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LIL' BUDDY'S BLOG - More First-Time Home Buyers Pass on "Fixer-Upper" Homes!

THE CHICAGO IL REAL ESTATE MARKET, AND OTHER THINGS CHICAGO, FROM THE POINT OF VIEW OF A LITTLE WHITE DOG!

Buddy Waits by his Cell Phone - November, 2007

I'm keeping the cell phone close - expecting an important text message from one of my Buyer Clients, a first-time buyer Pomeranian named Dulce!  She lives on Marmora Avenue, across the alley. 

When she texts me, she wants an answer - now!  Or, she'll just bark continuously until she gets one. 

Back in the day, when I was just a little pup, and even before, many young, energetic human home buyers opted for a home they could buy cheap, for fix up, with a lot of potential "sweat equity," and call their own.

This way, they can have the house rehabbed specifically to their tastes, and perhaps enjoy a much higher price when they sold down the line.

TV shows were everywhere explaining and demonstrating home remodeling and gut rehab, let by the immortal "This Old House," hosted by Bob Vila.

Team Leader Dean and my Human Mommy Sue went this route as well.  In 1998, they purchased a vintage Chicago Style Brick Bungalow in the South Edgebrook Neighborhood on the Northwest Side of Chicago.   Yes it was completely renovated - back in 1962, that is.  A second face lift was in order - and they did it!

More accurately, they had it done, by professionals - BEFORE they actually moved in!

Today, their house - and MY house - looks great, although there are a whole mess of paw prints on the kitchen floor these days, with me chasing my new Pup Reporter, Gracie, around, and around, and around half the day.

But they were proud of what they did - and did earn considerable equity in the process.

Fast forward to Chicago, 2008.

Here, the market is overstocked with inventory.  Prices within the past year have fallen - as much as 9.5%, or more, in some Chicago Neighborhoods or suburbs.  The buyer, for the moment, is king here in Chicago.

And today's buyer wants everything in move-in condition.  They don't want a reconstruction project in their new home from Day One!

One survey of local brokers by a national franchise real estate company found that only 7% of first-time buyers they have run into were looking to immediately renovate their new home.  81% want the house in top-shape from the day they move in!

And they feel they can get it to - as the market here has softened prices on even the most up-to-date, highly-upgraded digs around Chicago.

According to Jim Gillespie, President and CEO of Coldwell Banker Real Estate, "In the past, first-time home buyers were willing to purchase older, more basic houses in an effort to save money and break into home ownership. 

Today, this buyer group has higher expectations.  They have grown up accustomed to their parents' lifestyles."  Most of these first-time buyers, he continued, have never roughed it before, and they don't seem inclined to rough it now.

All the while, first-time buyers want affordability - more than half of those surveyed list this as their primary concern.  They want a larger home, in top condition - and still at a low price.   We at Dean's Team Chicago have seen this attitude with several of our younger buyer clients, and other Buyer's Agents are seeing this as well.

"It's important for first-time home buyers to remember that by considering a 'fixer-upper' for their first home purchase, they can build equity over time and move up and into their second-stage home that better reflects their expectations," said Gillespie.

Today, we've found a number of younger buyers thinking they can buy any home they want, in top shape, for next to nothing, due to the weakened real estate market.   What they often find, however, is that the nicest homes, though selling for less than they may have a couple of years ago, are still commanding a considerable premium over those needing considerable work.

Many buyers finding a home or condo in need of only minor work are offering low.  One North Side Chicago Realtor estimates that some first-timers are using even cosmetic repairs needed as an excuse to discount their offer price by 10 to 20 percent, or possibly more.

According to the study, buyers financial priorities have shifted as well over the last ten years.  At that time, first-time buyers' biggest concern was having enough money for the down payment.  Today, only 17% consider larger down payments the biggest factor, as more loan options have come to market requiring less money down initially. 

Gracie, Buddy's Admin Assistant - 08-21-2008

In 2008, having an acceptable FICO Credit Score seems to be paramount, as a lower score can result in a higher interest rate, a required "down payment premium," and far more stringent requirements to get approved for a mortgage.

As for me, and my Lil' Gracie - it doesn't take much to make us happy.  Fixed up, not fixed up - we don't really care, so long as our pens are clean, our back yards spacious, and our Meaty Bones crunchy!

You dogs want to find out more?  Check out Mary Umberger's column in last Sunday's Chicago Tribune.

YOUR ACE REPORTER ON FOUR PAWS,

BUDDY HOLLY MOSS (assisted by GRACIE MOSS) & DEAN'S TEAM CHICAGO

Posted: Thursday, September 04, 2008 8:05 PM by Dean's Team
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