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ANSWER TO THE QUESTION
Is The Market Slowing Down?

Most people that watch the real estate market will notice a trend here in Chicago where the market takes off in late winter/early spring, begins to slow in the summer and really slows down in the late fall/early winter before picking up again and the cycle goes on. These last two-plus years, that cycle has derailed and we never saw a slow down, except in inventory. This created a seller's market for over two years, which caused home prices to inflate, buyers to compete with multiple offers, and some buyers to avoid entering the market altogether. But are we finally seeing a shift towards stabilization and perhaps even a buyer's market? It's possible! 

Looking at two of our recent client transactions, we've definitely felt the shift ourselves. One of our agents recently went under contract with their client. They found a perfectly nice home in Arlington Heights that fit their needs and they decided to make an offer. Our agent noticed that the home had been siting on the market for 25 days - a very rare occurrence in Arlington Heights, which has been red-hot throughout the pandemic. Although the home was very nice, the buyers wanted to offer less than the asking price. While this would have certainly been close to impossible previously, our agent was able to negotiate the purchase price down to almost $13K less than the asking price. Not only are his buyer clients very happy, but it sends a hopeful message to the rest of his buyers! This is not a commercial as to or ability to negotiate, rather to share a story that's starting to show what's happening in the general real estate market.

A 2nd agent has been working with his first time buyer clients since March 2022. They were interested in buying a home on the north side of Chicago and placed 8 offers on homes around Irving Park and Sauganash neighborhoods. They got more aggressive with each offer and were still beat out by another buyer every time. Finally, they found a home near Jefferson Park and quickly made a competitive offer. Since their were no other offers on the table, their agent advised coming in at asking price but offering an escalation clause to the offer so they could still compete if another buyer was to throw their hat in. Luckily, no other buyers showed interest and the sellers accepted their offer at asking price. 

So although these are only two examples in a sea of thousands, we mention them because they are going the way of what other Realtors and economists are noticing. Though homes are still being listed with higher asking prices, homes are starting to sit on the market for longer and price drops are increasing. Eventually, homes that accepted lower offers will begin to be used as comps for newly listed homes and the price drops of homes will continue. However, don't expect a market crash like we saw in 2008. Instead, consider this the stabilization we've been needing to see for over 2 years now. Even though home sellers may not be getting the premium offers they were receiving last year, if the market begins to cool off, more buyers may return to feeling confident about making a purchase, creating a normal market for the long-term. 


 
ACTUALLY, THERE'S ONE MORE QUESTION
What is PMI?

Anyone considering buying a home this year could be bogged down by the rising interest rates and record high inflation. They could be looking for ways to keep their monthly payments low and one way to do that is to avoid or reduce their Private Mortgage Insurance (PMI).

PMI is a required payment to the lender when a home buyer puts down less than 20%. It can vary in cost, but typically it ranges from .5%-1% of the purchase price. For a home purchase of $300K, that could mean $1,500-$3,000 a year, broken into monthly payments of $125-$250 a month. So how do you reduce this cost or get rid of it altogether?

Well, there is only one way to get rid of it and that is putting 20% down on your home purchase. Since many first time home buyers can't come up with that sum on their own, consider asking a family member for a cash gift or cashing in your 401K. If neither of those options apply to you, then putting down as close to 20% as possible will have a positive affect on your PMI rate. Keep in mind, you can request the PMI payment be removed by your lender once you have made enough payments to reach 20% in equity. If you're not necessarily keeping track, or forget to make this request, then the bank will automatically remove PMI once you've reached 22% equity. However, this only applies to conventional loans. (PMI is required to be paid for the life of the loan when borrowing with an FHA loan).

A 2nd way to reduce the PMI amount is having a high credit score. Lenders use borrowers' credit scores to determine the risk of the borrower defaulting on the loan. A borrower that shows they can handle multiple lines of credit with low balances and on time payments will have a higher credit score and thus lower risk, helping to reduce that PMI payment. 

Lastly, fixed rate mortgages are considered less risky than an adjustable rate mortgage (ARM). Since the rate on an ARM can increase over time, the risk of defaulting may also increase. Therefore, a lender can request a higher monthly PMI when you opt for an ARM. 

You can always discuss your estimated monthly payments with your lender to ensure you are qualifying for lower monthly payments.  
BIKES AND MUSIC UPDATE
Felix Ponce, the Director of Bands at Back of the Yards College Prep High School was given several instruments last month. Here's what he had to say about it:

"When I first got the email about bikes and music looking for a school to donate used instruments to, I was in slight disbelief. For a long time I have looked for organizations to help me build my inner city band program and have not had much luck until I made contact with Bikes and Music. Financial stress can often prohibit my students from pursuing music, but this organization has helped me acquire 30+ instruments allowing me to increase the number of students we can service in our Band, Drumline, and Traditional Mexican Music Ensemble. If it were not for their generosity, I would have had to turn students away."

We're having a FUN-Raiser!

Bikes & Music is a registered 501(c)(3) non-profit and a for-impact corporation. Donations are needed now to help with the costs of bike repairs, new helmets, and bike locks! Our goal is to raise $25,000 by our new goal date of September 24th! With your help, we will get more bikes to people in need throughout Chicagoland.

All who donate are welcome to join us on September 24, 2022 for a group ride and cookout!

Support our cause by donating today! DONATE

Visit www.bikesandmusic.org or email carrie@bikesandmusic.org for more info or to schedule a bike (or instrument) pick up!
 
INTERESTING STATS
This issue we wanted to take a look at the real estate market in Lombard, IL. Lombard is a suburb 20 miles west of downtown Chicago, with a population of nearly 44,000. According to the US Census, approximately 70% of the population owns their home in this village, which is a part of DuPage County. Residents here enjoy a plethora of recreational activities, breweries, and an annual Lilac Festival. 
Despite being accessible to Chicago, home to a decent population and a variety of things to do, the median home price in Lombard has stayed relatively steady, peaking at $295K just last month. Even during the last couple of years, when we saw home prices rise by double digit percentages, the price increase in Lombard is just shy of 5%. That being said, the prices have steadily risen throughout 2021 and into 2022, so it is still an active market. How has this affected supply and demand?
Interestingly, the supply of homes in Lombard has been consistently dropping the last 12 months or so. In the last view villages we've looked into, there's been at least some fluctuation - but here in Lombard, the amount of homes has steadily dropped every month. While this graph looks like it's been a steep decline from an average of 140 homes for sale in early 2021 to just over 90 now, consider the population of homeowners - around 30,000. Understanding the supply out of the actual amount of homes in this village, inventory has been significantly low for the last 12 months and beyond. 
Typically, you see demand rise when supply drops, and that was the trend in late Winter/early Spring of 2021. However, demand has been dropping nearly every month since then. Although there are quite a few more homes under contract than currently for sale, average days on market in Lombard is currently at 43 days. It will be interesting to see how the rest of the year plays out in this town.
KEVIN'S KORNER

Why Online Home Value Estimators Are Unreliable

Whether you’re looking to buy, sell or refinance a home or are simply curious about its value, online home value estimators are popular tools. Also known as automated valuation models (AVMs), they include services such as Zillow Zestimate and Redfin Estimate. AVMs work by using available data about a property to calculate a home value estimate with little or no human input.

While AVMs are typically free and instant, that convenience can come at the cost of accuracy. For example, while Zillow claims its estimates are within 5% of a property’s final sale price 82% of the time, that number plummets to just 39% for off-market homes that later sell. The shortcomings of AVMs have led to some high-profile failures, such as when Zillow’s former CEO famously sold his home for 40% less than its Zestimate value.

Why, in this high-tech age, can AVM estimates still miss the mark by so much? Here are three major reasons why these services shouldn’t be relied on for accurate estimates.

The source data can be wrong, outdated or missing

AVMs use data from public records, previous home sales and homeowners themselves to calculate home value estimates. However, those calculations are only as good as the data itself. An incorrect square footage measurement, bedroom count, tax assessment or other data point can throw off the estimate of the home and even surrounding homes as well. Some AVMs may even fail to include important sources of information, such as the MLS (multiple listing service) databases used by the real estate industry.

Home features and upgrades may not be recognized

No database or algorithm can recognize everything that adds value to a home. The amount of natural light, the interior finishes and the window views are all features that can affect what a home is worth but may not be reflected in an AVM estimate. Even home improvements could be left out of the equation unless they are considered in the assessments of local tax authorities or other sources that feed into the AVM calculation.

Limited homes-sales data can throw off estimates

AVM estimates are at their best when used on a home that is currently for sale in a community with a high proportion of recent home sales. This is because the home itself will have ample up-to-date information available on its own for-sale listing, and there will be plenty of recent comparable sales to utilize when estimating a value. However, if the home last sold many years ago or the community rarely sees homes change owners, an AVM will struggle without fresh data for its estimate.

Conclusion

While online home value estimators can provide a free ballpark number, they shouldn’t be relied on for an accurate home value estimate. This is especially true when making important decisions such as listing a home for sale, making an offer to buy a property or checking if you’re eligible to refinance a home. To get a more accurate estimate, talk with a real estate agent or home appraiser in your area.

Information provided by:

Kevin P. Koykar, CFP®, ChFC®
Senior Loan Officer
kevin.koykar@dkmortgage.com
dkmortgage.com/koykar
C: 224-639-5100

AWESOME CLIENT - GREAT JOB AVI!
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Ryan's Review 
Rage Against the Machine

July 12th - United Center

The Rage Against the Machine show at the United Center on July 12th, 2022 was my 6th time seeing RATM, the 5th was the Alpine Valley show two days prior.  At the Alpine show, I was up close and personal in the pit, but I had to leave halfway through the show. It was AWESOME! On July 12th, this was a special night because I was bringing my 17 year old daughter, Alix, and it was not by me forcing that upon my kid. Alix loves RATM and she reminded me that night that her RATM awakening happened when she was in 6th grade on her way to a swim meet and she asked me to play music to get her pumped up. 'I've got a song for you', I said and seconds later the car volume was turned up a bit while 'Sleep Now In The Fire' by RATM was blaring through the speakers. 'Play it again!', came from the back seat and after that morning, she dove into them and never looked back. 

So when RATM announced this tour pre-covid, I asked Alix if she wanted to go and the reply was an excited 'YES'. But once covid hit, RATM put off this tour a couple times. It was a large tour and tickets were selling and unlike smaller bands that could probably 'wait and see' what's going to happen, the size and scope of this tour resulted in early announcements postponing the tour. The last shuffling of the tour resulting in RATM starting with the original 2nd leg of the tour making the  original 1st leg now becoming the 2nd half. I only mention this because this resulted in the Alpine Valley show and the two United Center shows as the first three concerts this band has played in 11 years. I was lucky to see the first two shows back in action.

So I wanted to start off this review as an ode to Zack de la Rocha, because I think he's an underrated lead singer in terms of talent and passion and everything you want in a lead singer, especially a rock band. But I ended up at a different place.  More on that later.

Back to the show: I wanted Alix to see the opening band, Run the Jewels, since she'd never seen a rap performance. We got there for the 2nd half of RTJ's set and they are great. I'm sometimes critical of rap performers being too boring on stage, but not these guys, and the songs were awesome.  They were having fun, bouncing around the stage, at the same time they played with conviction.

Then it was time for RATM.  Their stage set up was hidden by a gigantic canopy and once the baseline for 'Bombtrack' started, the crowd started to buzz and when the drum and guitar kicked in, the canopy dropped and we were all in it!. You can't replicate that type of spark,  Then they went into the 2nd song, 'People of the Sun', which is a GREAT song from Evil Empire. Side note: Evil Empire to me is a top 10 album of all time. I don't think there's a single bad song on that album. Next song, 'Bulls on Parade', which is their most popular song and this notched the crowd up to another level. 

Next song - 'Bullet In Your Head', my favorite song by RATM, especially live. It's got a couple of ledges to the intensity and really ramps up at the end. It gave us everything we expected, too much in fact because Zack de la Rocha, who's 53 but looks 33, was jumping around the stage at the end of the song and landed on his ankle. He limped off to the side of drum set, finished the song, and he moved off stage for about 75 seconds before coming back and speaking to the crowd. "I don't know what happened to my leg just now, but even if I have to crawl across this stage we're going to play all night. We've been waiting too f'ing long for this, we're not just going to give up." And the crowd goes crazy, but we are all thinking 'how is this going to work?' But RATM didn't give us a lot of time to think about that nor do they have a ballad waiting in the wings for moments like this to calm things down a bit. Rather they go right into the ripper 'Wake Up'. Zack is side-stage on an amplifier, assaulting his microphone and even though hobbled, he stills brings the energy.  Towards the end of the song, he's screaming the chorus 'Wake Up' and you can see he wants to stand up, but's he's so frustrated he can't.  Mid scream he then throws his mic into the mosh pit, where someone proceeds to pick up the mic up and screams on cue - 'WAKE UP'.  Zack points him out with a huge smile and the crowd eats it up. That was a heavy metal moment and that's when I knew they were going to make this night into something, they're not just going to sit back and dial it in. 

From that song forward, we were reminded there's another superstar in the group -- guitarist and Libertyville High School graduate Tom Morello. 'Tire Me' was the next song which is a crazy, fast punk machine gun paced tune, maybe the hardest song for Zack to sing (or anyone on the planet). Tom starts to take center stage, jumping around and doing what he does with his guitar. Through 'Tire Me' and the rest of the show, he took the helm. And that's just what a RockStar does. The rest of the show was amazing, getting better and better, and the crowd just did not stop. By the end of the night, last song being 'Killing in the Name Of', the whole GA section was a mosh pit - the whole thing. Just a complete free for all with an energy I'd never seen before. Know this: RATM is not looking for you to sing along at their show or raise your phone flashlight or ligjhter, rather they're pleading with you to listen to their messages, and almost forcing you to act. They want you to be pissed off, more importantly, they want you to do something about it! Starting a revolution is not off the table.  Whether you agree with their messaging, politics, and / or extreme views, it doesn't matter.  It's the well this band is drawing from and like it or not, you're forced to take in.

At the end of the show, with the crowd drenched in sweat and frenzied, the whole band came over and gave Zack a hug. There was so much adrenaline from the band and the crowd, and I see this from time to time, but that night just felt different. Everybody had to chip in to make it work, and the crowd was an equal component of that equation.

I recently read a review of the movie, 'Learning to Live Together: The Return of Mad Dogs and Englishmen.' Great film, and in the movie Chris Robinson of the Black Crowes sings a few songs with Tedeschi & Trucks.  The writer of the article stated that while watching the movie, he fully realized that Chris Robinson is a true American Treasure.  What?  I've seen The Black Crowes as many times as I've seen RATM, and I'm a big fan of the Black Crowes.  Chris Robinson can take over crowds.  He can sing, he can dance, he can get you to groove and smile while drinking your 22oz concert beer.  But he doesn't hit that mark often.  You're getting him hot or cold - no in-between.  When it comes to Zack, I'll side with Tom Morello's quote about him:

“In my opinion, Zack is the greatest frontman of all time,” Morello said. “He’s the punk rock James Brown. There’s no one in the history of Western music that has the sort of the totality of spiritual commitment onstage and in the studio as that guy.”

And it's every show, every song, every moment - broken ankle or not - that's an American Treasure.  But speaking of Tom Morello, he showed us all something that night.  There are a lot of great bands, but there are only a few exceptional ones. Morello taking front stage at our show, with that not being part of the plan, and playing like he was 17 years old in his garage in Libertyville thinking he was in front of 30,000 people at The Chicago Stadium. A Rock Titan. And when people discuss with me the greatest guitarists of all time, Tom Morello will forever be on that list.

How are they not in the Rock and Roll Hall of Fame?  Buy me a beer when I see you, let's chat.
Client Appreciation Party! 
Thank you to all of our past clients who attended our Annual Client Appreciation Party, this year taking place at Ravinia in Highland Park! We had so much fun grooving to G-Love, OAR and Dispatch among our real estate friends and family. Can't wait to do it again next year! 
Thanks for Reading! 
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