Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Chicago home prices' Category
A couple days ago I met with a group of about 25 seasoned @properties realtors to discuss a weighty topic in our topsy-turvy industry: pricing. Leading the discussion was Paul Boyd, our assistant managing broker and performance coach, who emphasized that Chicago homes that aren’t selling in today’s market are, by definition, over-priced. If they were priced correctly, he pointed out, they would attract a buyer.
The realtors gathered around the conference room swapped stories about stubborn sellers who refused to lower their prices, their homes gathering dust without showings for months. We recalled others — the ones who listened to us! — who agreed to a reasonable price right off the bat and quickly found buyers. We lamented the difficulty of telling “the brutal truth” to sellers: Your property is worth much less than you had hoped.
Finally, Paul advised one of us to tell a seller (someone who was unwilling to lower her price, despite being on the market for months with no showings), “I think you should stay here.”
Because that, after all, is what it really comes down to. Do you want to move, or do you want to stay? And if the answer is move, that usually means you are going to have to lower your price. More than you wanted to. More than your neighbor did when she sold two summers ago. Maybe more than you can really afford. But enough so that buyers who are out house-hunting this spring will actually come to visit your home, realize that it is well-priced, and be confident enough to make an offer.
How much is enough? Your realtor should have a pretty good idea. Ask her or him to sit down with you and carefully explain the comps for your neighborhood and type of home, so that you can see clearly what similar properties are selling (or not selling) for. If your home is already on the market, consider how much traffic you’ve been getting and what comments prospective buyers have made.
And whatever you do, do not simply leave your house or condo on the market for months at the same price! If it’s not selling, that means it’s priced too high for the current market. And if you’re not willing to lower the price, as Paul says, maybe you should just stay put.
More evidence that home sellers often overestimate the value of their properties in this difficult market: New data from the Illinois Assn. of Realtors shows that 66% of Illinois home sellers had to reduce their asking price at least once in 2010.
The trend was particularly pronounced in the Chicago area. In Cook County, sellers agreed to 17,335 reductions per month, according to numbers compiled by Chicago Agent magazine. Cook County claimed more than half the statewide figure of about 30,000 price cuts monthly.
Home sellers in the Chicago area — one of the regions hit hardest by foreclosures nationwide — also had the largest price cuts in the state, chopping an average of 6% (or $16,000) each time they reduced their asking price.
Studies have shown that the longer your home remains on the market, the more likely a price reduction becomes. And the more price cuts a property endures, the less money you will eventually pocket. Properties grow stale, after all. Buyers aren’t so keen on homes that have been on the market for months on end, with the seller steadily chipping away at the price. Even if the home is finally priced well, many buyers will assume that the seller must be desperate by now and offer even less.
I know well, dear sellers, the temptation to just try to get a higher price, the price you want, that imaginary figure in your head that would allow you to at least break even. It’s a temptation you should avoid. The only numbers that count in this game are the comps — the sales prices for other similar homes that have sold recently. Take a hard look at what such homes are selling for, and price yours accordingly.
Otherwise you too will join the unfortunate ranks of those forced to cut the price in order to sell their home.
Andersonville, home to the tony Lakewood-Balmoral district of beautiful turn-of-the century homes, is now seeing a variety of historic homes selling at bargain prices. Even some of the gorgeous rambling Victorians — the kind that used to routinely go for more than $1 million — have been selling at sharply reduced prices.
Take 1450 W Summerdale, a 4-bedroom, 3-bath, elegantly restored Queen Anne Victorian that sold in December for $837,000. It was originally priced at $939,000 when it hit the market in May 2010. Or 5418 N Magnolia, a historic 1911 house in Lakewood-Balmoral that was offered “pre-foreclosure” for $975,000 in June. It sold in October for $825,000.
New homes — a relative rarity in Andersonville — could also be found in the bargain bin. 1619 W Winona, a newly constructed 5-bedroom home featuring a media room with a wet bar, a chef’s kitchen, and a roof deck was priced at $925,000 when it hit the market last January. It sold for $867,000 in July.
I’ve lived and owned property in Andersonville for six years, and a few years ago it was nearly impossible to find a single-family house here for less than $500,000. But several Andersonville houses have recently sold in the $400,000 range, including a short sale at 1701 W Farragut that went for $400,000 in September. This one was a lovely 3-bedroom house, built in 1904 but still in good condition, with an updated kitchen. (It lacked a garage, however.)
Another short sale, a 3-bedroom brick Victorian at 1657 W Carmen, sold for $435,000 in August. With an updated kitchen and baths and a lofted third bedroom, the house was originally priced at $575,000 in October 2009. And 1520 W Hollywood in north Andersonville, a cute and compact 3-bedroom in updated condition, sold for $397,000 in August. I remember showing this little blue house to buyers over the summer, when it was priced at $450,000.
So if you love Andersonville’s friendly vibe, the restaurants and shops along Clark Street, the leafy streets and proximity to the lake and Red Line, now is the time to put down roots in a great community where houses used to be out of reach for everyone but the wealthy.
Sales of Chicago single-family houses and condos fell a dramatic 38.5% in November compared to the previous year, according to the latest data from the Illinois Assn. of Realtors. Prices slipped, too. The median home price in the city of Chicago was $206,000, down 4.2% from $215,000 a year ago in November 2009.
While prices seem to be looking for a bottom, far fewer properties are changing hands than in years past. If you look three years back, to November 2007, you’ll find that 1801 sales closed that month compared to 1144 this November, a sobering 37% plunge. Prices plummeted in those three years as well, sinking from a median sale price of $290,000 to today’s $206,000 — a 29% drop.
This is why we’re now seeing so many short sales and foreclosures in Chicago. Thousands of people who bought homes in 2005, 2006, 2007, and even 2008 have seen the value of those properties drop perhaps 10 to 40%, depending on what they own in which neighborhood. If they need to sell due to a job loss, move, divorce, illness or any other reason, they may find that a short sale (or even a foreclosure) is the only way out because they owe their lender so much more than the home is now worth.
It’s a vicious cycle, and it looks like it will continue into 2011. The more distressed properties pour onto the market, the more prices will be pushed down, which makes it even harder for existing owners to keep their heads above water when it comes time to sell.
Sellers will need to price their homes more aggressively than ever in the new year if they want to find a buyer. And buyers (the few that remain ready with cash or strong enough credit to obtain a mortgage) will continue to find many excellent real estate bargains and low interest rates throughout Chicago in 2011.
Today the Illinois Assn. of Realtors released its October sales data, and WBEZ housing reporter Ashley Gross called me to discuss the latest grim numbers (listen to the WBEZ interview here).
In the city of Chicago, home sales fell nearly 40% in October compared to the same month a year ago, with 1,217 sales compared to 2,012 homes sold last October. Much of the decline, in my opinion, can be attributed to the death of the federal tax credit for home buyers. Buyers last year (and for the first four months of 2010) stood to reap thousands of free dollars from the federal government if they bought a home. But once the credits expired in April, so did much of the demand from home buyers.
In Chicago — as the local realtor associations like to point out — total home sales from January through October are still up 4.6% compared to the first 10 months of 2009. That’s true, and that’s good news. Overall, our local market found some stability in 2010.
However, all of that gain came in the early months of the year. Ever since the summer, we’ve watched sales volume wither. The story is much the same throughout the larger Chicago metropolitan area as well as Illinois as a whole.
But prices have plunged more steeply in Chicago than the rest of the state. The city’s median price in October 2010 was $183,000, a 14.9 % decline compared to $215,000 in October 2009. For the state as a whole, prices fell 6.5% over the past year.
As I told WBEZ, I don’t expect a recovery in 2011, not with so many foreclosures clogging our Chicago market. Home sellers need to price their properties accordingly if they want to attract a buyer — an increasingly rare species these days.
The decline in Chicago real estate prices does have its upside. For example, it’s now possible for buyers to afford a historic home in leafy, tree-lined Edgewater for less than $500,000.
And they aren’t all fixer-uppers. Many of these spacious houses are already in fine condition, with perhaps a bit of cosmetic work to do.
Consider 6329 N Hermitage, a rambling American four-square home built in 1903 that has four bedrooms on the second floor and two more upstairs in the attic. The lot is large by Chicago standards: 37.5 feet wide and an extra-long 162 feet deep. It looks fairly well-maintained and gets lots of light, and it features a large unfinished basement with high ceilings (a plus for those inclined to renovate.)
Other recent Edgewater offerings include 1413 W Hood, a 3-bedroom house with original oak trim throughout, refinished floors, a new kitchen and baths, and a six-year-old roof. Priced at $475,000, it’s been on the market less than a month.
There’s also 1619 W Bryn Mawr (which is closer to Andersonville), a cute 3-bedroom with a new kitchen, new baths, and a fully finished basement. It was listed for sale a month ago at $499,900.
These are charming houses in good locations at prices that were unthinkable even two years ago, when similar houses were selling for $600,000 and up. So if you are one of Chicago’s many condo owners who face a loss if you sell now, take heart! You will only gain when it comes time to buy your next home, especially if you’re moving up into a single-family house.
Chicago’s real estate market continues to gasp and wheeze this autumn, with the Illinois Association of Realtors reporting that homes sales fell 27% in September compared to the previous year. The city’s median price dropped like a stone as well, falling 20% — from $225,000 a year ago to $180,000 this September.
However, if you look at the entire year, things are a bit brighter. Thanks largely to the now-expired federal tax credit for home buyers, Chicago’s year-to-date sales jumped 11% during January through September 2010, compared to the same period in 2009. The year-to-date median home price fell 8%.
Looking ahead to the always-slow winter season, I would say that qualified buyers have a great opportunity to buy a home at both a stellar price and interest rate … but everyone else (sellers and existing homeowners) is in for a long, chilly slog towards spring.
The number of foreclosed homes, meanwhile, is soaring in Chicago. In fact, the Chicago metro region recently ranked third in the nation for foreclosures, with more than 12,000 foreclosed homes in the third quarter of 2010, behind only Phoenix and Miami. The Chicago area’s foreclosure activity jumped 35% in the third quarter, according to RealtyTrac, a company that tracks distressed properties.
Some of Chicago’s more affluent neighborhoods — like the Loop, West Loop, South Loop and Lincoln Park — have also seen large increases in foreclosures. In the Loop, for instance, there have been 205 foreclosure filings during the first nine months of the year, a 77% increase over the same period in 2009, according to data compiled by the Woodstock Institute, a non-profit research group based in Chicago.
The troubled buildings in the Loop include River City at 800 S. Wells, where there were 16 new foreclosure filings in the last three months; Century Tower at 182 W. Lake St. (nine foreclosure filings); Park Millennium at 222 N. Columbus Drive (six), according to the Woodstock Institute. In the South Loop, where many of the newer condo buildings have ended up filled with renters, a handful of buildings had two-thirds of the recent foreclosure filings: 1620 South Michigan Ave. (twelve); Vision on State at 1255 S. State St. (eleven); and 1720 South Michigan Ave. (eight).
It always amazes me when I compare today’s cautious home buyers to the buyers of 3 or 4 or 5 years ago, who were willing to spend top dollar, at interest rates of perhaps 6 and 6.5%, to buy a home. Buying Chicago real estate is a MUCH better deal now, with prices down 20-30% in some neighborhoods, and banks offering rock-bottom mortgage rates of 4.5% or less for a 30-year, fixed loan.
Basically, if you buy today, you could get the same property at a huge discount compared to what you would have spent on it a few years ago. Yet buyers seem to be sitting on their hands during one of the best buyer’s markets ever, afraid to make a move.
So I was glad to see that Karl Case, an economics professor who was one of the creators of the widely-read Case-Shiller housing index, wrote an op-ed piece yesterday in the New York Times explaining that real estate was still a good investment, especially given today’s low prices and interest rates.
“This financial crisis has made us all too aware that we live in a Catch-22 world: the performance of the housing market drives the economy, and the performance of the economy drives the housing market,” Case wrote. “But housing has perhaps never been a better bargain, and sooner or later buyers will regain faith, inventories will shrink to reasonable levels, prices will rise and we’ll even start building again.”
Case explained that the advantages of today’s lower home prices and interest rates translated into savings of hundreds of dollars per month on an ordinary house. He also pointed out that home owners can deduct the interest they pay on their mortgage, a tax break unavailable to renters.
This is, quite simply, an extraordinarily good time to buy a house. That’s what I try to tell my skittish buyers, emphasizing to them that if they plan to stay in the home for years (which I recommend), in all likelihood they will be making a sound investment.
But perhaps all optimistic realtors sound like… optimistic realtors. Maybe Karl Case says it better. To read Case’s piece, click here.
Ouch. Once the tax credit expired, so did interest in buying homes. That’s the gist of the data released this week showing that home sales plunged in July, both in Chicago and nationwide.
Nationwide, the annual sales rate fell 25.5% in July over the previous year, according to the National Association of Realtors. The numbers were a little better in Chicago, where July home sales (single-family houses and condos) slid 19.5%. There were only 1,589 sales last month, compared to 1,975 homes sold in July 2009.
All the foreclosures clogging the Chicago market also helped to yank down prices. Chicago’s median home price was $196,500 in July, according to the Illinois Association of Realtors. That’s a drop of 19.8% over last July, when the median price was $245,000.
Genie Birch, president of the Chicago Association of Realtors, said that the abrupt drop in July home sales “seems consistent with what Chicago realtors anticipated for the summer, as buyers on the fence moved up their purchases to earlier in the season in order to qualify for the federal tax credits then offered to move-up or first-time home buyers. While it still remains a great time to buy, buyers are guarded as they consider their own financial stability and job security in the current market, hindering many from making a purchase.”
Statewide, homes sales fared even worse but prices held up better than in the city. Sales were down 29.7% in July compared to last year, and the median home price in Illinois fell 4.3% to $160,000. Illinois has been one of the hardest-hit regions in terms of both unemployment and foreclosures.
Chicago home prices rose slightly — 1.2% — in May, according to Case-Shiller Home Price Index data released this week. Chicago condos fared even better, with prices jumping 2.7% in May as many first-time buyers rushed to close on their home purchases so they could claim their $8,000 tax credit.
Ah, memories. While it’s good (and relatively rare) news to see Chicago home prices halt their four-year downward spiral, this uptick probably can’t be sustained. Not with the expiration of the tax credit and the flood of foreclosed properties poised to hit the market over the coming year. Illinois has one of the highest foreclosure rates in the nation, and Chicago ranks in the top fifth of foreclosure filings among more than 200 American cities.
Chicago prices are already down 1.5% over the last year. If you survey the real estate carnage of the last five years, you will see that single-family home prices have now plummeted almost 28% from their September 2006 peak while condo prices have sunk 20% since their high in September 2007. That basically wipes out most of the last decade in home appreciation, bringing us back to prices last seen in 2002.
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