Market Conditions: February Sales Rebound 2.2% in Chicago But Median Price Still Declines 6.7% YOY
The February 2012 Chicago sales data is out. Sales rebounded but couldn’t even reach 2010 levels, which, you’ll recall, were juiced by one of the first time homebuyers tax credits (remember those?).
In the city of Chicago, February 2012 home sales (single family and condominiums) totaled 1,079, up 2.2 percent from 1,056 homes sold in February 2011. The city of Chicago median home sale price for February 2012 was $140,000, down 6.7 percent compared to February 2011 when it was $150,000.
Here is the sales data for February going back to 1997 (courtesy of G). It is slightly different from the IAR’s data:
- 1997: 881 sales
- 1998: 991
- 2000: 1383
- 2001: 1151
- 2002: 1677
- 2003: 1566
- 2004: 1814
- 2005: 2228
- 2006: 1855
- 2007: 1703
- 2008: 1454
- 2009: 870
- 2010: 1257
- 2011: 1092 (IAR= 1056)
- 2012: 1224 sales (IAR = 1079)
Here is the Median Price Data also going back to 1997 (thanks G!):
- 1997: $117,000
- 1998: $132,000
- 1999: $143,750
- 2000: $161,500
- 2001: $180,200
- 2002: $212,000
- 2003: $215,000
- 2004: $229,900
- 2005: $268,900
- 2006: $267,500
- 2007: $270,000
- 2008: $290,000
- 2009: $218,125 (with 31% being REO/Short Sales)
- 2010: $176,000 (with 46% being REO/Short Sales)
- 2011: $150,250 (with 50% being REO/Short Sales)
- 2012: $140,300 (with 52% being REO/Short Sales)
The Condo/Townhouse sales data since 2008 (thanks to G again):
- 2008: 1087 sales, median price of $314,900
- 2009: 451 sales, median price of $280,000 (with 18% being REO/Short Sales)
- 2010: 660 sales, median price fo $250,000 (with 33% being REO/Short Sales)
- 2011: 604 sales, median price at $193,500 (with 46% being REO/Short Sales)
- 2012: 692 sales, median price at $165,250 (with 50% being REO/Short Sales)
“A mild Chicago February continues to prove positive for the city’s housing market,” said REALTOR® Bob Floss, president of the Chicago Association of REALTORS® and Broker/Owner of Bob Floss and Son Realty. “Sellers and buyers are closely watching opportunities to make the move right for them in this economy. While sellers are motivated to close on their homes, they are also strategic in looking for ways to make opportune investments in the purchase of their next home, garnering them more value for their dollar. First-time homebuyers are equally measured, looking for distressed or right-priced traditional purchases of homes to help make their investment dreams a reality.”
Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois, said the mild winter is helping the housing market move upward. The Illinois and Chicago PMSA Pending Home Sales Indices surged in the first two months in 2012. This spring surge is typical in a cyclical housing market with activity levels high when the weather warms. However, this year’s spring surge is stronger and came earlier than last year, according to Hewings.
“The other good sign is from the labor market. Last month, the U.S. unemployment rate was unchanged at 8.3 percent and the nonfarm payroll employment rose by 227,000. According to the Thomson Reuters/ University of Michigan’s survey of consumers, consumer’s confidence level is high and this high confidence level is due to a record number of consumers that were aware of ongoing increases in jobs,” Hewings said.
“For Illinois, the most relevant factor would be a surge in job creation and the state’s economy has been showing consistent signs of life in the last 12 months. For most of 2011, Illinois’ job growth kept pace with the nation, whereas for much of the previous two decades the job growth hovered at rates between one third and one half the national levels.”
IAR’s sales data isn’t even as promising as G’s showed for February. (Why the big difference? A couple of hundred closings is a BIG deal. Is the data messsed up again?)
The rest of the state and the 9 county Chicagoland area actually showed much stronger sales.
Why is Chicago lagging?
Is it really much of a recovery if the data isn’t even back to 2010 levels even as prices continue to fall?
Illinois sees 15.1 percent increase in home sales; strongest February sales report since 2008, data show [Illinois Association of Realtors, Press Release, March 21, 2012]
Sabrina,
Yeah, I emailed you a few minutes ago. I think this data is messed up. As of right now the MLS indicates 1260 closings in February, though that’s a little higher than I had on March 7 because of lags in the data.
Yep- it looks messed up AGAIN.
It’s kind of funny, actually. Because the “real” data is so much better than they’re reporting.
Isn’t anyone checking it? Don’t they WANT the better headline? It’s not like this data hasn’t been out there for weeks now.
The IAR needs to read Crib Chatter!
It’s amazing that absent a mania and absent any government juicing, lower prices continue to bring out more buyers. Prices are getting low enough I may even consider moving out of my studio in uptown; maybe I’ll start looking at some $30,000 garden one bedroom apartments on Wilson or something.
with all the money you saved not paying your landlord your portion of the section 8 rental agreement, you could probably manage the first floor!
Shouldn’t the headline be “Prices continue to fall as short sales and foreclosures make up 1/2 of all sales.
Good luck selling your house as you compete with the bank owned one that’s listed at 30% off.”
Ugh, these numbers make me want to vomit into my knife catching wound.
“Shouldn’t the headline be “Prices continue to fall as short sales and foreclosures make up 1/2 of all sales.
Good luck selling your house as you compete with the bank owned one that’s listed at 30% off.””
We’ve discussed this many times in different forms. The market is bifurcated, median prices primarily reflect the mix of properties being sold, inventories are low, demand is up. Good luck trying to get a deal on an attractive property. There are multiple instances of multiple bids on those.
in today’s world, real estate is real time – sales in february are reflective of sentiment and activity in prior to December – it is a TOTALLY different market right now. This is just like being in the fourth quarter and analyzing plays/scores from the first quarter. Look at contract activity for march – that is the key.
“I think this data is messed up. As of right now the MLS indicates 1260 closings in February, though that’s a little higher than I had on March 7 because of lags in the data.”
Ho hum. Gary, you might want to exclude Chicago Heights and Chicago Ridge from your count. With them, it is 1,260 today in the mls. Perhaps, you are unaware they are not in Chicago? The count for Chicago is at 1,235 as of today. This might explain your overcount earlier this month, too.
The simplest explanation for the IAR undercount is that they forgot about February 29th this year.
‘Good luck trying to get a deal on an attractive property.’
We’ve tried to discuss this before, too. Show us the “attractive properties” that illustrate price increases. It should be easy with all of these “bidding wars” underway. I’m still waiting for some of your examples of short sales/REO selling for significantly less than regular sales for similar units within a building, too.
“Show us the “attractive properties” that illustrate price increases.”
I don’t think he means price increases in general but price increases over listing price. I’m also hearing chatter from various sources that attractive prices are getting multiple bids. Prices continue to fall but there is competition unlike a few years ago when prices were in a free fall.
http://www.redfin.com/IL/Park-Ridge/1219-S-Washington-Ave-60068/home/13567461
Listed $239,500, sold $253,500.
What’s the best corollary to the sales data that G/Gary are able to provide for prices in Oak Park and/or River Forest?
After having taken a good look at a lot of properties out there, I’m not even seeing as much acceptance of declining valuations in OPRF as I’m seeing in the hot GZ neighborhoods. At least in the city, most people seem to be acknowledging some decrease in valuations in their lists. Maybe they’re only acknowledging 10% when we think it should be 20%, but at least there’s some reflection. I’m seeing a lot of houses in OPRF looking for 10-20% PREMIUM over 2003-2005 prices. Is there a public resource available to track sale trends out there like you guys have been able to cite for Chicago proper?
“I don’t think he means price increases in general but price increases over listing price. I’m also hearing chatter from various sources that attractive prices are getting multiple bids. Prices continue to fall but there is competition unlike a few years ago when prices were in a free fall.”
Why won’t the salesman state that clearly?
“Listed $239,500, sold $253,500.”
How does that $253,500 compare with a year ago?
clio
“in today’s world, real estate is real time – sales in february are reflective of sentiment and activity in prior to December – it is a TOTALLY different market right now.”
“prior to December”? What a laugh. 67% of February’s closed sales were for contracts signed on 12/15/11 or later. clio continues to never get anything right.
I guess the Feb sales didn’t match up to his contract expectations.
clio (January 9, 2012, 4:08 pm)
“I am INCREDIBLY shocked at the numbers of houses that went under contract in the past few DAYS (yeah, I was shocked about the last two weeks of december, but this is ridiculous).”
I guess everything is all better now since brokerages think this will fly
http://www.chicagotribune.com/business/breaking/chi-koenig-to-add-service-fee-for-buyers-renters-20120321,0,3699370.story
Here you go G:
5030 N Leavitt Unit #1
http://www.redfin.com/IL/Chicago/5030-N-Leavitt-St-60625/unit-1/home/12807700
Listed on 1/23/12 for 59.9K
Sold on 3/2/12 for 80K
Here’s another:
1704 N Maplewood
http://www.redfin.com/IL/Chicago/1704-N-Maplewood-Ave-60647/home/13414736
Listed on 11/28/11 for 54.9K
Sold on 1/11/12 for 117.5K
G – “Show us the “attractive properties” that illustrate price increases. It should be easy with all of these “bidding wars” underway.”
http://www.redfin.com/IL/Chicago/1910-N-Clark-St-60614/home/13344013
Under contract in 2 wks. 5 bids. 2008 pre-Lehman price $1.8mm. Will sell above $1.9mm.
4921 N Avers
http://www.redfin.com/IL/Chicago/4921-N-Avers-Ave-60625/home/13492315
Listed on 10/8/11 for 120K
Sold on 12/7/11 for 150K
In listing notes:
Property was in need of total rehab with no working heating, plumbing or electrical.
Even this HORRIBLE garden unit I linked to months ago sold for $100 over ask:
4816 N Avers Unit G
http://www.redfin.com/IL/Chicago/4816-N-Avers-Ave-60625/unit-G/home/23035599
Listed on 10/20/11 for 15K
Sold on 11/22/11 for 15.1K
This building has multiple violations including rodent holes.
4751 N Luna
http://www.redfin.com/IL/Chicago/4751-N-Luna-Ave-60630/home/13480067
Listed on 10/3/11 for 61.5K
Sold on 11/29/11 for 83.5K
Listing notes said “needs work” and did not include photos so I assume it was a wreck.
1823 N Kimball
http://www.redfin.com/IL/Chicago/1823-N-Kimball-Ave-60647/unit-1/home/13419069
Listed on 9/13/11 for 56.9K
Sold on 10/27/11 for 101.5K
Again, “needs work” and “cash only”.
Please make milkster stop. He said desirable!! I wouldn’t take a shit in any of those places.
“Listed on 10/20/11 for 15K
Sold on 11/22/11 for 15.1K”
Seriously?
holy moly
“Under contract in 2 wks. 5 bids. 2008 pre-Lehman price $1.8mm. Will sell above $1.9mm.”
2008 price included two PINs. Both 1910 and 1912 Clark. They were both multi-units when sold in ’08, were they not? Are they selling both parcels now? What did they spend converting?
this one was my fave. bidding fell just short of an example of rising price
5030 N Leavitt Unit #1
http://www.redfin.com/IL/Chicago/5030-N-Leavitt-St-60625/unit-1/home/12807700
Jul 26, 2007 Sold (Public Records) $210,000
Listed on 1/23/12 for 59.9K
Sold on 3/2/12 for 80K
anon (tfo) (March 21, 2012, 12:49 pm) “2008 price included two PINs. Both 1910 and 1912 Clark. They were both multi-units when sold in ’08, were they not? Are they selling both parcels now? What did they spend converting?”
1910 N Clark was converted / updated prior to the 2008 sale and hasn’t been updated since 2008 – same state as that sale. You’ll notice the first redfin sale on 6/4/2008 said multi-property but the second sale on 7/14/2008 didn’t. This was originally purchased by a developer who re-habbed the whole row of houses and sold the finished properties so this is truly selling above the 2008 price.
Can someone explain to me exactly what a buyer’s realtor does other than setup appointments to see properties? There is no doubt in my mind that there is more to it, I am just ignorant as to what it is. Someone please stem my ignorance.
they research stuff
“You’ll notice the first redfin sale on 6/4/2008 said multi-property but the second sale on 7/14/2008 didn’t.”
I’ll note that I looked up the deed, and prefer public records to MLS records. And that both of those sales refer to the same transaction.
Milkster, who said anything about sales for more than list? Of course they exist. My question is, which of those sale prices indicate a rise in market value for that particular property type? You’re a bottom caller. Show me specific sales that mark a bottom.
Can we just clarify that bottom means prices are not going lower?
It does not mean places are selling at 2007 prices.
You asked for examples of “bidding wars” which I provided.
And yes, for the properties I’m looking at, I still think the bottom was 12/31/2010.
I’m not going back on that.
I bought 1 property in 2010 and another in 2011 and negotiated a hefty discount on each.
At the time there was little competition and banks were eager to cut a deal.
There were plenty of auctions too.
Stuff was sitting on the market for ages.
Now there’s nothing in the pipeline and anything that hits the market ends up in a bidding war.
I’m still waiting for this theoretical flood of REOs to hit the market.
The robosigning deal has been settled.
Where are the REOs?
anon (tfo) (March 21, 2012, 1:20 pm) “I’ll note that I looked up the deed, and prefer public records to MLS records. And that both of those sales refer to the same transaction.”
No clue what’s going on with the MLS vs public records. I just looked on the ccrd.info site and found the following:
1910 N Clark has Mortgage of $1.44mm 6/4/08 (20% down implies $1.8mm which matches ’08 price)
1912 N Clark has Mortgage of $1.653mm 1/7/08
1914 N Clark has Mortgage of $1.5925mm 10/27/10
I believe the developer bought 1910-1914 N Clark to develop thru 1910 N Clark LLC. I am positive this unit was purchased post rehab in 2008 and is in the same condition as 2008 and this transaction represents a property that appreciated in price 2008 to 2012.
“Please make milkster stop. He said desirable!! I wouldn’t take a shit in any of those places.”
Of course you wouldn’t.
You just take a shit and then put the tp in the garbagecan instead of flushing it.
That’s what they do in Brazil.
“Can we just clarify that bottom means prices are not going lower?”
And you have to further decide if it’s a descriptive statement that prices have not been going lower in the last X months (which would be some version of case shiller, segmented for whatever neighborhood/price range/type of property/whatever the statement is being made about) or a prediction that they will not go lower in the next Y months (which would be, you know, really useful to know). Case shiller, for example, has bottomed in the recent past in the first sense but not the second.
Fred:
Run of the mill buyer’s brokers focus on doing whatever they must to get paid a commission. In theory a buyer’s broker is your advocate but imho they tend to focus 100% on their interest first and foremost. I find it ironic that Koenig & Strey announced new policy today to try to charge & collect another half commission from buyer clients. I acn not believe this attempt at double dipping will fly – who needs to pay a buyer’s broker in a (very short of qualified ready willing & able) buyer’s market?
“…exactly what a buyer’s realtor does other than setup appointments…”
Also, have to decide if we’re talking real prices. Which I assume everyone does, it just goes unsaid, right?
“You asked for examples of “bidding wars” which I provided.”
Milkster, You are mistaken. I never asked for any such thing.
“And yes, for the properties I’m looking at, I still think the bottom was 12/31/2010.
I’m not going back on that.”
Please give me a specific sale that marked the bottom of your market category.
Southbound:
So if I were buying a $300k home, I would pay a realtor $7500 to make phone calls and advocate for me? I find it extraordinarily hard to believe that if this really is all they do that more people don’t ditch them and do it themselves. I don’t really know anything about real estate, but hell, I know how to use a phone and argue!
“I don’t really know anything about real estate, but hell, I know how to use a phone and argue!”
Do you know how to get a seller’s agent to give you the coop commission, with reasonable certainty?
G,
I don’t want to say that the sale below necessarily marks ‘the bottom’ but think this early 2010 purchase has yet to be beat in the old irving park market. The comparable properties, that I will in succeeding posts, all sold for more.
http://www.redfin.com/IL/Chicago/3923-N-Lowell-Ave-60641/home/13459273
$375,000 1724 sq ft
compared with
http://www.redfin.com/IL/Chicago/3725-N-Lowell-Ave-60641/home/13459254
1,664 sq ft for $455,000
vs http://www.redfin.com/IL/Chicago/3732-N-Lowell-Ave-60641/home/13459167
$425k, for 1800 sq feet
$375k in today’s market bought this featured on CC
http://www.redfin.com/IL/Chicago/3656-N-Tripp-Ave-60641/home/13458473
1700 sq ft, next to the high school, not a nice looking frame four sq or victorian like the others.
Thanks, HD. All of these bottom callers and it’s you who will finally give me a specific example. Life never ceases to surprise me.
I think it has to due with the lack of inventory.
http://www.redfin.com/IL/Chicago/4052-W-Patterson-Ave-60641/home/13458979
2112 sq feet for $499
Now I know this seller is losing money, and I know it’s been rehabbed, and I know it’s ‘bigger’, and I know they’ve tried to sell it in the past to no avail;
but upon relisting it went under K in a heartbeat; and it’s a victorian on a lot in old irving – they’re all pretty comparable, some are bigger, some are newer, etc. But the cheapest comparable homes have been in livable condition has been $375,000 and that’s the first link above in 2010.
They’ve gone up in price into the mid-$400’s in 2011 and now the high $400’s in 2012.
Okay, G.
Here is my example of the bottom:
2706 W Julia Ct. – (Logan Square)
http://www.redfin.com/IL/Chicago/2706-W-Julia-Ct-60647/home/13417370/mred-07693963
Listed on 12/14/2010 for just 12.9K
Sold on 1/28/2011 for 36K.
It sold for several times the list, yet was still an extremely low price.
I haven’t seen as good a deal since.
http://www.redfin.com/IL/Chicago/3847-N-Tripp-Ave-60641/home/13458664
1979 sq feet, with a big addition, and redone in 1999 and, yada yada yada
under contract listed at $499 in days.
I’ve seen the price of these more or less comparable Victorians go from the high $300’s in 2010 to the high $400’s in 2012. Bottom? Who knows, every market has a submarket so Old Irving especially (south side of Irving Park or North side or west or east of highway, etc) but lord knows there aren’t any $300k victorians south of irving park.
here’s what $399 now buys now, still went under K in like 10 days, 1880 sq ft:
http://www.redfin.com/IL/Chicago/4149-N-Keystone-Ave-60641/home/13481066
Wrong side of irving, no central AC, radiator heat, shitty block filled with tons of condo conversion foreclosures, only a handful of SFH neighbors.
I lied, there is one victorian for less than $400k south of irving, it’s on keeler, and it’s total renovation project. big red house, no pics of the interior, been trying to sell for months, very big house, finally went under K recently. Not really comparable to the 1600-2000’s sq ft Victorians in the area.
HD, you ALMOST resurrected my interest in OIP. I would have bought the 3656 Tripp house if I have known I could have gotten it for that price. I believe the realtor said it would never go that low — and we know it chased the market for years starting about $500K.
We also took a pass on the 4149 Keystone house because the porch looks bad, no AC and the block is a traffic nightmare (what’s that term you used? external obsolescence). didn’t see the bathroom spa in the early pictures though.
I’ve given up on the city. The cost to live in a ‘safe’ area is too rich for my blood; and after factoring in private schools, if necessary, I have yet to understand the benefits of living in a ‘blue’ neighborhood paradise. I still live in old irving for now, and i’ve enjoyed it here, but $500,000 to have a house where my garage will most assuredly be broken into once or twice a year all the while paying $6,000 a year for private school is not my idea of city livin’.
“Do you know how to get a seller’s agent to give you the coop commission, with reasonable certainty?”
Fred–DZ hit it on the head. You’re unlikely to be any better off without a buyer’s agent because of how compensation is setup. Seller has an agreement to pay their broker X%. That X% is generally shared 50/50 with the buyer’s broker. No buyer broker means no split–better for the seller’s broker. I’ve seen very sophisticated people attempt to buy on their own and negotiate that 50% cut as a reduction to price–but seller and seller’s broker are in a contractual agreement for X% and while, theoretically they can agree to reduce, I think it’s unlikely to happen. It’s true that the actual work of a buyer’s agent isn’t difficult but, unless a buyer has purchased before, they have no clue what they are doing. Anyway, for these reasons I’ve split the buyer’s broker commission 50/50 with buyers that know what they want and aren’t going to waste my time. It’s been a win/win for both sides.
Chris M
This was my thought. It would give the buyer a way to negotiate a lower price. Why wouldn’t a seller/agent go for this? Neither party would be losing money, in fact, it would save the seller money since the % based taxes due at closing would be lower. Will this become more common if Koenig & Strey’s plan that Icarus linked to actually works out?
Will the For Sale By Owner thing finally take off if Koenig & Strey’s plan doesn’t fail?
I think the whole FSBO thing will finally take off once they come up with a phone app for it. 😀
Fred, the issue is that the agreement is between the seller and the broker, which is usually not the agent. So think of John Smith as the agent and Koenig & Strey as the broker. Agreement is with K&S not John Smith. John Smith has no say in the contract between seller and K&S. (John Smith has an employment agreement with K&S.) The listing agreement would need to be modified and while it technically can be done I haven’t seen it done successfully. As to why it hasn’t worked I don’t know other than brokerages don’t really like to do it. That’s why I offer a 50% rebate to buyers–it works and it’s legal.
As for that K&S thing, it’s pretty much a wash because the co-op commission will typically cover the fee. However, sometimes the commission isn’t 2.5%–sometimes 2.25%, 2% or lower, so in that case the buyer would be out of pocket. Those lower CCs are most common where the seller is doing flat fee MLS and wants to set the CC low. And, obviously, if the buyer doesn’t buy then they lose the retainer, which the article doesn’t go into detail as to how much that would be.
Pure FSBO is difficult because without the MLS you’re property is being overlooked by most of the market. There are a bunch of flat fee brokers that will list you on the MLS for a few hundred and that’s the best way to go if you have the time/interest to show a place yourself.
http://www.coldwellbankeronline.com/property/details/2352758/MLS-07945495/911-West-School-Street-Chicago-LakeView-IL-60657.aspx
Listed@137.5K, sold@176K, multiple bids situation. Bought, refurbished minimally (cleaning and paint), and rented out in <2 Months (positive cash flow).
your*
Milkster,
Not to horn in on your debate with G, but can you use noncrapshack evidence? I love them, but they’re not transparent enough to be good data.
But speaking of crapshacks, this one strikes me as a better deal than your Julia place, despite the multiple in price difference, based solely on the pics and what I know about the locations:
http://www.redfin.com/IL/Chicago/2324-N-Sawyer-Ave-60647/home/13419426
Nonchatter–yes, based on the photos listed, that looks very underpriced. I’m actually going there with a client this evening. I’m sure there will be a bidding war.
“Seller has an agreement to pay their broker X%. That X% is generally shared 50/50 with the buyer’s broker.”
And that sharing with the buyer’s broker is per the contract with the seller or per agreement of brokers as part of MLS (or whatev the relevant organization is) membership? Wondering if there’s a potential antitrust claim.
I know the levels of the overall or coop commissions are not supposed to be fixed. But I take it that any broker that is part of the MLS will automatically get the coop commission offered, while an individual buyer would have no such claim. Is the right to obtain the coop commission part of a joint agreement among brokers?
Chris M,
Am watching that with interest. My experience is that dog-eared buildings in good locations of LS have always had bidding wars since bubble burst.
And for all you CPS handicappers, that Sawyer place is in the best Tier 1 neighborhood you’ll find in the city. Although nobody knows if that’s much of a benefit.
I’m not trying to say a seller’s agent isn’t worth it. The way I see it, you are paying the brokerage to list on the MLS, paying for an agent’s time to show the property and any marketing that happens (pamphlets in the home, web site, etc..). In fact, it is for this reason that I am surprised that brokerages don’t turn away sellers who want to overprice their property, knowing it is going just sit on the market and soak up an agents time. The only reason I can see a brokerage not wanting to participate in no buyer agent would be to protect their own agents. I can see agents getting cranky about losing half their business.
Now we need a FBBB revolution. For Buy By Buyer!
Chris, sounds like K&S wants an easy way to separate serious buyers from the not so serious with the retainer. I imagine the time spent per closed transaction is quite high these days and the intangible cost adds up on deals that don’t close for the agents and brokerage.
Listing agent will say something like “Broker is authorized to share Broker’s compensation or commission with all cooperating Brokers regardless of any cooperating Broker’s agency relationship to Seller, Broker or the Buyer.” And being licensed in real estate only means you can legally accept compensation; you need to be a member of the local MLS to actual be entitled to received the compensation. You can’t be a member of the local MLS without being a member of the local Realtor association. You’re right–the commission isn’t technically fixed–it’s negotiable, even though there is a norm for different areas–that’s a very heavily emphasized point in all real estate classes, despit what you see in practice. Yes, the co-op compensation is offered only to MLS members–a licensed broker that is not an MLS member would not technically be entitled to it.
And, regarding that house, it is in a nice area of LS. I actually live a block away. Sawyer and Spaulding have some unusually large lots and great location for the neighborhood. It looked like this place has been sitting vacant for a while now.
Meant to say listing agreement
Russ–I think K&S’s idea makes sense but as long as other brokerages don’t require a retainer then I think most buyers are going to turn elsewhere. I bet it doens’t work for them and they drop it at some point.
“And for all you CPS handicappers, that Sawyer place is in the best Tier 1 neighborhood you’ll find in the city. Although nobody knows if that’s much of a benefit.”
Hah–I noticed that. Both the CPS tier and assessed values are favorable in this pocket area.
For the non-serious buyers, why not setup a service where all the brokerage does is setup appointments and provide itineraries to buyers. A non-licensed minimum waged secretary could do this and not soak up an agent’s time. An agent would only step in when the buyer was actually ready to make an offer.
“For the non-serious buyers, why not setup a service where all the brokerage does is setup appointments and provide itineraries to buyers. A non-licensed minimum waged secretary could do this and not soak up an agent’s time. An agent would only step in when the buyer was actually ready to make an offer.”
A lot of properties these days are on lockboxes and codes are only given to licensees. Pretty common with REOs and a lot of other distressed properties
Chris, it will be hard to charge it if the other brokerages don’t go along. K&S agents will have to clearly show why they are justified in charging the retainer. I can’t think of how they will be able to make that case.
However, I could see a situation where they charge a retainer but rebate some of the commission. Since the retainer should cut out some of the time wasting clients, the ones that do move forward should be rewarded. So basically charge the retainer but charge less overall on closed transactions. Since the retainer would cut down on fall out, the cost should be lower for those that do close. Of course, they could also just give the buyer a choice. 2.5% no retainer or say 1.75% or 2% with retainer.
Russ–that sounds like a pretty reasonable proposal. Although I think that most people, given the choice, would choose the no retainer option even if it costs them more.
So how much, exactly, is the cost of getting a real estate license and joining MLS/Realtor Assn (in terms of both time and $$)? It has been well established on this site that the bar is too low, but how low is it really? If I could study for the weekend, get my real estate license, then pay a grand to join the MLS/Realtor assn, it could be worth it on a half-mil transaction where it could save $12.5k. 11k, even on a week’s worth of time, is a pretty good ROI in my book. Am I way off on the actual time/money involved in doing this?
“So how much, exactly, is the cost of getting a real estate license and joining MLS/Realtor Assn (in terms of both time and $$)? It has been well established on this site that the bar is too low, but how low is it really? If I could study for the weekend, get my real estate license, then pay a grand to join the MLS/Realtor assn, it could be worth it on a half-mil transaction where it could save $12.5k. 11k, even on a week’s worth of time, is a pretty good ROI in my book. Am I way off on the actual time/money involved in doing this?”
If I’m not mistaken it’s about 120 hours for the broker’s license. I can’t remember what the courses cost. You’d have to pay for and pass the exam. License is $200 or so every 2 years. Dues and fees are about $1k/year. 18 hours or so of continuing education courses that you would need to pay for and take every renewal period. I just recently had to take a proficiency exam (just $50 for exam) to bump up from broker to managing broker.
It’s not a bad ROI. But if you’ve never been through the purchase process at least once you’d probably be better off just having an experienced broker help you.
Better hurry-Says they already have multiple offers.
“Nonchatter–yes, based on the photos listed, that looks very underpriced. I’m actually going there with a client this evening. I’m sure there will be a bidding war.”
“Better hurry-Says they already have multiple offers.”
Yep–no surprise there.
“But if you’ve never been through the purchase process at least once you’d probably be better off just having an experienced broker help you.”
I would tend to agree with that sentiment, even though I don’t hold most brokers in the highest regard. I was a broker (in another state), managed associations (in another state), and I’m an attorney. We didn’t use a buyer’s broker on our purchase in 2010. It went fine, but (i) I spent a good bit of time running down loose ends and getting odds and ends completed and (ii) I think a good broker might have helped us get a slightly better deal.
this is how it’s done
bought in OK condition – summer 2011 for 240k
probably put in 75k MAX
relist for 430k – under contract in 5 days
That tells the whole story……. (of why cheap properties are going to sell like hotcakes now – flippers are out in masses)
http://www.redfin.com/IL/Hinsdale/541-E-Hickory-St-60521/home/14059836
“I would have bought the 3656 Tripp house if I have known I could have gotten it for that price. I believe the realtor said it would never go that low.”
Icarus, why didn’t you just make a lowball offer?
Why did you let the realtor boss you around?
I’ve been like a broken record since I started posting on this site telling people to just try.
C c c:
You ignore location, the number one rule of real estate when you tout this deal – unlike virtually all other homes in Hinsdale this one is in LaGrange’s school districts. Imo you grossly over estimate the desireability of this house at new ask and it remains to be seen whether a lender’s appraiser agrees with you.
Also Icarus,
You should have used my buyers agent.
She’s been submitting all my lowball bids and she said she gets a thrill out of getting a deal for her clients.
I noticed this today, too: 30yr rates are up 25bps.
Economic Uplift May Be Drag on Housing
http://online.wsj.com/article/SB10001424052702303812904577295800088229304.html?mod=WSJ_hp_LEFTTopStories
Welcome to the next leg down.
“this is how it’s done”
Crib Chatter has been covering this for the last year (in fact, it was one of the “top stories of 2012”).
All buyers want “new”. So if you buy a foreclosure on the cheap and can fix it up (even minimally)- you’ll find a buyer.
Heck, my family just spent 4 months renovating my grandmother’s suburban ranch house that was built in 1971. We put in a new kitchen (cherry, stainless steel, granite), new baths, hardwood floors and painted. (oh- and replaced two windows.) We got an offer on the first day it was on the market (priced it right.) The renovations probably got us an extra $40k (when all is said and done.)
Nothing else has sold in her neighborhood in the last 6 months (not even the foreclosures- which were cheaper than my grandmother’s house- but not THAT cheap.)
But buyers want “new.”
“You ignore location, the number one rule of real estate when you tout this deal – unlike virtually all other homes in Hinsdale this one is in LaGrange’s school districts.”
Actually- LaGrange schools are awesome. They blow away CPS. And to get a basically remodeled house for around $400,000 in that great school district with easy access to downtown Chicago? Sure- sign me up.
“For the non-serious buyers…”
If I were selling, a “non-serious buyer” wouldn’t get in my door.
Bob- there’s no doubt that if interest rates keep rising and they push up mortgage rates- then people in the White House and the Federal Reserve will get very nervous (again) about housing. They can’t keep rates low for forever but their plan was to keep them low enough to get the housing recovery going so that when they rose it at least had some legs under it.
So far, their strategy hasn’t really been successful. I don’t think Bernanke had any idea that the housing bust would last this long- even after all the stimulus and with record low rates. Heck- they can’t hardly get anyone to buy right now with 4% mortgages. What happens if they’re 6%?
“We got an offer on the first day it was on the market (priced it right.) ”
I’d say you under-priced it. Pricing it right I’d consider a list time of 14-90 days.
“The renovations probably got us an extra $40k (when all is said and done.)”
Congratulations, Sabrina!
Hi Milkster, I don’t recall what confluence of events lead to me passing on this one. Perhaps when I saw it, it was still high 400s to low 500s and it didn’t seem realistic that it would go that low. I might have been getting over OIP too.
Which neighborhoods are piquing your interest these days, Icarus?
If I see anything I’ll e-mail you.
I would have to say Portage Park, Jefferson Park, and maybe Edgebrook Glen. My wife really digs Old Norwood Park though, so if you find us a gem, there could be a scarf or a new pair of shoes in it for ya ;D
“Which neighborhoods are piquing your interest these days, Icarus?
If I see anything I’ll e-mail you.”
i have to admit, i was surprised to see how quickly this was snapped up. not because i don’t think it was worth it. Because it supports the premise presented here that good REOS are snapped up by insiders before us average joes can vette them.
http://www.redfin.com/IL/Chicago/2319-N-Sacramento-Ave-60647/home/13417935
“I’d say you under-priced it. Pricing it right I’d consider a list time of 14-90 days.”
Not in this market Bob. Not if it’s a totally renovated property (like the one in Hinsdale that Clio linked to that went under contract in just days.) Inventory is low. And it’s even lower for totally turnkey properties. Buyers are looking for anything “new” and they will snap it up quickly.
I actually thought we were pricing it a little too high for the neighborhood, as, like I said, nothing else had sold in the last 6 months- but lo and behold it’ll sell for $10k off the list. Closing is next month. Everything else in the neighborhood is just sitting.
Don’t underestimate the power of stainless steel appliances and granite. Some other family members didn’t want to do the granite (as it’s not exactly a mansion house) but I insisted- as the cost difference wasn’t that great (not that many counters.) I think it paid off in the end.
“Congratulations, Sabrina!”
Thanks Milkster. We’re just glad it’s done. Renovating a property sucks. It takes way longer and costs more than you think it will.
This is why all the buyers just want to buy it “new.” ha!
“And it’s even lower for totally turnkey properties. Buyers are looking for anything “new” and they will snap it up quickly.”
First of all, congratulations on your sale, Sabrina.
Second of all – you are absolutely 100% totally correct – all buyers want new and clean. The BEST thing a seller could do is move out and renovate their house (even a few cheap renovations) – this will likely result in a fairly quick sale at a premium price. Of course I realize that a lot of people can’t afford to move out or do renovations, but if you COULD, it would make a LOT of sense in the long run!
Yeah, that’s totally an inside deal, that property on Sacramento. Applebrook realty provided the listing? Who the F are they? They probably took the listing for 500$ commsission because you know the banks, god forbid, never pay a full commish. Who knows what side deals if any are going on in that. The property manager in some god forsaken place in flyover county doesn’t give two flying Fs what happens to the property, he’s paid probably 15$ an hour to make sure it sells, and that’s a good job in the county.
But don’t worry, there are plenty more where this came from in the pipeline. I know because I have the three year old foreclosure files on my shelf 🙂
“We’ve tried to discuss this before, too. Show us the “attractive properties” that illustrate price increases. It should be easy with all of these “bidding wars” underway. I’m still waiting for some of your examples of short sales/REO selling for significantly less than regular sales for similar units within a building, too.”
I’ve been busy all day trying to satisfy high demand in the market which G doesn’t think exists. Anyway, I never claimed that there were price increases. I claimed that attractive properties get multiple offers. A good example is 3838 N Leavitt that went under contract in 7 days with multiple offers. Or this one: http://blog.lucidrealty.com/320_elgin-forest-park-illinois-60130/ that sold in under one week with multiple offers. And I got an email from Russ just yesterday telling me tales of numerous deals with multiple offers and he sees more deals close than I do.
“You ignore location, the number one rule of real estate when you tout this deal – unlike virtually all other homes in Hinsdale this one is in LaGrange’s school districts,”
uhhh – southbound – the house is in the Hinsdale school district – not La Grange (not that there is anything wrong with la grange schools!!).
“LaGrange schools are awesome. They blow away CPS.”
[first, assuming that southbound is correct w/o checking]
Two blocks away from LaGrange is CPS? Do houses in Chicago claim Hinsdale schools? (yes, I do regularly see the ones that claim Payton or Northside or Lane as “the” high school, and that is similar)
The Hinsdale house claimed Hinsdale schools–if LaGrange schools are so great, why lie?
As for short sales selling for significantly less…at the time I wrote that this one, priced at 419K, had gone under contract in under one week: http://lucidrealty.com/homes-for-sale/Chicago_Lincoln_Park/condos_townhomes/1453-W-WRIGHTWOOD-AVE/ and was very similar to a short sale at 2561 N Greenview priced at 336K which has been on the market for almost a year without any takers. However, just yesterday 1453’s contract fell apart so we’ll have to wait to see what it sells at. And I don’t know what the contract was for but there is no way it was close to 336K and they relist it at 419K again. I’ll see if I can find some other examples.
“[first, assuming that southbound is correct w/o checking]”
I really should know better. Clearly in Hinsdale Central. 181 for primary, 86 for secondary.
Still cant shake the Cook County stink.
More on short sales vs non-short sales. Look at University Commons where I actually have a lot of data. It’s mostly distressed sales there in the last year. Some of the short sales have closed as low as $124 – 155/Sf while the non-short sales have closed between $165 – 215.
The thing about short sales is that there is the PITA factor and most of the time they are being marketed by short sale mills that don’t give a damn about what price they get. Yeah, if a listing agent is intent on doing the best job possible they can get close to market value but these short sale mills just don’t care and you can tell from their crappy photos.
“The Hinsdale house claimed Hinsdale schools–if LaGrange schools are so great, why lie?”
The poster seemed to be indicating it was all about location, location, location and since this had a Hinsdale address and LaGrange schools it was inferior (when many, many people would gladly pay $400,000 to get the excellent LaGrange schools- because they can’t afford the Hinsdale home prices.) Actually- I know many a parent that CHOSE LaGrange versus Hinsdale because they didn’t want their kids going to high school with those rich kids (but we’ve already chattered about that in another thread.)
I just brought up CPS comparison because it’s absurd to say “oh no- someone looking for good quality schools would NOT buy this house because now it’s in LaGrange school districts.) LaGrange is NOT CPS. Not even close. I’m not an expert on suburban schools and I know they’re not ALL the same (on the elementary level) but your child will be fine going to the excellent LaGrange schools.
Why lie if they ARE LaGrange schools? Because Hinsdale IS the more prestige town. But, again, your kids will be fine in either school. Basically- set for life.
“I’ve been busy all day trying to satisfy high demand in the market which G doesn’t think exists. Anyway, I never claimed that there were price increases. I claimed that attractive properties get multiple offers. A good example is 3838 N Leavitt that went under contract in 7 days with multiple offers.”
I think G’s whole point is that multiple offers doesn’t mean the market has improved. Not at all. It could mean:
1. The property is priced really low (as we’ve seen multiple offers on many foreclosures over the last few years)
2. Sellers are FINALLY wising up to the reality of this market and pricing it correctly in order to sell it.
So a house priced at $400,000 the last 2 years which finally lowers it’s price to $300,000 and gets 4 offers- doesn’t mean that things have “improved” if it last sold in 1997 for $275,000.
That’s how I read what G was saying (not speaking for him or anything.)
“But, again, your kids will be fine in either school. Basically- set for life.”
Wow, that is pretty impressive.
““But, again, your kids will be fine in either school. Basically- set for life.”
Wow, that is pretty impressive.”
If this were true I’d pay double the ask on the Hinsdale place. But in reality as it isn’t, is the school premium really worth it? I mean La Grange isn’t CPS.
Sounds to me like some “Real (Nagging) Housewives of Hinsdale” might blog here.
The other day I saw a New Trier sailing club sticker on some luxury SUV. I immediately thought of what an egregiously assholeish thing to display and how one must lack perspective to put that on there. But hey if it gives the valets any more motivation to drive it like it’s stolen Ferris Bueller style then I guess it all evens out.
“For the non-serious buyers, why not setup a service where all the brokerage does is setup appointments and provide itineraries to buyers. A non-licensed minimum waged secretary could do this and not soak up an agent’s time. An agent would only step in when the buyer was actually ready to make an offer.”
First, non-serious buyers have the opportunity to visit open houses weekly. If a buyer is at a point to make an offer I would consider them a serious buyer. A serious buyer spending even $250,000 or above does not want to waste their time looking at properties that do not meet their criteria. I understand that there are many people considering making a home purchase and just want to get a sense of the current market and that is what open houses are for.
As for serious buyers, they have limited time and want an experienced agent that can limit 100+ listings to 20 because of their expertise in the market. I even see rental clients using their lunch hour to view listings because that is all the time they have. Time is money and most buyers do not have the time to learn the market, the buildings, the associations, rules and regulations, special assessments, rental caps, pet restrictions, FHA approved buildings, percentage of rentals, pending litigation, etc.
A good specialized agent in your area of interest will help target the properties that meet your immediate criteria rather than some person setting up appointments with buildings that you would never even consider if you knew the specifics.
Without the specialized knowledge a “good” buyer’s agent provides, you could spent countless hours searching, writing offers, negotiating and then in attorney review realize your great deal is nothing but.
You are better off searching for a knowledgeable full time agent than taking on the market yourself. The agent will have probably seen in person the previous comparable sales to give you sound advice regarding the value of the property you are considering. Remember, great agents make a living by referral, not just one sale. A great agent will want your future referrals and is not just looking to make “just a sale.” I understand there are good and bad in every profession but it is pretty easy to recognize the difference!!!
“A great agent will want your future referrals and is not just looking to make “just a sale.” I understand there are good and bad in every profession but it is pretty easy to recognize the difference!!!”
Uhhhh – not really!!! Just as in every profession, looks aren’t all that they seem. I owned a townhouse in a fairly upscale subdivision (people there were pretty sophisticated). There was one agent who convinced a few people to price their townhouses (at various times over a period of 1.5 years lower than market value). Obviously these sold within days (this was in the very early 2000s). Then, she went about touting how she sold this townhouse in 1 day and that one in 3 days and that she could get the job done better than everyone. When time came to sell MY place, I drank the cool aid and called her. She told me to list it for 380-399k – not a penny more. I went with another agent, listed for 479k and sold it for 470k within 3 months (I had 4 offers in that time – all above 400k). Unbelievable.
“So a house priced at $400,000 the last 2 years which finally lowers it’s price to $300,000 and gets 4 offers- doesn’t mean that things have “improved” if it last sold in 1997 for $275,000.”
Actually, it does – because last year, even at the lowered price, it would have stayed on the market!! The funny (actually not funny at all) thing is that all of a sudden all of these people with cash are coming out of the woodwork. Any and all properties that are any type of “deal” or even slightly underpriced are snatched up in days. The average Joe has another thing coming if he/she thinks the foreclosure flood that will be coming will be available/offered to them – those properties (no matter how many there are) will ALL be snatched up by these rich people. Builders (in Hinsdale/Oak Brook and St. Charles) have been working “behind the scenes” during the past few years getting investors to pony up cash so that when this time comes, they go in and buy up these places. They described it as a total win-win situation. They get money by building and the investor will get a great return on his money (remember, people want new new new).
It amazes me how creative people can be!
“Heck- they can’t hardly get anyone to buy right now with 4% mortgages. What happens if they’re 6%?”
Feels to me that will depend on how/why it goes to 6%.
“Feels to me that will depend on how/why it goes to 6%.”
Don’t tell me that you believe it’s a complex system. I learned all the econ that anyone needs to know in Intro to Micro and Intro to Macro. Plus, i know that everyone alwyas is a rational actor and acts solely in their enlightened self-interest, so it’s wicked easy to predict what would happen if mortgage rates went to 6%.
Especially since someone here previously cited a bunch of stuff that showed that nominal home prices are not really affected by changes in mortgage rates. Don’t even need to look at underlying inflation or anything else, because nominal prices are all that matter, even if you’re losing your shirt in real dollar terms.
“There was one agent who convinced a few people to price their townhouses (at various times over a period of 1.5 years lower than market value). Obviously these sold within days (this was in the very early 2000s). Then, she went about touting how she sold this townhouse in 1 day and that one in 3 days and that she could get the job done better than everyone. When time came to sell MY place, I drank the cool aid and called her. She told me to list it for 380-399k – not a penny more. I went with another agent, listed for 479k and sold it for 470k within 3 months (I had 4 offers in that time – all above 400k). Unbelievable.”
There are several of these guys running around advertising that they sell homes really fast and some of them even claim they sell them for more money (which is a claim that is almost impossible to validate). That’s how many become “top producers”. And this is what keeps me awake at night. It makes me sick. It’s actually difficult to compete with these clowns because of lack of information in selecting agents. It’s not like going to McDonald’s where you can determine the quality of the experience by sampling the service 20 times and referrals are hit or miss.
“I learned all the econ that anyone needs to know in Intro to Micro and Intro to Macro.”
Odd you would say that. I was just about to describe it as this.
Correlation positive to .. W1(iT0 – iT1) + W2(eT1-eT0)
“even if you’re losing your shirt in real dollar terms.”
Dead serious. I am certain that there are so many people anchored to their net that most would prefer to make nominal and lose real than the other way around.
“Can someone explain to me exactly what a buyer’s realtor does other than setup appointments to see properties?”
So there’s already been a fair amount of discussion on this topic but here’s my take. A good buyer’s agent will determine the buyer’s criteria and set up more precise searches for the buyer than they could do for themselves. Part of the job is to get the buyer to think more critically about what it is they want and usually they will notice a number of inconsistencies in what the buyer says they want. Inevitably a buyer will start to look at stuff that doesn’t meet their stated criteria.
Yeah, we set up appointments – which can actually take more time than you think if you are trying to coordinate 6 over a 2 hour block. Then when we do the showings we try to make sure that we uncover as many issues as possible with the property and compare the buyer’s reaction to the property to their stated criteria. We try to get a sense of relative values based upon the buyer’s criteria and suggest loosening the criteria to open the field – i.e. consider options they might not otherwise consider.
If a buyer likes a property we dig deeper by talking to the listing agents to get more of the back story on a place and to see if we can read between the lines – e.g. does the listing agent really believe that the place is worth that much? What arguments will be most credible to this agent and the seller? What is the seller’s motivation? What is the listing agent’s track record in setting prices? If it’s a condo building there are numerous questions that need to be asked.
And yes we do research on what else is selling and what is for sale. Can we create a credible alternative for the seller? How can we make an offer without damaging the credibility of the buyer? And we need to keep the buyer and seller from making irrational decisions, which even the most sophisticated buyers fall victim to.
Inevitably, unless the buyer buys a couple of homes a year, the buyer has a ton of questions on the process and the various documents involved. They need referrals for attorneys and lenders and inspectors.
Once we have a deal there is a lot of coordination that takes place – especially if the buyer is using an attorney or other provider that we didn’t recommend and they’re a clown. I’ve had attorneys call me up a 9 PM the day before a closing to figure out how to do a tax proration.
And then there is the whole commission rebate problem. I can’t just write a check to the buyer at closing and be done with it. There are RESPA rules I have to follow. The rebate must appear on the HUD unless it’s a cash deal. I have to coordinate with the buyer’s lender and the title company to make sure it’s handled properly because every time they act like they’ve never seen a rebate before (maybe they haven’t). And I have to send them copies of the RESPA regulations and argue with them – and I need to do this well in advance of the closing and follow up again and again because they keep forgetting about it.
To the question of Can you get a license and/or do all this yourself?
Of course. You can also change your own oil but is it worth your time? If you do it it’s going to take a couple of hours because you don’t do it that often and you don’t have the proper tools. The real question is whether or not the buyer’s agent is overcompensated for what they do. I think they are above $200K – especially at the higher price points – which is why I think a buyer rebate on a sliding scale makes sense.
And what you learn to get your license is a small fraction of what you need to know to do your job effectively. The licensing process teaches you nothing about the market or the effective use of the MLS or how to market a property or how to negotiate or condo building issues or personality issues, etc….
A good buyer’s agent can save you a ton of time and money. The only problem is how do you find a good buyer’s agent and the process for doing that is not well defined. 80% of the agents out there are turkeys.
“Yeah, that’s totally an inside deal, that property on Sacramento. Applebrook realty provided the listing?”
HD, Applebrook Realty was the listing agent on 2706 W Julia too.
They would not answer any questions about the property by phone or e-mail.
Icarus, I’m so happy to hear you are staying in the city.
You’re my friend and I would never accept a gift.
If anything good hits, I will let you know.
I love those neighborhoods too.
Gary – honest question here:
Do you think there should be a sliding scale for commissions?
I have found that most times, transactions involving properties worth under 250k are MORE time consuming than properties worth over 2 million. This is because many of the buyers/sellers of the 250k property may not be that financially savvy or educated, may not have financial resources, and require a lot more hand holding and explaining. Compare that with a spectacular pristine 3 million dollar property bought by a rich, educated, experienced buyer. THEY will do all the work (to make sure the deal goes through and is smooth). Yet the commission difference is staggering (12,500 vs 150,000)
“I think G’s whole point is that multiple offers doesn’t mean the market has improved.”
That’s pretty much it in regards to prices, Sabrina.
“Do you think there should be a sliding scale for commissions?”
Oh, absolutely. I think in general the work goes up with the price – except for the really unsophisticated (or overly sophisticated) first time buyer at the low end. But it’s not linear. So that’s why I use a sliding scale – higher % rebate at the higher prices.
But it’s up to the individual broker/ agent to make this determination.
G-Can you see if there are more over ask sales recently?
I do think that multiple properties going over ask is a symptom of a ‘hot’ market. If buyers see properties sit forever with multiple price reductions, they think “Why buy now? prices will be lower in the future” If buyers put in offers and repeatedly lose out to higher offers, how do you think they will react in the future?
I’m clear that you are talking purely about prices, but I think the psychology of the market DOES have an effect on prices, it might just take a few months for it to show up in the hard numbers.
“I think G’s whole point is that multiple offers doesn’t mean the market has improved.”
That’s pretty much it in regards to prices, Sabrina.
I have several clients purchasing single family homes in the $700-$1 million range and they all seem to be getting in multiple offer situations. The multiple offers are real because my clients aren’t getting the properties and they aren’t low balling either from what I can tell. It certainly doesn’t make a trend, but it seems as if buyers and sellers are finding a common ground at least for single families in that price point.
Russ, do work in the city exclusively or suburbs as well?
I would think a fair compromise in the demand to satisfy this requirement is obtainable. I wouldn’t seek a single property as the liquidity makes that a mighty high task to find a property that traded at the bottom and then trades again since.
I would look for price per sq ft in some tiers within condos… some adjustments for floors # would be easy. If I saw 1103 $ in Jan vs 1403 $ higher by more than standard 3 floor diff value…. I’d accept that.
“I would look for price per sq ft in some tiers within condos”
Yup, but then you are in the condo market, which may or may not, differ from the SFH market, even within the same price range.
Agree it’s hard to find the same property that sold last year and this year, and if there were such a property, the consecutive sales might well indicate something anomalous was going on. When you don’t have sales of the same house, properties are so idiosyncratic that even when you have e.g. a sale last year and this year of superficially similar homes, there are enough differences, of significance, that you could reasonably make the case that (adjusted for quality) prices have gone up by 3 percent or down by 3 percent.
And you have the small sample problem of course.
And there’s confirmation bias.
Vlajos, I work everywhere (including other states). However, my typical client is a young professional so I’d probably say 80% of the deals I finance are in the Greenzone. With that said, I feel like I am doing more in the burbs than previous years because a lot of my older clients are moving up to single families out to the burbs now – Oak Park, Evanston, North Shore, LaGrange, etc. The inner burbs I guess.
The multiple offer stuff I am seeing is on city properties though. Houses in Bucktown, Lakeview, etc. To clarify, it doesn’t seem they are selling for over list though, but close enough to make the seller happy and getting multiple offers. Basically, house lists at $900k and multiple offers start coming in around $800k and wind up around $875k or so. It isn’t like during the boom where the list price was the starting point. The list is kind of the end point.
“Yup, but then you are in the condo market”
Sacrifices one must make for more readily available transparency. add up all those condos and it has to be a big percent of overall market anyway…. S/B reasonably highly correlated to SFH as well.
It would work for me…
I agree, G is technically accurate in asking for what he is asking, but just not practical by the constraints of how things transact.
“I agree, G is technically accurate in asking for what he is asking, but just not practical by the constraints of how things transact.”
It doesn’t require a resale, only that of a reasonable substitute with adjustment. DZ’s +/-3% error margin is to be expected.
My request is really just to get some idea of what is creating the bottom calls. Obviously, the small sample problem is real, or else HD’s Old Irving SFHs have gained 25%+ in 2010-12 based on the one low sale outlier. Regardless, I realize that I don’t look as closely at individual sub-submarket sales as some do here. I am just curious about what sales these people believe to be at the bottom.
“If buyers put in offers and repeatedly lose out to higher offers, how do you think they will react in the future?”
dahlia, in a vacuum it will create price increases. However, there are many more factors in play. The extended period of low listing volume and continuing high foreclosure numbers are two that come to mind. The multiple offers in this environment are more likely to create increased inventory. How will buyers react to that in the future?
“I’m clear that you are talking purely about prices, but I think the psychology of the market DOES have an effect on prices, it might just take a few months for it to show up in the hard numbers.”
Of course it does, I have never claimed otherwise. I just believe that the immense shadow inventory far outnumbers fence-sitting buyers. Market supply was built for a demand that wasn’t even met during the free money bubble peak. A lot of that excess supply sits in the shadows and has not yet hit the market. No doubt that we’ll see at some point if the psychological effects of the current inventory manipulation result in a market turn with lucky duckies instead of the same old knifecatchers.
“My request is really just to get some idea of what is creating the bottom calls.”
I agree with you. I would love to see something as well. Until something appears as an uptick it can’t have bottomed. I’d like to see it in the mid-level properties more-so. Showing me that rich people now have more money since X-Mas, is something that’s obvious.
“I do think that multiple properties going over ask is a symptom of a ‘hot’ market. If buyers see properties sit forever with multiple price reductions, they think “Why buy now? prices will be lower in the future” If buyers put in offers and repeatedly lose out to higher offers, how do you think they will react in the future?”
Recently listed and sold a newer construction house in Lake View. We priced it a bit higher than two comparable sales on the same block within the last year. Within the first week I had 21 showings and 4 offers. The home closed for slightly over the asking price. Listed for $1,199,000 and closed for $1,205,000. Many of the buyers looking at the home said they had recently been outbid on other homes and this was definitely creating a sense of urgency.
“or else HD’s Old Irving SFHs have gained 25%+ in 2010-12 based on the one low sale outlier.”
The trend from 2008 to 2010 was down down down (from the $500’s and $600’s). The lowest priced sale was the $375k ‘outlier’ as you called it, but it’s not so far outside the realm of reasonable to call an ‘outlier’; after that sale prices quickly rebounded in this sub-market and now they’re up a bit. Like I said, it’s the inventory, or as you call it, small sample size, that leads to the jump in prices. Regardless, the were a handful of $300’s sales during the 2008-2010 time period (not all early 1900’s victorians or four squares however); these days the $300,000-$400,000 price range is really weak, there’s hardly anything for sale. Even this tiny and cramped, but somewhat updated home, sold in the $400,000’s just a few months ago. In my opinion this would have been below $350,000 had it been listed in 2009/2010 instead of 2011.
http://www.redfin.com/IL/Chicago/3755-N-Kildare-Ave-60641/home/13458910
“We priced it a bit higher than two comparable sales on the same block within the last year.”
You sold 1723 W Wolfram for $1.205M What 2 sales are you referring to? I only see 1718 W Wolfram, which sold for $1.24M.
I don’t think prices have bottomed by any stretch of the imagination. What we’re seeing is that lower prices are continuing to bring out more buyers. And if higher sales volume brings out more buyers, more sellers will list at even lower prices to attract those additional buyers. The banks seem to have worked through some of the kinks in the short sale process which makes it easier for distressed properties to move from the shadows into the light. Sure, certain sub-markets are selling for higher than list or even higher than recent sales, yeah, that generally happens this time of year anyways, that’s what’s ‘supposed’ to happen in a normal market, so that’s not any surprise. The economy has sort of turned a corner to so speak at least for some segments of the economy. Whether it continues remains to be seen, I think europe and china’s slowdown will affect us, or maybe it’ the other way around, our recession has started to affect them…
1718 Wolfram was a bit larger with an extra floor and bedroom. 1722 Wolfram closed in 2010 for $1,088,000, different design but same square footage and bedrooms. 1724 Wolfram, similar design to 1722, but also same sq. ft and bedrooms also closed in 2010 for $1,050,000. Both had market time over 100 days.
So, your previous statement, “We priced it a bit higher than two comparable sales on the same block within the last year” was false.
“1718 Wolfram was a bit larger with an extra floor and bedroom.”
An extra basement bedroom?
1723 W Wolfram
Master Bedroom: 18X14 2nd Level Hardwood
2nd Bedroom: 13X11 Lower Hardwood
3rd Bedroom: 18X13 2nd Level Hardwood
4th Bedroom: 12X10 2nd Level Hardwood
5th Bedroom: 17X15 2nd Level Carpet
1718 W Wolfram
Master Bedroom: 17X14 2nd Level Carpet
2nd Bedroom: 16X11 2nd Level Carpet
3rd Bedroom: 12X11 2nd Level Carpet
4th Bedroom: 16X15 3rd Level
5th Bedroom: 12X11 Basement
The north side of Wolfram also has 117′ deep lots instead of the standard 125′ on the south side.
Should have said the last two years. It has been a year since I was in the 1718 home but it had an extra room on the additional top floor and a roof deck. If I remember correctly it had two bedrooms on the lower level so that is where the extra bedroom was. 1718 also did not have the same wear and tear as 1723. The 1723 home was more comparable in size and layout to the 1724 and 1722 homes that sold in 2010.
G – 1718 Had one extra BR and one extra Bath. Did you look at the picture? It is obviously a larger home. Cut her some slack – her comments were pretty accurate.
Ginger – Thank you for sharing your experience in this market.
“G-Can you see if there are more over ask sales recently?”
Sure, I’d love to illustrate the current hype.
Chicago SFH/condo/TH February sales
year/closed/closed over list price/%
2012 1,224 223 18%
2011 1,092 245 22%
2010 1,257 289 23%
2009 870 166 19%
The condo numbers might not accurately reflect the question due to exclusion of parking in some list prices. The freestanding SFH data does not have that same potential for inaccuracy.
Chicago SFH February sales
year/closed/closed over list price/%
2012 532 98 18%
2011 488 125 26%
2010 597 147 25%
2009 419 75 18%
My bad – I incorrectly recalled that Cook County part of Hinsdale = Lyons HS district & assorted junior & grammar school districts. While Lyons et al are all great school districts I based my statement on the incorrect assumption that children living in this home would face inconvenience factor that their friends ie other neighborhood kids would mainly go to different schools. My apology for providing wrong information.
“Cut her some slack – her comments were pretty accurate.”
Except where they obviously weren’t. Has there ever been an inaccurate statement made by a realtor here that didn’t err to the side of market hype? I’ll start cutting some slack when they even out.
G
Thanks for the data!
Can you give us the March numbers when they are ready?
G – You are incorrect. Her error actually was on the side of the market being worse than it is. Prices have declined every year. Lets assume they were at an index of 100 when the earliest of the homes she was comping to sold (that would be 1722 which sold 1/1/2010). The index should have been lower on 2/1/2011 since home prices continued to decline from 2010 to 2011 – lets say a 5% decline to an index value of 95. The home she sold was about 10% higher than both of the homes she referenced that sold in 2010. Therefore in index terms that would be 110 which is a 10% increase from 2010 but a 110/95 = 16% increase from 2011 index level. Thus she would have been better off using a comp from 2011 (showing a 16% increase in price instead of a 10% increase) if she was deliberately trying to hype the market. I think you just assume every realtor is disingenuous which is not the case.
I don’t think anyone is claiming that the bidding wars are leading to closed prices above the list. I know I am not. A very specific group of properties are getting multiple offers, but the offers are almost always below list. The prices get bid up and buyers are losing out, but not above the list at least in the ones I have seen. I’m only seeing this in the single family homes in that $700-$1m or so range. I haven’t seen the same dynamics with the McCondos.
It sounds like the acceptable inventory in that price range for a single family in the greenzone is just very tight. I definitely think it is too early to say it is a trend or will even be reflected in the numbers. However, you notice when your clients are getting out bid especially when the market for the past few years has not resulted in multi offer situations 99% of the time on non distressed properties.
Just got off the phone with IAR and there was indeed a problem with the February Chicago numbers – new numbers coming out shortly. As G suspected the local MLS did not feed February 29th to the IAR. So they’re going to show a significant increase – like 16.6% for Chicago. But I would argue that you should scale the numbers back by 28/29 to account for the different number of days and then you would get 12.5%.
“would argue that you should scale the numbers back by 28/29 to account for the different number of days”
And one shouldnt forget that the snopacolypse really took out two or maybe three more days.
I’m looking at estate sale/foreclosure general good deals are getting bid up above ask andgoing under contract in a few days. Extremely frustrating .
G — thanks very much for the over list price/% data. Do you know if there is any seasonality bias in the data? I can’t think of a reason there would be, but I’m also surprised that the number of sales for over list has decreased in 2012 compared to prior years at the same time that the number of short sales and REO sales remains high. Also, do you have this data going back to 2004 or 2005? I’m curious what the percentage of over-list sales looked like during the peak of the boom.
“G – You are incorrect. Her error actually was on the side of the market being worse than it is. Prices have declined every year…I think you just assume every realtor is disingenuous which is not the case”
The point of my request for examples was to compare the general index to specific sub-submarkets, not to just assume that “prices have declined every year” evenly across the board.
Still incorrect? Note that I said “err to the side of market hype.” The market hype currently is all about a sudden market turn. Her misstatement clearly supported the hype since it feeds a sense of urgency by shortening the turnaround time. I never said the misstatement was intentional, only that it followed a pattern.
Likewise, I don’t assume every realtor is disingenuous. To me, that implies they have additional knowledge that they are withholding in order to affect a desired outcome. That is simply not the case for most realtors when it comes to market conditions. There is often nothing more to it than the eternal optimism of a salesperson due to their paycheck depending on it. Details in support of market opinions are often casually misstated and rarely researched at all. Again, I think this has to do with the profile of any salesperson.
G – It’s obvious you are very biased against realtors. Ginger posted on this site under her own name with a real world example – a rare occurrence on cribchatter. I made no statement regarding your original request – only the statement “Has there ever been an inaccurate statement made by a realtor here that didn’t err to the side of market hype?”. She said in her original post that buyers were outbid on properties in Lakeview – not on the same block so its irrelevant that the two pricing comps were 1.5 and 2 yrs ago. You were the one who challenged her on comparable sales price and you were incorrect she was hyping the market based on price. It makes sense for her to use those two properties as pricing comps since they were literally across the street and comparable in size. I personally am in the market and I have been outbid on three properties in the last 4 months and I think Ginger is correct that this phenomenon is affecting people in the LP/GC/LV area.
“…list price/% data. Do you know if there is any seasonality bias in the data?”
There is seasonality to REO/foreclosure % of total sales due to decline in owner occupied demand in the winter months. Sale prices in excess of list prices are most common in short sale/REO sales, so it follows that seasonality exists in their , too.
Chicago SFH/condo/TH February sales
year/closed/closed over list price/%
2012 ALL 1,224 223 18%
2012 NO SS/F 587 63 11%
2012 SS/F 637 160 25%
Chicago SFH February sales
year/closed/closed over list price/%
2012 ALL 532 98 18%
2012 NO SS/F 238 17 7%
2012 SS/F 294 81 28%
“Also, do you have this data going back to 2004 or 2005?”
Chicago SFH/condo/TH February sales
year/closed/closed over list price/%
2004 ALL 1,814 369 20%
2004 SFH 739 136 18%
2004 condo/TH 1,075 233 22%
Ginger: “We priced it a bit higher than two comparable sales on the same block within the last year.”
Yoss: “She said in her original post that buyers were outbid on properties in Lakeview – not on the same block so its irrelevant that the two pricing comps were 1.5 and 2 yrs ago.”
???
“You were the one who challenged her on comparable sales price and you were incorrect she was hyping the market based on price.”
Of course I did, since I couldn’t find the “two comparable sales on the same block within the last year.”
I think it is clear how her misstatement supported the current market hype of a rapid market turnaround. You failed to make your case otherwise.
“And one shouldnt forget that the snopacolypse really took out two or maybe three more days.”
Not really. That occurred in early February so all it would have done is shifted activity until later in the month. But more importantly, these are closings and the snow might have delayed showings but not closings.
“. I personally am in the market ”
I seriously doubt it. That’s why you’re a serial lurker who walks, talks, writes and acts like a Realtwhore.
yoss–if realtoring isn’t putting enough scratch on the table you’re going to need to find a new profession. no way around that.
Bob – Check out my previous comments on other threads and you will find mostly negative sentiment on the market. You will also see that I have talked about bidding on two properties. I am defending Ginger not because I’m a realtor but because she came to a site that is mostly negative towards realtors and posted under her own name useful information regarding her recent experience and was eviscerated by G, unfairly in my opinion.
Bob, I don’t know what’s happened to you lately, but you sound like a doofus. knock it off.
G – Let me break it out for you. Ginger’s original statement was 1. she recently sold a property above recent comps 2. she thought the reason it moved so quickly at that price was because current buyers had been outbid previously. She used the two comps from 1.5 and 2 years ago to illustrate 1. the home closed above other homes on the same block 2. the house she sold was sold much faster than those properties. The statement regarding buyers being outbid previously is anecdotal and can’t be proven (there is no index or tracking statistics for people being outbid). You accused her of hyping the pressure buyers are feeling to bid in the market by using properties that were sold 1.5 and 2 yrs ago vs 1 yr ago. It doesn’t matter that she used those properties as examples because they were used to show 1. the home she sold was above recent sales 2. the home she sold closed faster than similarly priced homes. They were not used to support the anecdotal statement that buyers had recently been outbid.
yoss–let me break it out for you. Ginger stated that “We priced it a bit higher than two comparable sales on the same block within the last year.” I questioned the existence of those sales. Ginger confirmed that they do not, in fact, exist. I commented how realtors always seem to err on the side of market hype around here. You attempted to prove (in an amusing way) that she did not err on the side of market hype. I pointed out the obvious that market hype is currently all about the rapid market turnaround and the heightened sense of urgency, and Ginger definitely erred in support of that hype. I never said that her misstatement was intentional. I didn’t treat Ginger unfairly when I pointed out her factual error that she later corrected. I never disagreed with the statement that buyers are being outbid and this is creating an increased sense of urgency. I only pointed out her factual inaccuracy that made the turnaround appear to be more sudden, thereby erring on the side of market hype.
“G-Can you see if there are more over ask sales recently?”
“Can you give us the March numbers when they are ready?”
dahlia, it doesn’t appear to be the case. Here’s March 1-21 closed data for each year:
Chicago SFH/condo/TH March 1-March 21 sales
year/closed/% over List/% Short Sale REO
2012 913 18% 45%
2011 860 20% 49%
2010 1,052 19% 38%
2009 701 17% 37%
2008 1,158 21% n/a
2007 1,429 21% n/a
G–They do exist from 2010, regardless I was just giving a recent scenario of a home sold over ask price which is confirmed and was under contract in 13 days for more than $117000 than a comparable home sold in 2010 and more than $155,000 than another comparable home sold in 2010. It sold for $35,000 less than a home sold less than a year earlier but that home was larger in size. These are all facts and you can confirm for yourself.
1722 Wolfram closed in 2010 for $1,088,000, different design but same square footage and bedrooms. 1724 Wolfram, similar design to 1722, but also same sq. ft and bedrooms also closed in 2010 for $1,050,000. Both had market time over 100 days.
Enough, G, we get it that you hate realtors and mortgage brokers, and I am not a fan of most either, but piling on someone who gave nearly completely accurate information from memory and was being honest, in addition to being willing to use her real name and to respond, is going too far.
For what it’s worth, I think that the properties she listed are good examples of the Burley premium. If they were in Jahn or whatever the AAE is just south of there, they would probably be under a million.
“These are all facts and you can confirm for yourself.”
Of course, that’s why I questioned your original misstatement about the existence of 2011 sales. I didn’t question the rest. I only commented further on how the mistake fit a pattern of observations here.
“whatever the AAE is just south of there”
Prescott, right?
Must be Prescott from where it is, it just slipped my mind and the Burley area map I have doesn’t show the AAE for just South of Burley.
Quadruple Dip: Housing Relapses As “March Is Turning Out To Be The Weakest Month Since Last October Re: Buyer interest”
http://bit.ly/H99FYN
City of Chicago condo/TH/SFH closed totals March
year/closed/median/% REO-Short Sales
Year Closed Median %REO/SS
1997 1,226 $126,875
1998 1,540 $137,003
1999 1,766 $152,125
2000 1,793 $167,500
2001 1,800 $195,000
2002 2,112 $210,000
2003 2,261 $225,000
2004 2,772 $244,950
2005 2,822 $271,125
2006 3,000 $275,862
2007 2,399 $285,000
2008 2,098 $300,000
2009 1,219 $217,000 37%
2010 1,860 $207,750 38%
2011 1,481 $163,763 49%
2012 1,630 $170,500 44%
City of Chicago condo/TH/SFH closed totals March
Includes Days on Market and Closed Price data:
Year/ Closed/ Median/ %REO SS/ DOM median/ SP:LP Median/ %SP>LP
2010 1,860 $207,750 38% 95 96.4% 19%
2011 1,481 $163,763 49% 116 95.9% 20%
2012 1,630 $170,500 44% 108 95.5% 19%
City of Chicago condo/TH/SFH closed totals 1st Quarter
Year/ Q1 Closed
1997 3,060
1998 3,530
1999 4,126
2000 4,362
2001 4,228
2002 5,306
2003 5,578
2004 6,279
2005 7,163
2006 6,864
2007 5,952
2008 4,755
2009 3,007
2010 4,354
2011 3,633
2012 3,948
Lake View condo/TH closed March
year/closed/% REO-Short Sales
1988 45
1989 67
1990 78
1991 76
1992 103
1993 93
1994 110
1995 95
1996 123
1997 135
1998 166
1999 138
2000 138
2001 151
2002 150
2003 173
2004 170
2005 209
2006 232
2007 180
2008 190
2009 75 3%
2010 102 8%
2011 68 24%
2012 109 23%
Lincoln Park condo/TH closed March
year/closed/% REO-Short Sales
1988 58
1989 71
1990 76
1991 76
1992 102
1993 76
1994 113
1995 84
1996 88
1997 89
1998 104
1999 110
2000 98
2001 96
2002 101
2003 120
2004 132
2005 124
2006 103
2007 128
2008 97
2009 30 3%
2010 74 8%
2011 62 23%
2012 62 13%
Near North condo/TH closed March
year/closed/% REO-Short Sales
1997 121
1998 144
1999 155
2000 182
2001 174
2002 244
2003 203
2004 282
2005 391
2006 279
2007 235
2008 203
2009 103 10%
2010 163 17%
2011 152 20%
2012 182 19%
Loop condo/TH closed March
year/closed/% REO-Short Sales
1997 24
1998 35
1999 27
2000 28
2001 49
2002 44
2003 84
2004 107
2005 72
2006 49
2007 43
2008 162
2009 37 3%
2010 71 17%
2011 43 44%
2012 52 25%
Near South condo/TH closed March
year/closed/% REO-Short Sales
1997 7
1998 9
1999 16
2000 23
2001 18
2002 30
2003 25
2004 88
2005 68
2006 116
2007 62
2008 112
2009 47 13%
2010 49 18%
2011 37 41%
2012 43 53%
City of Chicago condo/TH/SFH closed totals March
year/closed/median/% REO-Short Sales
Year Closed Median %REO/SS
1997 1,226 $126,875
1998 1,540 $137,003
1999 1,766 $152,125
2000 1,793 $167,500
2001 1,800 $195,000
2002 2,112 $210,000
2003 2,261 $225,000
2004 2,772 $244,950
2005 2,822 $271,125
2006 3,000 $275,862
2007 2,399 $285,000
2008 2,098 $300,000
2009 1,219 $217,000 37%
2010 1,860 $207,750 38%
2011 1,481 $163,763 49%
2012 1,630 $170,500 44%
Thanks G. I like seeing the data going back to last decade when we had a more “normal” market and that’s where our sales are now at. Also, the individual neighborhood data is very interesting because sales are still really depressed in the GZ (at least compared to most years this decade.) But it’s better than where we were last year- that’s for sure.
2005/2006 were the most glorrrious years for the real estate industry.
Breaking news:
A Lincoln Park realtor says that prices are rising on 2-bedroom units in LP.
http://yochicago.com/lincoln-park-sales-show-year-over-year-gains/26380/
Hurry! Buy now or be priced out forever.
Hahaha!