Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Chicago home sales' Category
Short sales are getting a tad easier these days. That’s not to say they aren’t a pain in the neck — they are, for both buyers and sellers — but hundreds more of them are closing in the Chicago area, and nationwide, as banks finally realize that in many cases this is a better outcome than a foreclosure.
Why are short sales so difficult? The answer is that someone — a bank — will lose money. With a short sale, a borrower is trying to sell his/her home for less than what they owe on the mortgage, sometimes considerably less. In order for a short sale to close, the lender must agree to the loss, and banks by nature don’t want to lose money. Many banks are also swamped with mortgages gone bad, and they typically take months to respond to a short sale offer. And sometimes they say no.
Right now, I have three different short sale deals under contract with various buyers. One was supposed to be ready to close “right away,” since several previous deals had fallen through and the bank had already approved the list price. But it’s been more than a month so far. The other two deals will probably drag on for much longer, since the banks involved have yet to approve a short sale or even respond.
Still, short sales are on the rise. According to a story yesterday in the Chicago Tribune, there were 907 short-sale transactions in the Chicago area in January alone — a 35% increase over a year ago. Foreclosures, however, accounted for twice as many sales.
Nationally, too, more short sales are being completed. An estimated 105,000 short sales closed during the first quarter nationwide, the highest number in three years.
I still don’t advise attempting to buy a short sale if you’re on any sort of a timeline. But if you have months to spare, and plenty of patience to boot, you could give it a shot. More deals seem to be closing, and you’ll probably get a good deal on the price. Short sales sold at an average discount of 23% in January, the Tribune said, while foreclosures sold for 29% off.
With home buyers streaming through Chicago neighborhoods this spring in search of a bargain, I’m beginning to see a phenomenon that hasn’t reared its head much in recent years: the “multiple offer situation.”
Dreaded by home buyers but embraced by sellers, this pulse-racing affair occurs when more than one buyer makes an offer on a property at the same time, sometimes within the space of hours (or even minutes). The seller’s realtor will then advise all parties of the “multiple offer situation” and often ask everyone to submit their so-called “best and final offers.” Sometimes, however, one offer is so outstanding that the sellers will decide to negotiate further with only that buyer, leaving the others by the wayside.
I have been extremely busy during the last month, taking various buyers out to see properties as soon as they hit the market and helping submit dozens of offers (hence my recent lack of blog posts!) Many of our offers have been negotiated and accepted, but I can think of at least five that wound up competing against stronger offers and losing out. The bidding wars weren’t confined to a single price range, either; I saw them cropping up anywhere from a $130,000 condo in Edgewater to a $650,000 house in Ravenswood. In two situations, I was representing an investor who was bidding against five to ten other offers (often cash offers) for houses in Irving Park or Portage Park.
It is becoming commonplace to run into other buyers looking at the same property, and to hear the seller’s realtor mention that he/she has showed the home seven or eight times in one day. By the end of March, I was advising my buyers to move quickly if they really liked a home — especially if it was priced well and in good condition. It’s always better to be the first one in and get the property under contract than to wind up paying more because someone else wants it too.
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.
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
Eleven years ago, the U.S. presidency was up in the air, with everyone waiting to see whether George Bush or Al Gore had won the 2000 election as Florida struggled to recount its votes. The Y2K bug had proven to be relatively harmless, and 9/11 was still in the planning stages. No one had ever heard of the Ipod, Friendster, or Wikipedia, let alone the Iphone, Facebook, or WikiLeaks.
And the median home price was about $174,000 in Chicago. Today, according to data just released by the Illinois Assn. of Realtors, we’re back to those days. In fact, Chicago’s median price slid even lower last month — to $162,000 — than it stood in the year 2000.
While the median price fluctuates a bit from month to month, this is the lowest I’ve seen it in ages. Chicago’s home prices have fallen 11.5% just in the past year. This is a pretty grim sign for anyone hoping to sell their property.
However, the number of homes changing hands is up — another indication that the Chicago market may be stabilizing, albeit at a lower price point. Nearly half of the sales these days involve foreclosures or short sales, and most of them are at prices below $200,000. Sales of single-family houses and condominiums totaled 1,312 in October, up 7.9% from 1,216 homes sold in October 2010.
“The increase in units sold in the city of Chicago continues to show the absorption of distressed properties in the market,” said Bob Floss, president of the Chicago Assn. of Realtors. “Prospective buyers in the market are making investments that make sense long-term.”
Condo sales in downtown Chicago continued to sink this fall, dropping 9% over this time last year. Developers closed just 229 sales downtown in the third quarter, according to a new report from Appraisal Research Counselors, a Chicago consulting firm.
In a weak market, some buyers were inspired to make the move only after steep price reductions. A recent story by Crain’s Chicago Business said that Parkside of Old Town, a redevelopment built at the site of the old Cabrini Green towers on Division Street, had the highest number of closings in the third quarter — 26 units — after chopping prices 30% to 40% over the summer. One-bedroom condos priced at $259,000 were reduced to $155,040 with a free parking space, while two-bedroom units went from $379,900 to $229,500, including parking. Parkside also offered buyer incentives like a $10,000 grant from the city.
Has the Chicago market hit bottom? This week, a national home index showed Chicago prices increased more in August than most other cities in the country — a welcome sign that our market has finally found its footing after five years of sinking prices.
The Standard & Poor’s/Case-Shiller index showed that August home prices rose in half of the 20 cities tracked. The biggest price increases were in Chicago — which was up 1.4% over the previous month — as well as in Washington and Detroit. It was the fifth consecutive month that Chicago notched a monthly gain. (Year over year, however, Chicago prices were still down 5.8%, bringing us back to median Chicago home prices last seen in 2002.)
Right now, the inventory of homes for sale is rather low in Chicago. Many would-be sellers are keeping their homes off the market for the time being, because they are unwilling (and often unable financially) to sell at today’s prices. Inventory in the Chicago area has plunged almost 50% from a year ago, according to a recent story in the Chicago Tribune. The short supply of homes may be helping to firm up prices.
This week I’ve already met with two potential buyers who are looking for a 3-bedroom home — one hopes to find a condo near Little Italy and the other either a single-family house or a condo somewhere along the Red line from Lakeview to Edgewater. Even as the weather turns chilly, Chicago buyers are getting the message that 2002 prices and 1960s interest rates make 2011 a great time to buy property.
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- More choices ahead for Chicago buyers as rally cools