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Happy New YEAR!

On behalf of the entire team of Enterprise Realty Brokers I would like to wish all of you a happy and prosperous 2019!  This year was a record-breaking year for Enterprise and this is all thanks to our clients who have put faith in us to handle one of the biggest investments of their life for them.   Thank you for your trust and we look forward to working with you again in 2019 and beyond!

Sincerely,

Dan Cuckovic

Managing Broker/Owner

Enterprise Realty Brokers

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Real Estate prices continue to grow

With 2018 nearly over and the stock market going through some rough time, we decided to look back and see how the real estate market has performed, relative to prices, this year. Despite the interest rate hikes and the stock market turbulence, 2018 will be a positive year for the Chicagoland’s real estate market.

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Happy Holidays from Enterprise Realty Brokers

2018 is almost behind us and we would like to wish all of our clients happy and safe holiday season.  This was a record year for Enterprise Realty Brokers and we look forward to working with all of you in 2019!

Sincerely,

Dan Cuckovic

Managing Broker/Owner

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Q1 Real Estate Market Update- Good time to be a seller!

The first three months of 2018 proved to be challenging for the Chicagoland real estate market.  While the economy and the job market continued to perform well, the lack of supply of real estate available for sale has reached new lows.  The real estate agents are blaming supply as the most important driver of the slowdown in the number of closed sales in the first three months of the year.  So let’s look at some of the data to see if this theory holds true.

Homes available for sale

At the end of March 2018 there were 33,412 homes available for sale in the region of the market covered by the Midwest Real Estate Data service (MRED), which covers approximately 19 counties of the Northern Illinois and surrounding areas.  This is approximately 16% less homes available for sale in comparison to the same period last year.  At the end of March 2017 there were 39,997 homes available for sale.  Additionally, the number of new homes hitting the market has dropped each of the first three months of the year in comparison to the 2017.

Market Supply

As a consequence of the lack of the new homes on the market, the “month’s supply” measure (indicating how many months would it take to sell out of the current inventory if no new homes are listed) at the end of the March 2018 was 3.1.  This number has been keeping steady since December 2017.  As a reminder, a good, balanced market, is when the “month’s supply” gauge is somewhere between 6-7 months.  The current measure of 3.1 indicates a strong seller’s market.

Average Home Price

In support of the number indicated above is the fact that the average sales price continues to climb up.  At the end of March 2018 the average sales price was $230,000.  This, in comparison to $220,000 the year before, yields a modest 4.5% increase in an average property value.  It is observed that the largest increases in the property values came from the lower priced homes, while the larger homes, particularly in Lake County, have seen stagnant, if not declining prices.  This is mainly due to very high property taxes which are driving away some of the demand for these homes. 

Interest Rates

When talking about the Q1 of 2018 it is difficult not to touch the topic of interest rates.  There was a lot of discussion about interest rates and how the FED has increased, and plans to continue to increase interest rates few more times this year.  While rate hikes by FED are not directly related to mortgage rates, a correlation can be made between the two events.  The mortgage rates have indeed increased and a conventional 30 year mortgage will now cost you somewhere around 4.25-4.5%, depending on the creditworthiness of the borrower.  According to the Freddiemac.com, the average 30 year interest rate at the end of March 2018 was 4.44%, with .5% points, while at the end of March 2017 this rate was 4.2% with the same point percentage.  Clearly, the interest rates are on the rise and this can be considered an impediment for the homebuyer.  However, it is important to note that despite this increase in mortgage rates, the rates are still considered to be some of the lowest in history, and as such, a good deal for the borrower.

Market Activity

All this leads us to a measure of market activity (number of closed sales) for the Q1 of 2018.   Due to all the factors mentioned above, the market activity has indeed subsided in the first three months of this year in comparison to the same period last year.  The number of closed sales in the MRED region in the first three months of the year was 22,556, in comparison to 24,193 in the same period last year.  This yields a 6.8% reduction in closed sales.  While this number can be considered significant, the real estate agents are hopeful that the number of closed sales in 2018 will rebound and at least meet the number of closed sales in 2017.  Realtors are hoping for more seller movement at the end of the school year, which should help the buyers who have been looking for a while to find their perfect home.  And as the interest rates should not be changing significantly at least until June this year, the Q2 of 2018 should be a good time for both buyers and sellers.   

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2018 Real Estate Market Outlook

2018 Chicago Real Estate Market Outlook

by Dan Cuckovic, Managing Broker, Enterprise Realty Brokers

01-19-2018

Last year was a great year for real estate and the US economy overall.  Interest rates remained low, the job market continued to improve resulting in the lowest unemployment rate in decades, real estate sales continued to improve and the prices of homes continued to grow.  As the rental prices continued to remain high, the idea of homeownership appealed to many.  The biggest issue for realtors in 2017 was the supply of homes.

The question at hand; how is the 2018 going to look like?

First, the impact of tax reform

The new tax reform made several tax changes that directly impact the homeowner.  Capping the property tax deduction to $10,000 per year and reducing the level of mortgage on which you can deduct interest from $1,000,000 to $750,000 will definitely not sit well with the homeowners owning larger and more expensive homes.  Unfortunately, as Illinois is a state with a higher property tax structure, these changes impact many of the Chicagoland owners.  These changes may directly impact the prices of some of the more expensive homes and, at best, will slow down the value appreciation of those homes.

The impact of rising interest rates

According to Dr. Joe Kirchner, Senior Economist with Realtor.com, the average 30 year conforming interest rate in 2018 will be 4.6%.  Considering that the same rate at the beginning of the year is hovering around 4%, it is expected that, by the end of 2018, this rate will be near 5%.  The rise in interest rates will drive buyers to purchase more affordable homes, putting pressure on the high priced properties.  This will be offset somewhat by the fact that the tax cuts should produce a higher take-home income for the average American.

The impact of new construction

New construction is on the rise, but still far apart from the levels seen in the late 2000’s.  Furthermore, the new construction is generally taking place in high-end markets, and in the Chicagoland specifically, in the $600k+ market.   The answer as to why this is happening is simple; builders are trying to take less risk by building homes with higher profit margins.  However, it is expected that, as the market in the $600k+ market get saturated, builders will be forced to take on more risk with building lower priced new construction homes.

The impact of rental market

According to Realtor.com the rental market in general has been seeing stagnating price levels for some time now.  Rental prices have soared in 2014/2015 and early 2016, but have not moved much higher since.  The explanation to this may be in the fact that the wages have not followed the steep increase in housing costs.   Nonetheless, the Chicagoland area is still considered to be the market with a strong rental demand, mainly driven by millennials who are hesitant to enter into the homeownership.

The impact of supply

Supply of real estate remains the biggest issue for homebuyers and realtors in the market currently.  As the level of new constructions is still low and the prices of homes have increased over the last few years, the current homeowners are having trouble making a decision to move into a bigger home or a different area, leaving fewer opportunities available to the new homebuyers.

So, how is the 2018 Chicagoland real estate market going to look like?

–          The supply will remain an issue, particularly in the $600k or less segment of the market.  Acting quickly and making a fair offer may be your ticket to buying the home that you really wanted.

–          Buying early in the year may result in smaller portion of your monthly payment going towards the interest.  This will help you, the buyer, pay off that home sooner or give you an ability to buy the larger home you always wanted.

–          If you are a homeowner looking to get yourself a larger home, this may be a good time do to so.  The demand for your home will be high, while the demand for the higher priced homes is relatively stable.   This may give you a possible opportunity to get a bargain on a larger home while receiving a premium on your sale.

–          If you are still renting, you probably need to reconsider your options.  While there is nothing wrong with renting, owning a home is still more affordable in the long run.  Buying your next home before the interest rates go up may be one of the best investment decisions you ever made.

 

Dan Cuckovic, Managing Broker
Enterprise Realty Brokers
708-955-7950
[email protected]

 

 

 

 

 

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Congrats to Paige L!

Congrats to Paige L. on the purchase of her new home in Wonder Lake. Paige was a new client to Enterprise Realty Brokers and we thank her for using our services. We look forward to working with Paige in the future and we wish her the best of luck in her beautiful new home.
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New Agent- Welcome Giorgia

We would like to welcome the newest addition to our team, Giorgia Kusic. Giorgia joined Enterprise Realty Brokers because she recognized the quality that our company offers to its clients. She wanted to be a part of a growing company where she can truly make a difference. She brings another level of energy and passion for real estate to our team. Giorgia will primarily service the southwest Chicago suburbs. She speaks English and Serbian. You can reach her by calling 708-340-3668 or emailing [email protected]

 

 

 

 

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Q2 Market Overview

Q2 Market Real Estate Market Review- Oh That Supply!

Positive Market Activity

Real Estate market activity in the first 6 months of the year remained strong and continued to exceed the market activity for the same period of 2016 and 2015.  In the first 6 months for 2017 the number of homes sold in the MRED (Midwest Real Estate Data) service area, which covers most of Northern Illinois, grew by 4.44% in comparison to the same period in 2016.  Additionally, the average sales price of the homes increased to nearly $285,000, representing an increase of 4.23%.  While these numbers represent strong market activity, it is important to note that the growth in number of transactions as well as of average price, in comparison to the growth in the first six months of 2015/2016, has slowed down.

Overlooking bargains on bigger homes

If you are looking to buy a home in the Chicagoland area, particularly a smaller home with less than 3,000sf, you are in for one frustrating endeavor.  Poor selection, high demand and high prices are just some of the issues our clients have been facing this year.  On the flipside of that, sellers of homes smaller than 3,000sf are very much enjoying the situation, but not enough of them decide to cash in.

The main reason for the low supply of the smaller and more affordable homes (less than 3,000sf and $400,000) is the fact that there is little to no new construction taking place in this segment.  The supply is coming from resale only.  In the graph above you will notice that the supply of homes smaller than 3000sf is less than 5 months (meaning that if no homes are added to the inventory the current inventory would sell out in 5 months).  The inventor of homes smaller than 2000sf is even lower.  Experts say that the healthy balance in the real estate market is between 6-7 months supply of inventory.  Many homeowners who currently own smaller homes or condos are hesitant to move onto a bigger property despite the fact that they can get premium for their home and possibly a bargain on a larger home (specifically homes $600,000+).  High taxes and investments necessary to improve or maintain larger homes are the main causes of buyers holding off on purchasing larger, more expensive homes.  Current supply of inventory in this segment is over nearly 9 months for Cook and Dupage County and over 11 months in Lake County.  Due to this reason, the $600,000+ market is very much buyer’s market, despite low interest rates and arguably, good economy.  A large majority of our seller clients this year have been people who are moving out of state or selling their investment property, not those who are moving to a bigger place. 

Market Outlook

In regards to the market outlook we don’t foresee a major shift in the real estate trends.  There are talks about the interest rates possibly being increased one more time before the end of the year or in the early 2018.  However, the last two increases have not produced a significant impact on the real estate rates.  On the other hand it is important to note that the global economy has not suffered from a major correction for some time now.  Economists predict a major correction at least once in 10 years, which means that sometime in the next 2-3 years we can expect a major slowdown in the economic growth or even recession.  As that is usually followed by the increase in the unemployment rates we can expect to see a slowdown in real estate market activity as well.  While owner occupants may put up a fight and resist the price drop, investment properties, particularly residential rental units may see a drop in value as renters may not be able to continue to afford the current sky-high rents. 

In summary, real estate market is strong and prices, on average, continue to grow.  Anyone looking for a bargain will only be able to find it in the segment of large and expensive homes.  Owning real estate is still much better than paying rent, but depending on how the economy performs, that may not hold true for long. 

Dan Cuckovic

Managing Broker/Owner

Enterprise Realty Brokers Inc.

708-955-7950

[email protected]


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ERB Welcomes Val Popovic

Enterprise Realty Brokers welcomes Val Popovic, an experienced real estate broker specializing in the representing buyers and sellers of residential real estate in the city of Chicago and suburban areas. With dozens of successful deals behind him Val brings the experience and quality of service to our company. Val is a great addition to our team and we look forward to working with him in the years to come.  To reach Val please call 312-780-9300 or via email at [email protected]

 

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Agent of the Week

Our very own Dan Cuckovic, Managing Broker and owner of Enterprise Realty Brokers was named Agentology (also known as MyAgentFinder.com) Agent of the Week. Dan helped the last three consecutive clients referred by this service find or sell their home. Enterprise Realty Brokers is a trusted MyAgentFinder partner and we look forward to successfully serving even more clients referred to us by this service.  We also thank Blair, James and Leslie for being awesome clients and we look forward to successful closings on all three of these transactions.