Market Conditions: Chicago Sales Plunge 40.4% in February YOY
The Illinois Association of Realtors released February 2009 home sales for both Chicago and the 9-county Chicago area today.
The plunge continues.
From Crain’s:
In the nine-county Chicago region, 3,082 single-family homes and condominiums were sold last month, a decline of 28.8% compared with 4,326 sales in February 2008, the association said.
In the city of Chicago, sales fell 40.4% in February, to 841 compared with 1,412 in February 2008.
Median price in Chicago also sank to $218,250 from $290,000 in February 2008.
“We believe the recent sales activity in the Chicago marketplace is indicative of strong interest by investors and bargain hunters in distressed properties,” David Hanna, president of the Chicago Assn. of Realtors, said in the release.
I checked to see what the numbers looked like in February 2007.
See the March 2008 post on February 2008 market conditions here.
There were no numbers on overall Chicago sales. For some reason, the only discussion was on February 2008 condo sales.
The city’s condo market showed a mix bag, as sales dropped 9.7% to 1,047 units while the median price rose 10.5% to $314,900.
But here’s the number of homes and condos sold in the 9-county area in February of the last 3 years:
- 2007: 5,894
- 2008: 4,326
- 2009: 3,082
Local home prices off 29% in Feb. as median prices fall [Crain’s Chicago Business, Mar 23, 2009]
How funny. I just came here to report that 4,000 Chicago realtors left the business in the last year: http://blog.lucidrealty.com/2009/03/24/4000-chicago-realtors-bail-on-market/
These figures show that we are still knee-deep in a real estate depression.
Might as well pile on the good news here. Just updated my employment charts for Chicago as well as my IAR sales chart. Chicago has lost 233,000 jobs in the last year. Unemployment is now at 8.4%. See the last chart here: http://blog.lucidrealty.com/chicago_real_estate_statistics/
Also, the second graph on the page has the IAR data mentioned above graphed back to January 2006.
I wish we had the breakdown of normal sales vs. distressed (short sales & foreclosures). Last night someone posted a Bloomberg link which shows that in CA 45% of all sales were either short sales or foreclosures.
Honestly if you don’t want to pay bubble pricing its not worth dealing with people that bought between 2003-2008. None of them either have money to bring to the table or want to sell their unit so much they are willing to do so. Thats fine with me my first property purchase will be a distressed one then.
Right now the data might be fooling delusional home loaners that they have a 60% chance of selling their unit vs. the bubble years, which is still decent odds. However if distressed sales represent even half the amount they do in California, sellers have a 38% chance of selling their unit vs. bubble years.
There are people out there willing to buy but whats the point in buying a condo just to have your neighbor slide into foreclosure? And banks are definitely stricter. 2 years ago I applied for a mortgage and the banker told me to put my student loans into deferment to raise my DTI. This year they want to know down to the dollar what I owe.
Bob, I think the numbers are indicative of the fact that distressed sales and a lack of expensive home sales have been driving the average and median numbers down. This average could turn up like a V rather quickly if distressed sales do not continue to flood the market. Eventually, distressed sales will come to an end, which will help bring confidence back. Fortunately, we also have another confidence boom in our back pocket…the olympics.
Gary: Great charts showing the 2006 data on your link. Thanks.
Distressed sales will continue to flood the market – that I most definitely assure you that will continue to happen.
Here’s what I see the problem is: the media, realtors, RE bulls, etc, are all saying “It’s a great time to buy!”
Yet when I sit down and crunch the numbers…after figuring my 20% down payment, property price, taxes, insurance, etc….decent non-foreclosure properties are still very expensive. Even for my two attorney household with no debt other than student loans.
I don’t want to stretch my budget too much to buy a 2/2 in a nice area or a middle class home on the NW side in a decent neighborhood. Damn it, with the oversupply of homes out there, I shouldn’t have to stretch my budget at all. But wishing/asking prices are still out of touch with reality in many cases.
My household isn’t the only household thinking this way: 3,000 sales in the month of February is pathetic and anemic. The market is about as close to a standstill as you can get without shutting down. If there were such great deals out there then we would should have more than 3,000 sales.
I agree with you guys completely. There are plenty of rational people, me included, that have a decent credit score and can do the 20% down, but are waiting for prices to be realistic. Bubble buyers won’t be able to sell at market prices because most of them are underwater and won’t be able to come up with the difference, so the only thing I expect to see move will be bank-driven. That means short sales, foreclosures, and developers that are forced to unload their units by their distressed lenders.
Better buy soon before hyperinflation sets in… seriously. All this money the government it printing won’t be able to be contained once the employment picks up over the next year or two. So buy in the next two years unless you really want a 15% rate mortgage… with good credit!
Agree with homedelete. We have been looking to buy in LP and have submitted 5 offers over the past year. We have been laughed at, asked if we were going to go around lowballing everyone in LP, told that Lincoln Park is different than everywehere else (“Prices are only down 1-2% from the peak in LP”), etc. The bottom line (in general) is people paid way too much in 2004-2007 and most of them are overleveraged and cannot sell unless they can negotiate a short sale with the bank. But since many loans are securitized, this is often times not possible. On top of that, the agents keep giving the sellers a glimmer of hope (mortgage rates are low, spring is here, etc.)and they believe it. The net result is very few sales occur.
Think Small,
I don’t see any data indicating the bottom in Chicago will be a V. If anything it will be an L. However if you turn the Chicagoland Case Shiller Index upside down it does indeed look like an upside down V, a vega, if you will.
To all those wanting to get a great deal in a certain area within a certain timeframe just remember if you’re bottom feeding and so the selection will be much more limited. As you expand your timeframe obviously the selection will be greater.
The most important thing is financing has disappeared for idiots willing to overpay. Once that was largely removed we should see inventory sit longer and longer and more distressed sales pop up.
What happens if all this printed money doesn’t make it to wages but instead the extra dollars turns into an emerging market carry trade? Japan pumped trillions of Yen into the market and most of it ended up overseas and not into the domestic economy.
Sonies, if interest rates reach 15% then that will only hasten the drop in home prices. A buyer can always refinance a lower mortgage rate but he cannot redo the purchase price.
The total Feb 2009 condo/TH sales in the City of Chicago were 442, with a median of $258,000. Those were YOY declines of 57.8% and 18.1%, respectively.
The condo/TH markets in the “desirable” areas are still in the sales collapse phase. The only way this will turn around is with large price reductions.
Lake View
Year Jan Feb
1988 35 31
1989 50 41
1990 46 31
1991 34 26
1992 43 68
1993 54 58
1994 62 52
1995 65 57
1996 70 75
1997 81 87
1998 83 89
1999 112 91
2000 72 98
2001 95 91
2002 80 123
2003 123 94
2004 95 112
2005 120 123
2006 127 126
2007 95 134
2008 67 102
2009 40 39
YOY -40.3% -61.8%
Lincoln Park
Year Jan Feb
1988 35 34
1989 56 38
1990 56 58
1991 41 32
1992 35 38
1993 54 51
1994 89 73
1995 48 42
1996 72 60
1997 67 50
1998 69 75
1999 71 54
2000 59 90
2001 60 49
2002 47 68
2003 63 56
2004 72 71
2005 133 69
2006 63 76
2007 71 70
2008 44 36
2009 14 19
YOY -68.2% -47.2%
Near North Side
Year Jan Feb
1997 98 88
1998 107 105
1999 122 88
2000 140 120
2001 136 116
2002 117 294
2003 153 160
2004 221 228
2005 217 532
2006 323 204
2007 280 175
2008 187 208
2009 88 80
YOY -52.9% -61.5%
Loop
Year Jan Feb
1997 19 14
1998 31 20
1999 34 26
2000 20 30
2001 22 22
2002 39 30
2003 44 27
2004 68 95
2005 40 28
2006 29 32
2007 62 35
2008 77 81
2009 42 20
YOY -45.5% -75.3%
Near South Side
Year Jan Feb
1997 1 5
1998 5 7
1999 16 30
2000 10 65
2001 9 12
2002 36 28
2003 53 33
2004 50 64
2005 77 91
2006 45 62
2007 80 49
2008 34 70
2009 36 31
YOY 5.9% -55.7%
A buyer can always refinance a lower mortgage rate but he cannot redo the purchase price.
-homedelete
This is exactly why I think the people at R+D659 are complete nutjobs when they say their mortgage interest rate discount will work as an incentive. They are subsidizing you with cheap financing to inflate the price, and you’ll be stuck holding the hot potato when you try to resell.
“What happens if all this printed money doesn’t make it to wages but instead the extra dollars turns into an emerging market carry trade?”
That won’t happen because the dollar is the world’s reserve currency.
I’m deciding whether to buy or rent and I agree with many of the comments here. The prices are still WAY too high. I looked at a new development condo in the West loop – they were asking over $560k for the smallest units. I don’t want to buy in a small, new condo building for fear of the effect of foreclosures on association fees, building maintenance, etc. Would it be better just to rent right now??
“That [extra dollars turns into an emerging market carry trade] won’t happen because the dollar is the world’s reserve currency.”
It won’t happen in combination with high interest rates, bc the way the Yen carry trade worked was by borrowing Yen at near 0% and investing in Iceland, NZ, AUS at 6, 7, 9%. If US rates are 15%, money will (likely) flow into the US, not the reverse.
“The condo/TH markets in the “desirable” areas are still in the sales collapse phase.”
With all of the areas having many, many more total units not necessarily actively for sale). LP is especailly crazy, with 2 months combined being the second worse one month in 20+ years (only Feb 91 had lower sales than Jan and Feb 09 **combined**, and then only 1 less sale).
If US interest rates stay low but emerging markets have high interest rates that’s what makes a carry trade. I’m not saying it’s going to happen but it’s more like a scenario than the reflation of the housing market.
It’s the prices and the lack of exotic financing. That’s why no one is buying. Buyers aren’t sitting on the sidelines – they’re still priced out of the market. 10% off the 2006 price is not a deal.
A ton of valuable info and comments here. The most valuable piece of info was posted by Bob:
“The most important thing is financing has disappeared for idiots willing to overpay. Once that was largely removed we should see inventory sit longer and longer and more distressed sales pop up.”
What I am left wondering though, and have been discussing with my two top realtor friends is this. If we do see many distressed/foreclosed properties flooding the market and see the same amount of greed by those who have the financial resources to pay cash to acquire these distressed properties, won’t we fall right back into the gutter and be in the same or worse scenario in a few years?
Not tooting my own horn here, but I do have a good amount of assets that I am going to be investing in Chicago Real Estate and will not be using any lending institution to do so, (and know there are plenty of others around the country who will be doing the same thing). Who is to say that these people, myself not included as I missed that ‘greed gene’, will not make the market crash yet again by buying low and selling high through some new process of ripping off inexperienced buyers?
I mean, with a new and somewhat inexperienced administration rewriting the RE rules and buying requirements, can’t the same dangerous thing happen and we end up back on the bottom?
MJ, I have a feeling that those snotty LP realtors who are basically laughing at your offers now will be laughed at themselves very soon (I have had the chance to do so a few times recently) as this once untouchable area will of course be brought down a few notches to the same level as the rest of Chicago. As golden as that area is to some, I am sure the money well is going to run dry on those who overextended themselves, bought at inflated prices and now cannot afford those overhyped places. Or like millions of other Americans, will just plain run out of money.
Just give it time MJ, I have a feeling you land your LP place sooner than you think.
Sorry to high jack – but check out this home in Chgo for sale. Think THIS one will sell??
http://online.wsj.com/article/SB123783052349616069.html
“I mean, with a new and somewhat inexperienced administration rewriting the RE rules and buying requirements, can’t the same dangerous thing happen and we end up back on the bottom?”
Flesh out this sceanrio for us a little. I don’t understand what you’re suggesting–they’d have to loosen the rules further than they were 3 years ago AND find new sources of funny money, as all of the IBs (who were levering up then) are now commercial banks subject to stricter (but not strict) capital requirements.
There’s a big difference in lending availability b/t the ~10:1 for banks and the ~30:1 than the IBs implemented to keep up comp-wise with the hedgies. And that difference shows up in the “lack” of lending.
PS-WL, can you try *two* hard break per paragraph? your long post are hard to read.
“If US interest rates stay low but emerging markets have high interest rates that’s what makes a carry trade. I’m not saying it’s going to happen but it’s more like a scenario than the reflation of the housing market.”
Emerging markets interest rates will always be higher than US rates. Its called default risk.
If inflation starts raging there is no way that interest rates in the US will stay low. Banks WANT high interest rates. Go look at an amoritization schedule and look at the difference in interest collected on a 6% or 9% mortgage. Its nearly 300% on the 9! Only about 200% on a 6!
Reflation of the housing market will come as soon as prices come down to earth compared to income… I don’t see prices coming down due to pretty much everyone being underwater, so the government is inflating the hell out of our currency so that we can pay off our debts quicker as our wages increase, therefore reflating the housing and everything else market.
westloopelo,
two issues with your analysis:
1) when you pay cash you set the comps; and since the trend is down, you will have a hard time flipping them. Sure you can rehab and flip but that was so 2003/2004;
2) you will have a hard time finding qualified purchasers to sell to. Inventory (including the ‘shadow’) market is only getting bigger, while the number of sales continue to decrease. Tough odds for a quick sale.
3) we’re still quite some ways away from from ‘deals’ in real estate.
“Sorry to high jack – but check out this home in Chgo for sale. Think THIS one will sell??
http://online.wsj.com/article/SB123783052349616069.html”
McFuglycrapbox! Purple kitchen/living room cabinets? Home depot floors… 6.25 million… Really?
“Unemployment is now at 8.4%”
Wow. That is incredibly good. 91.6% of people in this City that want a job have one! Over 90%!
westloopelo, not quite. There will be some “buying low and selling high through some new process of ripping off inexperienced buyers,” but this will mostly be in the conforming-loan market since that is where lenders might still push things. More specifically, the FHA market seems to be the best opportunity for suckers. The less cash required, the easier the mark. If that ain’t a lesson learned from the bubble, what is?
However, most of these “investors,” regardless of past successes, are simply knife-catching now. In fact, most are speculating: on future values, rents and on buyers returning to the market.
The current crop of “investors” are just future distressed owners/sellers, for the most part. Price corrections will not end until sales numbers increase dramatically.
“If we do see many distressed/foreclosed properties flooding the market and see the same amount of greed by those who have the financial resources to pay cash to acquire these distressed properties, won’t we fall right back into the gutter and be in the same or worse scenario in a few years?”
In a word: no. Investors can and are setting the comps on the way down, this is true. However even they are using leverage (even if they have stricter lending standards than owner-occupants). If you are using financing you are subject to the same constraints as anyone with a mortgage and the potential for a distressed sale is always there. In other words some of today’s “investors” could very well be tomorrow’s short sales and foreclosures as well depending on how bad things get.
The amount of people paying cash (such as you) in my guess is infinitesimally small compared to the overall market. Not really enough to have much of an impact on the market, to be honest. Maybe some companies used to do this but these days they are probably all in survival mode and many won’t make it.
Could investors cause temporary upticks in certain segments of the Chicago market? Sure. Could they cause these same upticks in Chicagoland as a whole? I doubt it–Chicagoland is a pretty broad, big area. I might be in the minority here when I say that different suburbs are almost perfect substitutes for each other, but investors wouldn’t be able to bring Arlington Heights to a 20% premium to Schaumburg, for instance.
As some chatters have stated the market is diverging into 2 separate entities, home you can live in, homes you can invest in (distressed). Each target different types of buyers with some overlap.
The issue about a bottom/recovery will hinge on regular buyers buying homes they can live in rather than distress properties that will require time/money/work to bring up to true market condition.
If somebody wants to comp a distress property to a home that is livable they would be doing a disservice to their clients and the market. Same can be said of comping a distressed property as a representation of the housing market as a whole.
I searched in the chi market for nearly a year to find the place I live in, and with good reason I am worried about the future, but not so much now, I just don’t see good homes being discounted to absurd levels, given construction replacement costs I saw on my appraisal and home insurance paperwork, I just don’t see any evidence of it, unless the market is broken (there are arguments for that) price matching distressed properties shouldn’t happen at all.
Many people can stay put for years, its a game of chicken and they only entities that are (and should lose) the banks, unfortunately the taxpayers, and debt holder(hopefully just the holders of sub-prime and other bad loans).
““Sorry to high jack – but check out this home in Chgo for sale. Think THIS one will sell??
http://online.wsj.com/article/SB123783052349616069.html”
McFuglycrapbox! Purple kitchen/living room cabinets? Home depot floors… 6.25 million… Really?”
I love the “Mr. Bukowski says he created … a simple, “clean-lined” interior.” I guess I have a different concept of “clean-lined” that doesn’t include crown molding and (somewhat random) brick and stone walls.
Although I do appreciate the difficulty he’d have had with his neighbors if he’d put up a 8000 sqft Gropius house.
It is also on three lots–short lots, but three lots nonetheless, whihc must have made land acquistion v.,v. expensive.
anon, what I was ‘suggesting’ was that while throwing crazy money at banks and lending institutions and promising stricter rules, we have yet to see exactly how their ideas are going to materialize and help the RE market…if at all or ever.
Am I hopeful? Of course I am, I have too much involved to NOT be hopeful. Only time will tell where we are headed. Sidenote: I did vote for Obama!
RE: your PS, I admit writing and spelling are not my strong points! I am more of a hands on worker than a brain…I am edumacated though, LOL.
But just for you, I will try…hey it took me years to get away from using all CAPS…
HD,
1) with the turn of the economy, I broke free from that ‘oh so five years ago’ fascination of rehabbing and flipping. The places I am investing in now are basically move in ready, with only slight visual enhancements needed. Also, I am purchasing them as investment/rental properties for now.
I can afford to do this until the market ‘straightens out’ and I find buyers who are looking not to flip, but rather to make ‘homes’ of them.
Just know I am not blinded by huge profits and greed. I can afford to buy and sit on them for years without any harm done to my portfolio. I am in no hurry to sell any of my properties. The ones that I do have on the market will not see any reductions in price regardless of what the realtors tell me is happening.
That said, I recently sold two properties that were up for only a short amount of time. Were they “deals”? I suppose to the buyers they were.
As ‘twisted’ as this business is right now, not everyone is in a huge panic, unloading or going broke trying to keep up on their mortgage payments. Some of us are in it because we enjoy and appreciate what we do. In the end, it will all work out…keep that hope right?
I like this listing for this house
http://2461ngenevar.rubloff.com/
At $25,000 I’d consider it!
BTW – Looks like the owner paid %975,000 for it in 2004.
“while throwing crazy money at banks and lending institutions and promising stricter rules, we have yet to see exactly how their ideas are going to materialize and help the RE market…if at all or ever.”
well, yeah, we don’t know what will happen, but the stricter rules are playing out a bit right now. Your question read a bit like a “concern troll” to me (not that I think you are), so I didn’t have any idea what you were getting at. It does seem they are saying one thing and doing two or three different things right now, but no matter what they were doing, we won’t know if it’s good or bad for at least a couple years.
well, yeah, that is exactly what I was saying…while we do feel ‘stricter rules’ now (in that the greedy asses can’t get any loans causing everyone else to suffer) who knows what will happen in a year, in five years.
BTW, WTH is a ‘concern troll’? I’ve been called a lot of things over the years, but that is a new one!!
“BTW, WTH is a ‘concern troll’? I’ve been called a lot of things over the years”
As I noted, I don’t think you are. But a concern troll is an internet phenomena (usually in political fora) where someone who actually holds View A posts as if having concerns about an issue with View B. Thus, you ask [paraphrasing] “won’t the administration’s fixes get us into a bigger hole” when you are opposed to whatever the admin does. Not really relevant here, but that’s how it read, to me–again, not that I think you are.
Continue the highjack:
anon said “It is also on three lots–short lots, but three lots nonetheless, whihc must have made land acquistion v.,v. expensive.”
Actually, I know that property very well (my wife and I used to walk by it going to church). I highly doubt that Mr. B had to acquire the lots separately. They were part of one unified property that contained a cute little former coachhouse turned house and a yard in front of it. Then he came along, got a bunch of variances and squeezed that house onto the property. The interior certainly leaves much to be desired, I love that section of Virginia Terrace and the location in Lincoln Park is hard to beat.
As for the topic at hand – this is good news for my wife and I that the RE market is getting slower and the supply just increases. Though, we will have to look at the distressed (but not dumps) in our nice suburb.
“I highly doubt that Mr. B had to acquire the lots separately.”
Oh, I agree, but three lots in LP was still three lots in LP, esp. at this location. I’m sure he paid a pretty penny.
Is it any wonder Mr. B is having problems finding work lately given the fascinating architecture and design of his humble abode?
anon,
TY for the explanation and you are correct in your assessment of me, I am not a concern troll!
But further, no I am not opposed to any fixes the new admin proposes as if they go through enough scenarios something will work.
The thing I am concerned about is that if speculators come in and snap up drastically undervalued/underpriced properties the whole RE scene will go back to what we are in the middle of now.
Sort of a jump out of the fire then jump right back in.
Re: that Architect’s home for $6.25 mil….I think it is beautiful!!
Sonies: I used those same colored cabinets in a rehab in Florida and the photo just makes them look purple when they really aren’t…they are a reddish shade that is hard to describle, but they are not purple.
Now bring down the price to maybe…$2.5 mil and some sports star or visiting actor would pick it up. Sill lovely home!
Anon(tfo)- McFuglycrapbox! Purple kitchen/living room cabinets? Home depot floors… 6.25 million… Really?”
If the wood is purpleheart (Grain looks similar), it will darken to a very nice color. Though I’m not sure if the color is correct or not as the built-ins have a different tint as well. If they stained it that color they are retands.
How can you tell that they have HD flooring?
Some positive news…
WASHINGTON (MarketWatch) — U.S. home prices rose 1.7% in January compared with December, the Federal Housing Finance Agency reported Tuesday. It was the first monthly increase in a year.
Spin this one, nega-toids….
http://www.marketwatch.com/news/story/Home-prices-rise-first-time/story.aspx?guid=%7B2B492854%2DBF5F%2D48A5%2DADD4%2D355555D5BD2D%7D
paulj, any realist knows what that data represents and that hyping it is the fantasists’ realm.
The data is “seasonally-adjusted.”
How did that last “seasonally-adjusted” monthly increase reported from 1/08 to 2/08 work as an indicator of improving market conditions?
The 11/08 to 12/08 index also initially showed an increase. It was later “revised” to show a decline.
Will this data also be revised? What does the FHFA say? “The agency also said the volume of sales in January were relatively low, and future revisions of the month’s data could result in “significant” changes.” Well, we will wait and see which way the revisions go. http://www.housingwire.com/2009/03/24/home-prices-post-surprise-gain-in-january/
Look at the sales numbers upthread. The prime Chicago areas are still in the sales collapse stage of the correction. Sales will only increase as prices decline.
“Sales will only increase as prices decline.”
In a static economy this would be true. With a melting real economy it could very well be the case that transactions fall at the same time prices do (or even faster).
We just bought a northside 3-flat. It is in rough shape and we couldn’t get a loan because of the condition so we did a lowball cash deal. We plan to rehab, rent it out and hold it long term.
Although the property was not technically a short sale (the owner was behind on payments , but not under water), the owner was distressed and headed toward foreclosure. We ended up buying the property for 50k under appraised value.
Most of the properties ( multi unit, Northside) that I have followed and have sold quickly have been really cheap. So I do think that the market is distorted, with super cheap stuff selling and everybody else thinking they are going to get a huge bargain. The fact that we couldn’t get financing sent the price down 10% right there.
Bob, agreed. The correction will follow a predictable pattern: sales decline, sales and prices decline, sales increase and prices decline, some chaos near stabilization, stabilization.
Eventually, low enough prices will result in sales increases and clear inventory. It is only then that the market (sales and prices) will stabilize, and it will be at a much lower price than today.
JohnnyU:
I was quoting to tie the threadjack together; I have no comment on the cabinets or the floors–that was quoted language.
I did find it funny that an architect would say “he created … a simple, “clean-lined” interior.” ” when he used crown molding and (imo) random brick and stone on the walls. Or can you explain how the concept fits the execution?
@ homedelete:
You couldn’t have said it better in your first post–home prices just aren’t reflective of current market conditions. I was looking to do a direct sale with the owner of the condo I’m living in and her ‘negotiated’ price was $25,000 more than what I felt it should be and more than what market value trends have shown for sales in said building. The end result is the owner is putting the place on the market and I am looking elsewhere but even still I’m finding similar trends…
My mistake, I thought it was your comment.
The great room is the only room that fits the description. As for the brick, it almost looks like colored CMU. I think its an attempt to create some interest by using contrasting materials and tie the rooms together.
He’s trying to appeal to some demographic using Archspeak. Not sure who is target is.
YMMV
“He’s trying to appeal to some demographic using Archspeak. Not sure who is target is.”
I’d guess people who are impressed by “architect designed” stuff, but have no clue.
“almost looks like colored CMU”
Ha. Given that it’s in what looks like a media room, I’d not want it to be real stone of any sort, from an acoustic POV. Also, why end it with 6 inches of another row in the kitchen? It wouldn’t have the right balance ending on the last full row?
What really baffles me is the brick wall (with arches) in the dinging room. Don’t get that at all.
G: “Eventually, low enough prices will result in sales increases and clear inventory. It is only then that the market (sales and prices) will stabilize, and it will be at a much lower price than today.”
For high rises and crappy conversions, I agree but, I think you generalize too much. So far, the only large price reductions are coming from bank, short or desperation sales. How large is that inventory? I don’t know but I doubt it is large enough or will be brought to market in such a way as to cause a reset of the entire Chicago housing market.
RunnerRunner:
There’s about 130,000 properties currently on the market in the Chicagoland area if Baird & Warner’s website is accurate- don’t know if it is and also don’t know if that includes more than the 9-county area. 3000 were sold last month.
If no other properties came on the market, it would take over 3 years to sell the current inventory. Of course, we should see more sales than 3000 a month during the summer selling season. (or will we?)
But it tells you the extent of the problem.
The inventory is growing while sales collapse. That’s never a good scenario for prices.
Sabrina et al.
Regardless of ppl’s pessimism, homeowners should not be worried. As westloop has stated he/she won’t lower prices in the face of contrary evidence since they put some money and time into their projects, if you truly want a property be prepared to pay a premium from what you expect from recessionary prices, unless your buying a moldy piece of shi$%, then enjoy the fruit of your labor/capital.
moreover I still believe you can’t lump distressed properties with regular normal market sales. regardless if you want to, regardless of quantity, like may poster have said they find LP a desirable part of town and if there are 50 distressed properties in lawndale they won’t be move to act. so if there are 150K properties in CHI they have to be in areas where people will take notice for it to have an effect.
It’s absurd to say you can’t lump one in with the other.
I wish Illinois broke out the percentage of distressed sales (as California and other states do.) But without the distressed sales, just how bad would February have been?
The market would have come virtually to a standstill.
Every buyer wants a “deal” and is willing to wait for one.
Sabrina’s right: without the distress sales the market would be 30% maybe 50% slower. The fact of the matter is banks are not bringing back the option arms, or the NINJA loans, or the stated income loans, all of which dramatically increased the price of housing to astronomical levels. Market prices will have to adjust accordingly, even if that means excruciatingly more pain, but in the long run, housing will become more affordable for all future homebuyers.
My opinion is that this is that the near simultaneous crash of the housing market and the stock market is only the first of life’s pains for the prolific group of spenders, the baby boomers. Many boomers were counting on the paper value of their home and stock portfolio to fund their retirements. Younger generations can walk away from their underwater mortgages and bad stock investments and start over but the boomers are stuck with their investments.
The other shoe to drop will be the cutting of medicare and social security in the future. There isn’t much of a choice no matter how large the voting block.
“we should see more sales than 3000 a month during the summer selling season. (or will we?)”
I doubt we will see sales increase mush in coming months. It is not easy for a first time buyer and as is pointed out here daily, why buy a crummy 2/2 box when you can rent a crummy 2/2 box for less. Current owners who would be looking to trade up/down are locked in. That leaves the buyers of distressed props, many of them speculators.
It would be very interesting to know the number of distressed props in Chicago as a percentage of total households. The higher that number, the larger the effect those sales will have on the rest of the market. The smaller the distressed inventory, the less long term effect those sales will have on the market even if they constitute a high percentage of sales for a several months.
“ …housing will become more affordable for all future homebuyers.”
Who’s wishing now?
Both of revassal’s posts are ridiculous and I suspect he is trolling.
“Regardless of ppl’s pessimism, homeowners should not be worried. As westloop has stated he/she won’t lower prices in the face of contrary evidence since they put some money and time into their projects, if you truly want a property be prepared to pay a premium from what you expect from recessionary prices,”
Revassal plz see my post earlier in this thread on this. If it will make it easier for your search for “infinitesimal”. However its my guess that you really don’t know what you are talking about and are just troll baiting.
dahliaChi,
New moniker on here. But why would you need financing if you could pay cash? Me suspects you’re an amateurish realtor troll trying to reinforce a viewpoint.
I call BS on your quote below. If it wasn’t a short sale you wouldn’t be privvy to the owner’s financial condition. It is SO OBVIOUS you are misrepresenting your situation at the very best, but in my view just a realtor cheerleader more than likely.
Stop lying. Your lying on this blog is not going save your career nor turn around your personal financial situation.
“Although the property was not technically a short sale (the owner was behind on payments , but not under water), the owner was distressed and headed toward foreclosure.”
anon (tfo):
“Ha. Given that it’s in what looks like a media room, I’d not want it to be real stone of any sort, from an acoustic POV. Also, why end it with 6 inches of another row in the kitchen? It wouldn’t have the right balance ending on the last full row?
What really baffles me is the brick wall (with arches) in the dinging room. Don’t get that at all.”
The area at the break is all kinds of f’ed up. The counter extends past the curio and the wall material is too close. I guess someone didn’t check their dimensions. They should have held it back a minimum of 18″, butting it into the counter would have looked wrong as well.
I really like the dining room but it doesn’t fit with the rest of the house.
Bob, this part was even more ridiculous:
“The fact that we couldn’t get financing sent the price down 10% right there.”
No financing available and only a 10% cash discount? That’s extreme knife-catching.
Runner Runner, you acknowledge that sales will not pick up in coming months (while already at historic lows,) that you can rent for less than buying, and that “trade up/down” buyers are “locked in” and can’t move.
Yet, when HD concludes that “…housing will become more affordable for all future homebuyers,” you conclude “Who’s wishing now?”
I can only assume it is a conflict with your personal financial interests which creates such cognitive dissonance?
You can believe what you want about being a troll, yet my point stands true as people want a breakdown of distressed vs other sales, because combining both created confounding variables which have to be disentangle in order to understand where the market is going.
For example you want a SFH/(whole multi) in the Northside (Irving/Albany/parts of Logan) (near transport) you have the choice between a reo&unrenovated @ around 200K or partially/fully between 325K-450K please let me know how the properties as an aggregate will explain what is occurring in the market as a whole.
The problem is that some of you are hope/expecting the market will come down so you won’t be a knifecatcher/(can be happy and comfortable with your purchase) etc., but if buyers approach the market as distinct subunits, then prices will invariable level off in each subunit insofar as to prevent absurd pricing of livable units.
This is no different that the different markets between condos/townhouses/SFH/multi units. And as people predict and expect defaults to continue into the future at least until 2011. People will become more comfortable in approaching the market this way because each has its own strategy.
One man’s definition of ‘absurd pricing of livable units’ is another man’s affordable housing payment.
“but if buyers approach the market as distinct subunits, then prices will invariable level off in each subunit insofar as to prevent absurd pricing of livable units.”
“please let me know how the properties as an aggregate will explain what is occurring in the market as a whole.”
Today’s “partially/fully between 325K-450K” are not selling and many are tomorrow’s distressed sales. Especially as currently distressed sales keep setting the bar lower. So, what is the point in segregating them when the dividing line is fluid?
It is another realtor con job to keep stressing some difference in distressed sales when so few other sales are occuring. No different than “the American dream of homeownership,” “real estate always goes up,” “buy now or be proced out forever,” “it’s a great time to buy,” “they aren’t making any more land,” etc etc.
No, I don’t have the breakdown in neighborhoods, but since sales in total are at historic lows, every sale is a comp. That’s what the banks expect from appraisers, anyway.
Hi Bob and G,
I wrote my original post from a public computer and couldn’t remember the spelling/caps of my screen name.
I’m avoiding giving absolute numbers on my sale because I know that people here can look everything up and i want to maintain my privacy.
I am for real and most certainly not a knife catcher. The property in question is 5 blocks from the Redline and not in RP. We got it for @ 85 cents a sq ft (above grade) for an all brick building with 2 car garage.
The original owners had the property for 40+ years and took out a huge mortgage more recently. Then they paid 2/3rds of it back and then stopped paying altogether. Bizarre, but true. I found out about the Lis Pendens on Realty Trac and made them cough up the info to make sure it was not a short sale.
It’s crazy out there…..
“We got it for @ 85 cents a sq ft (above grade) for an all brick building with 2 car garage.”
OK, even I believe 85 cents psf is a good deal. That’s what, under $3500 for a 4,000 sf property?
I just don’t see how it wasn’t a short sale at that price?
Alot of theories here on what to do and what to expect. I have looked at dozens of 2/2 condos over the past year, and am a cash buyer. While prices are coming down by dribs and drabs, it does not appear that the type of substantial reductions necessary to reflect fair value are coming any time soon. I’ve tried some low-balling, without success, and the short sales and foreclosures are usually real dogs. So I sit without, not wanting to overpay, while tempted to just go ahead and jump in because I’m tired of the wait. Does anyone feel something big is around the corner (i.e., next 6-12 months) in price reductions, or will this death by 1000 cuts continue to make this a long term struggle? I can’t wait 2-3 years for things to get real, and this process is getting boring, quite frankly.
G- The owners owed less than the (reduced) sale price. They were able to pay off their loan, attorney fees, back taxes,water bill, etc. They ended up with a small amount of cash. When all was said and done, if they had just kept the building up, they would have doubled their meagre profit after paying off their debts.
“I can’t wait 2-3 years for things to get real”
If you can’t wait, you likely will need to pay a premium over the eventual minimum price. Either that’s okay with you or not.
Dahlia–
you said you paid $0.85/sqft. If the place is the biggest three-flat in Chicago, you still would have paid less than $5k for it. G was having fun with your “85 cents” error.
At $85/sqft, if it’s in plausibly rentable condition (I know you said rough, but there’s rough and there’s **rough**), that sounds like a pretty good deal. If the foundation is about to collapse, that’s a different story–you just bought a liability with your future buildable lot.
desteve,
I fear it will be death by 1,000 cuts, unfortunately. Everyone underwater CANNOT bring money to the table whether they would like to or not. So they’re effectively stuck. Other sellers have effectively anchored in their mind what their property’s value is worth based on zillow, their inflated tax assessment or what their neighbor’s property sold for in 2006.
oops- $85 dollars. I was thinking about rent to sq ft multipliers.
“Everyone underwater CANNOT bring money to the table whether they would like to or not. So they’re effectively stuck.”
That’s why the government is trying to inflate us out of this mess. Since RE prices are fairly sticky, since nobody wants to continue to owe money to the bank after they sell their place, and the government wants to curb forclosures as much as possible because they aren’t good for the RE market, The government is going to try to inflate wages and the dollar to support the previously insane real estate prices. Its going to get ugly. Buy lots and lots of gold as a hedge. Seriously.
Can they inflate? I know they will try; the Japanese government has been trying to inflate for YEARS w/o success. The Fed in its ivory tower thinks that it is the master of the universe but what if it is wrong? What if their grand economic theories of liquidity and flowing credit have it all wrong; when in reality the american consumer and business has excessively and unsustainably high debt loads that cannot be repaid even with so-called inflationary measures? I full well understand inflation is the Feds primary goal; they have made that clear time and time again. The real question is: will they be successful in reflating the RE/Equity/Commodities markets, or, will the laws of unintended consequences apply?
“The real question is: will they be successful in reflating the RE/Equity/Commodities markets, or, will the laws of unintended consequences apply?”
That’s not an either/or, it’s a if they manage to have moderate inflation, how do they prevent either (1) more inflation than they want or (2) erosion of USD position as reserve currency. In other words, is moderate inflation possible w/o unintended consequences? Probably not.
anon(tfo),
I agree with you….I guess I will have to pay a premium over what the eventual minimum price may be, as I simply can’t wait for the satisfaction of reaching bottom. There is a quality of life factor that has a value, so if I end up paying $100,000 too much in hindsight, I will have enjoyed the property for 2-3 years, and can make up the difference during the next big real estate bubble 🙂
OMFG. I can’t stop laughing.
somebody making 10 an hour can buy a home
http://www.mantecabulletin.com/news/article/2560/
“a one-bedroom, one-bathroom condo with 700 square feet in Modesto, (California)”
You can get houses for $1,000 in Detroit too but that doesn’t mean people should buy there.
“You can get houses for $1,000 in Detroit”
Plus all the accumulated unpaid taxes.
I believe those Detroit houses can be had from the city for just the hope you pay the future taxes. Banks have also been selling REOs with taxes all paid up in order to get rid of the future liability.
That should have said that at least one bank has sold an REO for $1 with taxes paid up. http://abcnews.go.com/Business/Housing/Story?id=7034770&page=1
“Have a Buck? Buy a House!
Desperate Sellers in Detroit and Beyond Unload Properties for Cost of Citi Share”
I love that byline! Bwhahahaha!