All Forum Posts by: Alex Fenske

Sent you a message

City of Chicago, like most big-market cities, has imposed some pretty tight restrictions on STRs that make it tough for a non-owner occupant, so I would start with reviewing those to determine whether the Chicago city limits environment is acceptable to you. Suburbs are hit or miss in terms of regulation. I have one agent who started an STR in an otherwise unexciting suburb last year and has had better cash flow than if it were a LTR, though she also lives very nearby and self-manages.

 Thanks for the idea, just sent her a message

I run an investment club for real estate agents in the South suburbs of Chicago. We meet monthly and at each meeting we have a speaker or panel on a specific topic. I was slated to have a speaker for our January meeting who teaches a STR course - she was going to basically give an abridged version of her course and get the opportunity to pitch the full course for those who were interested - and she fell through. I'm looking for someone who could step in and teach the same topic.

Here are the specs:

- Meeting is 2:30-4:00pm CT on Wednesday, Jan 18. Speaker's time slot is roughly 2:50-3:50 as we do an intro and a wrap-up as a part of each meeting.

- Speaker must be valid and experienced in profitable STR ownership and preferably already teaches this topic to others, has an existing presentation etc.

- There is no fee available for this. Typically our speakers get a win in the networking opportunity or the chance to gain clients for whatever it is they do. I wouldn't expect anyone to do this if there were not a "win" in it for you, but the win cannot be a speaking fee as this club is free and has no budget.

Just copy/pasting the market report I complete each month for my brokerage and clients. Coverage area is all single family housing (detached and attached) in Northeastern IL. Data comes from MRED LLC, St Louis Fed, MortgageNewsDaily.com, and NAR.

Housing Affordability
- The current market shift is primarily a result of deteriorating housing affordability: Homes have become so expensive that many people either can’t or won't buy. The NAR’s Housing Affordability Index compares household income, home prices, and mortgage costs. If the median income earner could spend 25% of their gross monthly income on principal & interest for a 30-yr fixed rate mortgage (with 20% down) on a median-priced home, that is an index of 100. A higher index means homes are more affordable; a lower index means homes are less affordable. Nationwide, from Oct '21 to Oct '22 the index fell from 148 to 91. The Midwest fell from 195 to 124 and is the only region with an index over 100. Consider what this means for where prices go from here.

Supply – down significantly
- New listings are down 24% from Dec '21, the fewest new December listings on record.
- There are 10% fewer homes for sale than Dec '21, the 2nd lowest month on record.

Demand – down significantly
- Pending contracts are down 29% compared to Dec '21 and closed sales are down 37%, both figures representing the lowest December demand since 2011.

Supply/Demand Relationship – stable, seller’s market
- Months supply are at 1.5, compared to 1.4 in Dec '21. There are still far more buyers than sellers.
- Median days to contract were 16 in December, half that of Dec '19. The 12-month rolling average has held steady at 9 days since Sep '21.

Prices – flat to slightly down
- Monthly home prices were down 2.2% compared to Dec '21, marking the second consecutive year-over-year dip.
- Seasonally adjusted prices remained flat for the 5th consecutive month, 3.6% above one year ago.

Mortgage rates - volatile
- Today’s (1/5/23) 30yr fixed averages 6.41%, up about 0.5 from recent lows in mid-December, but still quite a bit lower than their peak in Oct/Nov.
- The Fed is expected to increase the Fed Funds target rate by 0.25 in February, following their current plans to continue rate increases but at a lesser pace until inflation is under control. Currently zero Fed officials believe there will be any decreases in 2023.
- Expect continued volatility every time there’s a jobs report, inflation report, Fed announcement, etc.

What to do?
- Sellers: Short market times and ample demand are very real but will not show up in price the way you would think. Price, prep, and stage aggressively.
- Buyers: Pay close attention to wildly fluctuating mortgage rates, evaluate multiple financing options, and listen to your lender's advice on timing.

Hi all,

After realizing I've been selfish by investing in real estate myself for the past 14 years and helping primarily experienced investor clients, I have finally begun putting some systems in place to help more of our clients and contacts get started in doing the same. Feel free to jump onto our upcoming webinar on Jan 12 for an introduction to real estate investing, primarily focused on long-term wealth building. Our primary target audience is those interested in investing in our market area, Chicago's south suburbs and south side.

I have an agent in my office who has built a good number of SFR I think primarily in the Bronzeville area. Mostly onesie/twosie stuff though, no larger developments. Would she be a good contact for you?

 Definitely interested in that, please send info

Thank you! This is for the entire ConnectMLS coverage area, so while it's a heck of a lot more tailored than what the public is hearing on the news, it still smooths over a lot of variation from the countless markets within. For example, I've seen a couple of neighborhoods on the South side where SFR are in 6+ months supply.

I complete a housing market update each month for my brokerage and for my clients; figured I would share it here in case it's helpful for anyone else. My data sources are Midwest Real Estate Data LLC (connectMLS/InfoSparks), MortgageNewsDaily.com and the St. Louis Fed. You can watch the video or read the outline.

Supply
- New listings down 19% from November 2021, the fewest new November listings as far back as my data goes, through 2008.
- 11% fewer homes for sale than November 2021, the lowest November on record.

Demand
- Pending contracts and closed sales are both down over 30% compared to November 2021 and are at their lowest levels in at least 7 years.
- If it weren’t for the severely limited supply described above, this would be UGLY.

Months Supply
- Fell from 2.0 to 1.9 months, a seasonally normal change. 2nd lowest November supply behind 2021.
- Median days to contract stayed flat at 13 days from October to November. The 12-month rolling average remains at 9 days, steady at that number since September 2021.

Prices
- Monthly home prices were down 1.8% compared to last November, marking the first year-over-year decrease since 2012.
- Seasonally adjusted prices remained flat for the 4rd consecutive month, 3.6% above one year ago.
- Many research institutions have adjusted their outlooks for nationwide home prices to fall slightly in 2023 rather than stay flat. However, housing affordability remains stronger in the Midwest than other regions, and one report ranked the 10 housing markets that will hold up best with 3 of the top 6 areas being right here in the Chicago area.

Mortgage rates
- Today’s (12/8/22) 30yr fixed averages 6.29%, down nearly a full point from its peak on 10/31/22 but still than double where it started the year. Government loans are a half-point lower.
- The Fed is expected to taper their rate increases to a 0.5 increase this month rather than .75, based on inflation moderating a bit.
- Expect continued volatility every time there’s a jobs report, inflation report, Fed announcement, etc.

What to do?
- Sellers: It’s a strange world, where there are more buyers than sellers, but prices are flat as a pancake. Price aggressively and invest the energy into preparing and staging your home.
- Buyers: The temporary easing of mortgage rates offers a fantastic opportunity to lock now. Examine less traditional loan products such as 5/1 ARMs, rate buydowns, and even assumable mortgages which present one of the most attractive opportunities imaginable in the current market conditions.