At Home in Naperville

Lien holders are becoming more willing to work with homeowners who are underwater on their homes.  Underwater means a homeowner owes more on their home than it is currently worth and, according to CoreLogic, nearly 23% of homeowners fall into this category. 

In the 4th quarter of 2011, 88,000 short sale deals closed nationally according to RealtyTrac, a leading website tracking distressed properties.  This is anincrease of 15% from the same quarter of 2010.

Here in Naperville, 4th quarter saw 35 short sales close which closely parallels 2010's 34 closed short sales.

These numbers show an slight increase locally but a substantial increase nationally.  This is good news for those homeowners who are underwater and are struggling to stay current with their payments.  Banks are beginning to realize that the losses they will take on a short sales are much less than the losses they would take by foreclosing on these properties.

In an interview on CNBC this morning, Warren Buffett said that real estate might be a more attractive investment for a young investor who knows where they want to live for the next 5-10 years.  He cited that the low interest rates on a 30 year fixed rate mortgage coupled with depressed housing prices make for a good opportunity. 

Buffett went on to say that investors who are handy could benefit from purchasing several distressed properties and renting them out.

There are many individuals who are entering into the real estate market and building a portfolio of investment properties.  USA Today recently ran an article featuring two local sisters who had always dreamed of owning rental properties but had been priced out of the market in the past.  Now they're "capitalizing on a confluence of events: depressed home prices, rising rents and a strong rental demand."

People who are interested in building a rental portfolio are certainly at the right moment in time.  As the National Association of Realtors reported last week that home prices increased again in January, marking the third month in a row of increases.  Some have said that this rise indicates that the housing market has hit it bottom but I think we need a few more months to see if that's true.  In any case, there are many properties on the market that would be an attractive investment for someone looking for a rental property.  Feel free to contact me if you have any questions regarding rental properties and real estate investing.

Earlier this week the National Association of Realtors released their existing home sales numbers for January of this year and the uptrend continues!  Closed residential sales were up 4.3% from December and 0.7% higher than January of 2011.  This marks gains three out of the last four months.  Housing inventory fell 0.4%, down to a 6.1 month supply inventory from December. 

Locally, single family home sales in Naperville increased 2.9% from December to an average of $380,654.  Naperville's supply is a little higher than the national numbers.  We currently have a 7.4 month supply of homes on the market.

With the holiday months behind us and the Spring market starting to get underway we can expect more homes to enter the market.  Fortunatly buyer activity has been picking up both nationally and locally.  Interest rates are still near record lows at3.92% for a 30 year fixed rate mortgage according to Freddie Mac's national average commitment rate.  This coupled with low home prices and rising rental rates, consumers are finding that buying a home is a wise decision, and often cheaper than paying rents.