Data through July 2008, released by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, "shows record declines and a continuation in the trend of double digit declines across many cities in the prices of existing single family homes across the United States."

The 20-City Composite Home Indice shows a new record annual decline of more than 16%. 

Chicago shows a 10% decline over the last year.  Trinity Illinois Real Estate Brokers George Georgopoulos and Elias "Louie" Mossos say that while this is good news for buyers, the current financial woes make it harder to obtain financing. 

"Buyers should begin identifying ideal properties and continue to monitor them in the next few months," Georgopoulos said, "during which time prices are expected to drop further."

"Since it is becoming increasingly harder for buyers to obtain credit, they should begin improving their credit histories by paying off past-due balances, debt collectors and over-the-limit balances." according to Mossos.

There are some great opportunities in Milwaukee for luxury condos.

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Building more luxury condominiums in today’s tight credit market might seem like risky business, but there appears to be a strong demand for them in downtown Milwaukee . . .There is a "buffet of condo buyers" coming from all demographic groups, according to Mary Beth Gasper-Waite, a real estate agent who is working with the upscale Residences at Hotel Palomar and owner of Metro Condo Connections in Milwaukee. "We have seen more buyers coming from outside of Milwaukee. I have sold an increasing number of downtown condominiums to people from Chicago. Amtrak makes it possible to commute; there’s no driving and no traffic," she says. "These couples have discovered the incredible quality of life in Milwaukee. People who live here don’t always appreciate that."

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From Reuters

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HomeVestors(R) of America, Inc., the company famous for its "We Buy Ugly Houses"(R) billboards and America's #1 Home Buyer, has named the top 10 markets for real estate investing in the first quarter of 2008.  They are as follows:

   1. Dallas, Texas

   2. Houston, Texas

   3. Atlanta, Georgia

   4. Fort Worth, Texas

   5. St. Louis, Missouri

   6. Philadelphia, Pennsylvania

   7. San Antonio, Texas

   8. Denver, Colorado

   9. Minneapolis, Minnesota

   10. Phoenix, Arizona

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See you in Texas!

From the IRS website

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The Internal Revenue Service cautions taxpayers to be on the lookout for a new wave of scams using the IRS name in identity theft e-mails, or phishing, that have circulated during the last two months.

In May and June alone, taxpayers reported almost 700 separate phishing incidents to the IRS. In 2008 so far, taxpayers have reported about 1,600 phishing incidents to the IRS.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

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Read the entire article to see what scams people have been falling for in these hard times.

Bad news for the suburban office sector:

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Demand for leased suburban office space has fallen to levels not seen since the last recession, industry observers say, and some building owners are holding on to their property because buyers are rare.Cushman & Wakefield said second-quarter suburban leasing of office space fell 23 percent to 1.3 million square feet compared with the first quarter.

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The Chicago Tribune reports that the downtown office vacancy rate was 10.2 percent in the second quarter, improved slightly from 10.5 percent in the first quarter.  However, that contrasts with the suburbs, where vacancies have risen to 14.6 percent in the second quarter.  In the first quarter, 14.1 percent of office space sat vacant, based on a study by Transwestern, a real estate services firm.

One reason for the decline in demand is that employers are locating in downtown Chicago to attract younger employees, who often prefer the city to the suburbs.  What other reasons do you think affect suburban office space demand?

As the Chicago Tribune reports, many large mortgage brokers went out of business during the subprime-lending bubble burst because they could no longer find investors to buy their loans and fund their operations.  Today, the pool of mortgage lenders is much smaller than it was in the past and billions of dollars in liquidity have disappeared.

Additionally, the remaining lenders are gun-shy about rising delinquencies and foreclosures that have forced many to take large write-offs.

Diane Swonk, chief economist with Mesirow Financial in Chicago, told the Chicago Tribune that "Time heals all wounds, and we haven't had enough time yet to heal this wound . . . Banks and other lenders are being more conservative. They're saying, 'I need to be compensated for this risk.' "

The current economy has a significant effect on mortgage rates.  If the U.S. economy has narrowly avoided a recession, the Federal Reserve will probably not lower interest rates further and, in fact, could start raising them again as soon as October, according to the Chicago Tribune.

"With commodity prices rising, especially for oil and food, the Fed may have little choice but to tighten credit to slow inflation, which eats away at the value of wages as well as financial assets, economists say.

When inflation goes on a tear, investors want higher premiums for lending money, which translates into higher long-term interest rates."

According to the Wallstreet Journal, "Even the Trump name isn't bigger than the calamitous condo market. Donald Trump's reputation as a real-estate developer could take a hit as some condominium projects emblazoned with his famous name run into trouble.

No one is safe from the real estate market slowdown, Donald Trump is feeling the pain as tightening of credit lowers demand and leaves a few Trump Towers in the lurch. Trump's two Florida projects have stopped construction even after one collected deposits from buyers. Trump's Toronto project suffered years of delays. In Chicago, The Donald, Ivanka and Donald JR are having trouble selling units as 30% of Trump Tower Chicago remains unsold.

Not that The Donald is at great financial risk, since he no longer puts a substantial amount of his own money into these projects. He sells his name to developers.

"U.S. house prices sank 3.1 percent in the first three months of 2008 from a year earlier, the second quarterly decline since June after 13 years of increases" while "inventory of unsold properties continues to swell, pushing down home prices", according to Bloomberg News.

This decline is serious when you consider that many homes are not worth the amount of the mortgage that homeowners owe.  As Paul Kisel, chief economist at Northern Trust Corp. in Chicago put it, "This is a financial crisis. You can't put lipstick on this pig.''

However, the Wall Street Journal has some promising news for the Chicago market:

A flurry of condominium building has kept prices down on much new construction. At the same time, some established apartment buildings are still seeing buoyant prices, even as properties spend more time on the market. The Carlyle, a 1960s-era glass-and-concrete tower along the city's prized Gold Coast neighborhood, recorded the highest price ever -- $2.4 million -- for one of its "C"-tier units earlier this year, for example.

Jim Kinney, president of Rubloff Residential Properties in Chicago, says "80% to 90% of the buildings along the Gold Coast achieved a record sales price in the last year." The older buildings are often in blue-chip locations and are generally cheaper, per square foot, than new units.

Bargains abound in Chicago's periphery. Seven miles south of the Carlyle is Bronzeville, a gentrifying community that during the housing boom was a favorite of buyers who couldn't afford Chicago's glitzier core. Just last month, a bank that owns a foreclosed duplex in Bronzeville dropped the asking price to just $85,000, from the January listing price of $129,900. The owners who lost the property originally paid $330,000 in November 2005, about a year before the Chicago market peaked.

But beware: Prices may be stagnant or worse for a long time to come. "Because of the huge inventory, it will take years to recover," says Christina Miller, a Rubloff agent, citing periphery neighborhoods such as Wicker Park, Ukrainian Village and Bucktown.

Chicago's desirable North Shore suburbs are, for the most part, doing well. Median prices in Evanston, Wilmette and Winnetka, all hugging Lake Michigan's shoreline, are up over the past year to varying degrees, though sales volume is down sharply, according to a Zip Code analysis by DataQuick. Sellers are receiving about 89% of the list price, according to March data from the North Shore-Barrington Association of Realtors. That's down from about 95% at the peak of the market.

In upscale Highland Park, about 25 miles north of downtown, prices are down more than 6%. But that average is being skewed by a high number of sales of low-end homes, some forced by foreclosure.

The National Association of Realtors states that Chicago area, single-family home prices dropped in the last year 6.6 percent, to $249,600 and prices dropped 7.7 percent nationwide, to $196,300, from $212,600 a year earlier.

The Chicago Tribune elaborates on the NAR study and reports that U.S. prices fell 3 percent for condominiums, cooperatives and townhouses, but metropolitan Chicago prices for existing units rose 7 percent.

Chicago faces a big problem: 6,000 condos are expected to enter the market in downtown Chicago this year, despite strict mortgage requirements and slowing sales.

The Chicago Tribune also reports that "Sales of newly built downtown condominiums plummeted by about 83 percent during the first quarter, to 201 units from 1,207 units a year earlier, according to a report to be released Wednesday by Appraisal Research Counselors."

How do you think this will affect Chicago condo prices in the Loop?

If you are one of the many Illinoisans in trouble of defaulting on your mortgage, Illinois Attorney General Lisa Madigan has some advice, according to CBS 2:

Please reach out. Make sure that you are in communication in particular with a HUD-certified housing counselor because they can make sure that you understand your loan."

There are many places to get help and housing counselors say that if you're about to fall behind in your mortgage, you should contact your lender before you miss a payment.

"It helps to work with a HUD-certified housing counselor. To find one, and for other tips on fighting foreclosure check these resources:

-- The Attorney General's Mortgage Lending Guide, a resource manual containing step-by-step instructions for those struggling to make their loan payments and a list of HUD-certified counseling agencies that offer default counseling services. 

-- To get a referral to a certified housing counselor or to learn more about the steps to take to avoid foreclosure, homeowners can call Madigan's Homeowners' Referral Helpline at 1-866-544-7151 from 8 a.m. to 5 p.m. Monday through Friday.

-- State of Illinois Resources – this includes a calendar of upcoming Homeownership Outreach Day Fairs

-- DuPage Homeownership Center -- the group working with Richard Fox 

-- City of Chicago Foreclosure Prevention"