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Sizzle is back in the South Loop

filed under: Chicago home prices, Chicago home sales, Market conditions, South Loop posted on March 27th, 2015

SOUTH LOOP:

SCOOP ON THE SOUTH LOOP: Condo and house prices have rebounded sharply, and although they haven’t quite reached the heights of six years ago, before the crash.

A well-known Chicago developer just agreed to pay $26 million for a large chunk of land just north of Roosevelt Road, on the east side of the river. A new brewery, Motor Row Brewing, opened its doors in January on the 2300 block of South Michigan. Hundreds of new apartments are being built along South Clark, the British School of Chicago is designing a new South Loop campus, and home prices are steadily recovering — in some cases almost reaching peak levels last seen six years ago.

Is the South Loop back in the game?

Just three years ago, the South Loop was awash in cheap condos whose owners were so deeply underwater that they were going into foreclosure, trying to sell them short, or simply renting them out and waiting until prices recovered. Entire buildings had slipped from bright “grand openings” with shiny sales centers into a troubled half-lives as rental buildings because so few owners had stuck around to live there after the market crashed. When I would go to show condos in the South Loop, some buildings had so many units for rent and sale that they’d designated a special room for dozens of lockboxes filled with keys, so REALTORS® could let themselves in.

At the bottom of the market — which turned out to be the summer of 2012 for the South Loop — median sales prices in two of the area’s main zip codes, 60616 and 60605, had plunged about 40 to 50% over the peak in 2009.

What a mess. But the turnaround has been sharp, and now prices are within 13 to 17% of their previous highs. In other words, the South Loop is well on the road to recovery.

In practical terms, this means that the median home price is now $298,525 in zip code 60616 and $361,000 in 60605. Which means that an investment in the South Loop is now looking like less of a gamble and more of a sure thing. Sellers will finally be able to unload properties bought at the top of the market, and buyers will find a neighborhood whose restaurant, bar and retail scene is growing hotter by the day.

Written by Sue Fox // Please leave a comment.

How to Buy a Chicago Foreclosure (as Supply Steadily Shrinks)

filed under: Buyers, First-time buyers, Foreclosures posted on January 25th, 2015

A FETCHING FORECLOSURE:

A FETCHING FORECLOSURE: This vintage 3-bedroom house in the Bowmanville section of Lincoln Square was a foreclosure that needed work. But it still sold in just two weeks to a cash buyer for $360,000 — more than $45,000 above the asking price.

Interested in snapping up a foreclosed home, a tarnished gem that you can make gleam with a little elbow grease? So, unfortunately, are a lot of others –  including many large institutional investors who buy Chicago-area homes by the hundreds, often outbidding regular home buyers with cash.

Over the past three years, large companies like Blackstone Group and American Homes 4 Rent have bought roughly 10,000 distressed properties in the Chicago area and converted them into rentals, a buy-and-hold strategy that has helped drive up the prices of such homes by about 30%, according to a recent analysis by Realty Trac. But with houses that once sold for an average of about $161,000 now going for $210,000, it’s gotten much harder to find a good deal.

Meanwhile, there are fewer foreclosed homes to choose from. Chicago still has one of the highest foreclosure rates in the country, but total foreclosure activity has declined about 25% over the last year. It’s down almost 80% from 2009 levels, when the city’s real estate recession was in full swing.

So what’s a determined buyer to do? In 2014, I helped my buyers purchase more than 20 foreclosed homes, and there is definitely a method to the madness. Here are a few tips to make the process easier:

1) Be Ready to Pounce: The market for foreclosed homes in Chicago is very competitive. Many of them will attract multiple offers and sell within days, so it’s vital that you are prepared to act quickly. This means having a pre-approval letter from your lender or proof of funds from your bank, showing you have the financing in place to complete the purchase. It means visiting the home as soon as it hits the market to assess its condition. And, in most cases, it means making a strong offer. Unless the property has been sitting on the market for months, chances are other buyers will be interested. So do your homework, have your realtor run the comps and prepare a solid offer that can stand up against the competition (which often includes cash offers from investors.)

2) Hire a Great Inspector: Foreclosures are usually left vacant – sometimes for months – and by definition their last owners were in financial trouble. So these homes are often in poor condition, with battered floors and missing appliances. Mold and water damage are common. In general, houses and 2-flats are in worse shape than many foreclosed condos, which can be relatively new depending upon the building. When buying a foreclosure, it’s important to know exactly what you are getting into in terms of repairs and maintenance. A top-notch home inspector will provide what is likely to be a long list of all the home’s problems, along with guidance about which repairs are critical and which can probably wait a few years.

3) Amass Your Cash: Many foreclosed properties need work. And with Chicago’s 100-year-old housing stock, they often need A LOT of work, sometimes more than $100,000 worth of it. These rehab jobs are not for the faint of heart (which is why so much of the flipping business is now dominated by institutional investors.) If you don’t have the cash of your own, you’ll need some type of construction loan, and they are not always easy to obtain. Fannie Mae recently ended its HomePath mortgage program, which provided loans to rehab rundown foreclosures owned by Fannie. But there are still options like FHA’s 203K renovation loan (designed for owner-occupants) and Fannie’s HomeStyle renovation loan (which can also be used by investors who plan to rent out the home.)

One last tip: If you do intend to live in the home, keep an eye out for foreclosures owned by Fannie Mae or Freddie Mac. Both offer First Look programs that are designed to give regular home buyers an edge over investors when a home hits the market, by allowing owner-occupants a period of 15-20 days to make an offer – before offers from investors will be considered. This may be the single best way for an ordinary buyer to turn a boarded-up foreclosure back into a home.

Written by Sue Fox // Please leave a comment.

Home prices jump 15% in 2014, but cold weather chills sales

filed under: Buyers, Chicago home prices, Chicago home sales, Market conditions, Sellers posted on January 8th, 2015

GOING TO GRACELAND:

GOING TO GRACELAND: This beautiful 1906 home in the west Graceland neighborhood sold for $820,000 -- $21,000 above the list price -- in just 3 days this fall. With fewer homes to choose from in Chicago, prices are up 15% over last year.

The new year is off to a bitterly cold start, with temps hitting 5 below zero this morning and Chicago public schools closed for the second day in a row. While the brutal weather is never ideal for house-hunting, Chicago’s real estate market nonetheless is on the upswing, with prices increasing a whopping 15% in 2014, according to the latest sales figures from the Illinois Assn. of Realtors.

Home price appreciation in the city was more than double that in the state of Illinois as a whole, where prices rose 6.9% from November 2013 to November 2104. But fewer homes were changing hands — a mark of the low inventory that continues to flummox buyers who enter the market with high hopes only to discover how few homes are actually for sale.

“As we round out the year, higher median sales prices and low inventory continue to be the market pattern,” said Hugh Rider, president of the Chicago Assn. of Realtors.

Home sales in Chicago dropped 11.5% over the past year, and the scarcity of homes listed for sale helped push up prices. The median home price increased to $230,000 in November, the latest month for which data is available.

Some analysts also said that a spate of freezing weather in November (which has gotten even worse in January!) was to blame for driving down sales. It was the state’s “fourth-coldest November on record,” pointed out Geoffrey Hewings, director of the Regional Economics Applications Lab at the University of Illinois. “While prices continue to improve, the sales forecast for the next three months indicates declines,” he said. Foreclosures sales are also on the decline, leading to fewer investor purchases.

All of which points to 2015 as a bright year for home sellers, who may be able to finally sell their home at an acceptable price — which for most people means they won’t have to bring any money to closing. If the Chicago market continues to recover, more and more fortunate sellers could even reap a profit.

Written by Sue Fox // Please leave a comment.

Lincoln Square on a Tear as Average House Price Tops $600,000

filed under: Buyers, Chicago home prices, Lincoln Square, Market conditions, Sellers posted on January 5th, 2015

FINISHED PRODUCT: This new FINISHED PRODUCT: This new 5-bedroom house in the Bowmanville area of Lincoln Square recently sold for almost $900,000. The previous home, shown below, was torn down.

It’s getting harder to find an affordable house in Lincoln Square, a lovely, low-key neighborhood just north of North Center and west of Andersonville. In the last year, single-family home prices in Lincoln Square have climbed 8.2%, pushing the average house price here to $630,000. The gain comes on top of a huge run-up in prices in 2013, making the once-sleepy Lincoln Square one of the hottest areas in the city.

What’s driving the boom? The neighborhood has long appealed to Northsiders looking for a less expensive, quieter alternative to Lincoln Park and Lakeview. With plenty of good restaurants to be found along Lincoln Avenue, tree-lined streets filled with quaint A-frame houses, acres of green space and ball fields at Winnemac Park — not to mention easy access to the Brown line, Lincoln Square became a natural destination for buyers priced out of neighborhoods closer to the city core.

But as Chicago’s housing market recovered, this area exploded in popularity – and its home prices quickly followed suit. Two years ago, the average price was $475,000 for a house here, according to MLS data. The average condo price was $199,000. Now both of those figures are up about 32% — and the demand has led to bidding wars for even the lowliest foreclosures. Local schools have improved, too. In recent years, Chappell Elementary School went from the middle of the pack to earning a 9 out of 10 rating from Great Schools, a nonprofit that provides school information nationwide.

Cash buyers are snapping up rundown Lincoln Square homes, particularly in the Bowmanville area north of Foster Avenue, where even a mold-ridden house lacking a working kitchen will likely attract multiple offers. Six months later, you may see the same address — now featuring a brand-new house or a gut-rehab renovation — back on the market for upwards of $700,000 or even $800,000.

RAW MATERIAL:

RAW MATERIAL: The original house, which stood for more than 100 years, was purchased by a developer for $250,000 cash in early 2013 and demolished.

Consider, for example, the fate of 2200 W Farragut Avenue, a dilapidated, century-old house that sold in early 2013 for $250,000. The listing described it as “very dark and dangerous” and warned that the buyer “must be ready for a project.” Indeed, the cash buyer tore down the house and promptly replaced it with a five-bedroom house complete with three and a half baths, a finished basement, and a roof deck over the garage. It sold in less than two weeks, for $889,000.

So if you’re looking to buy in Lincoln Square, or any city neighborhood, contact me. I have the resources to get you the down-low on the best deals (and steals) in Chicago.

(Note to readers: This blog post originally appeared on Dec. 29 the @properties blog, where I am one of the regular agent bloggers.)

Written by Sue Fox // Please leave a comment.

More choices ahead for Chicago buyers as rally cools

filed under: Buyers, Chicago home sales, Edgewater, First-time buyers, Market conditions, Sellers posted on November 20th, 2014

OR BEST OFFER: OR BEST OFFER: This 5-bedroom Lakeview home, priced at $629,900, had been used as rental house for two decades. It needed some updating, and though it sold quickly in September, it went for $575,000. Buyers can expect more room to negotiate with sellers in 2015, as inventory rises.

OR BEST OFFER: This 5-bedroom Lakeview home, priced at $629,900, had been used as rental house for two decades. It needed some updating, and though it sold quickly in September, it went for just $575,000. Buyers can expect more room to negotiate with sellers in 2015, as inventory rises.

I recently represented a buyer who was looking for a condo in Edgewater. We found a good option, and even though my buyer made a cash offer within a few thousand dollars of the asking price, the seller’s agent kept insisting that there was “a great deal of interest” in this property and that we’d better come up to list price or it would be gone. But the days went by, and despite the alleged tide of interest, no one else actually emerged with a better offer. The seller eventually accepted my buyer’s offer and we are scheduled to close shortly.

A year ago, I wouldn’t have been surprised if, in fact, there were at least 2 or 3 other interested buyers. Inventory was quite tight as sellers held off listing their homes, hoping for prices to climb — and they did. Chicago home prices jumped dramatically in 2013, by more than 11%, and multiple-offer situations became quite common.

But in the last few months, buyers again seem to be gaining advantage as inventory increases. The number of homes on the market is now up more than 5% over last fall, according to MLS data. And new listings have increased each month since March.

This means we are now close to a balanced market in Chicago, in which supply and demand meet in the middle and neither buyers nor sellers have the upper hand. There is now almost a 5-month supply of homes on the market, and most experts consider a 6-month supply to be the critical balance point.

So if you weren’t able to find the home of your dreams this year, don’t give up! A bigger selection of homes for sale, and possibly a slowdown in prices, may be ahead in 2015.

Written by Sue Fox // Please leave a comment.

A market in recovery: Chicago-area foreclosures plummet as house flipping soars

filed under: Albany Park, Buyers, Chicago home sales, Foreclosures, Market conditions posted on October 22nd, 2013

FLIPPING OUT:

FLIPPING OUT: This 1911 3-bedroom stucco home in Albany Park, an estate sale described as a "diamond in the rough," sold in January for $149,200. Four months later, it was back on the market with a new kitchen, three additional bathrooms, fresh paint and refinished floors throughout, and a finished basement featuring a 4th bedroom. It sold within a few weeks for $380,000. As prices recover, house flipping is on the rise throughout Chicago, especially on the North side.

A pair of new statistics caught my eye this week, both suggesting that the era of rock-bottom real estate in Chicago is rapidly becoming a thing of the past.

First, the number of local homes (in the Chicago-Naperville-Joilet metro area) in foreclosure dropped 31.3% over the same time last year, according to the data firm CoreLogic. This stands to reason: With home prices climbing throughout the year, homeowners now stand a better chance of being able to sell or refinance their homes — instead of defaulting on their mortgages.

At the same time, thousands of cheap Chicago homes in need of repair — many of them foreclosures or short sales — are quickly being snapped up by investors, who usually pay cash. They are fixing them up (with new kitchens, baths, finished basements and sometimes new roofs and mechanical systems) and popping them back onto the market again just a few months later. And these renovated homes are selling quickly to buyers who don’t want to (or can’t afford to) do all that work themselves.

There were 2,235 single-family houses that were sold and then sold again within six months in the Chicago area from January to September, according to a new Realty Trac report, more than double the 1,086 homes flipped in the same period in 2012. This doesn’t even include the homes that took a bit longer than six months to renovate and sell.

Written by Sue Fox // Please leave a comment.

It’s over: After 7 years, buyer’s market in Chicago comes to an end

filed under: Buyers, Chicago home prices, Chicago home sales, Lincoln Park, Sellers posted on August 26th, 2013

MOVING

MOVING ON UP: With home inventory scarce and prices up 25% over last summer, buyers have lost their edge in the Chicago market. But sellers still must be mindful of the comps and price their homes accordingly. This 2-bedroom, 2-bath Lincoln Park condo sold rapidly, in 14 days, after the sellers dropped the price from $499,000 to $475,000.

For all the Chicago home buyers out there who were waiting for the bottom, it has arrived. In fact, we seem to have hit it sometime late last year, as the spring market here rebounded with a fury. Now, as the summer season winds down, we can clearly see that home prices are up substantially, inventory is still quite low, and Chicago real estate is selling more quickly than it has in many years.

What’s a buyer to do? First, it’s time to recognize that the market has fundamentally changed. No longer can you see a well-kept property in a desirable area like Lakeview or Lincoln Park or Bucktown, throw out a lowball offer and expect to get a deal. In most cases, you won’t even get a call back. The home will be gone, sold to another buyer, oftentimes in a matter of days at a price close to the asking price. This scenario, meanwhile, is spreading to other less-central, less-gentrified neighborhoods that aren’t considered as hot.

So, if you are a serious buyer, you must get your ducks in a row. Decide early on which neighborhoods you would like to live in, because you will need a disciplined focus — not just a general preference for “anywhere on the North side” or “somewhere near an L stop” — in order to  jump on good listings as soon as they hit the market. Get pre-approved for a loan if you need one, or prepare to provide proof of funds if you plan to pay cash. And then, get to know the current market.

For example, in June, Chicago home prices surged 17.5% when compared to the previous June, and sales were up 12.5%. The average time a home was on the market, meanwhile, fell 32.9% to just 51 days.

And the market only grew hotter as the summer wore on. By July, the median price was $250,000 — up 25% from the previous July when it was $200,000. Sales were up 31.1% over the past year. Average market time dropped to 48 days.

“The market is starting to come together, especially in the condo arena that was hard-hit across most areas of the city. That condos are moving at a strong pace now and prices are also increasing means that both buyers and sellers are feeling confident,” said Zeke Morris, president of the Chicago Association of Realtors.

As we head into the fall season, Chicago’s real estate market will inevitably slow down. The fall is a good time for potential buyers to start exploring the market, even though there won’t be a lot to choose from. There also won’t be as much competition from other buyers. You can go to open houses, check out some neighborhoods, get a sense of pricing.

My buyers who start their search in the fall or winter are the ones who are best prepared to find a good deal come spring, when sellers start to list their homes again. These buyers know the market quite well by that time, and they are ready to pounce when the right house comes along.

Written by Sue Fox // Please leave a comment.

Chicago home prices & sales skyrocket in May

filed under: Andersonville, Bucktown, Buyers, Chicago home prices, Chicago home sales, Lakeview, Lincoln Park, Lincoln Square, Loop, Market conditions, Sellers posted on June 24th, 2013

LINKED

GOING FAST: Like many homes in desirable Chicago neighborhoods, this Lincoln Square house sold in less than a week. With 3 bedrooms, 3 baths and a finished basement, it went for $555,000 -- less than $5,000 off the asking price -- and closed in May.

It’s getting hot out there! In the space of just a couple months, Chicago’s housing market has gone from listless to galloping — at least in many of the most popular Chicago neighborhoods such as the Loop, River North, Lincoln Park, Bucktown, Lakeview, Lincoln Square and Andersonville. The latest sales figures from the Illinois Assn. of Realtors just came out, showing that home prices in Chicago jumped 17% between May 2012 and May 2013.

Home sales — the number of properties trading hands — were even stronger, soaring 30% over last spring. In May 2012 there were 2,125 homes sold in Chicago, compared with 2,762 sales last month. Properties are also selling much faster; the average market time in Chicago is now less than two months.

If you’re thinking of buying a home this year or even next spring, it’s time to get serious about the search, because there isn’t much for sale and the best properties sell very quickly. “What is going on with this market?” I had a buyer ask me yesterday. “If I see something I like online, within a day or two it’s already gone.” Yep, that’s now the case in many hot neighborhoods. In Andersonville alone, I’ve been involved in three transactions in the last month where the home sold for list price or slightly under (1 to 2% less) within a week of hitting the market. And in one case in Lakeview, I had a buyer offer a bit more the asking price because we knew the home would attract multiple offers (it did, but my buyer won out.)

There is a supply problem right now in Chicago: not enough homes are being listed for sale, especially in the areas buyers prefer. In order to compete, buyers must be pre-approved for a loan (or, even better, pay cash) and be ready to jump on new listings as soon as they hit the market.

And sellers? Well, you are certainly better off now than you were a year ago. Your home will likely sell fester, and for more money, than it would have last summer. But keep in mind that prices citywide are still much lower than they were in 2006 and 2007. Still, Chicago sellers now have a good chance of attracting a buyer (or even multiple buyers) if they stage their home properly and price it fairly. Let me know if you need help!

Written by Sue Fox // Please leave a comment.

Spring market turns up the heat

filed under: Andersonville, Buyers, Chicago home prices, Chicago home sales, Market conditions posted on May 4th, 2013

SOLD! In a sign of how fast the market is moving, I sold this Andersonville condo in a week. It attracted multiple offers.

SOLD! The Chicago market is moving much faster this spring than it was in 2012. For example, I sold this Andersonville condo, a 1-bedroom unit with a separate dining room and a large deck, in just a week. Like other homes in appealing areas, it attracted multiple offers.

Chicago’s housing market is rapidly turning a corner, with prices climbing briskly this spring as buyers jostle for quality homes amid a morass of foreclosures and short sales. The number of homes for sale — which was already low last year — has plunged even further, falling from 14,358 listings in the city in March 2012 to only 7,813 this March, according to the Chicago Tribune.

And by some estimates, more than half of the homes available are distressed properties. The lack of desirable homes is forcing buyers to move quickly when they see something they like, igniting a rash of multiple offers and slashing market times. It now takes an average of 70 days to sell a Chicago home, down about 25% from a year ago.

This is great news for sellers, who have had very little to cheer about for the last seven years. Finally buyers are buying again, driven by a sense of urgency. The median price of a Chicago home was $187,500 in March, up 9% from $172,000 a year earlier, according to data gathered by the Illinois Assn. of Realtors. Chicago condo prices also jumped 9.3% to a median of $235,000.

“It is an excellent time for sellers to move their homes quickly, if priced well in what’s fast become a thriving market,” said Zeke Morris, president of the Chicago Association of Realtors. “The city’s housing inventory in March was down 45 percent compared to the same time last year. Data tells us that buyers are taking advantage of this period when homes are still priced attractively and interest rates are low, concerned that it might not last.”

I just listed a condo in Andersonville, a large 1-bedroom home that had been recently rehabbed, and the first two buyers to see it both made offers. It sold within a week. And such success stories are no longer so unusual. Many properties — the ones in good condition and desirable neighborhoods — are now selling within days.

Written by Sue Fox // Please leave a comment.

2012 home prices climb in most big cities, but not Chicago

filed under: Buyers, Chicago home prices, Foreclosures, Lincoln Park, Market conditions, Short sales posted on December 28th, 2012

A DAY

SOLD IN A DAY: This stately 5-bedroom Lincoln Park home, built in 2005, had languished on the market with a $1.8-million price tag in 2009. But it recently sold as a short sale for $910,000 after just one day on the market. Distress sales like this are relatively rare in Lincoln Park, one of the most desirable (and expensive) parts of the city.

Home prices have been falling — plunging, really — in Chicago for the better part of a decade now, declining about 30% since the city’s housing market peaked in 2006. But 2012 was supposed to be different. And for most of the year, it was.

Chicago prices finally stopped their downward slide and began to turn up, little by little, as the spring and summer buying season progressed. With inventory tight, many buyers found themselves competing for available homes, especially properties in good condition in coveted neighborhoods. Multiple offers became more common and homes sold more quickly than in previous years.

But a recent survey of home prices in 20 major U.S. cities — the monthly S&P/Case-Shiller report — shows that Chicago was one of only two cities where prices actually fell over the past year. The report (which covers the most recent data, through October 2012) found that Chicago home prices slipped 1.3% over the past year. The other city where prices fell, New York, saw a 1.2% decline.

Chicago prices also fell on a monthly basis, dropping 1.5% in October over September, the weakest result among all the cities surveyed.

So what’s ahead for our local real estate market? I read these numbers, which always vary slightly from those compiled by the Illinois Assn. of Realtors, as a sign of stability. Prices are pretty much flat over last year. But after years of large declines, this is a marked change in direction. The market has now reached a turning point. It’s no longer in free fall, but prices are not appreciating yet, either.

Is this what the bottom looks like? Probably, although we may bump along here for awhile longer before prices really start to climb.
A sustained recovery depends on strong employment in the Chicago area and a decline in the thousands of foreclosures seen annually here, both of which the city has yet to achieve.

Written by Sue Fox // Please leave a comment.