Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Chicago home prices' Category
Things have been super busy lately, with Chicago homes selling left and right as buyers submit offers in a rush to beat the April 30 deadline for the home buyer’s tax credit. I haven’t had a day off in more than two weeks, and yesterday I submitted three offers on behalf of different buyers.
But here’s the interesting part: Two of them were trying to buy foreclosures. Sales of distressed properties (such as foreclosures and short sales) are becoming a huge portion of the Chicago housing market, and this phenomenon is driving down prices across the board. About 40% of the condos and single-family houses sold last month were distressed properties, according to new data from the Illinois Association of Realtors.
And prices? The median home price in Chicago is now just $176,500, down nearly 22% from $225,000 in just the last six months. This is a huge drop, reflecting just how busy buyers have been at the lower end of the market, where many of the troubled properties tend to congregate. Chicago home sales, meanwhile, are up sharply, increasing almost 42% in February compared to the prior year.
The turbulent market spells tough times ahead for ordinary Chicago homeowners who hope to sell, because their home values are also being beaten down by the rash of foreclosures and short sales (particularly in neighborhoods with lots of distressed homes.) Even in affluent areas, many owners who bought their homes within the last five years are now facing the gloomy scenario of either owing more than their home is worth, or not being able to sell for enough money to cover their closing costs as well as their loan.
Buyers, too, face new hurdles involving these distressed properties — especially if they want to buy a condo. Lenders have strict requirements these days for condo loans, and many of the distressed condos that look like good deals may in fact be impossible to finance through a mortgage, because the condo building itself is financially unstable. Others may be short sales that will never close (most short sales don’t), sliding instead into foreclosure.
“INCREDIBLE financing incentive!! Spectacular views!! Great values!! Location, location, location!!” So went the email I recently received from the team marketing the SoNo development in Lincoln Park, where the developer and MB Financial have just teamed up to offer an extremely low interest rate for buyers who are able to put at least 10% down.
I’ve written about the price cuts at SoNo in the past (see my June 16, 2009 post), but this new mortgage deal should really light a fire under the remaining units. The developer and MB Financial are now offering a 3.99% interest rate on a 30-year, fixed rate mortgage with no PMI (private mortgage insurance), which is, I must admit, a fabulous deal. But do you want to buy at SoNo?
Almost 70% of the building’s 232 units have now been sold, and prices are quite competitive, with 1-bedrooms starting at $250,900 and 2-bedrooms at $421,900. According to one agent marketing the project, “The developer and building isn’t in any kind of trouble. In fact it’s quite the opposite…It’s a last push to get the project closed out in conjunction with the home buyer tax credit.”
Let it be said that although my @properties colleagues are marketing the project, I have absolutely nothing to do with this development. If you’re interested in living in a new high-rise in Lincoln Park (in this case, a pair of towers near North and Halsted) this could be a good opportunity. The low mortgage rate would save you hundreds of dollars per month, depending on the price of the unit.
If you’re interested in checking out SoNo, give me a call at 773-816-1788.
The first housing reports of 2010 are in, and our blustery but beloved city seems to be following the trend we’ve seen in recent months: Chicago home sales are up, but Chicago home prices are down. Hmmm… Could there be a connection? Looks like Chicago buyers realize that it’s a great time to purchase property, what with prices clobbered, foreclosures rising, interest rates low and the tax credit beckoning.
So, according to the monthly Illinois Association of Realtors report, January 2010 home sales (single-family and condominiums) were up 31.1% compared to the previous January. But Chicago’s median home price in January was $195,000, a 4.9% decline from the $205,000 median price a year ago. (Other measurements, like the monthly S&P/Case-Shiller Home Price Index, show Chicago prices falling even further in 2009, posting a 7.2% drop.)
“We remain hopeful that while distressed properties are being absorbed, homebuyers on the fence will take advantage of the extended and expanded homebuyer tax credit, and consider this a great time to buy a home,” said Genie Birch, president of the Chicago Association of Realtors. “While the greatest hurdle is still securing financing, the current market has tremendous opportunities for homebuyers and investors looking to expand their portfolios.”
Prices in the Chicago area have actually been hit harder than in the rest of Illinois. The median price was up ever so slightly (0.2%) statewide in January year over year, to $145,300. Blame it on foreclosures in Chicago, said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois.
“Foreclosed properties continue to exert downward pressure on median prices in Chicago but much less so in Illinois,” Hewings said in a statement this week. “There is evidence that median price increases will moderate in the state over the next three months (February, March and April), remaining about the same as those a year earlier; for Chicago, the median prices will be about six percent below comparable prices. The forecast indicates sales for February through April increasing in Illinois in the 1 to 14 percent range and in Chicago in the 18 to 50 percent range on an annual basis.”
In other words, count on the “sales up, prices down” storyline to continue this spring in Chicago.
Even as home prices nationwide continued to inch up for the 7th month in a row, the news was less rosy in Chicago. From November to December, Chicago home prices endured the sharpest decline of all 20 metro areas tracked by the S&P/Case-Shiller Home Price Index. (For a good overview of the pressures that continue to bedevil the housing market, check out this Bloomberg interview with Robert Shiller, the Yale professor who co-founded the home price index.)
Chicago home prices declined throughout 2009, ending down 7.2% for the year, according to Case-Shiller. Still, the drop was only half as bad as what we saw the previous year, when home prices in Chicago plunged more than 14% in 2008.
“As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained,” David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, said in a statement accompanying the report.
It seems that the impact of the government’s $8,000 and $6,500 tax credits for home buyers is wearing off. If this is how the Chicago housing market fares when buoyed by government support, what can we expect prices to do next?
It’s already as if the boom never happened: As of the 4th quarter of 2009, average home prices across the United States are now back to 2003 levels, according to Case-Shiller.
In 2009, just 6 out of 20 cities saw steeper price drops than Chicago in 2009: Las Vegas (down 20.6%), Tampa (11%), Detroit (10.3), Miami (9.9%), Phoenix (9.2%), and Seattle (7.9%).
After slogging through two years of sluggish sales, many local developers seem to be finally getting the message and deeply cutting prices on downtown Chicago condos. The downtown area was rapidly overbuilt during the boom with thousands of new condo units hitting the market each year, and when demand suddenly stalled developers were left with huge numbers of spanking new, but unsold, condos.
The Chicago Tribune ran a story about the trend this weekend, pointing out that from 2008 to 2009 there were 7,750 condo units built downtown, an area that includes the Gold Coast, River North, Streeterville, Loop, West Loop and South Loop. About 2,200 new-construction units are still available for sale by developers. And that doesn’t count the 3,000 or so downtown condos on the market that aren’t brand new, but are resales.
“The market presents an excellent buying opportunity, certainly unmatched by anything we’ve seen recently,” Gail Lissner, vice president at Appraisal Research Counselors, told the Tribune. “For anyone with a job, who feels good about their employment, this is a great time to buy. There are some outstanding values in the market.”
Many downtown developers have recently cut prices by up to 30%, leaving Chicago condo buyers with plenty of bargains to choose from. These properties include 565 Quincy, where prices on a 1-bed/1-bath condo dropped from $312,900 to $219,000, including indoor parking.
But, as always, buyers must be careful! No matter how awesome the “Dramatic Price Reductions!!!” trumpeted on the sales brochures seem, your realtor needs to do her/his homework and research how many short sales and foreclosures are already cropping up in any given building. The massive price cuts do have a dark side, since they chop the legs out from under any early buyers who may have paid much more for a similar unit in the same building. Those buyers — the ones who paid $150,000 more than today’s lucky buyers — are in trouble.
And if there are too many of them in any given building, soon the building is going to be in trouble, too. Do you want to live in a development that will soon be filled with dozens of short sales and foreclosures as those owners try to get out?
I’m not saying that these downtown condos aren’t great deals — many of them are. I just want buyers to remember that however sparkling the sales pitch, they should make sure the building they buy into is stable before signing that contract.
Ever wanted to own a century-old Queen Anne Victorian with exquisite woodwork and stained-glass windows, the kind of historic Chicago home that routinely went for around a million dollars? Now may be your chance — at bargain-basement prices unimaginable until recently.
Check out this beautiful Edgewater 4-bedroom house at 6316 N Magnolia, currently a bank-owned foreclosure, for $530,900. The former owners listed it at $899,000 in 2006, and then steadily hacked sizable chunks off the price until the stately home slid into short-sale territory in 2008, and then into foreclosure.
It makes me sad to imagine such a gracious bit of Chicago history in some bank’s hands, abandoned and untended. The only silver lining is that now some ordinary homeowner might actually be able to afford such a gem.
While this Queen Anne stands out, there are now at least 10 turn-of-the-century homes for sale at a similar price point in Edgewater. Many of them would have fetched upwards of $700,000 just two years ago.
In the desirable Lakewood-Balmoral historic district closer to Andersonville, where relatively few homes change hands each year,we have also seen more modest price reductions. There is now a 1903 home listed at $835,000 at 5253 N Lakewood,which has been on the market for more than 9 months. It was originally priced at $925,000.
So if you’ve always dreamed of owning one of these charming Victorian homes but found the prices simply out of reach, it may be time to reach again… especially in Edgewater.
For the second month in a row, Chicago home prices have dipped a bit. In November 2009, prices slipped 0.8% from the previous month, according to the Standard & Poor’s/Case-Shiller home price index released yesterday.
Chicago’s performance was worse than other major cities, as the index showed a small increase of 0.2% in home prices nationally. Year over year, Chicago’s prices fell 8.5% — which was also worse than the 5.3% decline seen nationally since November 2008.
So, overall we now have Chicago buyers getting an 8.5% better deal than they would have scored a year ago. That’s part of the reason that sales have rocketed in recent months. Other factors include the $8,000 tax credit for first-time buyers and $6,500 credit for move-up buyers, which are still in effect, and the super-low mortgage interest rates we’ve seen recently. Buyers know a good deal when they see one.
Sales are booming this winter throughout the Chicago area, according to monthly data compiled by the Illinois Association of Realtors. In December 2009, home sales were up 33% in our nine-county metro region, with 5,752 homes sold compared to just 4,320 in December 2008.
“In 2009, we saw demand primarily for lower-priced homes from first-time buyers in addition to short sales and sales of foreclosed homes,” said Mike Onorato, the association’s president. “There is opportunity now for the move-up buyer to take advantage of the tax credit that ends April 30 and lower mortgage interest rates, which many analysts expect to rise by mid-year.”
If you look at all of 2009, home sales have basically remained flat throughout the Chicago region. And in the city of Chicago alone, home sales fell 7.4%, to 19,401 sales in 2009 compared with 20,946 in 2008.
So there you have it. Overall in 2009, Chicago’s housing market wilted a good deal, with both sales and prices down 7 to 9%. Better times could be ahead, but with Illinois unemployment still quite high (11.1%), I would advise buyers to be selective and sellers to be realistic. We aren’t going back to 2005 anytime soon.
Chicago condo owners, I feel your pain! (I really do, since I too own a condo here.) But let’s take a closer look at the 2009 data, because there are some tiny green sprigs of hope amid the gloomy news.
First, even as home prices slipped citywide, condos as a whole fared better than single-family homes, two-flats or other properties. Take the last week of December, for example: The median closing price for Chicago condos that week was $291,119 — about 9% less than the same week a year earlier, according to the Chicago Association of Realtors. Compare that to 32% price drops for single-family homes that same week and you’ll see that condos are holding up pretty well.
With more than a quarter million condo units citywide, Chicago is the country’s third-largest condo market. More than half of the residential real estate transactions here involve condos. And year-over-year, the median price for Chicago condos is indeed falling — by 5% from December 2008 to December 2009. That’s a tough pill for homeowners to swallow, and it affects hundreds of thousands of us.
The good news is that more Chicago condos are once again changing hands, making it easier for sellers to unload homes they no longer need. Condo sales shot up 36% from December 2008 to the same month a year later. This rapid thawing of the market is a healthy sign that stability is returning to Chicago.
I spent the weekend wedging my car into dubious parking spots and wading through the snow to show condos in Rogers Park, Lincoln Park and Old Town. Once again, I am mildly astounded by some of the deals I’m seeing, particularly in affordable neighborhoods like Rogers Park.
Not even a year ago, I was helping some other buyers find a 2-bedroom, 2-bath unit in Rogers Park in the $200K range. At the time, there were a zillion condos with one bath that made the cut, but adding that second bathroom dramatically narrowed the field. There were only about six or seven places to see.
Now, however, there are 69 listings on the MLS that match this criteria! And many of them can be had for a good bit less than $200K. We saw a 3rd-floor unit at 7465 N Seeley, a new conversion where the 2nd-floor unit sold for $204,900 in June 2008, for just $169,900. When you consider that the 3rd-floor tier is more desirable and usually priced slightly higher than the lower floors, this means we’re looking at roughly a 20% price cut over 18 months ago.
Rogers Park is full of great deals for the cost-conscious buyer. It’s also speckled with a lot of foreclosures and short sales, and investors are now coming in and buying some of these distressed properties, polishing them up and popping them back on the market. This phenomenon can result in sweet deals for the end buyer, because the investor is often willing to sell them below market value because he/she got them at such a steep discount.
I took my buyer to see one such property on Touhy, now priced at $125,000. That’s right, $125,000 for a 2-bedroom, 2-bath in fairly good condition just blocks from the lake.
As with any property, the trick these days is getting a mortgage. Some of the Rogers Park condos might not work with FHA loans, because they have strict requirements for the building’s condo association. And condos in mostly vacant buildings — and unfortunately there are a good deal of them — will be tough to finance at all, FHA or otherwise. Cash buyers will have the upper-hand in those situations.
I woke up today to 6-degree weather and a front-page, above-the-fold, New York Times story warning that the government’s Making Home Affordable program is not, in fact, making homes affordable and is actually prolonging the foreclosure crisis. Welcome to 2010!
Despite pressuring and cajoling lenders for almost a year, the government has not managed to find a permanent fix for millions of floundering homeowners. More than 2 million homes were lost to foreclosures or short sales in 2009, the Times reported, and at least 2.4 million more are expected this year.
Chicago is hardly immune. While we may have escaped the exaggerated boom and bust cycles that wracked many coastal states like California and Florida, Illinois is right up there in the nation’s Top 10 list for foreclosures. Our foreclosure rate doubled over the past year.
I know that sometimes there’s a disconnect between what buyers are reading in the newspapers and seeing on the streets. Buyers in some of Chicago’s most popular neighborhoods like Lincoln Park, Lakeview, Bucktown and River North may not see many foreclosures for sale, but the overall trend still benefits them. If dozens of foreclosures and short sales are roiling the market and driving down prices in Albany Park, for example, that holds down home values in nearby Lincoln Square. Prices citywide could easily slip again in 2010, because the increasing supply will clamp the lid on any recovery. The Illinois Association of Realtors is forecasting a 4.4% price decline throughout the Chicago area.
Is it finally time to buy? I see a short window from now until April, when many buyers can still claim either the $6,500 or $8,000 tax credit, and while interest rates are still hovering around the 5% mark. Borrowing money is extraordinarily cheap right now, but that won’t always be the case. Interest rates are expected to rise this spring, as the government stops propping up the market by buying mortgage-backed securities.
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