fairly affordable throughout 2017. Use the extra time you allot to make sure your credit score is in the best shape possible and that the other items you’ll need for loan qualification are in order (tax returns if you’re self-employed, source and verification of your down payment, etc.)

5 – Buy within your budget. One of the most important items on your Chicagoland home buying checklist should be to focus on what you can comfortably afford. Remember, mortgage lenders will use your debt-to-income ratio (DTI) to determine whether you qualify for home loan financing. Before you start the home shopping journey, take a look at your DTI. Take the total of all your recurring debt including your proposed monthly mortgage payment (PITI) along with other monthly debt like credit cards and car payments. Divide that total by your gross monthly income. Most mortgage lending experts say your DTI should be 36% or lower. The most important thing to remember is this: Take out the loan and the monthly payment you can comfortably afford, not necessarily the one you qualify for. Making a higher monthly mortgage payment is no fun if you can’t afford to buy steaks for the new backyard grill occasionally. Some experts recommend buying a home you can afford based on one income. That way, should you or your spouse lose their job or get laid off – or elects to become a full-time parent – you can still comfortably pay for your home.

6 – Consider the tax advantages. The tax benefits are a big part of any Chicagoland home buying checklist. Currently, the mortgage interest you pay on a primary residence is tax deductible. So, the tax savings are of huge consequence since you can deduct your home loan interest and your real estate taxes from your gross income. For example, if you earned $75,000 in gross income in 2016 and you paid $10,000 in mortgage interest and your property taxes were $2,000, you could lower your taxable income to $63,000 – saving you a bundle on income tax.

7 – Create a moving account. Another important item on your Chicagoland home buying checklist is to start a move-in fund. Of course, you’ll have to have a down payment, but don’t forget other things like closing costs, moving expenses and other necessities for your new home. If you’ve been renting, for example, you may need to purchase a lawnmower and other lawn care equipment – along with that backyard grill!

8 – You may choose to rent, if you’re not ready to buy. Let’s face it…sometimes it’s not a good idea to buy. Maybe after you review your Chicagoland home buying checklist you’ll realize it’s not the right time. If you’re not ready, don't force it. Rent instead. You’ll be happier, healthier and financially wiser to put it off a year or two until you feel more comfortable. Save your money. Find a better job. Get your finances in order. Do your homework. Then when you’re ready to buy you’ll be that much more prepared.

Read more about home buying advice in the section of articles on Chicagoland Home Buying Tips just below our Chicagoland Real Estate Categories in the column to your right.

Remember, we also post tips daily on Facebook and Twitter. Check us out there, too.

During a Chicagoland home inspection, it’s not unusual for issues to arise which need repair or replacing. Many times, it can mean a return to the negotiating table so the buyer and seller can hammer out the details of who’s going to fix what – or how much of a credit the seller is planning to give the buyer. When a home inspection discovers items needing to be addressed, consider these three tips to negotiate repairs.

Ask the seller to give you a credit for the cost of the work to be performed. There are several reasons for asking for a credit rather than having the seller have the required work done. First and foremost, the seller has likely lost interest in performing work on the home, regardless of the findings of your Chicagoland home inspection. After all, the contract is signed and even though there are issues pending that need to be negotiated, most sellers are too focused on buying and moving into their next home. Secondly, if you can get the seller to give you a credit against the sales price you can use that additional savings to have the work done yourself – with you being the new homeowner and with the work being done to your satisfaction. Thirdly, with a credit at closing the issue of repairing or replacing certain items falls squarely on your shoulders, keeping it simple and not involving the seller to ensure the work was being done.

Keep these items in mind as you prepare to negotiate after your Chicagoland home inspection report.

Consider long-range planning. Keep future repairs or renovations in mind when negotiating with the seller. For example, if there are water stains on the ceiling that occurred as a result of a leak, ask the seller for a credit to repair both the leak and repainting or repairing the ceiling. You may elect to repair the leak, but put off fixing the stain until later – especially if you know you’re going to replace the existing stippled ceilings with a smoother treatment. Keep those and other items in mind as you prepare to negotiate on the heels of your Chicagoland home inspection report.

Don’t let others “see your hand.” In a card game, it’s important not to let others see your cards because it will give them an unfair advantage and change the way they play the game. Use the same strategy during your Chicagoland home inspection. If you say too much to the listing agent about your likes and dislikes or about your plans for decorating certain rooms and how excited you are, you could lose your negotiating power. The listing agent may tell the seller, and it could affect the outcome of the credit they were thinking about giving you. For example, if you tell the listing agent you plan to completely re-do the entire kitchen, the seller may find out about it and be less inclined to give you a credit for repairing the kitchen cabinets or replacing a dishwasher. Don’t reveal your plans. Keep a “poker face.”

It’s probably good to mention here that you should always insist the sales contract be contingent on the home “passing inspection” by way of a Chicagoland home inspection report showing no discernible repairs that should be made. If you don't include that in the contract and make the assumption you can always come back and revisit or negotiate certain issues after the inspection, you may be unpleasantly surprised.

In the event the property inspection is completed without any mention of needed repairs or other shortcomings, that's good. There’s no reason for further negotiating. However, if there are items that need to be addressed and the contract doesn’t mention what to do in such a case, you’ve lost your negotiating power and may force the seller to consider other offers or back-up contracts if you elect not to move forward.

With that in mind, enter into the closing with a full awareness of what can happen. In the sports world the old saying, “It ain’t over ’til it’s over” means anything can happen while the game is still going on. It’s the same in the real estate world – a deal isn’t completed until the money goes from the buyer to the seller and the deed to the property is transferred properly. The lesson here is: “Be alert, stay on your toes and keep your eyes wide open.” Anything less than that and you run the risk of losing your negotiating advantage and making your home buying experience less than what it could be.

Don’t give “buyer’s remorse” any opportunity to enter the picture. Be happy and satisfied with your purchase. You’ll enjoy it that much more!

You can find more articles pertaining to Chicagoland home inspections in the Chicagoland Home Inspections section of our site below Chicagoland Real Estate Categories in the column to your right. We also post tips daily on Twitter and Facebook and would love for you to follow us there as well.