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More Chicago buyers shun condos and choose houses instead

filed under: Albany Park, Buyers, First-time buyers, Irving Park, Jefferson Park, Market conditions, Portage Park posted on February 5th, 2012

Irving Park, Chicago house

HOME SWEET HOUSE: More Chicago buyers are bypassing condos in favor of single-family houses. This 3-bedroom Irving Park house on an extra-large 50x163 lot recently sold for $225,000. It had a newer roof, but the listing noted that the house "will need some updating."

I’ve witnessed an interesting trend emerging in recent months, just by watching my own buyers as they move through the home-hunting process. And now I have some hard data to prove it: Chicago buyers are increasingly buying single-family houses, often skipping right past the condo stage that was once the point of entry for first-time buyers.

Five to ten years ago, if you were a North side buyer approved for a loan of $200,000 to $400,000, your best option was often to buy a condo if you wanted to live in a lively neighborhood with plenty of restaurants and shops (and sometimes even the lake) within walking distance. The Loop, South Loop, River North, Bucktown, Wicker Park, Lincoln Park, Lakeview, North Center, Roscoe Village, Lincoln Square, Andersonville, Uptown, Edgewater — all of these areas were bursting with new condo developments that made the most of city living at prices that were affordable for first-time buyers. Most of these folks never even considered buying a single-family house.

But today, Chicago housing prices have fallen so far that decent 3-bedroom houses can now be had for the price of a condo. The demand for single-family houses has climbed rapidly, with 37 percent of Chicago buyers choosing a house in 2011, according to data gathered by the National Assn. of Realtors. Two years ago, only 27 percent of buyers made a similar choice.

Likewise, the appetite for condos has waned. Just 39 percent of Chicago buyers opted for a condo in a building with at least five units in 2011, compared with 54 percent in 2009. (The rest presumably bought townhouses, two-flats or some other type of residential property.)

Among my buyers, the shift seems to be happening because they realize that by compromising a bit on the neighborhood, they are able to find a house for $200,000 to $300,000. These houses generally are neither large nor new. They tend to be around 1200 to 1600 square feet (often a bungalow, a ranch house, or an A-frame home) and they often need some cosmetic updating, especially things like refinishing the floors and renovating the kitchen and baths. But they usually offer all the appeal of a single-family house — including a backyard, garage, and basement, while NOT including a condo association, upstairs or downstairs neighbors, or monthly assessments.

“I never dreamed we would be able to afford a house,” one of my buyers recently told me. But more and more buyers can — particularly if they are willing to look a bit further west than they may have lived previously. Instead of the neighborhoods mentioned above, areas like Irving Park, Albany Park, Avondale, Logan Square, Portage Park and Jefferson Park are now attracting Northsiders who want a house but may only have $250,000 or so to spend. At price points around $300,000 and above, you can sometimes find newly rehabbed houses with finished basements in these neighborhoods. There is literally nothing to do but move in (which, in years past, was often the appeal of many new and gut-rehabbed condos.)

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Chicago home prices sink again

filed under: Buyers, Chicago home prices, Chicago home sales, Foreclosures, Market conditions, Short sales posted on January 28th, 2012

ANOTHER FORECLOSURE:

ANOTHER FORECLOSURE: This 4-bedroom, 2-bath house in Albany Park just closed for $160,000 -- which is roughly the median price these days in Chicago. It was a distressed property, like almost half the sales now taking place in the city.

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.

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Luxury home sales dive in Chicago

filed under: Buyers, Chicago home prices, Chicago home sales, North Center posted on January 18th, 2012

MILLION-DOLLAR HOUSE: This new

MILLION-DOLLAR HOUSE: This nearly new4-bedroom house, located in North Center in the Coonley school district, sold in November after less than a month on the market. The sale price was exactly $1,000,000, though the home was listed for $100,000 more.

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.

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A bright spot in North Center: Single-family home prices up 7.5%

filed under: Buyers, Chicago home prices, North Center posted on January 15th, 2012

ROSCOE:

ROSCOE VILLAGE CHARM: This renovated 3-bedroom in the heart of Roscoe Village sold in 2011 after just three weeks on the market. Located in the Audubon school district, it featured large bedrooms, a finished basement and a backyard with a deck. Priced at $669,900, it sold for $625,000.

While home prices in most Chicago neighborhoods have been steadily falling, North Center — a desirable area with good schools and walkable neighborhoods like Roscoe Village — is bucking the trend. In 2011, the median price for a single-family house here rose to $805,000, a 7.5% increase over the year before.

More of these lovely houses are being sold, too. Sales of North Center houses soared almost 23% in 2011.

Condo prices in North Center, meanwhile, have held steady, ranging from a median of $365,000 to $370,000 over the past three years. Considering that condos in many other North Side areas have fallen at least 10-20% in value in recent years, North Center is definitely holding up quite well.

As the new year begins, I have two buyers looking in North Center, both young couples with children interested in homes available here in good elementary school districts such as Coonley, Bell and Audubon. And despite the relatively high median price of $805,000, you can definitely find an updated 3 or 4-bedroom house in North Center for considerably less money. More than 30 houses, many of them century-old homes that have been renovated, sold for $500,000 to $700,000 in 2011.

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Buyers on prowl for bargains in 2012

filed under: Buyers, Foreclosures, Market conditions, Short sales posted on January 3rd, 2012

West Town, Chicago home

SELLING SHORT IN WEST TOWN: It's been a long road for this short sale, a modern 5-bedroom house located at 1634 W Erie. It was built in 2006 and originally priced just over $1.2 million. But despite being billed as a "smart" house with skylights throughout, high-end appliances and a media room with stadium seating, it never sold. By 2009 it was marked down to $680,000 and offered as a short sale. It's been under contract -- but failed to close -- four times in the last two years. The home is now priced at $615,000 and the listing says it's an "approved short sale" that can close in 60 days.

Happy 2012! Especially if you’re a home buyer.

From what I’ve been seeing over the past few weeks, Chicago buyers are already out shopping for their next home. Even during the height of the holiday season, I witnessed: One of my condo listings go under contract two days before Christmas, two separate buyers (in the Loop and Uptown) who are preparing to make offers this week, and another three new buyers who are starting their single-family home searches (in Bucktown, Irving Park, and Andersonville).

Home sales are on the rise throughout Chicago… but home prices are not. And neither, for the time being, are mortgage rates. That’s why it’s such an incredible time to be a home buyer. At no other moment in the past decade could you find home prices so low in Chicago (the median is now $160,000, nearly back to the levels of 1999), nor interest rates hovering below 4% for a 30-year fixed mortgage. Savvy buyers with solid income and credit scores are seizing the moment — and many people are simply paying cash for their properties these days, if they can afford it.

A major trend in 2012 will undoubtedly be the flood of foreclosed and short sale properties hitting the market; they already make up almost half of Chicago’s home sales. Illinois now ranks fourth in the nation for foreclosure activity, with 12,398 properties receiving foreclosure filings in November alone. In Cook County, foreclosure activity jumped 20% in November, according to a recent story in the Chicago Tribune, which attributed the rise to a 57% increase in homes sent to court-ordered auctions.

Buyers are out there, but they are definitely looking for bargains in 2012. And with homes now selling for about 30% less than what they commanded just a few years ago, bargains are not hard to find. It’s much harder to find home sellers — particularly the traditional kind who aren’t in foreclosure or attempting a short sale — willing to accept the new market reality and price their properties accordingly.

Written by Sue Fox // 1 Comment »

Chicago home prices drop 12% in year

filed under: Buyers, Chicago home prices, Chicago home sales, Market conditions, Sellers posted on December 25th, 2011

UNDER CONTRACT:
UNDER CONTRACT IN ANDERSONVILLE: This 4-bedroom house, listed at $524,500, found a buyer this month after more than a year on the market. The price started at $699,000 and was cut multiple times.

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.

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New houses spring up in North Center

filed under: Buyers, Developments, Market conditions, North Center posted on December 20th, 2011

SPEC AND SPAN: This Roscoe Village home

SPEC AND SPAN: This Roscoe Village 5-bedroom home, planned for an early spring delivery, is priced just under $1.2 million. Richard Kasper of Conlon Real Estate has the listing. Spec builders, newly hopeful about selling luxury homes, are building several dozen new houses in well-heeled Chicago neighborhoods like North Center.

Little by little, Chicago developers are once again breaking ground on new houses on lots sprinkled across the North side, bringing dozens of high-end homes to neighborhoods like North Center (which includes Roscoe Village and Ravenswood), Lincoln Park, and Bucktown. In North Center, for example, 18 new homes were sold this year, another 16 are still on the market, while 4 more are under contract.

It looks like Chicago is now witnessing the Return of the Spec Builder — local developers who plan, design and build single-family houses without having a buyer lined up ahead of time. “While spec building never entirely dried up, it slowed significantly after the bust, leaving only a few developers with deep pockets still standing” said a recent story in Crain’s Chicago Business. “Now, smaller builders that waited for signs of life — and the availability of financing — are once again breaking ground on million-dollar-plus homes, confident that buyers will bite.”

In North Center, the new homes for sale range from a 3-bedroom frame house at 2440 W Fletcher St. for $649,900 (with delivery planned for 2012) to a 7-bedroom mini-mansion on an oversized lot at 1936 W Grace St. for $1,749,900 (that the builder promises to customize.) But the majority of the homes are 5-bedroom houses, many of them in the Coonley elementary school district, for $1 million to $1.3 million.

A typical offering is 4108 N Claremont Street, which has a large family room on the main floor, a second-floor laundry room, and a finished basement with a rec room and a wet bar. It has been on the market for only a week, priced at $1,199,000. Once finished, it will be just over 4,000-square feet, with amenities like radiant heat, steam showers and an outdoor fireplace.

While Chicago is just starting to see a glimmer of new construction, housing starts — a measure of how many homes builders are working on — are up sharply throughout the country. Today the Commerce Department reported that housing starts jumped 9.3% in November, the highest in the past 19 months. It seems that low interest rates for mortgages, as well as lower home prices, are propelling buyers back into the market for new houses.

In Chicago, developer Mike Barrett of Barrett Homes is building three spec homes, in Roscoe Village, west Lakeview and Bucktown. “I wouldn’t say the market is flush with prospective buyers,” he told Crain’s, “but the people who are looking seem to be well-qualified and have a pretty good idea of what they want in a home.”

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How to sell your Chicago condo in 2012

filed under: Chicago home prices, Chicago home sales, Market conditions, North Center, Sellers posted on December 16th, 2011

274 DAYS LATER...

274 DAYS LATER... This unique 2-bedroom/2-bath Roscoe Village condo, located in an intimate 3-unit Victorian building, hit the market in June 2010 -- not a great time to list a condo in Chicago. Besides missing the spring market when most home-buyers are out looking, this one also missed the $8,000 tax credit the government gave to first-time buyers who signed a contract by April last year. Demand was really low by the summer, and this condo -- which included an office, back deck, large backyard and parking -- did not sell until the following April, 274 days later. By then the price had dropped from $350,000 to $300,000.

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!

Written by Sue Fox // Please leave a comment.

Distress home sales creep into Lincoln Park

filed under: Buyers, Chicago home prices, Chicago home sales, Foreclosures, Lincoln Park, Short sales posted on December 12th, 2011

THE RICH GET POORER: This

THE RICH GET POORER: This 4000-square-foot mansion at 2461 N Geneva Terrace was built with "only the best materials and construction methods" and priced at $6.25 million in 2009. Almost three years later, it had fallen into foreclosure and was sold for $2,725,000. It was one of dozens of homes (mostly condos) sold as a foreclosure or short sale throughout Lincoln Park this year.

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

Written by Sue Fox // 1 Comment »

Home prices expected to rise in 2012

filed under: Buyers, Chicago home prices, First-time buyers, Market conditions, North Center, Sellers posted on December 9th, 2011

A FALTERING FLIP?

A FALTERING FLIP? It's hard to flip a house for a profit when prices keep sinking. This 3-bedroom home in Roscoe Village, a foreclosure, sold in just 8 days for $285,000 in July. But its new owner put it right back on the market, without doing much besides staging it, for $419,000. With prices down about 5% citywide this year, there were no takers. Four months later, the house is still for sale -- now at $339,000.

At last, housing prices will finally hit bottom and begin to increase in 2012, according to a group of 54 economists surveyed by the Wall Street Journal.

The increase will be slight, probably less than 2.5% a year — not enough to keep up with inflation, the economists said. Yet the rebound will still be a welcome relief for homeowners across the country, who saw prices slip again this year. The economists predicted that home prices, as tracked by the Federal Housing Finance Administration, will fall 2.7% in 2011.

In Chicago, we’ve seen home prices drop about 5% this year, according to the most recent data from the Case-Shiller home price index. Prices started to recover here over the summer, only to dip ever so slightly (less than 1%) between August and September.

What’s next for the Chicago market? With interest rates at record lows — local lenders like Guaranteed Rate are now offering 30-year fixed mortgages at 3.85% — it’s still a stunningly cheap time to buy a home. But unemployment remains stubbornly high in the Chicago-Joliet-Naperville area, a factor that is likely to keep a lid on home prices. Even though Illinois led the nation in job growth in October, unemployment jumped from 8.8% a year ago to 9.7% in the Chicago area.

Written by Sue Fox // Please leave a comment.