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Flippers return to Chicago housing

filed under: Buyers, Chicago home prices, Foreclosures, Irving Park, Market conditions, Neighborhoods, Portage Park posted on October 12th, 2012

THE FLIP SIDE:

THE FLIP SIDE: With newly finished hardwood floors, fresh paint and wainscoting, this living room is typical of the houses being flipped in Portage Park and nearby neighborhoods. This 3-bedroom house, complete with 2 more bedrooms in the finished basement, sold for $306,000 in just five days in September. Before being rehabbed, it was just another beat-up bungalow in foreclosure until an investor bought it in March for $157,200.

Hundreds of investors, it seems, are now spotting opportunity in Chicago’s rejuvenated housing market.

House-flipping, a practice where someone buys a house (presumably at a discount) and quickly resells it for a profit, is once again on the rise. According to RealtyTrac, a real estate data firm, there were 1,067 homes flipped in the seven-county Chicago area during the first half of 2012 — a 30% jump from the previous year.

Investors often buy these homes as foreclosures and then fix them up, sometimes with cosmetic improvements like new paint, but often by gutting and replacing much of the interior and mechanicals. In many Chicago neighborhoods, the houses look almost new by the time they hit the market again three to six months later.

Over the past year, I’ve seen a good deal of flipping in areas like Irving Park, Logan Square, and Portage Park. These aren’t necessarily the hottest North side neighborhoods, but they are solid middle-class enclaves close to public transit and full of houses in the affordable $250,000 to $350,000 range.

Competition for distressed homes, which often sell below $150,000 in these neighborhoods, can be very fierce, and many ordinary buyers are outbid by investors willing to pay cash. But once the homes are rehabbed and offered for sale, they can be appealing deals for the end buyer. After all, it’s not easy to find a 3 or 4-bedroom house with a finished basement and new plumbing, electric, roof, paint, kitchen, baths etc. for $300,000 on Chicago’s North side.

I helped some first-time buyers find just such a house this year in Portage Park. This particular couple started out looking at condos in Uptown, but once they discovered they could afford a house if they were willing to move a few miles west, the house search was on. We looked at dozens of old and often rundown bungalows, Victorians, and ranch houses until we finally came across a lovely, fully rehabbed 4-bedroom Portage Park house for $279,000.

KITCH

REHABBED: Most buyers would prefer a new kitchen with stainless steel appliances. If the rehab work is done properly, these renovated houses tend to sell quickly. This one sold for $6,000 over the asking price, suggesting that there were multiple offers that drove up the price.

It was a great deal for my buyers, who knew how difficult it was to find a renovated house in their price range, and they snapped it up quickly. And it was apparently a great deal for the investor who flipped it as well. He bought it as a short sale for $115,000, renovated it, and sold it about five months later for more than double the price.

Written by Sue Fox // Please leave a comment.

Why can’t I find a house? Low inventory baffles buyers

filed under: Andersonville, Buyers, Edgewater, Market conditions, Neighborhoods, Uptown posted on October 2nd, 2012

THE MARKET IS MOVING:

THE MARKET IS MOVING: This 4-bedroom 1916 Edgewater house, complete with an updated kitchen and baths and a new laundry room, sold in September for $697,900 after just 16 days on the market. It was priced at $729,000. Homes in good shape tend to move quickly in a market that offers buyers low interest rates and prices, but few properties to choose from.

It’s an odd conundrum: Mortgage rates have never been lower and home prices have plunged, making 2012 an excellent time to buy property… And yet, there are so few places to choose from. Where have all the houses gone?

In Chicago, housing inventory is so low that many would-be buyers have grown frustrated with their search and decided to wait until the spring. As of October 1, there were 37,619 condos and single-family houses for sale, a 17% decrease over a year ago. In fact, Chicago’s home inventory has been steadily falling for years.

Here are the October figures for the last few years, according to data kept by the ITT Technical Institute:

October 2011      45,162 homes for sale

October 2010     51,265 homes for sale

October 2009     53,949 homes for sale

October 2008     60,169 homes for sale

October 2007     67,479 homes for sale

The limited selection has meant long and aggravating searches for buyers eager to find a home. Making matters worse (at least for ordinary buyers who want to live in the home without doing major renovations) many of the houses and condos on the market are distressed properties that need work. When a well-kept home in a desirable neighborhood does hit the market, it often sells quickly and sometimes attracts multiple offers.

This summer, I helped one couple find a 4-bedroom house in Edgewater, in a good school district they had targeted for their children. But the search took six months, and they made offers on at least two or three other homes that went to other buyers. They were very motivated to buy, but the problem was there were hardly any houses to choose from! Another couple I worked with, who were seeking a 3-bedroom condo in Andersonville, Edgewater or Uptown, ran into the same problem and finally decided to keep renting until the spring, when more properties hit the market.

I can think of at least three reasons for the tight inventory: Many Chicago homeowners are still underwater and can’t afford to sell, banks who own foreclosed homes have been holding some of their inventory off the market so as not to further depress prices, and thousands of would-be sellers simply don’t want to list their homes now — at the bottom of the market — when prices look like they will be higher next year or the year after.

Serious Chicago buyers know that they need to be ready to pounce when they see the home they want, before it’s gone. And for sellers, the lack of quality inventory gives them a chance to finally sell their homes, especially if they are in good condition and priced competitively.

Written by Sue Fox // Please leave a comment.

3 in a row! Chicago home prices jump for 3rd month straight

filed under: Buyers, Chicago home prices, First-time buyers, Market conditions, Mortgage Rates posted on September 28th, 2012

Case-Shiller graph, Chicago summer 2012It’s official: Home prices are at last on the rebound in Chicago, and around the nation as a whole. After a relentless six-year downturn that shaved about 30% off local prices, we have now seen three months of steady increases in the Chicago area, according to the latest S&P/Case-Shiller housing index.

Here’s what this means on a practical level, for ordinary Chicago buyers and sellers: Prices have stopped falling, and started to rise slightly. There is more competition now than in recent years, especially for nice properties in desirable neighborhoods, and we’re seeing more multiple offers and homes going under contract at a faster pace (sometimes in a matter of days or weeks). Sellers now have a good chance of finding a qualified buyer IF they price their property in line with recent sales.

But the price increases have been small — especially when compared to the steep declines that preceded it. For example, the Case-Shiller data shows single-family home prices climbing 2.7% from June to July, on top of a 4.6%  jump from May to June and a 4.5% increase from April to May.

Overall, home prices in Chicago stand about where they were a year ago. Sellers need to remember this when pricing their homes; a “housing recovery” doesn’t mean that prices have shot back up to 2006 levels. Check out the graph above to see what I mean!

Still, the market is getting healthier. The summer home-buying season was so busy I barely had time to blog about it. Attracted by the lowest interest rates ever seen on mortgages — rates on 30-year fixed loans just hit 3.4% this week! — buyers are now flocking back into the market.

I’m especially encouraged to see young buyers decide to stop renting and buy their first homes. Many of my buyers this year have been in their 20s or early 30s, a key home-buying demographic which will power the market forward. After all, with mortgage rates so low and Chicago rents on the rise, buying is now making more financial sense than renting in many cases. A recent report by Trulia showed that buying a home in Chicago is now 50% more affordable than renting a similar home here, making Chicago a better deal for buyers here than in most other cities (72 out of 100) surveyed.

The home-buying season is now cooling off as the winter approaches, but I expect the spring of 2013 to be very active as more Chicago buyers take advantage of this unprecedented combination of low prices and low interest rates.

Written by Sue Fox // Please leave a comment.

Chicago home prices continue to climb

filed under: Andersonville, Buyers, Chicago home prices, Chicago home sales, Market conditions posted on June 26th, 2012

ALMOST FULL PRICE:

ALMOST FULL PRICE: This beautiful 1883 home in west Andersonville sold in just 17 days. Featuring 3 bedrooms, 3 baths, lots of original woodwork and an extra-large lot, it sold for just $10,000 under its $650,000 asking price.

The spring of 2012 seems to mark the turning point for the Chicago housing market. We now have several months of solid data showing that home prices and sales are both on the rise, and the latest numbers from May suggest that the market is finally gaining strength.

In May, sales of single-family houses and condos soared almost 20% over the previous year, from 1,703 to 2,037 homes. It looks like buyers are snatching up mortgages with record-low interest rates (or simply paying cash) to take advantage of home prices that rival those last seen more than a decade ago. But prices, too, are now on the rise; the median sale price in May was $203,000, up 6.8% over last May.

Last week, I had a buyer getting ready to make an offer on a condo in Lakeview. She was reviewing comps I’d sent her about six weeks earlier, when we began looking in that area, and she had devised what seemed like a fair price. But wait! I ran the latest comps, which captured all the May and early June sales, and it was immediately clear that prices had already shot up. That’s how quickly this market is moving.

It’s been a relief for many sellers — those who priced their homes reasonably — to see how quickly they were able to sell this spring. Buyers are finally out in force, and they are sometimes getting into bidding wars for the most desirable places. If your home is still on the market this summer, it is likely priced too high. It’s time to take a closer look at the recent sales and adjust your price accordingly, before the inevitable fall slowdown comes.

Written by Sue Fox // Please leave a comment.

Downtown condo sales on the rebound

filed under: Chicago home prices, Chicago home sales, Developments, Downtown, First-time buyers, Market conditions posted on June 2nd, 2012

P_cmls_5925_235_VBF___Tier_05_Kitchen___Living_Room

THE SCOOP IN THE LOOP: This 2-bedroom, 2-bath condo, located in a new 46-story tower at 235 W Van Buren, was listed at $329,900 and is now under contract. Sales of downtown Chicago condos like this one have skyrocketed this spring.

In another hopeful sign for Chicago’s real estate market, the sales of downtown condos recently hit a two-year high. It seems as though buyers are finally starting to absorb the excess inventory that has shadowed the downtown market ever since the downturn, holding down prices and forcing some newer buildings to turn to renters.

In April, there were 360 condo sales pending in the downtown area, up 55% from a year earlier. While this is good news, prices have yet to recover in downtown Chicago, making this summer an especially good time to buy a condo in the heart of the city.

Over the past two years, according to MLS data, median prices for condos in the Loop have fallen almost 8%, from $352,500 to $325,000. Developers of many downtown condos have had to slash prices to attract interest. Interest rates, too, have dropped and are now at record lows — around 3.75% for a 30-year loan for people with the best credit and sizable down payments.

The combination of low prices and rock-bottom interest rates make this year the best time to buy a Chicago home in at least the last 12 years. Will prices downtown continue to slump, or are we at the bottom? We have seen a recent uptick in prices (and sales) citywide, suggesting that a recovery, however faint, may finally be taking hold.


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At last, Chicago home prices begin to rise

filed under: Buyers, Chicago home prices, Chicago home sales, Lincoln Square, Market conditions posted on May 28th, 2012

SOLD IN 9 DAYS:

SOLD IN 9 DAYS: This 4-bedroom Lincoln Square house, which featured all new electric, plumbing, HVAC, roof, and other modern amenities throughout, sold for $590,000 -- close to its full asking price of $599,000 -- after just 9 days on the market. Updated homes in desirable neighborhoods have been selling well this spring as the Chicago market improves.

The spring housing market has been very busy this year, with many homes going under contract quickly and multiple offers cropping up on some of the most desirable properties. Recent data from the Illinois Assn. of Realtors confirms that the Chicago market is finally gaining strength again after several years of steady declines.

In the city of Chicago, the median home price for April jumped 9.3% over that of the previous year, to $184,800. April home sales were also up significantly, rising 19.4% over this time last spring (which was kind of sluggish). Last April there were 1,466 single-family houses and condos sold, but this year the number shot up to 1,750. Chicago home prices and sales also increased in March over the prior year, though not as dramatically.

“With rents in the city of Chicago increasing, paired with a limited supply of rentals available, renters are reviewing their options,” said Bob Floss, president of the Chicago Assn. of Realtors. “Historically low interest rates and great opportunities in the market are compelling to both first-time and move-up buyers looking to spend their dollars wisely and own their own home.”

I have seen a lot of activity this spring, from first-time buyers finally ready to jump into the market to investors paying cash to snap up distressed properties to families seeking to move into a larger home. There have been more than a few bidding wars, particularly on single-family houses in desirable locations. The market finally seems to be finding its footing. But what I don’t see is buyers — who are without exception looking for a good deal — bothering with homes that are obviously overpriced.

If you are looking to buy a Chicago-area home this year, keep in mind that updated properties in nice neighborhoods tend to attract a lot of interest, and if they are well-priced they could sell quickly. And if you are trying to sell a home, be sure it is competitively priced. Buyers are out there for homes that are properly priced — and you may sell faster than you imagined.

Written by Sue Fox // Please leave a comment.

Short sales jump 35% in Chicago

filed under: Buyers, Chicago home sales, Lincoln Square, Market conditions, Short sales posted on April 30th, 2012

WILL IT CLOSE? That's the perpetual question with any short sale. This one, a

WILL IT CLOSE? That's the perpetual question with any short sale. This one, a 3-bedroom house in the Bowmanville section of Lincoln Square, was listed at $264,999. It's been under contract for three months now.

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.

Written by Sue Fox // Please leave a comment.

The return of the multiple offer

filed under: Buyers, Chicago home sales, Edgewater, First-time buyers, Irving Park, Lincoln Square, Market conditions, Portage Park posted on April 8th, 2012

OFFERS

MULTIPLE OFFERS AT PARK TOWERS: Located at 5415 N Sheridan, this popular high-rise overlooking the lake in Edgewater offers studios and 1-bedroom condos at relatively low prices. One of my buyers was recently in a multiple offer situation here, with the winner paying nearly full price, in cash, and closing about two weeks later.

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.

Written by Sue Fox // Please leave a comment.

Sue Fox interviewed on WBEZ

filed under: Buyers, Chicago home prices, Foreclosures, Market conditions posted on March 1st, 2012

This morning I was interviewed by WBEZ housing reporter Ashley Gross about the low prices of foreclosures in Chicago. Buyers can expect about a 50% discount off regular market prices when buying a foreclosure in the Chicago area, according to data gathered in the fourth quarter of 2011 by RealtyTrac.

But, as I cautioned WBEZ listeners, that’s often because foreclosed homes are in lousy shape and need work. Single-family houses that have been seized by lenders sometimes have leaks, mold, damaged floors and other problems. Many of them are missing kitchen appliances, and occasionally they’ve even been stripped of copper plumbing (which thieves find valuable). No one is living there — often for months — and the neglect takes its toll. Foreclosed condos, too, can spring leaks (I have seen two where the refrigerator leaked in the vacant unit, damaging the condo downstairs as well.) And they often are found in buildings with other distressed condos, which can mean the building itself is financially unstable and thus it will be difficult to get a mortgage there.

Remember how a home winds up in foreclosure to begin with: its owner couldn’t afford it. That usually means the owner couldn’t afford to maintain the home, either. Rare is the foreclosed property that is in sparkly new condition.

Anyway, most of this didn’t make it into Ashley’s interview because the final cut was only 30 seconds long… but here is the link in case you’d like to hear it:

Sue Fox on WBEZ

Written by Sue Fox // Please leave a comment.

Lincoln Park house prices fall, but condos hold their value

filed under: Buyers, Chicago home prices, Lincoln Park, Market conditions posted on February 10th, 2012

$400K OFF:

$460K OFF SALE: This 4-bedroom "majestic greystone" in Lincoln Park was priced at $1,550,000 when it hit the market last spring. Six price cuts later, it was being offered at $1,090,000 when it went under contract a month ago. Such steep discounting is no longer rare in Lincoln Park, where single-family house prices have dropped precipitously.

In many Chicago neighborhoods we’ve been seeing condo prices falling steadily, while the price of single-family houses has tended to hold up a little better. This is the case in places like Lincoln Square, Uptown, Edgewater, Rogers Park, West Ridge and Logan Square.

In Lakeview and North Center, which are two of the most popular North side neighborhoods, both condos and houses have held their value and prices have even slightly increased over the past two years.

But in Lincoln Park — another popular neighborhood, and one of Chicago’s most expensive — I’m seeing condo prices hold steady (with just a small 3.3% decline over two years) while single-family house prices have fallen steeply. The median single-family house price is now $1,280,000 in Lincoln Park, a 22.4% drop over two years earlier, when the median was $1,650,000.

This plunge suggests the difficulty of selling high-end houses in a time of uncertainly and austerity. In Chicago, only the Near North Side (home to Old Town, the Gold Coast, Streeterville and River North) now boasts higher single-family home prices than Lincoln Park, with a median price of $1.6 million. But that figure also reflects a major drop, down 25.6% in the last two years.

I think there could be something more at work, though. Maybe some luxury buyers are choosing the suburbs over the city? Over the past two years, single-family home prices have held relatively steady across much of the North Shore, including Wilmette, Winnetka and Glencoe.

Written by Sue Fox // Please leave a comment.