The Housing Market

[bob]

So what is going on in your neighborhood?

My area is stagnant. There are 8 houses for sale with 2 being listed for over 200 days. I have seen some price drops. These are homes being listed between $475K - $550k. The thing that is scary is that I don't see anyone looking.

I really think these home will sell in the $425-$450k range.

[jenrik2714]

I hope the market is doing good because I am getting ready within the next month to put my townhome for sale in Oakhurst. I am hoping to get 194,000. I have 2 brds 1 loft and a huge master bedroom with a 2 car garage. It is 1800 sq. ft.

I live in Oakhurst in the townhome section, and my neighbor sold their townhome for $174,500 their th is smaller with only a 1 car garage. There are for sale scattered around

[Avenging Eagle]

Here is another sign that it is a buyer's market.

The tribune put it on the front page yesterday!

SHOPPING FOR A HOME? LOOKING TO SELL? EXPERTS SAY AT LAST ...
It's a buyer's market

By Mary Umberger
Tribune staff reporter
Published May 7, 2006

In the housing market, this is what "normal" feels like:

Homes sell in months, not hours. Prospective buyers actually browse. They drift back for a second look at a place weeks later, confident that it still will be available. They want the price cut. And they get it.

It's been a long time--at least five years--since the Chicago area's real estate market worked this way.

But many agents say the buying frenzy is now over, and "normal" has returned. Prices this year will appreciate less rapidly, and in many cases houses won't sell themselves before a sign has even gone into the ground.

That means it's time for a seller attitude adjustment, real estate agents say. Think about making a mere profit rather than a killing.

"I tell sellers, this is not the market we used to have," said Gold Coast agent Jeri Dry. "I tell them to be prepared for a six- to nine-month marketing time, and that's if they're priced correctly.

"It could be a year," Dry said. "Lots of condos have been on the market for 300 days."

Agents see no catastrophic shift from the housing boom times, with homes languishing and prices in decline. The volume of sales appears to be running on a par with last year's record numbers, and there are still towns and neighborhoods where sales continue to clip along.

What has changed in terms of verifiable statistics is that the inventory of homes on the market has surged, even for the traditional spring selling season. Faced with so much competition, many sellers are being counseled to settle in for a longer wait, and think hard about their asking prices.

"You tell them, `Tighten your belt as tight as you can get it,'" said Deerfield real estate agent Honore Frumentino. She said that North Shore homes in the $2million to $4 million range, which already had been selling slowly in 2005, are getting even less attention now.

"We had a three-year supply of those homes last year, now it's up to five," she said.

In the first four months of 2006 the Chicago-area market took on about 97,000 new listings of single-family homes and condos, up from 83,000 new listings in the year-earlier period, according to the Multiple Listing Service of Northern Illinois.

It is too early in the season for statistics on market times and selling prices to indicate the phenomenon of a return to "normal," but interviews with a dozen agencies reveal a clear change in tempo and expectations.

A leading concern, they say, is that while the number of homes on the market is higher, the pace of sales has not changed, resulting in a bigger pool of available stock. That translates into an advantage for buyers.

"I'm worried about selling," said Chip Wagner, whose home in Naperville went on the market about two weeks ago.

Wagner pays more attention to the market than the average consumer because he is an appraiser whose firm compiles studies of home sales throughout Chicago. He said Naperville is a prime example of the market shift.

"There are 30 percent more listings this year than there were at the same time last year, and 20 percent fewer homes under contract," Wagner said. "I'm at a price that we consider to be strong here. But there haven't been many lookers."

His Naperville firm, the Headrick-Wagner Appraisal Group, says Chicago-area homes are piling up. In 2004 there was typically a 2.9 months' supply of single-family homes for sale, meaning that if no others were to come on the market the supply would be exhausted in about three months.

In 2005 that number averaged 3.7 months. At the end of March it hit 4.2. Headrick-Wagner interprets inventory above four months as a so-called buyer's market.

Put another way, Wagner says that about 2 percent more single-family homes were under contract April 1 than one year earlier. Yet Chicagoland's single-family inventory is 30 percent higher than last year.
Such numbers do not mean that the Chicago market is in any kind of bubble trouble or that the average seller is on the verge of losing money, said David Lereah, chief economist for the National Association of Realtors, which reported that the nation had a 5.5-month supply of existing homes in March.

"We've been running under four [months' supply] for the last year or more," Lereah said. "Now we're starting to see supply come up. I regard the danger zone--make that the `yellow flag zone,' where I start to be concerned--at above six months' supply."

Whatever he calls the zone, Chicago isn't in it, he said.

Last year's 8 percent price appreciation here probably will evolve into 3 percent this year, said Downers Grove agent John Veneris, former president of the Illinois Association of Realtors. "At the end of the year we'll see that prices have leveled out, but they won't drop."

The change in market tempo is clearly tied to rising interest rates; the average 30-year rate is up a full percent over last year.

But some industry analysts see other factors at play.

Analysts say that some buyers have gotten skittish--they've heard the word "bubble" so many times that they are holding back, waiting to see what happens. At some point enough people start to think things are slowing down that they behave differently, creating the self-fulfilling prophecy of a slower market.

Real estate experts also surmise that when interest rates were at their lows, some people might have been enticed to buy when they might have otherwise remained renters for a time. Thus the market was dipping into its pool of future buyers, resulting in a bit of a slowdown now.

Then there are the investors, who in the past couple of years have been credited with a stealth influence on the market, pushing prices higher. Some analysts credit them with one-quarter to one-third of all home purchases in 2004 and 2005. That market also may be cooling.

"The rehabbers we had a year or two ago, they all picked up and moved on," said Oak Park agent Donna Karpavicius. "Things changed in a big hurry."

Another reason that some properties are on the market longer is that the housing construction boom, particularly in the city, created a taste for new or totally renovated properties.

"They don't want to do much work," agent Dry said of today's home buyers. "They want to move in, hang up their clothes, and that's it."

And so, some sellers in the "fixer" category, which these days is very broadly defined, may get surprisingly low offers, agents say.

"This is a year when I've had more low-ball offers--people coming in $60,000 to $80,000 below asking prices," said Karpavicius, who recently took over another agent's languishing "needs work" listing of a home in Riverside.

She immediately got the price reduced to $429,900 from $489,500 but has received little response, other than a couple of too-low offers around $350,000.

Karpavicius and other agents said they are encountering price expectations that defy local statistical norms.

"There's a type of seller who expects they'll be able to finance their 2-year-old daughter's Yale education on the sale of their two-bedroom, two-bath," said North Side agent Lino Darchun. "They don't understand the concept of `comps,'" or market analyses of comparable previous sales.

Mike Malloy took a long, hard look at the "comps" last weekend when he met with Downers Grove agent Veneris to discuss putting his Woodridge home on the market.

"If this were last year at this time, I'd be telling him to go $10,000 higher," said Veneris.

Malloy, who with his wife, Maureen, wants to move to Beverly in order to be closer to family, said he is philosophical about the $10,000 difference that a year can make. He's not greedy, he said.

He paid $199,000 in the heat of the boom; the home had been on the market just one day when he bought it in 2003. He figures he'll do well if it sells anywhere near his $274,000 asking price.

"I've only been here three years, so either way, that's a lot of money," he said.

[forthekids]

bob said:

So what is going on in your neighborhood?

My area is stagnant. There are 8 houses for sale with 2 being listed for over 200 days. I have seen some price drops. These are homes being listed between $475K - $550k. The thing that is scary is that I don't see anyone looking.

I really think these home will sell in the $425-$450k range.

A house down the street from me (in WE) just sold in less than two weeks and they got $15K more than asking as there was a bit of a bidding war. I don't know the selling price, but it had to be over $600K.

[doctorwho]

forthekids said:

bob said:

So what is going on in your neighborhood?

My area is stagnant. There are 8 houses for sale with 2 being listed for over 200 days. I have seen some price drops. These are homes being listed between $475K - $550k. The thing that is scary is that I don't see anyone looking.

I really think these home will sell in the $425-$450k range.

A house down the street from me (in WE) just sold in less than two weeks and they got $15K more than asking as there was a bit of a bidding war. I don't know the selling price, but it had to be over $600K.

I believe price range has a LOT to do with it-- the homes in my subdivision range from $375 - $430 or so.

In the last month 3 houses up for sale....

One on a busy road , listed for $20k more than anything in our subdivision has sold for $8K over list in 2 days

One sold full price 6 days

One sold ' BY OWNER" in 8 days for full asking price ...

two more just listed right by me - one family moving about 8 blocks away for home by park - the other was a job transfer to Colorado - will be watching them.....one had a VERY well attended open house last weekend.

There are over 150 homes for sale today in Naperville for $1M + and a glut of homes in the $600K+ range -- lots of transfers as school year winds down etc...also with job market scary, and interest rates while still very good, people got spoiled with the historic lows not so long ago -- less move ups right now....I have a friend owns a multi state mortgage brokerage, and says move ups have slowed in the market.......

[wvhsparent]

My area too 450+ seems to have a bunch on the market for a long time. I too saw the Trib article about the buyers market.. I wonder what that will do to the population projections?
Probably spread them out for a longer period IMHO.

[gumby]

Last month, my neighbors on both sides of me sold their homes "by owner" in 3-4 days. One at full asking price, the other at a 3% off asking price. $496K and $468K respectively at $165/sf and $175/sf. The $468K one will close on Wednesday. The $496K one in a month.

This is in Buttonwood in the court across from the park.

Again, as we have discussed before, it is a combo of price, location, and season. I see houses selling in this area pretty quickly.

[doctorwho]

gumby said:

Last month, my neighbors on both sides of me sold their homes "by owner" in 3-4 days. One at full asking price, the other at a 3% off asking price. $496K and $468K respectively at $165/sf and $175/sf. The $468K one will close on Wednesday. The $496K one in a month.

This is in Buttonwood in the court across from the park.

Again, as we have discussed before, it is a combo of price, location, and season. I see houses selling in this area pretty quickly.

Houses by me going $160 - $165 per sq ft also, and quickly. BTW I think my one neighbor who ismoving bought one of those two houses -- LOL !

[gumby]

lol. I woudn't doubt it. The buyers only live a few blocks away. They bought a great house. The present owners are/were maniacal about upkeep and attention to detail. Closing is tomorrow on that house. The other house ($496K) is being bought by someone in 203.

I think, another aspect is updating and upkeep if you want a fast sale. I heard from both neighbors that people looing at their houses remarked how clean and tidy they were. Apparently people will display homes that are literally dirty. I recall seing a few like that when we were looking around.

So, a clean house in a good location at the right time of year at a decent price (even if it's not the cheapest in the neighborhood) will sell pretty quickly.

[momof3]

Mixed news on the local housing market. It confirms what DrW pointed out earlier - moderately priced homes are still doing pretty well, while the over 500's are taking longer.

What housing bubble?
Naperville homes still selling well despite slowing U.S. market, brokers say

By Larry Avila
staff writer

John Matthews doesn't have time to pay attention to the national trends in his industry.

As sales manager for the Naperville office of Baird & Warner, he has his hands full.

"I track the (Chicago-area) market, but I don't look at how every office is doing," he said.

Many economists have said the nation's red-hot real estate market is showing signs of cooling. Matthews doesn't believe that's true, particularly in Naperville, but the numbers tell a different story.

The Realtor Association of West/South Suburban Chicagoland reports that 444 existing homes were purchased in Naperville between January and April, down about 10 percent from the same period last year and a drop of 17 percent from the same time in 2004, a record year for the industry nationally.

Matthews is unfazed by the figures, but he understands the market isn't what it used to be.

"We're hearing different stories because there are different pressures happening in other markets," he said. "We're lucky to be in Naperville, because the market here still is doing well."

Though the sales numbers are down, homes that were for sale in Naperville between January and April didn't stay on the market long.

The average market time in Naperville during that period was 88 days, which is 22 days shorter than the same period last year and six days shorter than in 2004.


Who's coming to town

Regardless of what the numbers show, people continue to move to Naperville.
Job relocation brought Laura and Robert Steed from Minneapolis. The couple and their three children quickly adapted to life in the region.

"We've moved around quite a bit," Steed said. The couple also has lived in the Dallas area and Omaha, Neb.

Laura Steed said she and her husband were able to find a preschool quickly for one of their children. She said the city's broad selection of housing and its numerous amenities made Naperville an easy choice.

"We've been impressed so far," she said.

Their move was assisted by Robert Steed's employer, ConAgra, which purchased the couple's home in Minneapolis and covered their relocation costs.

Mary Tremonte, a real estate agent with Baird & Warner, helped the Steeds find a home in Naperville.

Tremonte, who said she has averaged about 30 sales a year the past four years, expects to maintain her pace in 2006. Families like the Steeds represent her typical clients.

"There's a lot of young families moving to Naperville," she said. "Many of the people who I've helped move to Naperville are at points in their careers where they're moving up within their companies and want to come to the Chicago area." The hot market

A study of property sales and residential transfer listings that appeared in The Sun between Oct. 7, 2005, and March 24, 2006, shows that the largest volume of transactions were for properties ranging from $100,000-plus to $500,000-plus. About 15 homes purchased during that time were valued at $1 million or more.

U.S. Census numbers show that about 86 percent of the owner-occupied housing in Naperville ranged in value between $150,000 and $500,000. About 4.6 percent of the city's total housing stock was valued at more than $500,000.

Matthews said that if a reasonably priced home – one between $250,000 and $300,000 – becomes available in Naperville, it doesn't stay on the market long.

"The lower-priced homes always will move the best," he said. "The higher-priced buyer is a little bit pickier."

Executive-level homes – those over $500,000 – are a different story.

"About a year and a half ago, it may only take 30 days to sell that kind of home," he said. "Now it may take 60 to 90 days to find a buyer."


Rising mortgage rates

Recent action by the Federal Reserve is driving up borrowing costs, said Andy Whitaker, chairman of the division of economics and business at North Central College. The federal funds rate now is at 5 percent, which is 2 percent higher than last May.
This has pushed up interest rates on home mortgages, which are heavily influenced by 10-year treasury notes, Whitaker said.

"People's money just isn't going as far as it used to," he said. "A year ago, a 30-year mortgage was averaging about 5.5 percent. Now it's above 6.5 percent."

The Fed has indicated that it may continue rasing short-term interest rates to keep inflation and consumer spending in check, he said. If this is the case, it could mean trouble for the real estate industry in the near future.

"If mortgage rates begin to push above 7.5 percent, then we really could start to see it impact the housing market," Whitaker said. "It could make housing less affordable for a lot of people."


Slowing forces

Nationally, Whitaker said, government figures show that the median value of existing homes fell about 3.3 percent. This was caused by an abundance of homes for sale, longer market times and rising mortgage rates.
Record appreciation of housing values in recent years drove investor buyers into the market, hoping to capitalize on the boom, he said. It's this segment that is trying to sell to now.

"In some sense, there is a bubble – that prices have gone up so much that they are really not sustainable," he said. "But as an investment, real estate still is safer than the stock market, because you won't see the real estate market take major drops like the financial markets."

Historically, real estate appreciates annually, even during stagnant markets, Whitaker said.

Matthews said some areas of the East and West coasts have seen rapid real estate appreciation. Home values in Sarasota, Fla., for example, soared 43 percent the past few years, he said.

That kind of appreciation has not happened in the Midwest, Matthews said.

He said the National Realtors Association expects real estate appreciation this year to return to more historic levels of between 4 percent and 10 percent. If this is the case, Matthews said 2006 still will be a good year for real estate agents.

"January wasn't a stellar month for our people, but it wasn't for a lot of brokers," he said. "Things picked up in February, March and April, and while homes may stay on the market a little longer this year, they still will sell."








05/21/06

[cantretirehere]

In my sub there are usually no more than 2 houses for sale each spring. This year I counted at least 10 for sale on my walks. All have sold pretty quickly and the 1200 sq ft ranch across the street from me was asking 339,000 but I doubt they got that. I think they ended up getting 320,000 so that puts it at approx $267 a sq ft.

Many of the neighbors are wondering out loud why there are so many houses for sale in our subdivision this spring.

The price ranges of the homes in our sub are from 320,000 to 475,000 so our lower prices could be why they sell fast.

I crack up, the houses in the 320's were about 75,000 when they were first built 25 years ago.

[gumby]

I'd love to get $267/sf !! That would mean almost a million dollars for us . . . somehow I don't think that's happening too soon.

[cantretirehere]

I think that some houses in our neighborhood get a lot per sq foot for a couple of reasons.

The biggest reason is that we walk to elem and middle we are a hair ouside the walking area for HS. Which leaves the walking to HS option open in emergencies (I make my daugher ride her bike to school on the days she misses the bus). Before they were driving, my kids rode their bikes to play tennis at Neuqua. So that is huge factor in the pricing. There are very few neighborhoods in which a kid can walk to all three levels of schooling.

Another reason is that we are probably one of the last few incorporated neighborhoods (in the last 20 years anyway) that have large yards. The smallest is a 1/4 acre, and we have many that are larger. Since the footprints of the homes are smaller it gives us even larger yards.

Something that makes our homes sell faster is that they are smaller than all the new homes being built. We have homes as small as 1100 sq ft. and as large as 3500 sq ft. So we are definitely in more people's price range. To top it off, starting with Ashbury and on through the years, builders haven't been building many smaller homes in the south of Naperville.

The homes have been updated over their life span so the buyer isn't wanting for some of the things they find in high end homes like hardwood floors and granite countertops, etc. If someone wants into 204 they are willing to pay a bit more per sq ft for a smaller house than they are for a larger one because it will still be affordable and since the houses sell fast they can't afford to hem and haw.

Unfortunately, the homes in the 400,000 to 600,000 range in south Naperville have a lot of competition when selling because there are a lot of them and they are all very similar in amenities. So sellers are willing to go down a bit after they are trying to sell their house for a while. Buyers really have their pick (and there is no rush to buy because if a buyer misses out on one house a similar house in a similar price range will be for sale in a couple of days) in that market. That drives down the $ per sq ft.

E.T.A. - Mature trees help also. Give the south of Naperville another 25 years. It will be really nice when the trees grow.

[gumby]

Interesting dynamic. I'm not very familiar with your area. Up here in the Buttonwood area (just across from Central HS), the $160-$170 is the going range it seems. Houses move fairly quickly because there seems to be not much middle ground here. You either pay 450K to 600K or you get into a tear down for a Mil plus. Houses here are between 2500 and 3500 sf it seems. Some are nominally smaller or bigger. Yards are relatively large as well 1/4-1/3 acre). But, I know we'll never hit the $260/sf mark anytime soon. You're in a fortunate situation.

I definitely see the competition scenario in that part of Naperville having an effect on the market.