Sue Fox, @Properties. Direct 773.816.1788
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Archive for the 'Uptown' Category
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.
Yesterday I took some buyers out house-hunting in Uptown, a historic neighborhood packed with vintage architecture, restaurants, nightclubs, and classic music halls like the Riviera, the Aragon Ballroom and the Green Mill jazz club. One of the best aspects of Uptown, in my humble realtor’s opinion, is that it’s one of the only North Side neighborhoods close to the lake that offers big, roomy, vintage homes at affordable prices — and the prices have gotten even more affordable lately.
If you’re looking for lots of space — meaning a large living room (often with a fireplace and built-in bookshelves), a separate dining room, spacious bedrooms, an eat-in kitchen, and often a sunroom and back deck to boot — Uptown should definitely make your short list. Condo buyers in particular should check out the Sheridan Park section of Uptown, bounded by Montrose, Clark, Lawrence and Broadway, which has dozens of historic six-flats. My buyers and I just visited several 3-bedroom units, with parking included, in the $230,000 to $280,000 range. These condos often sold for $325,000 and up just a few years ago, and they are so big that buyers can be confident they won’t outgrow them in a few years.
For buyers hunting for a single-family home, Uptown features turn-of-the-century gems with lots of space for the money. Many of them are Victorian homes built in the 1890s or Prairie style houses built over the next two decades. For a history lover like me, these homes are so gorgeous that mere words fail to do them justice… So here are some photos to tell the story. All of the homes pictured here are currently for sale:
Chicago two-flats are back… as a good investment option, that is. For much of the last decade, their price had climbed so high as to no longer make sense for many owners. As I had warned in previous posts, it is ludicrous to pay $500,000 or $600,000 (or more) for a two-flat when each unit will only rent for $1,200 or $1,300 a month.
And once the recession hit, this obvious math finally caught up with many two-flat owners. Suddenly people were scrambling to unload these properties, and the price of multi-unit buildings plunged. Now that they are priced more realistically — meaning that if an owner were to rent out both units, it would come close to covering the mortgage and other expenses — Chicago two-flats are suddenly in demand once more.
In Edgewater, for instance, a classic red brick two-flat located at 1300 W Norwood Street recently sold for $370,500. The math here makes sense: Assuming the buyer put down 10% and got a 30-year loan at a 4.5% interest rate, the monthly payment (including property taxes and insurance) would be about $2,525. Each unit has 3 bedrooms and a bath, which in Edgewater would rent for around $1,400 per month, giving the owner $2,800 in income. That’s enough to cover the expenses… which indicates that this purchase is a sound investment. (And in my example, the buyer didn’t even put down 20 percent! The numbers would work even better if he/she had.)
What wouldn’t make any sense at all is paying $600,000 for the same property, which is where it was originally priced in January 2010. The seller had to reduce the price seven times over the next year, finally settling at $429,000. Still, this two-flat closed for nearly $60,000 less when it sold in April 2011.
In Chicago, people sometimes buy two-flats with the intention of converting them into a single-family house. But even then, the property must be obtained for a reasonable price to make financial sense. These days, dozens of affordable two-flats can be found in appealing neighborhoods. I just searched the MLS in four North side neighborhoods relatively close to the lake — Edgewater, Uptown, Lincoln Square and North Center — and found 29 two-flats for sale from $149,000 (a foreclosure in Lincoln Square) to $400,000.
Is it time to jump back into the two-flat market? If the numbers make sense, I say yes.
The monthly sales data is out for February, and the median home price in Chicago — now $177,500 — appears to be pretty much what it was a year ago. It’s actually a tad higher (by $1,000). Perhaps prices have finally stopped their relentless downward slide in the Windy City.
Yet sales volume continued to plummet, meaning that fewer properties are actually changing hands. A year ago in February, there were 1,225 single-family homes and condos sold in Chicago, according to the Illinois Association of Realtors. But in February 2011, only 1,056 homes were sold, nearly a 14% drop. This is not encouraging news for sellers who are hoping to attract buyers during this year’s spring market.
And prices are way down from where they were even in 2008, which was well after the downturn began. Take a look at Chicago’s median home prices in February over the past four years:
- February 2011: $177,500
- February 2010: $176,500
- February 2009: $218,625
- February 2008: $290,000
This simple chart shows the devastating impact of the thousands of Chicago homes that have fallen into foreclosure or are being marketed as short sales. All these distressed properties have pushed the year-over-year median price down nearly 40% in just a few years.
While home sales have jumped significantly in the Chicago area, another less hopeful housing indicator — home foreclosures — is also on the rise. During the first quarter, more Chicago-area homeowners lost their homes to foreclosure than in any other quarter in the past five years.
Nearly 3,500 homes in the city of Chicago went through a court-ordered auction, the final step in a foreclosure, and 95 percent of them were reclaimed by lenders, according to a recent report by the Woodstock Institute, a Chicago-based think tank. In the six-county Chicago region as a whole, 9,302 homes went to auction during the first quarter.
It looks like the Obama administration’s Making Home Affordable program and other government efforts to stem the foreclosure crisis aren’t working. Loan modification often fails for people who simply can’t afford their homes. Illinois, one of the hardest-hit states in terms of foreclosures, now faces 11.7% unemployment — far worse than the national average. If people are out of work, it becomes pretty hard for them to pay their mortgages.
So what does all this portend for our local market? I see two trends that I expect to continue in Chicago through 2010 and perhaps beyond:
1) The surge in foreclosed homes will continue to push Chicago home prices down across the board, particularly in neighborhoods with lots of distressed properties. In the North side neighborhoods I cover, this would mean falling prices in Rogers Park, Albany Park and perhaps Uptown and Edgewater, and continuing pressure that holds down prices in more affluent areas like Lakeview, Lincoln Square and Andersonville.
2) The foreclosures — at least the ones in decent shape — will present an attractive buying opportunity for both first-time buyers who couldn’t afford a home in years past, and investors who are taking advantage of the bargain prices. I’m even seeing investors who buy foreclosed houses and condos, spruce them up a little, and then flip them back onto the market. Often the end buyer, who still gets a deal on the price, is a first-time home buyer.
- 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