Robert Darrow, @properties

Archive for the ‘Marketwatch’ Category

Both buyers and sellers ask about timing the market, and this Spring is no different.  Your Guide is advising sellers that are ready to go on market and buyers that are already out hitting the pavement. 

This year will prove to be unique.  There are several factors that will have greater influence of the cycle of sales this year than the normal seasonal cycles. 

Superbowl

The first milestone in a normal selling year is the Superbowl. (Read last year’s spring market kick-off post here.)  But this year, Superbowl is later than normal.  With itchy buyers already out shopping, smart sellers are already on the market, or just about ready to get on the market. 

If you START prepping for your Spring market sale just before Superbowl (which is February 7) and get on the market a few weeks later, your selling season is critically short.  Give yourself the extra three weeks of breathing room if you can get to market this weekend.

Home Buyer Tax Credit

The Home Buyer Tax Credit expires at the end of April, although closing can occur through June.  This is going to drive the Spring market, but will also move Summer buyers early in the season.  With some Summer buyers under contract ahead of schedule, we are predicting a slower than normal summer selling season.  This is another solid reason for sellers to push to get their homes on the market as early as possible. 

Fed influence on interest rates

The Fed runs out of money at the end of February.  Currently, the Fed is pushing interest rates artificially lower than the market which is why we currently have both conforming and jumbo loans as low as 4.875% and hovering around 5.0%.  When the Fed can no longer afford to push rates lower at the end of February, we are expecting rates to jump a bit; then continue rising to over 6%.  Historically, still a great interest rate, but with buyers used to rates near 5%, this will have a cooling effect on sales.

Each month Zillow emails me to tell me how much my house is worth.  I write about it each time so we can all live the dream.  (All the articles here.)

I’m delighted to receive this Holiday Bonus in my email this morning:

Slowly but surely, we’re clawing back to first-half 2009 levels.  Ahh, the good old days!

If all the months that I’ve been receiving updates on the townhouse, I think this month might be the most accurate.  One of my neighbors is on the market for $570,000 but has not sold.  One offer with a contingency, but that offer fell apart.  So it’s still on the market.

I’d love to know if you think there is value in upgrades and electronics.  The one for sale is pretty bare-bones.  Mine has a whole bunch of toys.  If giving advice to customers, my advice is normally that the bonus features don’t add value.  $25,000 in electronics, though?

Your Guide visited with some great clients over the weekend and went on a tour of Lincoln Park Townhomes.  These great clients asked about the possibility of locating a foreclosed unit.  And I had not found any.  I referred back to my earlier research on finding foreclosures in Chicago, but wanted to find out some hard data.  So for their benefit, and yours:

It’s not easy to find a foreclosure deal in most Chicago neighborhoods post here

Still getting requests for foreclosures post here

And the hard numbers:

• Lincoln Park has 1 townhouse for sale that’s in foreclosure
• Lincoln Park has 20 other regular condos for sale that are in foreclosure.  Mostly in less-desirable high-rises on the lakefront.
• There is 1 house in foreclosure for sale
• There are four 2-4 units in foreclosure for sale

Check out the map below from Realty Trac that shows where the most foreclosed homes in Chicago are located.  This affirms my earlier research that where the foreclosures are is not necessarily where my premium North Side buyers want to live.

Each month Zillow emails me to tell me how much my house is worth.  I write about it each time so we can all live the dream.  (All the articles here.)

I’m delighted to receive this Holiday Bonus in my email this morning:

Slowly but surely I am making up the mid-crash price drop.  If one of my neighbors’ units eventually closes, this could possibly shoot up even more. 

It’s interesting to watch the ragged edged estimate for my house sort-of mirror the ups and downs of the surrounding Lakeview neighborhood.  Finally some of these reports show some consistency.

Let’s see if Zillow agrees with my research:

The entire Lakeview neighborhood includes zip codes 60657 and 60613.  The graphs above disagree with the Zillow reports, but they include the 60613 zip codes that the Zillow reports don’t.  60657 is the south half of Lakeview right next to Lincoln Park.  Well, it’s true what they say about “location, location, location.”

Your Guide participates in the Credit Suisse Monthly Survey of Real Estate Agents which surveys a few thousand real estate agents across the US to gauge trends in new and existing home markets.  Agents comment on whether buyer traffic meets, exceeds or falls short of expectations each month.

Some highlights of the November Survey for Chicago

Modest decline in traffic in November; greater challenge is the lack of
urgency among buyers.

Traffic declines in November, falling below expectations. Our buyer traffic index fell to its lowest reading since July, coming in at 34 in November from 36 in October, indicating traffic levels below agents’ expectations over the past 30 days. Agents pointed to “employment issues” and a pullback from first-time buyers in our November Survey.  Agents mentioned that traffic was weak because people were “unsure” about their future job security, becoming discouraged from entering the market. We also saw a continuation
of the decline in first-time buyer demand we observed toward the end of our October Survey, despite the extension of the credit. One agent noted that, “First-time buyers have really slowed down on purchases,” while another said, “The extension of the credit has taken the urgency out of the market.” In addition, some agents said that, “Property is overpriced” despite agent commentary that buyers, “Still think the market has not bottomed out.”

Your Guide’s recent sales have been split equally between health care professionals and technology providers.  Health care seems to be one industry that is relatively healthy despite the woes in the job market in Chicago.  Tech executives face a bit more uncertainty, but execs with secure jobs certainly made moves in the fall, taking advantage of the Home Buyer Credits.

Each month Zillow emails me to tell me how much my house is worth.  I write about it each time so we can all live the dream.  (All the articles here.)

It’s all good news this month.  Not big.  But good, nonetheless.  This “Zestimate” is up 2.5% from October.  And October was up 2.9% from September.  This erases the theoretical losses from July through September where the estimate plummeted to a low of $535,000.

I like the trends as well.  Prices are edging UP in zip code 60657 whether you slice the data for 30 days, a year, 5 years or long term.  Delightful!

Chicago area home sales for existing homes jumped 33% compared to 1 year ago according to stats just published by the Illinois Association of Realtors.  It also marks the fourth straight month of increases compared to the same month a year ago.

Sales inside the City of Chicago also rose 28.5%, the second month of increase.  Sales were up 24% in Illinois, and the national figures were also 33% higher than sales from a year ago.

All the headlines and links:

Chicago Sees Surge in Home Sales

Chicago area home sales soar 33.3 percent

Chicago-area home sales soar in October

Home sales jump in Oct.

Chicago-area home sales jump 33%

Your Guide has a listing appointment later today for an owner that has two units for sale in a Lake Shore Drive high rise.  The family owns a corner one bedroom and the studio next door which is currently attached with an interconnecting doorway in order to use the studio as a master bedroom suite in its entirety. 

Since I haven’t posted charts and graphs in some time here at The Guide, what better opportunity to kill two birds with one stone than to share the research on pricing for one bedrooms and studios here.

STUDIOS

My favorite statistic on the Studios in the graph above:  Over a two year period, the FOR SALE price for studios has only fallen $1,000 – or 0.7%.  But that the SOLD price for studios has fallen $32,0000 – 20.9%.

AND:  The sale price is down at $121,000, but the lower list price is still hovering at $139,000. 

This demonstrates that there are still a LOT of sellers out there not dealing in reality.

ONE BEDROOMS

One bedroom FOR SALE prices have fallen $16,000 – 7.4% – over a two year period.  But SOLD prices are down $19,000 – nearly 10% – over the same period.  And again, there is a $20,000 disparity between current SOLD prices and current LIST prices. 

Can you measure degrees of fantasy?  Is one group of sellers more connected with reality of only off on pricing by 10% versus 20%?  Or are the delusions equal as overpricing by any amount will have the same result:  long market times and no sale?

Your Guide participates in a monthly survey of thousands of Real Estate Agents nationwide by  Credit Suisse to gauge the state of the market for new construction homes from the perspective of agents in the field.

Here in Chicago, traffic remains at decent levels with the tax credit being the key driver.

Our traffic index slipped to 43 in September from 46 in August, indicating slightly lower traffic levels but still at decent levels just modestly below agents’ expectations. Agents once again highlighted the soon-to-expire tax credit as the key driver of buyer traffic this month, noting increased urgency from both buyers and sellers (as the sellers realize demand may dry up after the tax credit expires so are more willing to negotiate a deal now). A number of agents included comments such as, “Time is running out for the $8,000 tax credit,” and “The imminent expiration of the first-time homebuyer tax credit is driving traffic.” Concerns among buyers remained focused on job stability and difficulty qualifying for loans, with one agent noting, “Job  insecurity has increased.”

Today’s Tribune front page headline reports Trouble in condo land.  Chicago (city only) sales stats show that single family home sales surged from August, 2008, to August, 2009, but condo sales lagged anywhere from around 10% off to more than 30% off.  Prices seem to be down, too.

While August sales of single-family homes in Chicago rose 22.6 percent from a year earlier, the city’s condo market saw sales drop 19.1 percent. Condo and town house prices plummeted as well, down 15.3 percent to a median sales price of $271,000, the Realtors’ trade group said. Single-family prices slumped 30 percent, to a median of $154,000, a price drop largely caused by foreclosures and short sales.

In contrast, Your Guide feels that last August through January were the worst of the doldrums.  With one closing in August, and one contract written in September that dragged into the New Year, the period from last August through January was the worst in memory.  And we’ve been around long enough to have worked through the 1989 to 1991 recession.

On the other hand, we can not argue with the reporting on pricing.  Your guide has written about pricing and the new reality in recent articles.  The 15.3% price decline quoted above is a good average for much of the City, but in certain markets the figures are worse. 

Some examples:

• In Lincoln Park – I’m seeing prices holding steady
• In Lakeview – I’m seeing prices 20% off
• In Albany Park – I’m seeing prices 33% off
• In the South Loop – I’m seeing prices 17% off

NOTE: in the examples above these figures are from personal experience, not an evaluation of the market statistics as a whole.