Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Chicago home sales' Category
The Illinois Assn.of Realtors released its latest data today, showing that Chicago home prices and sales both rose somewhat in September, compared to the same month a year ago. On the face of it, that’s good news. It seems that prices — and the number of homes changing hands — are finally starting to stabilize in Chicago.
There were 1,498 home sales (single family and condominiums) in September, up 6.8% from the previous year. Chicago’s median home price rose 5.6%, from $180,000 to $190,000.
Okay, $190,000 is better than $180,000. But it’s much worse than $225,000, which is where Chicago’s median price stood just two years ago, or $268,600, where it was three years ago. Check out the dramatic decline — in both prices and sales — over the past four years in Chicago:
- 2007: $267,750
- 2008: $268,600
- 2009: $225,000
- 2010: $180,000
- 2011: $190,000
- 2007: 2172 sales
- 2008: 1816 sales
- 2009: 1918 sales
- 2010: 1403 sales
- 2011: 1498 sales
So it’s a little premature to break out the hallelujah chorus. Even though things seem to be improving a bit, Chicago home prices are down 29% and sales have fallen 31% in just four years. The drop in sales volume was particularly steep in the autumn of 2010, after the federal tax credits for home buyers expired and demand dried up. Now Chicago’s market has recovered slightly from that abysmal season, giving us a pretty good idea of what the new normal looks like.
“September home sales in the city of Chicago show signs of stabilization, with an increase in the units sold for both single family and condominiums,” said Bob Floss, president of the Chicago Association of Realtors. “While interest rates remain historically low and prices compelling, we remain concerned about the overall economic stability of our marketplace with unemployment numbers and job creation still top of mind for so many buyers and homeowners, alike.”
This has been an odd and uncertain year for Chicago real estate. Deals are still getting done, but absolutely every element has to be in place in order to get to the closing table. As a realtor on the ground day in and day out, I have seen some strange standoffs unfolding this year, with both buyers and sellers hesitating at crucial moments and sometimes deciding to stay put. No wonder sales are so scarce!
Here is what I’m observing from buyers: There is little urgency. With mortgage rates hovering at a record low of 4% and home prices in the gutter, most would-be buyers realize this is a golden moment to buy a home. However, they are also somewhat casual about the opportunity, since from their perspective this has been going on for at least a couple years. Neither interest rates nor home prices seem to be in any danger of quickly shooting up, so what’s the hurry?
In the last few months, I have witnessed at least five buyers wade halfway into a deal, only to change their minds. I have had some buyers who are pretty sure they want to make an offer, only to reconsider and decide against it. Others look around for a couple months and then opt to keep renting for another year. I have even seen two buyers (neither of whom I was representing; in both cases I was the seller’s agent) who wrote up offers and then, for lack of a better word, freaked out. One went so far as to negotiate a price and then refused to sign the contract, while the other actually did sign the contract — and then a day later changed his mind. Under the attorney review period, he was still able to withdraw from the deal.
Things look mighty different, on the other hand, from the point of view of many sellers. I can’t tell you how many listing appointments I’ve gone on this year where — once I explained the recent comps and showed the owners what their home was likely to sell for — they suddenly realized just how bleak their situation was. I met with one lovely woman last week who exclaimed, “Oh my god, Sue! I knew the market was bad. But I had no idea how bad it was.”
Yes, it really is bad. As in, your home is probably worth 10-35% LESS than what you paid for it, depending on what year you bought it and where it is located. In real terms, this means that sellers who paid $330,000 in 2007 can’t even sell for $285,000. Sellers who bought for $230,000 in 2005 (and put $15,000 in upgrades) would likely have to list their condo for less than $200,000 to get a bite. Owners who paid $450,000 in 2005 sold the same place this year for $95,000 less. I just checked the comps for someone who paid more than $220,000 six years ago in a building where similar units are now selling for $100,000 to $160,000, depending on the condition.
It is routine for sellers to be faced with a diabolical choice such as: Do you want to stay in the cramped two-bedroom condo you have outgrown now that you have a new baby, or do you want to bring $50,000 to closing in order to pay off your lender and closing costs? Many, many people do not have the tens of thousands it would take to close the deal. So they stay put, they decide to rent out their place, they attempt a short sale with their lender, or they overprice their home and stick it on the market anyway, hoping someone out there will pay them not what it’s worth, but what they owe.
Thus, as the winter season approaches, we have a standoff. Many Chicago sellers desperately want to sell, but they simply can’t afford to lower their asking prices to the point where a buyer would be interested. Many buyers theoretically want to buy, but only if they find a place they adore at a price that can’t be beat.
Unfortunately for all Chicago homeowners, the median Chicago home price has plunged over the past four years. According to data just released by the Illinois Assn. of Realtors, the median price was just $192,500 in August, a drop of nearly 4% since last August. Now, a 4% drop doesn’t sound so terrible… but remember, this decrease comes on top of several years worth of steeper declines. Chicago home prices have fallen an astounding 37% since August 2007.
Check out the median price decline:
- August 2007: $305,000
- August 2008: $297,500
- August 2009: $229,900
- August 2010: $200,000
- August 2011: $192,500
Like most realtors, I encounter a lot of sellers who know that “the market is bad” but somehow cling to the hope that maybe their home is still worth what they paid for it, or at least what they still owe. They want to price their Chicago condo or house based on whatever number they calculate will protect them from financial harm.
But if you bought your home anytime in the last five years chances are very good that it is worth considerably less than you paid for it. A realtor can look up the recent sales in your neighborhood and give you a decent idea of just how much less. But even in North Side communities like Uptown, Andersonville and Edgewater, prices overall are down at least 20%. Irving Park, Albany Park, Logan Square, the South Loop and Rogers Park are in even worse shape (particularly Rogers Park, an area decimated by foreclosures where sale prices have dropped more than 60% in recent years). Lincoln Square, Bucktown, Wicker Park, and Lakeview have generally held up better, but they have still taken a haircut.
The volume of home sales is up over last summer, but that number is deceptive because last summer — right after the home buyer’s tax credit had expired — few people were buying homes. In the city of Chicago, home sales totaled 1,787 for August 2011, an increase of 20.3% over last August. But when you look at the number of homes sold each August since 2007, you’ll see sales have fallen too — by about 39%.
- August 2007: 2923 sales
- August 2008: 2078 sales
- August 2009: 1927 sales
- August 2010: 1486 sales
- August 2011: 1787 sales
All things considered, the Chicago market is in pretty dreadful shape, with both sales and prices down nearly 40% in four years. Sellers need to be ruthless in their home pricing and spotless in their home staging to attract a buyer, and for most people who bought their home in recent years it’s useless to imagine selling for what they paid or what they owe. Those numbers have no bearing on what their home is actually worth in today’s crippled market.
When it comes to truly high-end real estate, Chicago is worlds away from New York. While the Big Apple has dozens of properties that sell for multiple millions, it’s exceedingly rare to find homes in the Windy City that close for $5 million or more.
How rare? Over the past year, only three single-family homes in the entire city of Chicago have sold for upwards of $5 million, according to Midwest Real Estate Data LLC. Another five houses went for $4 million to $5 million. The most expensive Chicago house to sell was 25 Banks Street, a 13,500-square foot Gold Coast mansion built in 1880. Located a block from the lake, it boasted 8 bedrooms, 11 bathrooms, a media room, a wine vault, staff quarters with a separate entrance, and a rooftop terrace. But even this grandeur came at a bargain price: $6.8 million, about half its original price tag of $13.5 million after more than three years on the market.
Of course, there were also seven Chicago condos that sold for upwards of $5 million over the past year. With the exception of one, they were all at the Elysian, the new luxury building located at 11 E Walton Street. (The other was a top-floor penthouse located above the Four Seasons Hotel at 132 E Delaware Place.) At $8.6 million, the priciest condo cost more than the most expensive house — and both were cash deals, as were the majority of all the $5 million-and-up sales. Hmmmm, I was just wondering what to do with that $5 million just sitting in my bank account…
In any case, multi-million dollar sales of any sort are a rare breed in Chicago. There were only 50 single-family houses and 75 condos that sold for $2 million or more citywide (mainly in the Gold Coast, Streeterville or Lincoln Park) over the past year. On the North Shore, moreover, there were 86 homes that sold for over $2 million, but only six that fetched more than $5 million.
The latest Chicago housing data is out, covering the month of July, and it looks like both sales volume and prices have climbed slightly compared to last July. (But before you imagine a real estate rebound, remember that last summer Chicago home sales were in the gutter, once the federal tax credit for buyers expired. So things can only go up from there!)
Anyway, there were 1,655 home sales in the city of Chicago (single-family houses and condos) in July, an increase of 4.2% over the previous year. And the median home price in July 2011 was $210,000 — up 6.9% compared to the previous year.
“This is the first month, year-over-year, where we are without a federal tax credit and are encouraged by July’s sales, hopefully a positive outlook for the remainder of 2011,” said Mabel Guzman, president of the Chicago Association of Realtors. “There is an ongoing absorption of units throughout the city, specifically in the performance of the condo market over 2010, as well as compared to 2009.”
Some neighborhoods are obviously selling better than others. In Lakeview, for example, a popular area that is home to Wrigley Field and close to both the lake and downtown, there are now 260 condos for sale with 2 bedrooms and 2 baths. Another 64 of these condos are under contract (pending sale), and 122 have closed in the past three months. That’s a pretty good ratio in this market, with closed sales at roughly half the number of active listings. Condos in Lakeview, in other words, are selling.
Now consider Edgewater, another lakeside neighborhood just a couple miles north. There are 137 condos for sale right now that feature 2 bedrooms and 2 baths. Another 28 are under contract. But just 45 have closed in the past three months — a much worse ratio than in Lakeview. The closed sales don’t even amount to a third of the number of active listings in Edgewater.
Unfortunately, I’ve been witnessing sluggish condo sales in other northern neighborhoods, like Lincoln Square, Andersonville and Uptown. With condo buyers scarce in 2011, many of them seem to be opting to live in areas that are closer to the Loop. For first-time home buyers (or anyone else with cash or good credit), this is an excellent time to snag a great deal in the most coveted, central parts of Chicago.
Home sales are down all over Chicago — they fell 27% citywide over the past year — but things have really fallen off a cliff in the once-hot South Loop. The area is now flooded with glassy condo units, many of them in relatively new high-rises or mid-rise complexes, and it looks like this decade-long binge of overbuilding has left the South Loop with quite the condo hangover.
I was just there showing 2 bedroom/2 bath condos to buyers this week, and I was struck by how small many of them are. Even at the $300,000 price point (including parking), the living rooms tend to be so compact that it’s hard to imagine fitting in a dining table. The new kitchens may look flashy, but eating dinner scrunched over the breakfast bar can get old. Many of these condos do not even measure 1,000 square feet.
While they may be sufficient for one or even two people, such small spaces are often quickly outgrown. But there are so many condos in the South Loop that selling one can be tricky. Over the past year, the number of 2 bedroom/2 bath condos sold throughout the Near South Side (the MLS area that encompasses the South Loop) has dropped a stunning 39 percent, from 318 units to 194.
Sales have held pretty steady in the popular $200,000 to $300,000 range. But they have plummeted more than 50% for higher price points. The median condo price, meanwhile, has dropped about 7% year over year.
For buyers, the South Loop offers one of the only Chicago neighborhoods that is both so close to downtown and so affordable. But with sales slowing this dramatically, prices are likely to follow. As I advised my buyers, if you’re going to invest here, be prepared to stay awhile. With the glut of similar homes in the South Loop, it may be tough to sell if you outgrow your sleek 900-square-foot condo in three years.
The Chicago real estate market continues to struggle. In June, according to the latest data from the Illinois Assn. of Realtors, both the median price and the number of home sales fell considerably compared with the previous year.
This is more good news for Chicago buyers, and equally bad news for sellers. The median price for single-family homes and condominiums in June was $207,000, down 11.6% compared to $234,250 in June 2010.
And far fewer homes traded hands this June, primarily because last year we were still seeing the helpful effects of the federal tax credits for buyers, which inflated home sales. Home sales totaled 1,841 in June 2011, a dramatic 27.1% drop from the 2,526 homes sold during the same month last year.
Home prices and sales were also down statewide. Illinois home prices sank 11.7%, on par with Chicago’s numbers. But home sales across the state declined less than they did in the urban areas, dropping 16.3% over the past year.
The high number of foreclosures in Chicago — our city is now ranked #1 nationwide in foreclosed properties — continues to muddle the hopes of a local real estate recovery. “In the coming months, we will be observing the economic pressures which will likely lead to an increase in distressed assets to the market,” predicted Mabel Guzman, president of the Chicago Association of Realtors.
If you are considering buying a home, the forecast appears sunny for the foreseeable future. Rates on 30-year fixed mortgages are now hovering at 4.5% in the Chicago area, prices are back at levels last seen a decade ago, and there are plenty of foreclosures keeping a lid on price increases. Buying a home is now just as affordable as renting in Chicago, plus it gives you a significant tax break and the chance to build equity rather than just forking over thousands of dollars to your landlord every year.
Condo prices have tumbled 10.4% nationwide in the last year, according to data just released by the National Assn. of Realtors. But the plunge was much worse in the Chicago area, where prices dove 24.1% in the first quarter compared to a year ago.
The region (Chicago-Naperville-Joliet, in terms of the realtor’s association) fared worse than almost every other metro area in the country. Only the Tampa and Sarasota regions in Florida and Barnstable Town, Mass., saw condo prices fall further.
No wonder it’s getting so difficult to sell a condo in Chicago. What was once an active market has become seized and sclerotic, with thousands of condos for sale that just sit and sit and sit. I’m now seeing this troublesome trend in desirable neighborhoods like Andersonville and Lincoln Square, as well as much of Edgewater, Uptown, and even parts of Lakeview. Chicago’s North side seems to be awash in condos, may of them recent rehabs or nicely restored vintage units, that languish on the market for months despite their appeal. For many condos, showings are scarce and open houses attract only a few people, even at the height of the spring market.
What is going on here? Are young people, who traditionally drove the market for first-time condo buyers, deciding that it’s simply better to rent? Or are so many of them unemployed or under-employed that they can’t qualify for a mortgage? There are definitely fewer first-time buyers in the market these days; according to the realtor’s association, first-time buyers purchased 32% of homes in the first quarter, down from 42% last year when a $8,000 tax credit was stimulating sales.
If first-time buyers sit on the sidelines, our market will become paralyzed. First-time buyers drive sales by buying at the lower end, which then frees up those sellers to go buy another home. But if people can’t sell their condos, most of them won’t be able to buy again. They will be stuck. And unfortunately, this year many Chicago sellers are discovering that is exactly where they are.
This week, one of my buyers made an offer on a foreclosed 2-bedroom, 2-bath condo in Rogers Park. In years past, I did a healthy business in Rogers Park; it was a popular destination for first-time home buyers who wanted to live in an affordable area close to the lake.
But Rogers Park, like so many other up-and-coming neighborhoods throughout Chicago, has been just about crushed by the real estate downturn, resulting in a massive tide of foreclosures and short sales. This has made Rogers Park something of a buyer’s banquet, with deals you can only dream of in other North side areas, like newly-rehabbed 2-bedroom condos with parking for well under $200,000.
There are now 99 condos with at least 2 bedrooms and 2 baths listed for sale for less than $200,000 in Rogers Park (and more than 20 of them have 3 bedrooms.) But the truly shocking part is that nearly all of them are distressed properties, either foreclosures or short sales seeking to avoid a foreclosure. I just combed through all 99 listings, and I only counted 28 that were NOT foreclosures or short sales.
In fact, it’s so rare to find an ordinary seller selling a ordinary home in Rogers Park these days that it’s become a selling point: “REGULAR SALE!!!!” shouts the description for 1900 W Touhy Ave #1C, a rehabbed condo priced at $135,000.
The flip side of so many great deals is that most of them, unfortunately, will be difficult to actually buy. At least half of them are short sales, which require lender approval that takes months and often never comes. Many of these will eventually slide into foreclosure and be seized by a bank. Even the foreclosed condos can be tough to buy, though, because if they are located in a troubled building with other distressed units, lenders will not want to loan in that building.
So if you are a buyer considering Rogers Park — especially if you’re a condo buyer — please tread carefully. The neighborhood’s housing market has become a veritable thicket of problem properties, and you need to make sure you are well represented as you sort through the real estate rubble looking for a gem.
Remember the days when developers couldn’t seem to build new houses fast enough to satisfy the eager buyers who were lining up to buy them? This was mostly a suburban phenomenon in the Chicago area, although builders snapped up plenty of tear-downs in the city as well, razing older homes in favor of handsome (and expensive) new ones in popular neighborhoods such as Bucktown and Wicker Park.
Those high-flying days are tough to even imagine right now. New single-family home sales are now at the lowest point they have ever been since the data was first gathered in 1963, when the U.S. had 120 million fewer people, the New York Times reported Saturday. New home sales have plummeted more than 80% from the peak in 2005, while resales of other homes fell just 28%. And in the Chicago metro area, the trend is even more pronounced — new homes sales are down 90%.
In addition to the near-collapse of the financial system and record high unemployment in recent years, it seems that surging gas prices are also playing a role in this sustained downturn. Many people now prefer smaller, cheaper houses closer to their jobs. They are less willing to buy a new suburban house that demands a long commute. One home builder out in Richmond even decided to throw in a new car with any home purchase to boost his dismal sales, the Times said.
There are also thousands of foreclosed houses now competing for buyers’ attention. In Chicago, nearly 4 out of 10 home sales is a foreclosure.
Sometimes you fall so far, there’s not much lower to sink. That may be the case with housing starts reported for March, which were up 7.2% for a 549,000-unit annual rate. New building permits also jumped. Housing starts and permits remain down about 13% over last year, however.
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