Sue Fox, @Properties. Direct 773.816.1788
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This spring, it seems that Chicago homeowners have gotten the message that housing prices have dropped considerably — and they’re not coming back anytime soon. As I meet with prospective sellers this month, I’m sensing a sober new attitude towards selling their homes. People are being realistic, thoughtful, even calm as they digest the latest sales figures in their neighborhood and decide on a reasonable price.
It’s a noticeable change from recent years, when sellers were apt to be more skeptical of the comps, and more insistent that their home must be worth more. Chicago home prices have been falling steadily for about five years now, with each year worse than the last, and at this point many of those folks who wanted to sell in 2007 and 2008 but kept waiting until the market recovered have finally concluded that a rebound could be years off. Do they want to keep waiting?
Some of them, the ones who really need to sell, are deciding to bite the bullet. I have four new listings on or about to hit the market, and all of the sellers know that they are not going to make any money on their sale. Three of them are listing their homes for less than what they paid four or five years ago.
While the circumstances vary, it’s not uncommon these days for people selling an ordinary, run-of-the-mill condo to lose $50,000 on their sale, when you factor in the commissions and closing costs. That’s why inventory in Chicago is so low right now — the month’s supply in January was 30% lower than it was a year ago. People who can’t afford to sell simply aren’t selling (or else they are attempting a short sale.) People who can afford to sell are, it seems, finally pricing their homes to actually sell them.
And deals are getting done. I just sold a house in Evanston last week… for about 10% less than the seller paid for it in 2004.
Chicago home prices slipped again in December, capping another dismal year for the Chicago real estate market. According to the Standard & Poor’s/Case-Shiller Home Price Index, average home prices in Chicago fell 7.4% in 2010. This is even worse than the 7.2% drop in 2009 (but not as bad as the 14.3% plunge in 2008.)
As a whole, the 20-city index has fallen 31.2% from its peak, according to data released this week. Average home prices in Cleveland, Detroit, Atlanta, and Las Vegas are now below what they were 11 years ago. Robert Shiller, the Yale economist who co-founded the index, said this week that he sees “substantial risk” that home prices will continue to fall — which would put Chicago (along with Dallas, Charlotte and Minneapolis) there, too. In Chicago, the home price index is already back to its March 2002 level.
Chicago condo prices, which until now have remained one of the brighter spots in our market, fared even worse in 2010. Condo prices fell nearly 12% citywide, substantially worse than the 8.7% decline in 2009 and the 7.3% drop the year before. The condo index has sunken back to its July 2001 level, making this a lost decade for Chicago condo prices.
But not everyone is lamenting. This is a fantastic time to be a buyer, obviously (if you have cash or can qualify for a loan!) Home buyers have their pick of some very choice Chicago real estate at what are now basically the lowest prices seen in a decade.
I’ve noticed that inventory is down, however — probably because so many home owners can’t stomach the idea of selling at these prices. Fewer people are listing their homes for sale than in recent years. Last week, for example, there were only 1,120 property listings in Chicago, compared to 1,552 a year ago. That’s a significant drop — 28% fewer listings in just one year. The decline means buyers have fewer properties to choose from, so the popular ones may actually attract multiple offers.
Check out my latest listing, a lovely 2-bedroom, 1-bath condo in the heart of east Lakeview, at the corner of Waveland and Pine Grove. It’s the ideal mix of vintage charm and modern upgrades, and it’s priced to sell at $235,000.
Located at 3702 N Pine Grove Ave., this condo is in a great neighborhood, about two blocks from the lake and half a mile to Wrigley Field. Right when you walk inside, you feel the warmth of the interior, which has beautiful wood trim and hardwood floors throughout. This property features a large living room with a wood-burning fireplace, a formal dining room, and an updated kitchen with stainless steel appliances. It comes with a private balcony as well as a rear deck, and the building has a roof deck as well.
You can see more photos here. It’s a lovely place, and unlike many vintage condos this one comes with a washer and dryer inside the unit.
Please call me at 773-816-1788 if you’d like to see this condo. At this price, it won’t last long!
When will it end?
Not in 2010, apparently. The latest round of real estate data shows that Chicago home prices fell 5% to a median $199,250 in December 2010, compared to the same month a year earlier, according to the Illinois Assn. of Realtors. And substantially fewer homes changed hands: Chicago home sales (single family and condominiums) totaled 1,444 sales in December, an 18% decline from the 1,767 homes sold in December 2009.
The housing numbers look different, however, if you survey the entire year’s activity. For the year, Chicago home sales dropped only slightly; they fell 1.6% with 19,089 sales in 2010, compared to 19,398 sales for 2009. This stability was undoubtedly due to the giant pillar propping up the housing market all spring — the federal tax credits for home buyers. Once that artificial support was removed, both sales and prices plunged. For the year, Chicago’s median sales price fell 8% to $207,000.
“Buyers are finding value and opportunities in the marketplace and making long-term investments in real estate due to compelling pricing and low interest rates,” said Mabel Guzman, president of the Chicago Assn. of Realtors. “The median price for the city of Chicago in 2010 was $207,000, down from $225,000 the previous year, reflecting the influence of distressed properties in communities across Chicago.”
I’m beginning to hear both buyers and sellers ask the obvious question: Are we at the bottom? We could be bumping along it, I think. Across the country, the average home prices in major cities have fallen to their lowest point in many years, according to a recent New York Times story. The latest Standard & Poor’s Case-Shiller Home Price Index show home prices in nine of 20 cities — including Chicago — have fallen to new lows for this economic cycle. The Chicago index has slipped 7.6% from November 2009, with most of that decline happening since September.
A couple days ago I met with a group of about 25 seasoned @properties realtors to discuss a weighty topic in our topsy-turvy industry: pricing. Leading the discussion was Paul Boyd, our assistant managing broker and performance coach, who emphasized that Chicago homes that aren’t selling in today’s market are, by definition, over-priced. If they were priced correctly, he pointed out, they would attract a buyer.
The realtors gathered around the conference room swapped stories about stubborn sellers who refused to lower their prices, their homes gathering dust without showings for months. We recalled others — the ones who listened to us! — who agreed to a reasonable price right off the bat and quickly found buyers. We lamented the difficulty of telling “the brutal truth” to sellers: Your property is worth much less than you had hoped.
Finally, Paul advised one of us to tell a seller (someone who was unwilling to lower her price, despite being on the market for months with no showings), “I think you should stay here.”
Because that, after all, is what it really comes down to. Do you want to move, or do you want to stay? And if the answer is move, that usually means you are going to have to lower your price. More than you wanted to. More than your neighbor did when she sold two summers ago. Maybe more than you can really afford. But enough so that buyers who are out house-hunting this spring will actually come to visit your home, realize that it is well-priced, and be confident enough to make an offer.
How much is enough? Your realtor should have a pretty good idea. Ask her or him to sit down with you and carefully explain the comps for your neighborhood and type of home, so that you can see clearly what similar properties are selling (or not selling) for. If your home is already on the market, consider how much traffic you’ve been getting and what comments prospective buyers have made.
And whatever you do, do not simply leave your house or condo on the market for months at the same price! If it’s not selling, that means it’s priced too high for the current market. And if you’re not willing to lower the price, as Paul says, maybe you should just stay put.
Got a million dollars? If the recent sales figures are any indication, more wealthy home buyers are sinking their cash into Chicago real estate, driving up sales of condos and houses priced at $1 million or more. Sales of such properties jumped 31% in 2010, according to a recent story in Crain’s Chicago Business.
Such transactions are relatively rare: There were only 480 Chicago home sales for $1 million or higher in 2009, and 630 last year. These pricey properties, which are typically found in choice neighborhoods such as Lakeview, Lincoln Park, Old Town, Gold Coast, and Streeterville, tend to move slowly, sometimes taking a year or more to attract a buyer. In a sluggish market like ours, this means the backlog of unsold luxury homes could easily amount to an 18-month supply — more than twice the inventory we’d see in a healthy market.
The downtown Chicago condo market helped drive the increase in high-end sales, according to Crain’s. Luxury condo sales soared nearly 50% , to 364 units in 2010. Closings at new high-rises — like the Gold Coast’s Elysian Hotel & Private Residences, 11 E. Walton St., and Walton on the Park, 2 W. Delaware Place — contributed to the increase.
If you’re in the market for a high-end property, now may be the ideal time to buy. The median price of Chicago’s luxury single-family houses slid 12% to about $1.3 million last year, compared to $1.5 million in 2009. The median price for high-end condos actually rose a bit, but it was skewed by sales at top-shelf projects such as the Elysian. In general, Chicago condos with million-dollar price tags can now also be found in (the swankiest corners of) the bargain bin.
The new year is here, and Chicago’s classic brick bungalows — a beloved favorite of mine — are once again popping up for sale, at prices similar to those last seen five to ten years ago.
Here is a new listing that just hit the market this week: a 5-bedroom, 2-bath home on a 30-foot-wide lot near the river in Albany Park. Located at 4940 N Whipple, this 1921 bungalow features original woodwork and some updates such as newer electrical service, 3-year-old tuck-pointing of the brickwork, an updated garage, and a tankless water heater.
The large 17 x 16 foot living room is vintage bungalow style, with a (decorative) fireplace flanked by bookcases and topped with a lovely leaded glass window. The rear panels of the bookshelves appear to be made of beadboard, giving them a classic look. There is also a formal dining room and hardwood floors throughout the house.
The bungalow, described in the listing as “deceivingly large,” features three good-sized bedrooms on the main level, and two large rooms on the second floor. The basement is partially finished. But some areas need work, including the kitchen, which has outdated cabinetry and white appliances.
Priced at $349,900, the house sits on the eastern edge of Albany Park, right beside Lincoln Square. If you would like to see this bungalow, or any other home, please give me a call at 773-816-1788.
Andersonville, home to the tony Lakewood-Balmoral district of beautiful turn-of-the century homes, is now seeing a variety of historic homes selling at bargain prices. Even some of the gorgeous rambling Victorians — the kind that used to routinely go for more than $1 million — have been selling at sharply reduced prices.
Take 1450 W Summerdale, a 4-bedroom, 3-bath, elegantly restored Queen Anne Victorian that sold in December for $837,000. It was originally priced at $939,000 when it hit the market in May 2010. Or 5418 N Magnolia, a historic 1911 house in Lakewood-Balmoral that was offered “pre-foreclosure” for $975,000 in June. It sold in October for $825,000.
New homes — a relative rarity in Andersonville — could also be found in the bargain bin. 1619 W Winona, a newly constructed 5-bedroom home featuring a media room with a wet bar, a chef’s kitchen, and a roof deck was priced at $925,000 when it hit the market last January. It sold for $867,000 in July.
I’ve lived and owned property in Andersonville for six years, and a few years ago it was nearly impossible to find a single-family house here for less than $500,000. But several Andersonville houses have recently sold in the $400,000 range, including a short sale at 1701 W Farragut that went for $400,000 in September. This one was a lovely 3-bedroom house, built in 1904 but still in good condition, with an updated kitchen. (It lacked a garage, however.)
Another short sale, a 3-bedroom brick Victorian at 1657 W Carmen, sold for $435,000 in August. With an updated kitchen and baths and a lofted third bedroom, the house was originally priced at $575,000 in October 2009. And 1520 W Hollywood in north Andersonville, a cute and compact 3-bedroom in updated condition, sold for $397,000 in August. I remember showing this little blue house to buyers over the summer, when it was priced at $450,000.
So if you love Andersonville’s friendly vibe, the restaurants and shops along Clark Street, the leafy streets and proximity to the lake and Red Line, now is the time to put down roots in a great community where houses used to be out of reach for everyone but the wealthy.
The decline in Chicago real estate prices does have its upside. For example, it’s now possible for buyers to afford a historic home in leafy, tree-lined Edgewater for less than $500,000.
And they aren’t all fixer-uppers. Many of these spacious houses are already in fine condition, with perhaps a bit of cosmetic work to do.
Consider 6329 N Hermitage, a rambling American four-square home built in 1903 that has four bedrooms on the second floor and two more upstairs in the attic. The lot is large by Chicago standards: 37.5 feet wide and an extra-long 162 feet deep. It looks fairly well-maintained and gets lots of light, and it features a large unfinished basement with high ceilings (a plus for those inclined to renovate.)
Other recent Edgewater offerings include 1413 W Hood, a 3-bedroom house with original oak trim throughout, refinished floors, a new kitchen and baths, and a six-year-old roof. Priced at $475,000, it’s been on the market less than a month.
There’s also 1619 W Bryn Mawr (which is closer to Andersonville), a cute 3-bedroom with a new kitchen, new baths, and a fully finished basement. It was listed for sale a month ago at $499,900.
These are charming houses in good locations at prices that were unthinkable even two years ago, when similar houses were selling for $600,000 and up. So if you are one of Chicago’s many condo owners who face a loss if you sell now, take heart! You will only gain when it comes time to buy your next home, especially if you’re moving up into a single-family house.
Chicago’s real estate market continues to gasp and wheeze this autumn, with the Illinois Association of Realtors reporting that homes sales fell 27% in September compared to the previous year. The city’s median price dropped like a stone as well, falling 20% — from $225,000 a year ago to $180,000 this September.
However, if you look at the entire year, things are a bit brighter. Thanks largely to the now-expired federal tax credit for home buyers, Chicago’s year-to-date sales jumped 11% during January through September 2010, compared to the same period in 2009. The year-to-date median home price fell 8%.
Looking ahead to the always-slow winter season, I would say that qualified buyers have a great opportunity to buy a home at both a stellar price and interest rate … but everyone else (sellers and existing homeowners) is in for a long, chilly slog towards spring.
The number of foreclosed homes, meanwhile, is soaring in Chicago. In fact, the Chicago metro region recently ranked third in the nation for foreclosures, with more than 12,000 foreclosed homes in the third quarter of 2010, behind only Phoenix and Miami. The Chicago area’s foreclosure activity jumped 35% in the third quarter, according to RealtyTrac, a company that tracks distressed properties.
Some of Chicago’s more affluent neighborhoods — like the Loop, West Loop, South Loop and Lincoln Park — have also seen large increases in foreclosures. In the Loop, for instance, there have been 205 foreclosure filings during the first nine months of the year, a 77% increase over the same period in 2009, according to data compiled by the Woodstock Institute, a non-profit research group based in Chicago.
The troubled buildings in the Loop include River City at 800 S. Wells, where there were 16 new foreclosure filings in the last three months; Century Tower at 182 W. Lake St. (nine foreclosure filings); Park Millennium at 222 N. Columbus Drive (six), according to the Woodstock Institute. In the South Loop, where many of the newer condo buildings have ended up filled with renters, a handful of buildings had two-thirds of the recent foreclosure filings: 1620 South Michigan Ave. (twelve); Vision on State at 1255 S. State St. (eleven); and 1720 South Michigan Ave. (eight).
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