Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Chicago home sales' Category
You can really see the impact of the $8,000 tax credit for first-time buyers. In June, the final month buyers could claim the credit, Chicago home sales shot up nearly 28% over the previous June, according to data released today by the Illinois Association of Realtors. That marks the 1oth consecutive month of year-over-year increases in Chicago.
But just because more properties are changing hands doesn’t mean home prices are recovering. In fact, the opposite is true in Chicago. The median home price, now $234,250, is down 3.2% compared to a year ago.
Genie Birch, president of the Chicago Association of Realtors, pointed out that the year-to-date number of homes sold in Chicago is up 41% for the first half of 2010 versus 2009. “We believe this is a positive indicator that Chicago’s housing market is stabilizing,” she said. “Motivated buyers and sellers are working toward realistically closing deals at current market values.”
I have my doubts about whether our market is truly stabilizing, or whether we are just witnessing a final surge of home sales fueled by a government stimulus program that no longer exists. Congress has since extended the date to close on a home purchase through September (provided you were already under contract by April 30) to help people seeking the tax credit who were unable to close by June 30, the original deadline.
So we may yet see a slight swell of closings in July, August and September that were actually spurred by the tax credit. But that doesn’t mean our local housing market is healthy enough to stand on its own.
In the last week, I’ve had inquiries from two potential sellers who would like to sell their condos. Both have well-maintained units in popular Chicago neighborhoods (Lincoln Square and Andersonville) but, as I advised the owners, there are at least three good reasons to wait until the new year to list their homes.
1) Demand right now is extremely low. Chicago is a seasonal market, and the best time to put your property on the market is between January and May. That’s when the majority of buyers are out in force, and in a sluggish market like this one, well-priced homes in good condition stand their best chance of selling during the spring season. This year, demand is even lower than usual as we head into the fall, thanks to the government’s tax credits for home buyers. The credits were offered throughout 2009 and into the first four months of 2010, and they did the trick: Hundreds of thousands of homes sold nationwide, pushing up sales figures throughout Chicago and other wounded markets. But now that the tax credits have expired, much of the demand from buyers has also evaporated. Mortgage applications have plunged more than 30% in recent weeks (despite stunningly low interest rates.) Many people who wanted to buy this year have already done so — and this is especially true of first-time buyers looking in the $300,000-or-less range, which is where many Chicago condos reside.
2) Inventory is already climbing. More than 400 Chicago condos continue to hit the market each week, but nowhere near that many people are buying them. As demand stagnates, the number of unsold units will rise, adding to the competition your property would face if you listed it now. Will the picture be any better for sellers in the spring? It’s hard to say, since so much depends on Chicago’s job market. Some of the condos that don’t sell this year — and there will be thousands — may instead be rented out in the next six months, or their owners may give up and decide to wait a couple years.
3) Market time will add up. The number of days on the market is an important indicator of how well the property is priced and how much people like it. Most buyers would rather go see a new listing that just hit the market than a home that’s been languishing for 189 days (especially if the price hasn’t been reduced.) But if you put your home on the market in August or September, when many people are immersed in back-to-school activities or other fall commitments, you may be unveiling it to a relatively sparse audience. Market time often accrues during the fall and winter months with little to show for it, and then by the time the demand picks up in the new year, your property will already feel a little stale after six months on the market.
Waiting may be hard to do, but in my opinion many Chicago condo sellers have already missed the boat for 2010. Better to be ready to sail in early 2011 than to swim against this particular tide.
Even as the job picture brightens slightly in Illinois, the number of homes facing foreclosure continues to soar. The Illinois unemployment rate is now 10.4% — still one of the worst in the country, but better than the 11% we saw earlier this year. The scarcity of jobs has left thousands of local homeowners in trouble, and they are continuing to default on their mortgages in record numbers.
Nearly 24% more Illinois properties received a foreclosure-related notice in the first six months of 2010 than during the same period last year, according to RealtyTrac Inc., a real estate listing service that tracks distressed properties. This means more than 85,000 properties statewide — most of them residential, and many of them in the Chicago region — got a notice. Illinois had the 9th-highest rate of foreclosure notices in the nation.
Nationwide, the rate rose slightly more than 8%, RealtyTrac reported. More than 1 million homeowners will likely lose their homes to foreclosure this year.
What does this mean for our Chicago housing market? Nothing good, I’m afraid. Are you noticing more “For Sale” signs sprouting in your neighborhood lately? Now that the government’s tax credits for home buyers have expired, the inventory of Chicago homes for sale is starting to rise again. There were 4,259 listings in the Chicago area last week, according to Midwest Real Estate Data LLC, but only 855 closings.
This is an ominous sign. Last year the inventory was roughly the same (it was 5% higher then) but the number of closings during the same week last year was 31% higher.
In other words… there is a lot more pain to come in the Chicago real estate market. I predict more foreclosures, fewer qualified buyers to absorb increasing inventory, and further price drops. Anyone looking to buy will have plenty of homes at attractive prices to choose from, and anyone looking to sell will have an increasingly tough time.
Thanks to the federal home buyer’s tax credits, Chicago buyers turned out in droves to snap up properties in May, according to data released this week by the Illinois Association of Realtors.
In the city of Chicago, May home sales (single-family and condominiums) skyrocketed 32.1% to 2,057 sales, compared to 1,557 homes sold in May 2009. The increase marks the the ninth consecutive month of year-over-year sales gains. Sales are now almost back to where they were two years ago in May 2008, when 2119 homes were sold in Chicago.
Even more impressive, the median home price — which has been falling and falling in Chicago for several years now — actually ticked up 2.2% in May over the previous year. Chicago’s median price is now $230,000, up from $225,000 in May 2009.
“The tax credit created a more positive impact on the Chicago marketplace than the movement we saw in 2009,” said Mabel Guzman, the incoming president of the Chicago Association of Realtors. “Additionally, the credit afforded buyers the opportunity to look at higher-priced homes, helping keep their options more affordable.”
I expect that we’ll see more of the same — dramatically increased sales, and possibly slightly higher prices — when the June numbers are released. But home-buying demand has certainly slipped in Chicago since the tax credits expired April 30 (the date by which buyers had to have a home under contract in order to qualify.) They have until June 30 to close the deal.
Finally someone has added up just how many Chicago homeowners are taking a bath on their property when they sell it, and the numbers aren’t pretty. According to Zillow.com, 40% of Chicago-area home sellers in March sold their home for less than they paid for it.
In the city of Chicago alone, the picture was slightly brighter, particularly for condos. In March, about 30% of Chicago condo sellers sold for less than they paid, compared to 38% of all sellers citywide.
I suspect that the true number of people losing money on their real estate transactions is closer to 50% when you factor in the commissions and closing costs that a seller owes, which can be 6-7% of the sale price. That means even Chicago owners who sell for exactly what they paid wind up in the red — often by more than $10,000.
Even more ominously, the Zillow study also found that almost 32% of Chicago homeowners who own single-family houses are now underwater (meaning that they owe more than the property is worth). This is much worse than the national figure of 23%, an indication of how troubled our local market has become.
Sigh. It’s grim out there, especially for people who already own a home. I personally know at least a dozen would-be sellers who can’t afford to sell their home, and have decided to keep if off the market for now in the hopes that prices will recover.
But for every discouraged seller, there’s an opportunity for a fortunate buyer. Real estate prices are now at their lowest point in the last seven years, interest rates are hovering below 5%, and there are tons of properties to choose from.
And now for some good news… After several years of sluggish sales, condos in downtown Chicago are finally selling at a healthy clip, according to a recent report.
Downtown builders sold 256 condos and townhomes in the first quarter of 2010, up from 148 in the previous quarter and just 55 in the same period a year ago, according to Appraisal Research Counselors, a real estate consulting firm. Just to be clear, that’s nearly five times as many condos sold as compared to a year ago!
Of course, this glut of unsold units didn’t just miraculously begin to mesmerize buyers. Chicago developers chopped tens of thousands of dollars — sometimes hundreds of thousands — off their prices to attract buyers.
“If you discount, they will come,” Gail Lissner, vice president at Appraisal Research, told Crain’s Chicago Business.
For example, at 565 W. Quincy St. in the West Loop, developer Belgravia Group Ltd. slashed prices on some units by as much as 30%, sparking dozens of sales. The 241-unit project sold 59 condos in the first quarter (a period that coincided with the $8,000 first-time home buyer’s tax credit.)
Other Chicago projects also relied heavily on price discounts to attract buyers, including those at 200 N. Dearborn St., 222 E. Pearson St., the R+D359 development in the West Loop and the 38-story Silver Tower in River North.
Still, Chicago developers are climbing out of a very deep hole (Chicago Spire, anyone?) Crain’s reports that developers sold only 572 condos and townhomes in 2009 and 592 in 2008, a tiny sliver of the 8,162 they sold at the peak in 2005.
No one was quite sure how the April 30 expiration of the federal home buyers’ tax credits would affect the Chicago market, but two weeks later, I’m ready to call it: Things have definitely and dramatically slowed down.
As one agent put it (anonymously) to the Yo Chicago real estate website, “Between agents, the water-cooler talk is kind of dead. Showings seem to be dwindling, which isn’t a good sign going into June and July.” This agent confided that he (or she?) hasn’t had a closing all year.
I was fortunate to have a pretty busy spring selling real estate, with plenty of buyers and sellers going under contract throughout March and April on a wide range of homes priced from $120,000 to $600,000. But in the last two weeks, I would agree that showing requests have abruptly declined. I was chatting with another realtor I know in Andersonville recently, and he mentioned that despite having 16 listings not a single person had called to see any of these properties on a recent weekend in May.
It will be at least a month until we start to see actual sales data for May, which is usually an active month for home-buying in Chicago. But some data is emerging that shows that many realtors were already disappointed by buyers in April.
According to the Credit Suisse monthly survey of real estate agents, the buyer traffic index fell from 34 in March to 26 in April, indicating traffic levels below agents’ expectations (any reading below 50 shows traffic below expectations).
“Agents noted they expected to see a pickup in sales activity in April ahead of the April 30th tax credit expiration, but saw an underwhelming response from buyers throughout most of the month,” the Credit Suisse report said. “One agent commented, “We may have exhausted the buyer pool – not sure, but demand is not there like last year.” …One agent saw a delayed response to the tax credit expiration, commenting that, “Demand for the tax credit deadline kicked in LATE April.”
Home buyers who are now out and about seem to be kicking the tires rather than actively hunting for a property to buy. One couple I took out this weekend said that if they couldn’t find a house they liked at a price they could afford, they may wait a year or two to buy.
When the sales numbers for May arrive, I suspect we may find that hundreds of other potential buyers in Chicago feel the same way.
April 2010 was one of the busiest months I’ve ever seen as a realtor! Even though the government’s home buyer tax credits (in one form or another) have been in place for more than a year, there were plenty of Chicago home buyers who waited until the last minute to buy.
April 30 was the deadline for signing a home purchase contract; buyers now have until June 30 to close the deal.
I had four different buyers or sellers go under contract in the last 10 days of April alone. In one deal, the buyer made an offer on my seller’s Lincoln Square condo around 9 pm on April 29. Her realtor and I negotiated the deal until slightly after midnight, and everyone signed the contract the next morning… thereby just making the April 30 deadline. Whew!
Plenty of other real estate agents in my office, and across Chicago, witnessed the same eleventh-hour mania. Now hopefully we can all get the inspections, attorney review periods, and mortgage loans completed in time to close by June 30! Expect a similar frenzy at title companies in June as everyone piles in to close before the deadline.
We should see healthy home sales throughout the Chicago region for April, just like the 50% leap over the previous year we witnessed in March. But now that the government’s home-buying stimulus is a thing of the past, the question on everyone’s mind is… Now what?
The home buyer’s tax credit — which expires tomorrow — has certainly helped light a fire under Chicago home buyers. Home sales shot up again in March compared to March 2009, making this the seventh month in a row of year-over-year gains.
In the city of Chicago, March total home sales (single-family and condos) rose 49.7% to 1,814 sales compared to 1,212 sales a year ago, according to the Illinois Association of Realtors. For the entire first quarter, home sales were also up considerably, by 41.6% citywide.
But prices have continues to slip. Chicago’s median home price in March was $209,000, a 4.6% drop compared to $219,000 last year.
Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois, pointed to the latest figures as evidence of an “upward trend.” He told the Realtor’s association that “there is increasing evidence that the housing market is stabilizing; in many parts of the country sales have increased but prices remain stubborn. In places where there have been increases, they are modest; there is no doubt that the downward pressure on prices can be traced to the volume of distressed properties on the market.”
Meanwhile, foreclosures have continued to climb across Chicago and the metropolitan region. Nearly 3,500 Chicago homes went through a court-ordered auction in the first quarter, and 95% of them were acquired by the bank, according to a story in today’s Chicago Tribune.
This flood of bank-owned homes, which I’m now seeing popping up even in trendy neighborhoods like Lakeview and Lincoln Park, is depressing home prices across the board. But at last, homes are finally changing hands again at a healthy pace, and some stability is returning to our Chicago market.
It’s finally spring, and the $8,000 home buyer’s tax credit expires in only a month! These two factors combined seem to have pushed Chicago home buyers into overdrive this year.
In February, home sales in Chicago shot up 41.5% over last February, with 1,225 condos and single-family houses sold. This marked the sixth consecutive month of year-over-year sales increases, according to a report this week from the Illinois Association of Realtors.
“The tax credit has been a tremendous help for those home buyers on the fence,” said Genie Birch, president of the Chicago Association of Realtors. “With interest rates still favorable, and a month left before the tax credit expires, those considering making a purchase should do so now to take advantage of these great opportunities while they are still available.”
Thousands of buyers are still out house-hunting in March, and I predict that we’ll see strong sales volume in the Chicago area all spring. (Prices, of course, are another story. The median home price in Chicago fell more than 19% since last February.)
I’m starting to see multiple offers on well-priced properties… even properties that have been on the market for months! The demand right now is strong, but buyers are being careful not to overspend.
Home sales are also up in the Chicago region as a whole, rising 37.5% in Cook County in February.
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