Cook County home prices continue recovery

Cook County home prices continue recovery

By Mary Ellen Podmolik

Single-family-home prices rose strongly in Chicago and suburban Cook County during the year's second quarter, according to a local home price index, validating the sentiment that a housing recovery has taken hold in the Chicago area.

However, the pace of the recovery varies widely, depending on how hard-hit the area was by foreclosures.

Second-quarter prices of single-family homes rose 11.8 percent within the city of Chicago, compared with a year ago, and were up 8.8 percent from the first quarter, according to a Cook County home price index calculated by the Institute for Housing Studies at DePaul University.

Meanwhile, home prices in suburban Cook County rose almost 7.8 percent from a year ago and 4.7 percent from the first quarter.

"The city has always had stronger price increases over time," said Geoff Smith, the institute's executive director. "The Loop, the North Side: Some of the biggest price growth is in those areas. The suburbs are not as volatile. They're more stable so you don't see as much price change."

The methodology of DePaul's index is similar to that of the national S&P/Case-Shiller home price index that is released monthly. Instead of looking at total sales, the index looks at repeat sales of properties over time, so it is not skewed by atypically high or low sales that can affect median price changes.

Based on the index, single-family-home prices remain down 34 percent from their peak in late 2006.

On Thursday, the Illinois Association of Realtors will report August home sales. That report is expected to show another double-digit, year-over-year increase in sales and a rise in the number of homes newly listed for sale. However, the overall inventory of homes on the market last month was down by about a third or more from a year ago in some submarkets, according to data provided by Midwest Real Estate Data LLC to the Chicago Association of Realtors.

That supply-demand imbalance has driven sales volume and prices higher for months, fueling multiple-offer scenarios and some homes selling above list price. Higher mortgage interest rates also have nudged potential buyers into action; the average interest rate on a 30-year mortgage has increased by 1 percentage point since late May, to 4.57 percent last week, according to Freddie Mac.

By year's end, Fannie Mae chief economist Doug Duncan predicts home purchase mortgage originations will account for more than half of all loans written, as mortgage refinancing winds down because of the higher rates.

The outlook for mortgage rates is expected to get more direction Wednesday, following the end of the Federal Reserve Board's two-day meeting.

"There are still a lot of unusual factors in the housing market right now," Smith said. "The presence of investors and their role is different than in previous housing recoveries. The impact of underwater mortgages and people holding back on listing their properties is creating a price spike. When people start listing their properties again, it is going to slow price growth."

Economists are starting to voice concerns that the housing market is cooling. Monthly sales reports reflect homes that went under contract one to two months beforehand. Nationally, the National Association of Realtors' July measure of pending home sales decreased by a greater amount that was expected; it was the second consecutive monthly decline.

In DePaul's home price index, the second-quarter pricing gains were better in neighborhoods less affected by foreclosures. In areas in Cook County where less than 10 percent of properties went into foreclosure during the past seven years, second-quarter home prices rose 8.8 percent from a year ago, meaning they were down only 16.8 percent from late 2006's peak.

In high foreclosure areas, where at least one-quarter of the properties went into foreclosure between 2005 and 2012, single-family-home prices were down 58 percent from their peak, and rose only 5.3 percent year-over-year in the second quarter.

Buff up those hardwood floors so, they become a selling feature .

By Brooke McDonald, guest contributor

Wood floors (like people) look best with regular TLC. Aside from daily cleaning, sensitive wood floors require occasional in-depth maintenance that goes beyond a sweep or vacuum. Think of tired professionals and run-down moms. What do you do to revive their dull pallor? You send them to the spa to experience the health benefits of a massage, exfoliating body wrap, or facial. Then, voila – spa-goers come home revived!

To maintain a healthy glow, a hardwood floor has its own menu of spa treatments that must be followed regularly. For starters, after they’ve been in use for some years, wood floors needs to be sanded and finished afterwards by a protective sealer that will give them a natural sheen. Other wood floors may require patching in spots that undergo intense damage. Some wood floor owners also choose to have their wood floors stained to change their color.

But a “screen and recoat” might just be the ultimate spa experience for a floor, resulting in the best-looking floor you’ve ever seen. It’s an essential, routine step in-between standings that will guarantee a longer-lasting floor.

You may have also heard it referred to as a “buff and recoat,” because a “screen” is basically a light buffing to prepare the floor for a fresh coat of polyurethane — the recoat. Contrasted with sanding, which is more expensive, time-consuming, and intensive, a screening simply removes a top layer of life’s little mishaps — dents, scratches, basic wear and tear.

Every hardwood flooring business may give you a different quote on when to screen and recoat, but it really just depends on the condition of your floors. The rule of thumb is to be alert for noticeable wear and catch the damage before you start to see bare wood surface.

Polyurethane can’t protect a floor forever — it will eventually wear off. Typically this can start to really be evident anywhere from 3-5 years after the floors were sanded. Watch highly trafficked areas for the first signs of scratching or wear to the floor, like entryways, kitchens, or doorways.

Most people have a hard time justifying this process of beautifying a floor that still looks pretty good. But trust me — you don’t want to skip it. Think about the consequences of skipping sunscreen in the blazing hot sun. Without that protective layer, a few bad sunburns can do terrible harm to your skin.

Even minimal hardwood damage left unchecked could create damage that will only require greater and greater repairs over time.

First, rent a buffer

To prepare for a screen and recoat, you’ll want to rent a buffer machine from a store that specializes in hardwood floors, and get a pad and screen from them to use with the machine. A buffer contains a mesh with abrasive particles cushioned underneath a soft floor pad, which protects the floor from too much wood being removed, and ideally prepares it for the protective layer.

Other materials you’ll need

• A 120-grit screen for the edge of the room (to be used by hand)
• A T-bar (for applying finish)
• Rags or towels
• Floor finish/polyurethane
• Solvent to match your finish
• A mop

Before you begin

Make sure there are no loose boards or nails sticking up to get in the way of your screening process. Clear the floor area. Vacuum the floor and mop it with a vinegar/water mixture (one cup vinegar to one gallon of water). Let the floor dry completely.

Test the floor!

Test the floor first, especially if you are a relatively new owner of these floors and don’t have total knowledge of their cleaning history. Why? Certain grease-based or acrylic cleaning products that have been used on the floor could prevent polyurethane from bonding to the floor. Even worse, the recoat could end up peeling and looking really bad. If you do find evidence of one of these products on your floor, you can chemically strip the floor before proceeding.

How to test the floor for cleaning products

Grease-based: Clean a small out-of-the-way spot, and place several drops of paint thinner on the floor. Wait several minutes and wipe it up with a light-colored towel. If there is yellow or brown residue on the towel, you have a contaminant on your hands! You’ll want to use steel wool and paint thinner to scrub the entire floor to get every bit of residue off before you proceed.

Acrylic: Mix ammonia and water in a 1-1 ratio. In a similarly low-trafficked area as above (the same spot is fine!), drip a bit onto the floor and let it sit for 5-10 minutes. Does the floor turn white? If so, you’ll want to scrub everything with a 1:4 ammonia-water solution.

Screen

Screen by hand around the perimeter of the room. If you’ve never screened before, it’s basically just sanding. The floor should become duller (you’re only removing the top layer, remember). Use the buffing machine for the majority of the room. When you’re done, vacuum up the dust.

Recoat

Ensure that your floor is free of any particles before you recoat through a process known as “tacking.” Dampen a microfiber towel with water for a waterborne finish, or paint thinner for a solvent-based finish. Finally, apply the finish according to the instructions on the label. Let it dry for at least 24 hours until you walk on it or replace furniture.

And there you have it — a floor that is protected, newly buffed, and freshly shined, refreshed and ready for another three years of living.

The new White Ice premium exterior finish borrows elements from Apple.

The stainless steel appliance hegemony has ended.

On Monday, Whirlpool introduced a new premium exterior finish that they call "White Ice." With clean lines, silver accents and streamlined controls, the new collection's refrigerator, range, dishwasher, and microwave are a departure from the flash and glitz of stainless steel and its many lookalikes. In fact, the combination of a white finish, stainless handles and mirrored glass appear to have a lot in common with Apple's popular design language.

White Ice gives your kitchen a clean slate.

The streamlined new look combines with simplified features that Whirlpool says will make the appliances easier to use. "In addition to the intuitive technology, the line takes a fresh look at appliance design and features flawless exteriors that add beauty to any home," said Pat Schiavone, Whirlpool's VP of Global Consumer Design.

Because the whole suite of appliances have such a unique style that's exclusive to one manufacturer, it's a safe bet that Whirlpool is hoping customers will upgrade their entire kitchen instead of taking a piecemeal approach.

Whirlpool seems to be aiming their new finish at customers who have grown weary of stainless and its numerous imitators. Indeed, the manufacturer says the new finish is "signifying a shift in the culture of home appliances." Because it's essentially an update of the classic white exterior, White Ice may appeal to consumers who are bored by stainless but also don't want their kitchens to look dated. For Whirlpool, it's an attempt to appeal to homeowners in a bottomed-out housing market, where renovating is less about increasing resale value and more about appealing to an individual's own tastes.

Before the recession, investors looking to flip a house for profit wanted to install upscale finishes that could cheaply and easily update the look of a home. So from the HGTV-era onward, the most popular kitchens have combined granite countertops along with stainless steel appliances. Go to any home improvement store and you'll be sure to see rows upon rows of fridges and dishwashers with stainless steel and stainless-style exteriors.

It wasn't always that way, and all it takes is a look at classic sitcoms to see how far kitchens have come. If I Love Lucy were in color, the Ricardo's kitchen likely would've had pastel finishes alongside white and stainless. Along with shows like Maude andSoap, the '70s and early '80s brought in earth tones, like avocado, harvest gold and almond. Later on, white and bisque became popular -- even on the upscale appliances that Geoffrey tended to in The Fresh Prince of Bel-Air.

In addition to the modern White Ice, there are several other alternative finishes available on premium appliances. Smeg, an Italian company, builds retro-looking fridges that could easily be mistaken for your grandmother's Norge. They're available in a whole rainbow of shades, from bright yellow to deep purple. AGA, a British manufacturer, puts hard vitreous enamel surfaces in a variety of different colors on their ovens and dishwashers. Whirlpool's own Amana division also introduced a series of colorful refrigerators in 2009, including an exterior called Green Tea which features a floral motif.

The new White Ice refrigerator, range, dishwasher and microwave will be on display at New York City's Rockefeller Plaza this week for House Beautiful magazine's Kitchen of the Year event.

Home prices rose in June to their highest levels in nearly five years, increasing 2.2 percent, according to the Case-Shiller Home Price Indices released Tuesday. The 20-city index was up 12.1 percent from a year earlier, and the companion 10-city index was up 11.9 percent.

Economists surveyed by Bloomberg had expected the 20-city index to increase 2.3 percent from May and 12.2 percent from a year ago.

Case-Shiller’s national index, reported quarterly by Standard & Poor’s, was up 7.1 percent in the second quarter to 146.32, its highest level since third quarter 2008.

All 20 cities included in the survey improved both month-to-month and year-to-year.

The two surveys have improved monthly and yearly for 13 consecutive months.

The national index has improved in four of the last five quarters, dropping only in the fourth quarter of 2012 in that stretch. The 7.1 percent quarter-over-quarter matched the increase in the second quarter of 2012 as the largest quarterly improvement since the national index began in 1987.

The national index was up 10.1 percent year-over-year, matching the gain in the first quarter as the largest annual jump since the first quarter of 2006.

The 10-city index rose to 173.37, up 3.73 from May, to the highest it has been since August 2008 when it was 173.35. The 20-city index rose 3.41 to 159.54, its highest since September 2008 when it was 161.64

In the same month, according to the National Association of Realtors, the median price of an existing single-family home rose 5.4 percent, up 13.3 percent from a year earlier.

According to the NAR, homes prices were held back by sales of distressed homes. Foreclosures, eight percent of transactions, the NAR said, sold for an average discount of 16 percent below market value in June, while short sales, seven percent of transactions, were discounted 13 percent.

Home values improved as well despite higher mortgage rates, which could have both a positive and negative impact: rising rates themselves might bring prices down as buyers look for affordable monthly payments, but also increase demand as buyers try to lock in rates before further increases. The increased demand against weak inventories would send prices up.

While good news for home sellers, the continued sharp increases—the indices have shown double-digit year-year increases for four months in a row —are likely to revive concerns of a growing housing bubble as personal income growth continues to stagnate.

Still the increase in home values, according to economic theory, should mean improved consumer spending. The “wealth effect” theory holds that consumers spend based on increase in net worth, not income. Home values accounted for about 25 percent of the increase in net worth in the first quarter, according to the latest data from the Federal Reserve.

The Case-Shiller Indices have gone up for seven straight months and 13 times in the last 15; each index dipped last October and November.

The monthly increases were led by Atlanta, where prices rose 3.4 percent from May to June. The price index for Atlanta is at its highest level since July 2010. The price index rose 3.3 percent in June in Chicago, bringing prices there to their highest level since October 2010. Prices rose 2.8 percent each in San Diego and Las Vegas, while prices were up 2.7 percent in San Francisco.

Prices have increase for 16 straight months in San Francisco to the highest level since February 2008. Prices in Las Vegas have increased for 15 straight months and are at their highest level since February 2009.

Prices were up 1.8 percent in Phoenix, the 21st straight month-over-month gain, and 2.3 percent in Los Angeles, the 16th consecutive monthly improvement.

Year-over-year the price gains were led by Las Vegas, where prices were up 24.9 percent since June 2012 and San Francisco, where prices rose 24.5 percent in the last 12 months. Those year-over-year price increases were followed by Los Angeles, up 19.9 percent, Phoenix, up 19.8 percent, and Atlanta, up 19.0 percent.

Despite the June improvement, the 10-city index is down 234 percent from its June 2006 high of 226.29, and the 20-city index is off 22.7 percent from its July 2006 peak of 206.52.