Amid all the gloomy real estate news — plunging property values, rising foreclosures, houses that just won't sell — it's easy to forget that these are the best of times for a lucky few.
Home buyers with cash to spend and no house to sell are holding aces in today's market. Prices have receded to 2002 levels, with sellers often willing to knock off another 25% or more. Mortgage rates are rising but remain low at less than 6%. First-time buyers qualify for an $8,000 tax credit.
Add it up and buyers are landing bigger homes, in nicer neighborhoods and with more amenities, than they thought possible.
"Buyers are in the driver's seat," says Megan Jordan, an agent at Koenig & Strey GMAC Real Estate in Lake Forest. "Five to six years ago, sellers were at the wheel. Now buyers are saying 'touche.' "
Michael Pierson, president and chairman of Prudential Preferred Properties in Chicago, says, "First-time buyers are driving the market. They represent 50% of deals now; typically that's 35%."
Apart from them, Mr. Pierson says, anyone paying with cash or a fully approved mortgage "has the most strength. It takes risk off the table for the seller."
Barry and Rosalie Zaransky, both 57 and essentially retired, sold their Homewood house of 31 years and paid cash for a two-bedroom, two-bath condo in the Grand on Grand, in River North.
First listed at $599,000, last year it dropped to $550,000, "still a little out of our price range," Mr. Zaransky says.
With scant hope for success, the Zaranskys offered a low-ball, final bid of $475,000 for the condo and a parking space, and closed the deal.
"I'm sure the only reason they did (accept the bid) is we took financing out of the equation," Mr. Zaransky says.
The final score: a 20% discount overall and an enviable address.
"That part of River North, farther east, is one of the hottest areas of Chicago," says their agent, Jon Gerstein of @properties Inc., River North.
At 1,400 square feet, their condo is larger than others in the same tier.
"It has a lovely kitchen," says Ms. Zaransky, who works part-time at Ingalls Memorial Hospital in Tinley Park. She likes the stainless-steel appliances and extensive granite countertops.
The sizeable walk-in closet, "huge soaking tub and gorgeous shower" are pluses in the master bedroom, says Mr. Zaransky, a former psychologist.
It far outshines the condo they were planning to buy for nearly $500,000 in a new building nearby. That unit was smaller, with no window treatments, cheaper fixtures and a less attractive floor plan, he says.
Transferees are another strong group in this market, says Jane Field, an agent at Koenig & Strey's Gold Coast office, though companies are cutting back transfers.
"They're coming here whether someone buys their property or a relo company takes it over," she says.
Wealthy buyers also have an edge, Ms. Field says: "Especially if they are buying their third or fourth home, it makes sense for people in that strata to buy at these reduced prices."
Dennis and Amy Han, both 45, fall into that category. He is an ear, nose and throat surgeon in private practice. She is a psychologist at the Indiana University School of Medicine.
They live in Dyer, Ind., with their two children, 8 and 6, and own a weekend condo in Chicago's CityFront Plaza.
They recently purchased a 2,700-square-foot corner unit in Water Tower Place for $1.2 million, nearly 30% down from the original listing price of $1.7 million.
"It's a fixer-upper," Ms. Han says. "It has the original kitchen and bathrooms from the '70s. But at this price, the cost of renovating will still make it reasonable."
At pre-recession values of about $1.5 million, the Hans say they would not have purchased in the building, which they love for its North Michigan Avenue location, swimming pool and better views than CityFront.
The Hans are renting their other condo at a break-even rate, Dr. Han says, with a tax deduction for depreciation.
Their agent, Kim Jones, of Baird & Warner's Gold Coast office, says the Hans scored the lowest price per square foot in the building. After renovations, it could resell at $2.2 million, she predicts.
Alas, even those who strike a good deal sometimes suffer a smidgen of buyer's remorse and worry that their neighbors will resent them for driving down home values.
Because the unit was on the market for a year, the Hans wonder if they could have held out for less.
"I think we could have done a little better, but we didn't want to be jerks about it," Ms. Han says. "The person selling it lives in the building."
more at
http://www.chicagobusiness.com/cgi-bin/mag/article.pl?articleId=32114
No comments:
Post a Comment