Market Conditions: Is the Condo Market in Chicago as “Frenzied” as the Boom Years?
We’ve chattered about how quickly some properties are selling in 2015.
The data is confirming it. For condos in the GreenZone, the market times are the fastest they have been since the frenzied days of the housing boom in 2007.
From Crain’s:
In June, condos in the city sold in an average of 61 days, the fastest since at least January 2007, the earliest date available from Midwest Real Estate Data.
“It’s just as frenzied as it was at the height of the market” during the run-up to housing’s 2006 peak, said Julie Tag, an @properties agent in Winnetka, “but the difference is that people aren’t losing their heads and overpaying.”
To wit: Though single-family homes are selling at 86 days, unchanged from a year ago, their prices have risen more than condo prices. The median sale price of a city single-family home in June was $225,000, an increase of 8.9 percent from a year earlier, according to MRED, while for city condos the June median was $323,000, up 4.2 percent from June 2014.
Sellers who see their condos go swiftly are the ones who “don’t ask for inflated prices,” Tag said, or if they do, the property sits unsold.
Meanwhile, a condo on the third floor of a building on Monroe Street in the West Loop went under contract the first day in June that it was on the market, trumping the unit one flight up, which took three days to go under contract in May.
‘IT CAN BE CRAZY’
In River North, a ninth-floor unit on Huron Street was under contract after four days on the market. A three-bedroom condo on Damen Avenue in the Hamlin Park section of Lakeview went under contract in eight days.
“You’re seeing immediate sales, no waiting,” said Myrna Greenspan, the Lincoln Park @properties agent who listed both Monroe Street condominiums. “It can be crazy.” In May, the fourth-floor unit attracted six offers in its first 24 hours on the market, she said, and sold for $593,500, on an ask of $599,000. In June, the third-floor unit sold to the first lookers on the first day, at full price, $555,000.
Yet as hot as it is, buyers are also picky and expect move-in ready properties. If you have flowered wallpaper, you might want to consider painting before you list.
But given the quick market times, and lack of inventory, if you are selling a property and it doesn’t go under contract in, say, 2 weeks, is it because you are overpriced?
Condos are selling super fast this summer [Crain’s Chicago Business, Dennis Rodkin, August 13, 2015]
“if you are selling a property and it doesn’t go under contract in, say, 2 weeks, is it because you are overpriced?”
Probably, though there can obviously be agent and listing mistakes that contribute to this. And there is supporting data that can help you answer that question. But sellers still don’t believe it and cling on to false hopes.
Sold my condo in about 100 days (closed last week) after increasing the listing price by 3.5% after the first deal fell through (was under contract within 3 weeks). The number of showings is probably a much better indicator to conclude whether or not your property is priced correctly.
The problem is that we sometimes have properties that get tons of showings and no offers. At some point you have to conclude that you need a price reduction.
This reflects how the market WAS in June. Things have changed dramatically. July and August have been a much different picture. Very little activity.
Everybody was so sure that rates were going to rise in the Fall so they rushed to sign deals. That ‘sure thing’ projection is proving to be false. The 10-year actually hit 2.04 earlier this week and is currently at 2.19…much lower than the 2.40 range we were at a few weeks back. Rates might be falling further from here….except this time there are few buyers left on the sidelines. Properties will continue to languish and see price reductions as has been occurring the past 8-10 weeks.
“The problem is that we sometimes have properties that get tons of showings and no offers. At some point you have to conclude that you need a price reduction.”
This is what is interesting right now. But if you go 2 weeks with 25 showings and NO offers, then something IS wrong.
The property that I saw in an Open House a couple of weeks ago where the agent told me they had about 100 people come through is still on the market with NO price reductions.
After 2 weeks, every serious buyer who is looking at that price point has already seen the property.
“July and August have been a much different picture. Very little activity.”
It HAS slowed, but is that seasonal or something else?
Inventory is still insanely low. A property shouldn’t be available a month after it is first listed in the GZ.
It’s too soon for me to comment on August but the numbers suggest that July was just fine for activity. You can see it in my contract graph for July.
“It’s too soon for me to comment on August but the numbers suggest that July was just fine for activity. You can see it in my contract graph for July.”
Closings? Or contracts?
Closings in July were from contracts much earlier in the summer. The closings data is really delayed 30 to 90 days.
I’m not saying it’s dead like last year. But there has been a definite slowing in some of the GZ neighborhoods. Properties that would have been under contract immediately in the spring are sitting there. Personally, I think buyers are balking at the super high prices.
I was referring to contracts. July contracts were up 7.6% over last year. That’s my estimate, allowing for 20% attrition in the contracts actually written and still active on August 8. And my attrition factor has been running high too.
Okay. That’s better than I would have thought just given the anecdotal stories I’m hearing and what I’m looking at. But it could just be some of the neighborhoods I’m monitoring aren’t as hot as others.
I’ve noticed the $500,000 to $650,000 range seems really hot still. Over $1 million seems to have cooled. And under $400,000 also seems to have cooled.
Last July, sales fell 8.2% YOY- but, as I’ve said, 2014 was a “dead” year for the housing market. Sales slowed when the mortgage rates went up. It wasn’t until the end of 2014 that it started picking up again.
So this July SHOULD be well above 2014. So should August and September. Probably won’t really be in competition with hotter numbers until around Nov/Dec.
2016 will be interesting because it will be year over year comparisons with red hot 2015. It will be hard to top that if rates are actually rising (remains to be seen, of course.)
“The problem is that we sometimes have properties that get tons of showings and no offers.”
In that case, I would say that the problem is deeper than the price. Otherwise, somebody would at least toss a low ball offer to get it. If the property is unwanted, there needs to be some thinking as to why that is the case.
Maybe a large enough price reduction will mitigate the problem, but a better approach would be to address the issue and offer buyers something they want.
I’ve been here many times. What happens is that you’ll get all sorts of reasons why the buyers aren’t interested and there will be common elements. Usually it’s not something that can be easily addressed:
– Too close to the el
– Outdated
– Don’t like deck off the master bedroom
– Bedrooms split on two levels
– Property not well maintained
This happens when the property presents well online but not in person. So you attract a group of buyers that want more at this price point and are just not interested. But then you lower the price and bring in a whole different set of buyers and you get an offer. And the funny thing is that sometimes you don’t have to lower the price all that much to get that additional pool of buyers in – especially if you cross a threshold – e.g. x00,000
My top guess for why “tons of showings and no offers” is that the property is not move-in ready – from the perspective of the buyers. That is related to “outdated” and “not well maintained”, which is all under “condition”.
I think that most sellers have a rose-colored view of their property’s condition. While at the same time the buyers see numerous projects needed to bring the property up to their desired condition. The buyer’s desired condition gets very discriminating at high price points.
If the seller can be convinced to improve the condition, that helps.
“I think that most sellers have a rose-colored view of their property’s condition.”
add the phrase “and value” onto that sentence and you have the real reason why realtors still exist in the market place. dealing with people, sellers and buyers, is the most difficult part of the transaction. realtors were afraid of putting listings online yet that did nothing to reduce their relevance and purpose in the marketplace. look at the average listing time for a FSBO and you’ll see why realtors despite their oft derided uselessness do provide some value in the market place.