Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Chicago home prices' Category
In another hopeful sign for Chicago’s real estate market, the sales of downtown condos recently hit a two-year high. It seems as though buyers are finally starting to absorb the excess inventory that has shadowed the downtown market ever since the downturn, holding down prices and forcing some newer buildings to turn to renters.
In April, there were 360 condo sales pending in the downtown area, up 55% from a year earlier. While this is good news, prices have yet to recover in downtown Chicago, making this summer an especially good time to buy a condo in the heart of the city.
Over the past two years, according to MLS data, median prices for condos in the Loop have fallen almost 8%, from $352,500 to $325,000. Developers of many downtown condos have had to slash prices to attract interest. Interest rates, too, have dropped and are now at record lows — around 3.75% for a 30-year loan for people with the best credit and sizable down payments.
The combination of low prices and rock-bottom interest rates make this year the best time to buy a Chicago home in at least the last 12 years. Will prices downtown continue to slump, or are we at the bottom? We have seen a recent uptick in prices (and sales) citywide, suggesting that a recovery, however faint, may finally be taking hold.
The spring housing market has been very busy this year, with many homes going under contract quickly and multiple offers cropping up on some of the most desirable properties. Recent data from the Illinois Assn. of Realtors confirms that the Chicago market is finally gaining strength again after several years of steady declines.
In the city of Chicago, the median home price for April jumped 9.3% over that of the previous year, to $184,800. April home sales were also up significantly, rising 19.4% over this time last spring (which was kind of sluggish). Last April there were 1,466 single-family houses and condos sold, but this year the number shot up to 1,750. Chicago home prices and sales also increased in March over the prior year, though not as dramatically.
“With rents in the city of Chicago increasing, paired with a limited supply of rentals available, renters are reviewing their options,” said Bob Floss, president of the Chicago Assn. of Realtors. “Historically low interest rates and great opportunities in the market are compelling to both first-time and move-up buyers looking to spend their dollars wisely and own their own home.”
I have seen a lot of activity this spring, from first-time buyers finally ready to jump into the market to investors paying cash to snap up distressed properties to families seeking to move into a larger home. There have been more than a few bidding wars, particularly on single-family houses in desirable locations. The market finally seems to be finding its footing. But what I don’t see is buyers — who are without exception looking for a good deal — bothering with homes that are obviously overpriced.
If you are looking to buy a Chicago-area home this year, keep in mind that updated properties in nice neighborhoods tend to attract a lot of interest, and if they are well-priced they could sell quickly. And if you are trying to sell a home, be sure it is competitively priced. Buyers are out there for homes that are properly priced — and you may sell faster than you imagined.
This morning I was interviewed by WBEZ housing reporter Ashley Gross about the low prices of foreclosures in Chicago. Buyers can expect about a 50% discount off regular market prices when buying a foreclosure in the Chicago area, according to data gathered in the fourth quarter of 2011 by RealtyTrac.
But, as I cautioned WBEZ listeners, that’s often because foreclosed homes are in lousy shape and need work. Single-family houses that have been seized by lenders sometimes have leaks, mold, damaged floors and other problems. Many of them are missing kitchen appliances, and occasionally they’ve even been stripped of copper plumbing (which thieves find valuable). No one is living there — often for months — and the neglect takes its toll. Foreclosed condos, too, can spring leaks (I have seen two where the refrigerator leaked in the vacant unit, damaging the condo downstairs as well.) And they often are found in buildings with other distressed condos, which can mean the building itself is financially unstable and thus it will be difficult to get a mortgage there.
Remember how a home winds up in foreclosure to begin with: its owner couldn’t afford it. That usually means the owner couldn’t afford to maintain the home, either. Rare is the foreclosed property that is in sparkly new condition.
In many Chicago neighborhoods we’ve been seeing condo prices falling steadily, while the price of single-family houses has tended to hold up a little better. This is the case in places like Lincoln Square, Uptown, Edgewater, Rogers Park, West Ridge and Logan Square.
In Lakeview and North Center, which are two of the most popular North side neighborhoods, both condos and houses have held their value and prices have even slightly increased over the past two years.
But in Lincoln Park — another popular neighborhood, and one of Chicago’s most expensive — I’m seeing condo prices hold steady (with just a small 3.3% decline over two years) while single-family house prices have fallen steeply. The median single-family house price is now $1,280,000 in Lincoln Park, a 22.4% drop over two years earlier, when the median was $1,650,000.
This plunge suggests the difficulty of selling high-end houses in a time of uncertainly and austerity. In Chicago, only the Near North Side (home to Old Town, the Gold Coast, Streeterville and River North) now boasts higher single-family home prices than Lincoln Park, with a median price of $1.6 million. But that figure also reflects a major drop, down 25.6% in the last two years.
I think there could be something more at work, though. Maybe some luxury buyers are choosing the suburbs over the city? Over the past two years, single-family home prices have held relatively steady across much of the North Shore, including Wilmette, Winnetka and Glencoe.
The latest figures are in for December home sales, and once again, prices have slipped in Chicago as distressed properties gobble up nearly half the market.
The median sale price is now $156,000 in Chicago — a 6.2% drop from December 2010, when it was $166,250. Back in the robust days of 2005, 2006 and 2007 before the housing market crashed, Chicago’s median price stood between $279,000 and $287,000 each December. So you can see how dramatically local prices have fallen.
But the price plunge is deepened by the kind of properties now selling. Nearly half the homes trading hands, about 45%, are foreclosures or short sales. Many people may imagine that these homes are fabulous deals, attractive houses or condos sold well below market value. But as a realtor who actually tromps through these distressed properties on a regular basis, let me assure you that a lot of them are in crummy shape.
Foreclosed homes are vacant, and vacant homes invite leaks, mold, animals, vandalism and occasionally even squatters. They are often missing their kitchen appliances. An angry former owner may have damaged the home on the way out. Stained carpets, holes in the drywall, buckled floors and other maladies are common. Short sales, on the other hand, are still owned by a financially-strapped homeowner, so while they are often occupied, they may have been the victim of deferred maintenance for years. Sometimes tenants live there, and many times these homes are not in great shape by the time a short sale is finally completed.
Every once in a while you do run across a distressed property that is in good condition, but I would say that is the exception in most Chicago neighborhoods. The point is, with so many foreclosures and short sales now in the mix, Chicago’s home prices have been dragged down by the sheer weight of all these lower-end properties.
This phenomenon has made it very tough for ordinary sellers (who aren’t in foreclosure or attempting a short sale) to compete on price, particularly in areas with a lot of distressed homes like Rogers Park, Uptown, or Albany Park. Many people are opting to stay put (or try to rent out their homes) rather than sell in this environment.
The highest end of Chicago’s housing market took a beating in 2011, with sales of homes for $1 million or more falling 14.4% over the prior year. Only 539 such properties sold in 2011, compared with 630 homes in 2010.
Luxury condo sales were particularly hard hit, according to a recent story in Crain’s Chicago Business. Sales of million-dollar condos plunged 29% to 259 units, compared with 364 in 2010. The decline was partly attributed to the fact that no major new luxury condo developments were completed last year.
But the uncertain economy and troubled real estate market also certainly played a role. Many people are holding off on big-ticket purchases, and million-dollar homes are taking longer to sell. There’s a year-and-a-half supply of luxury homes sitting unsold throughout the Chicago area, Crain’s reported.
On the ground, I’m seeing some of these single-family homes endure multiple price reductions, occasionally to the point that their original asking price is sliced nearly in half. Often homes priced slightly above $1 million will sell for closer to $850,000 or $900,000. On the other hand, new or recently-built homes in hot school districts tend to sell quickly, with less of a discount off the asking price.
While home prices in most Chicago neighborhoods have been steadily falling, North Center — a desirable area with good schools and walkable neighborhoods like Roscoe Village — is bucking the trend. In 2011, the median price for a single-family house here rose to $805,000, a 7.5% increase over the year before.
More of these lovely houses are being sold, too. Sales of North Center houses soared almost 23% in 2011.
Condo prices in North Center, meanwhile, have held steady, ranging from a median of $365,000 to $370,000 over the past three years. Considering that condos in many other North Side areas have fallen at least 10-20% in value in recent years, North Center is definitely holding up quite well.
As the new year begins, I have two buyers looking in North Center, both young couples with children interested in homes available here in good elementary school districts such as Coonley, Bell and Audubon. And despite the relatively high median price of $805,000, you can definitely find an updated 3 or 4-bedroom house in North Center for considerably less money. More than 30 houses, many of them century-old homes that have been renovated, sold for $500,000 to $700,000 in 2011.
Merry Christmas! I hope everyone is enjoying the holiday season this year.
I just wanted to give you a quick update on where prices are heading: Down, in a word. The latest housing data from the Illinois Assn. of Realtors shows that Chicago home sales are picking up, but prices have continued to fall throughout 2011.
In November, sales of single-family houses and condos in Chicago totaled 1,377 — a 20.4% jump over the previous year. But nearly half of them involved short sales or foreclosures, troubled properties that are often sold at a discount. That’s the main reason, in my view, that Chicago’s median price has continued to slide.
The median price for a Chicago home sold in November was just $160,000. That’s 12.3% lower than it stood in November 2010 — and a startling 45% decline from the median price of $290,000 in November 2007.
Check out the plunge, year over year:
November 2007: 1859 sales and median price of $290,000
November 2008: 1093 sales and median price of $222,500
November 2009: 1905 sales and median price of $215,000
November 2010: 1144 sales and median price of $182,500
November 2011: 1377 sales and median price of $160,000
It seems that our local market is stabilizing as far as sales go, albeit with a lower volume of homes changing hands. But prices have yet to bounce back by any long-term measure. They may increase slightly for a month or two, but year-over-year home prices have declined for about half a decade now.
As the new year approaches, it looks like it will be a stellar year for home buyers, who now enjoy the lowest prices in 11 years and the lowest mortgage rates in more than half a century. Homeowners, however, will continue to suffer and sellers who are truly motivated will have to lower their asking prices to match this sunken market.
With the spring home-buying season right around the corner, it’s time for all you home sellers out there to put your plan into action for 2012. Selling property in Chicago, especially a condo, has gotten quite difficult, and every year there are thousands of perfectly nice condos that linger on the market without attracting a buyer. Here are some important steps you can take to make sure yours isn’t one of them:
1) Time it right: Chicago has a seasonal real estate market, with most properties going under contract during the first half of the year. In Chicago, the “spring” home-buying season starts early. Every year, I start getting calls from potential buyers as soon as New’s Year’s Day — and this year, I’ve even gotten a bunch in December. Despite the cold (and often despite heavy snow), many Chicago buyers throw on their winter coats and go house-hunting throughout January and February. The buyer traffic picks up even more after the Super Bowl, usually held during the first week of February. So if you are a home seller, aim to get your home onto the market sometime between January and May. By the summertime months, home sales start to decline and they are usually much slower by the fall. Often, the properties that take ages to sell (and endure multiple price cuts) are the ones that hit the market in the second half of the year, when not many buyers are out looking.
2) Stage it right: Many Chicago condos tend to be rather small, or short on storage or closet space. But even the larger ones, with 3 or more bedrooms, could benefit from the eye of an experienced realtor or home stager. We know what people like. By and large, buyers want to see clean, open spaces, free of bulky furniture that eats up the space, crowded counter tops, and stuffed closets. In this market, your condo literally needs to look like a developer’s model — beautiful, spare, tasteful, spacious. Imagine the rooms in a Pottery Barn catalog. Now is the time to rent a storage space or haul all your extra stuff out to your parent’s basement. Please get rid of all clutter and unnecessary furniture, and this often means items you don’t perceive as clutter or furniture that seems necessary to you. When you are trying to sell your condo, you often must spend months living with half your stuff in storage, as inconvenient as that is. Believe me, buyers don’t want to see that desk you had to cram into your bedroom because there was no other place for it, or that huge square ottoman that’s taking up half your living room floor. Reduce, reduce, reduce. Your condo will be much more attractive to buyers and will sell more quickly.
3) Price it right!!! This is by far the most important thing. Even a ratty old condo that hits the market in early October will sell if the price is low enough. Assuming you have something much nicer to sell, it is still IMPERATIVE that you price it correctly, which means: In line with what similar condos in your neighborhood have actually SOLD for in recent months, or slightly lower. It does NOT mean: what you paid for it, or what you owe. Those numbers are not relevant to the current market. If you aren’t sure what your condo is worth today, please call me at 773-816-1788 and I’d be happy to prepare a Comparative Market Analysis and bring it over. Unfortunately for sellers, Chicago home prices have fallen back to levels last seen a decade ago, which means most people who bought their condo more recently are either underwater (owing more than the property is worth) or forced to sell for less than they paid. Buyers today are a hesitant bunch, with little sense of urgency or desire to compromise on their wish list, and they will skip right over properties that are overpriced.
One last thing: If you are underwater on your condo but still need to sell or rent it, please let me know. I can help walk you through the various options so that you can move on with your life!
With so many foreclosed homes and short sales on the market, I’m sometimes contacted by home buyers hoping to scoop up a distressed property in one of Chicago’s most affluent neighborhoods. Trouble is, these areas have held their value better than most, and often there aren’t many foreclosures or short sales to choose from.
But in Lincoln Park, I have seen distress sales steadily rising over the last couple years — to the point that more than 1 in 8 condo sales in Lincoln Park in 2011 involved a foreclosure or short sale. So far, there have been 658 condo sales this year; 45 were short sales and 42 were foreclosures, meaning that 13.2% were distress sales. The majority of them involved homes that sold for $250,000 or less.
The bargains included 20 condos, all studios or one-bedroom units, that sold for $100,000 or less — a price range once virtually unheard of in Lincoln Park.
If you’re hoping to find a single-family house being sold under a financial cloud, however, your choices are fewer. Only 13 out of 135 Lincoln Park houses sold in 2011 were short sales or foreclosures. That’s less than 10%.
Most of these single-family houses sold for less than $1 million, but there were a handful of high-end luxury homes that also slid towards foreclosure. In some cases, it looks like a developer overestimated the market and got caught with a new home he/she couldn’t sell. At 2664 N Greenview, which the listing describes a 6-bedroom “designed mansion” built in 2008, the developer originally listed it for sale four years ago at $2.4 million. But as the market tanked, no buyer stepped forward, and the price was steadily chopped until the house finally sold this June (as a short sale) for $1.5 million.
Even a millionaire likes a bargain, after all. The most expensive distress sale in Lincoln Park was a new 15-room mansion at 2461 N Geneva Terrace “designed by a European architect for himself,” according to the listing, that sold in September for $2,725,000. Apparently the European architect couldn’t afford the grand home, which hit the market in early 2009 with a $6.25 million price tag. By 2010, it was being marketed as a short sale, and it eventually was seized by the bank and sold as a foreclosure.
It was still one of the most expensive homes sold in Lincoln Park this year.
Please see my other blog posts at www.hometochicago.com
- Sizzle is back in the South Loop
- How to Buy a Chicago Foreclosure (as Supply Steadily Shrinks)
- Home prices jump 15% in 2014, but cold weather chills sales
- Lincoln Square on a Tear as Average House Price Tops $600,000
- More choices ahead for Chicago buyers as rally cools