Sue Fox, @Properties. Direct 773.816.1788
Subscribe to Site
- FHA loans
- Market conditions
- Tax credits
Real Estate radio
Archive for the 'Chicago home sales' 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.
It’s already March 17 — Happy St. Patrick’s Day! — which means Chicago’s spring home-buying season is well underway. And the market is truly bustling right now, with buyers out in droves, making offers and getting ready to close on their new homes.
The government’s first-time home buyer’s tax credit has done wonders for the Chicago housing market, but it expires in six weeks. And that’s exactly why anyone hoping to sell a home in 2010 ought to be hustling that property onto the market as soon as humanly possible.
It’s not just to take advantage of the wave of first-time buyers, who make up half of all buyers nationwide, by some estimates. Many buyers seeking the $8,000 tax credit (or earlier versions of the credit) have already found homes, and hundreds of thousands of them have already closed. But that means that hundreds of thousands of home sellers are now free to go buy something else.
This what I call the move-up theory: When someone sells her $300,000 condo, for example, she is now free to go buy that $450,000 house. Which then frees up the next seller to go buy something else, and so on.
Of course, not every seller has the equity, or perhaps the desire, to buy a more expensive property. But once some people are able to sell, the market loosens up again, breaking the massive real estate logjam that has been strangling our market since 2007. Properties start changing hands again. Sales volume increases. We are already seeing this happening on a broad scale in Chicago.
So if you are considering selling this year, the time is NOW! Many of those move-up buyers are already out and about hunting for their next home, which could mean a healthy late spring/summer for mid-range home sales in the Chicago area.
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.
In the last few weeks, several of my buyers have made offers on well-priced Chicago houses and condos. But rather than focusing solely on the prices, let’s look at the market time. This often-neglected indicator shows just how quickly a well-priced home can move — something all sellers should consider when pricing their property.
In one case, my buyers made an offer on a Jefferson Park house that had only been on the market six days. In another case, a different buyer made offers on two Rogers Park condos — both of which were foreclosures that had been listed a few weeks ago. (One of them already had three offers on it.) This week another couple I represent made an offer on a nearly-new Andersonville condo that had been on the market for 28 days.
The sellers of these properties did not have to wait and wait to sell their homes. They didn’t put their place on the market in the spring, only to lose hope bit by bit all summer and finally take it off the market in the fall so that it wouldn’t accrue more market time over the winter. They didn’t endure a slow death by a thousand price cuts.
Consider these recent market statistics, from December: There were 1,332 Chicago properties that sold with no price changes made to their asking price, and on average they fetched 96.8% of the asking price. But the 923 homes that sold after at least one price change (most likely a reduction) only commanded 80.6% of their original list price.
The well-priced homes also sold much faster. The properties with no price changes spent 100 days on the market, on average, while the ones whose price had to be cut lingered for 241 days on the market.
If you want to sell your Chicago home, the time to get it on the market is now. There are lots of buyers out looking already, even in this snow, and they are truly ready to buy. But don’t try to outsmart the market. If you price your home fairly, in line with current market conditions and recent sales in your neighborhood, you will sell it much faster for more money than you otherwise will.
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.
It’s hard enough to sell a condo in Chicago lately, but some sellers seem to be making it more painful than necessary. I visit dozens of Chicago condos (as well as houses) every month, and I’ve grown accustomed to seeing them though my buyers’ eyes… and sometimes it’s not a pretty picture. In fact, I see the same mistakes so often I sometimes wonder what the heck realtors are advising their sellers, because it sure doesn’t seem to be to price the place well and clean it up!
So, in the spirit of bringing a few more deals together, here’s a list of the Top 5 Mistakes to avoid when selling your Chicago condo:
1) It’s overpriced. This should be #1, 2, 3, 4 and 5! Nothing guarantees that hardly anyone will come see your condo, and no one will make an offer on it, like sticking an inflated price tag on it. I cannot emphasize this enough: Everyone has access to up-to-date market data these days, and it’s quite obvious to buyers when a property is priced too high. Many of them will not even bother wasting time on a place that seems unrealistically pricey; they will just keep going on to the next one. With so many similar condos on the market these days — often in the same building — your best bet is to price your home competitively to attract a buyer quickly.
2) It’s cluttered. Many Chicago condos are not exactly overflowing with space. They may have compact living/eating areas and maybe there isn’t quite enough closet space or storage for a growing family. But when it’s time to sell, you need to clear out all the excess clothes, toys, books, piles of paper, boxes and whatever else you have jammed into your closets or stacked atop counters. The home should basically look like you ripped a page out of a Pottery Barn catalog: clean, spare, inviting. If it’s stuffed to the brim, it distracts buyers from the actual space and suggests to them that they may not fit here, either.
3) It needs a paint job. This is one of the easiest, cheapest ways to freshen up your home. Dirty, scuffed walls — or even walls in eye-popping colors — should be given a coat of fresh paint in a neutral color. Restoration Hardware offers a great line of calm sage, cream, stone, wheat and other natural, neutral hues.
4) It smells weird. This happens more than you might think. Dogs and cats are generally the main culprits, but lingering food or smoky smells, as well as mildew or moldy odors are also major turn-offs. If you have a pet, please be sure to clean up carefully after him/her. Other odors should not be masked with a scented candle or incense, but simply dealt with at the source. Just clean it up.
5) The condo building has problems. If you know the roof is leaking or the back porches need to be replaced, do yourself a favor and just offer a credit up front. No buyer likes to find out about these surprises as they peruse the minutes from your last condo meeting. Even if there’s no special assessment yet, buyers can see one coming, and it’s best to just negotiate a reasonable credit rather than let them walk away.
The 2009 Chicago market data is out, and @properties has pushed past Coldwell Banker to become the #1 real estate brokerage in Chicago in terms of sales volume! This is an exciting moment for us, and I’m thrilled (and grateful) to be part of such a progressive, forward-thinking, tech-savvy company. It’s all the more remarkable when you consider that @properties is less than 10 years old (compared to Coldwell Banker, which is 104 years old)!
As you can see from the stats, @properties is now the leader in representing both buyers and sellers in Chicago. We also added an Evanston office in 2009 and are now rapidly expanding our services to the North Shore. So whether you are a prospective buyer or seller, please give me a call if you have any questions about our local market trends. I love talking real estate… and now I work for Chicago’s #1 real estate company!
2009 Market Performance
#1 in Market Share (City): 12.4%
#3 in Market Share (Northern Illinois Region): 4.4%
#1 Increase in Market Share (City): 28.0%
#1 Increase in Market Share (Northern Illinois Region): 18.8%
#2 Increase in Market Share (North Shore): 68.6%
#1 New Construction Market Share (City): 16.5%
#1 Buyer’s Representative (City): 12.0%
#1 Seller’s Representative (City): 12.9%
#1 Average Market Time (Northern Illinois Region): 147 Days
#1 Selling Price to Original Listing Price (N. Illinois Region): 93.8%
Source: MRED, LLC, 1/1/09-12/31/09. Based on top 10 companies per category. Market share figures are based on sales volume.
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.
Yow. Chicago has just witnessed a full-on stampede of buyers, all racing to close on their new homes. November sales numbers were off the charts, with buyers snapping up 1,859 homes in the city, compared to just 1,094 last November, according to the Illinois Association of Realtors. That’s a 70% jump in a single year!
I am impressed. This just shows how many smart buyers there are, and I bet the majority of them were first-time buyers taking advantage of their free $8,000 from the federal tax credit (which was set to expire Nov. 30.) Interest rates were also super-low this fall, and home prices were quite reasonable as well.
The November numbers look more like what we generally see in the busy summer months. Even better, this horde of buyers seems to have built a floor under prices as well.
Check out this new stat: The median home price in Chicago is now $215,000, down 3.4% from November 2008. On the face of it, that’s not so great; prices have slipped a bit since last fall. But when you consider that ALL YEAR we’ve been looking at year-over-year citywide price drops of 10-18%, a 3.4% decline looks rather rosy!
In other words, home prices are recovering. They may not be what they were three years ago, but they have stopped declining each month and now they are starting to tick back up. It’s not too late for buyers to catch this wave, either. The $8,000 tax credit has been extended, so you have until April 30 to qualify. And if you’re already a homeowner who has lived in your home for at least five years, you could qualify for $6,500 if you buy a new place.
It’s becoming clear that the government’s Making Home Affordable program is failing to yank most struggling homeowners out of foreclosure. Lenders just aren’t modifying loans quickly enough — or on a permanent basis.
As of the end of November, more than 728,000 modifications were under way nationwide, but almost all were still in the trial period, according to the U.S. Treasury Department. Only 31,382 mortgages — about 4% — had their payments permanently reduced. Some analysts are now predicting we could see as many as four million foreclosures in 2010.
This is dreadful news for millions of families and the communities where they live. There is no question: Foreclosures hurt people, property values, cities, and the broader economic recovery. But for a handful of buyers who are willing to jump in, they also represent an opportunity to buy property they might not have otherwise been able to afford.
This year, I have unlocked the padlocked front doors to dozens, probably hundreds of foreclosed homes. There are boarded-up bungalows and chilly two-flats where the utilities were shut off months ago. Condo buildings whose developer went belly up before selling all the units. Single-family homes with children’s wallpaper still decorating the bedrooms. Half-renovated houses missing stoves and refrigerators and electrical outlets, where some investor started a rehab and then ran out of money. Deserted and now owned by a bank, some of these homes have also been damaged by water or mold.
Most of my buyers wind up passing on these homes. The price may be low, but they often require a lot of work. You need to be handy, or have money saved, or be willing to apply for an FHA 203K loan to rehab the place. But the opportunities are certainly there, and more are coming.
More than 9% of Chicago-area mortgages were 90 days or more delinquent in October, compared with 5% a year ago, according to First American CoreLogic. As mentioned in my previous posts, the foreclosure rate in Illinois doubled in the past year, and more than 8,500 homeowners received default notices last month.
If you are interested in purchasing a foreclosure, please give me a call. I can help you find a property that suits your needs, and I will refer you to capable lenders who can get the deal closed with a minimum of fuss. And if you act soon, you may qualify for a $6,500 or 8,000 home buyer tax credit.
- Sizzle is back in the South Loop
- How to Buy a Chicago Foreclosure (as Supply Steadily Shrinks)
- Home prices jump 15% in 2014, but cold weather chills sales
- Lincoln Square on a Tear as Average House Price Tops $600,000
- More choices ahead for Chicago buyers as rally cools