“What would Warren Buffett do?”
I have decided this is going to be my mantra in 2019! If you read about real estate news and projections for the coming year, things don’t look great. But, I’ve done my own research, and all I see is opportunity—just like our friend Warren, who has built much of his fortune during down markets. But I’m not one of those real estate brokers that sugar coats the situation. As with all things, there is an upside and a downside. I feel it is my job to educate my clients so that they are fully aware of the larger situation.
The larger Chicago economy is down: Generally, predictions are based around the idea that the Chicagoland housing market will echo the larger Chicago economy, which is not forecasting growth.
Taxes are high, and negatively impacting growth: Property taxes are high, which is lowering the maximum home values that people can afford.
Mortgage rates aren’t helping: Mortgage rates are increasing, and while they are nowhere near as bad as they have been historically, in Chicago in particular, higher home values and taxes are exacerbating the problem.
For buyers, now is the time! While Chicago has never been known for real estate “deals,” properties are not appreciating as quickly as they were a few years ago. The value is there for buyers, but that also means buyers need to be quick on the uptake and ready to make a move. There are plenty of frustrated buyers still out there waiting for the spring, so I anticipate there being a good amount of competition. Plus, rates are still decent, and only looking like they are increasing after spring. For buyers, this also means you should do your best to capture the momentum of the spring market.
Adjusting to the market still works: We are no where near close to the 2007 recession. For one, average market time in Chicago is still about three months. For sellers serious about selling, if you price your home strategically right out of the gate it WILL sell—especially with interest rates holding through the spring. What does strategic pricing look like? It is a delicate art (not a science!) that takes into account comparable properties, the condition and location of your home, and the market at large.
Chicago continues to evolve: There is still tons of growth throughout the city, and it shows no signs of stopping. In Lincoln Park, Lincoln Yards continue to solidify and finalize plans, there is still buzz around Elon Musk’s high speed train project, new construction popping up everywhere, and there is also P33—a collaborative effort between Chicagoland leaders to make Chicago a tech hub by Chicago’s bicentennial in 2033. They city is giving people a great reason to invest in living here, which is always a good thing for the market!
It’s all about the larger picture, and playing the long game with well-timed and strategic decisions. When in doubt, ask yourself, “What would Warren Buffet do?”