Market Conditions: Weather Is Blamed For January’s Weak Home Sales
We already knew January was weak but the official Illinois Association of Realtors numbers are out today.
January sales fell 9.1% year over year but last year was the highest in 6 years.
“The city of Chicago saw a 9.1 percent year-over-year home sales decline in January 2014 with 1,383 sales, down from 1,521 in January 2013. The median price also rose to $200,750 versus $157,000 in January 2013, an impressive 27.9 percent annual increase.”
Sales data since 2006 (thanks to G):
[unordered_list style=”bullet”]
- January 2006: 2009 sales and median price of $258,000
- January 2007: 1850 sales and median price of $279,900
- January 2008: 1203 sales and median price of $290,000
- January 2009: 918 sales and median price of $205,000
- January 2010: 1237 sales and median price of $195,000
- January 2011: 1034 sales and median price of $150,000
- January 2012: 1093 sales and median price of $149,000 (not sure why IAR has 1123 sales for last year)
- January 2013: 1521 sales and median price of $157,000
- January 2014: 1383 sales and median price of $200,750
[/unordered_list]
“January’s activity is fairly typical for this time of year,” said Matt Farrell, president of the Chicago Association of REALTORS® and managing partner of Urban Real Estate. “A brutal winter doesn’t typically encourage home shopping fever in Chicago, and with inventory down 25 percent, the homes that did sell produced well above the median price by almost 28 percent to just over $200,000.”
“Investor opportunities and first-time homebuyers are still finding deals in a market that we might not see again for years to come,” Farrell added.
“Severe winter weather and seasonal trends definitely affected sales in January,” said Phil Chiles, ABR, CRS, GRI, SRES, president of the Illinois Association of REALTORS® and Broker-Associate with The Real Estate Group in Springfield. “Despite diminished traffic from buyers, prices remained robust and indications are that they will continue to show strength as we enter the spring selling season.”
A couple of things are interesting about this report:
1. The jump in the median price is a red herring. All it means is that the middle class buyer has taken himself out of the game. The rich are still purchasing those $1.5 million new construction homes in Southport so it’s pushing up the median.
2. How can it be the weather? If you closed in January, you went under contract in November or December. While December’s weather wasn’t great, it wasn’t awful either. There were no polar vortices in December.
Mortgage applications continue to be way below seasonal norms. Historically, March sees the largest spike in mortgage applications for the year. The next 5 weeks will tell us how the spring home buying season will be.
Inventory continues to be low. Will that change when spring finally gets here?
Severe winter weather cools January home sales but median prices continue year-over-year march upward [Illinois Association of Realtors, Press Release, February 21, 2014]
I’m out of the country but I’m staying up on what is going on with housing (of course!).
The interesting story is the “mix” of what is selling now. Sure, the rich are doing well because the stock market is still holding near all-time highs. But anyone who has a tight monthly budget and needs a mortgage is feeling the sting of rising prices and higher mortgage rates.
These are some numbers from Sonoma County (wine country just north of San Francisco). It tells the tale of what is happening out there.
http://www.pressdemocrat.com/article/20140213/business/140219807#page=0
Buyers purchased 272 single-family homes last month, according to The Press Democrat’s monthly housing report compiled by Pacific Union International Vice President Rick Laws. Sales fell 5 percent from a year ago and were the lowest for January in three years.
But the month featured a tale of two markets. Sales of homes priced below $400,000 declined 45 percent in January from a year ago.
In contrast, 57 homes sold for $700,000 or more, compared to 21 a year earlier. Of last month’s transactions, 22 homes sold for $1 million or more, compared to eight a year ago.
The upper-end sales were a sign that “health and recovery has worked its way up the market,” said Laws.
I also have 1123 units sold in January 2012. That was the final number after the dust settled.
From Sabrina’s article:
“January ended with less than 600 homes listed for sale, about a two-month supply of inventory. That remains considerably lower than the roughly six-month supply that experts say is needed for a balanced market.
Sales of financially distressed properties declined 69 percent from a year earlier. They comprised just 12 percent of all sales last month.
Five years ago, nearly three out of four sales in Sonoma County involved distressed properties, mostly in the starter-home segment.”
Also, the article only covers SFH–over the past 90 days, over 10% of the sales in Sonoma County have been condos/THs and virtually all of them have been under $400k, and the majority under $225k.
I don’t find this surprising at all. A cold winter, lack of inventory, and an acute lack of lower priced inventory. I have a buddy looking in Schaumburg and there’s hardly any reasonably priced Sfh (at least Schaumburg reasonable) on the market. The realtors in my town are listing homes with kitchens from the 70’s at the same price as home with updated kitcpphens were selling for 6 months ago. It’s absurd. It will co tip to be slow I think until buyers start signing contracts, which may not be until April, considering there is another 2 week long polar vortex coming early next week. Things will thaw In march and buyers will start singning contracts in April.
Love Sabrina-
Now that we are comfortably above 3percent on the 10-yr…
You’re like Fox News… Cherry pick the data to prove your point.
Having said that… Yes the market has slowed down since last year. Is that bad???
The Polar Vortex even cut the murder rate by 50%:
http://www.dailymail.co.uk/news/article-2550568/Cases-gone-cold-Polar-Vortex-cut-Chicago-murders-50-cent-January.html
I had a feeling Chicago felt a little less murdery… I’m sure the wackjobs will say its due to the concealed carry laws and the no guns signs posted everywhere LOL
Rent vs Buy for Chicago:
“For buyers, the savings is significant. According to Trulia, buyers who stay in their home for seven years, will save about 47% compared with the cost of renting a comparable property.”
http://money.cnn.com/gallery/real_estate/2014/03/03/buy-vs-rent/4.html
I wouldn’t doubt that in today’s crazy market. Rents have shot through the roof. With the major investors charging $2,800 a month for a raised ranch single family home in Mayfair, yeah, it’s better to buy than rent!
“compared with the cost of renting a comparable property”
How many people rent a property that is genuinely ‘comparable’ to what they would buy? I never did, and everyone on CC who has discussed it–aside from anonny–didn’t either. Especially not for 7 years.
Yes, 50% over the next 7 years is a good guess for what I’d save v renting one of JMM’s $7200/mo sfh’s, but were we renting, we wouldn’t be renting a $7200/mo sfh–we’d be in a 3/2 condo or something similarly sized which would *also* be 50% of something ‘comparable’ to what we bought.
Very few people in my experience rent a place that is remotely comparable to what they choose buy. Most people seem to increase their housing expense fairly significantly when choosing to buy.
anon (tfo) – You are not thinking like a millennial!
“You are not thinking like a millennial!”
1. Duh.
2. I don’t think milennials who are renting places as nice as ones they would buy are planning to stay renters for 7+ years, unless (1) in very expensive markets, where less feasible to buy, or (2) what they would buy is, at best, a total crapshack, either bc they can’t/won’t afford more, or they’re artistes, or whatever.
Anon(tfo), seriously, stop it. We know you’re a millennial and we know you LOVE the skinny jeans. This facade you put is not ironic, it’s awful.
“How many people rent a property that is genuinely ‘comparable’ to what they would buy?”
The place I rent is maybe 30-40 percent of what I’d buy. Saving a lot of money this way.
I thought skinny jeans were out? (lets hope at least)
You think that those people who are renting the uber-expensive new apartments in the Near North are going to move out and buy crap shacks? They are just going to wake up one morning and lower their standards? I just don’t see it happening.
Does every older generation not understand the next generation? I can’t wait to shake my cane at Generation Z…
“Does every older generation not understand the next generation? I can’t wait to shake my cane at Generation Z…”
It also goes the other direction. Every generation blames the one before.
“You think that those people who are renting the uber-expensive new apartments in the Near North are going to move out and buy crap shacks? They are just going to wake up one morning and lower their standards? I just don’t see it happening.
Does every older generation not understand the next generation? I can’t wait to shake my cane at Generation Z…”
Hence the flippers and their rehabs all over the suburbs selling for $400k and above, that all look nearly exactly the same. Now that it’s getting even harder to find properties to flip (fewer REO’s, short sales and estate sales), they’re actually starting to build those faux mcmansions again. You know, the 2,925 sq foot house on the 50×130 lot because it meets the FAR ratio at .45 exactly … 2,925 ain’t a mcmansion by any mcmansion standards, but the turrents, brick, $20,000 all paver driveway make it look like mcmansion despite the relatively small size…
You think that those people who are renting the uber-expensive new apartments in the Near North are going to move out and buy crap shacks?
LOL!
“You think that those people who are renting the uber-expensive new apartments in the Near North are going to move out and buy crap shacks?”
Do they affirmatively *teach* ‘read to create an absurd ‘gotcha” in college these days?
Yes, Fred, that is the *best* and most likely meaning of what I said. The proper way to read things is to come up with the most absurd meaning possible. Let me form it into a ISAT question:
The least likely conclusion implied by the above excerpt is:
a) People who are paying $3000/mo for 1 bedroom rentals will not still be renting in Chicago in 7 years.
b) People who are paying $3000/mo for 1 bedroom rentals will most likely buy homes that cost $5000+/mo (ie, places that are genuinely “comparable” to what they rented).
c) People who are renting places that are 95%+ as nice what they would buy, and who are likely to rent that sort of place for 7+ years, are most likely going to buy a place below the Chicago median price (aka, in CC-speak, a “crap shack”)
d) People who are paying $3000/mo for 1 bedroom rentals are going to buy crap shacks.
Yes, you can come up with crazier shit, but (d) is pretty far afield from what I wrote.
“You know, the 2,925 sq foot house on the 50×130 lot because it meets the FAR ratio at .45 exactly … 2,925 ain’t a mcmansion by any mcmansion standards”
When you count the 1,462.50 sf rumpus room, etc., in the basement, and have a 4,387.50 sf (rounded off to “5000+” by some realtors), then you’re in the mcmansion range.
I’m with HD. People living in expensive cookie cutter rentals will move into expensive cookie cutter new construction homes. Kids who grew up in cookie cutter tract suburban housing have no issue living in these places. It’s all they know!
” People living in expensive cookie cutter rentals will move into expensive cookie cutter new construction homes.”
Jeebus. *THAT”S NOT THE POINT*. The question is: will people who are renting expensive 1-br apartments *buy* expensive 1-br apartments, and will the people who buy expensive 3/2s/SFHs in the city/in Winnetka rent an *equivalent* place for 5+ years before they buy? I contend “No” to both parts.
And, for periods shorter than 5 years, and especially shorter than 3 years, they are paying for the option, and the avoidance of entrance/exit costs–so *of course* their monthly outlay is higher, and *of course* as you get toward the ‘traditional’ (this was the rule of thumb, as I understood it, for a *long* time) 7 year breakeven point, buying looks better, and it also looks better if you compare short-supply rentals (like nicely updated SFHs) to their purchase costs, the rental looks worse.
Is this abomination a McMansion?
http://www.redfin.com/IL/Park-Ridge/Undisclosed-address-60068/home/13636357
This house, less than a block away from where I live, 2012, a .45 FAR ratio
http://www.redfin.com/IL/Park-Ridge/417-N-Redfield-Ct-60068/home/13647357
Here’s another house, only a block away from where I live, FAR ratio maxed out
http://www.redfin.com/IL/Park-Ridge/1720-S-Ashland-Ave-60068/home/13562393
This McMansion, a TRUE McMansion, 5,000 sq or more for only slighty more than a mil. This house is a two minute walk from my house, it’s at the end of my block
http://www.redfin.com/IL/Long-Grove/3722-Albert-Ln-60047/home/16899008
So you’ve bought a vacation home in Long Grove I see 🙂
What a bunch of hideous houses, I mean… wow wtf compells a person to spend a million bucks to live in that awful deferred maintenance nightmare in shitty park ridge or long grove
I like that the bose speakers in that volume living room appear to focus on the edge of the carpet.
Why did the solarium as living room become popular with anyone?
“I like that the bose speakers in that volume living room appear to focus on the edge of the carpet.”
sonos. that’s my tech rec for the new year.
people are idiots when it comes to sound tech… seriously… that has got to sound like shit in that massive room as well
“people are idiots when it comes to sound tech… seriously… that has…”
Still have the bug where I see a comment on the ticker but not when I click through. Posting this solely so I get logged in and can see if sonies (a) called me an idiot and (b) is an “audiophile”.
okay, maybe not on (a), at least not yet, but there is still time.
You are not an idiot,
I am not an audiophile,
I also like to think I’m not an idiot
I researched it!
The thing about audiophiles is that they only heard the artifacts and not the music.
DZ’ing to see next post.
Also, no need to be audiophile to know that that set-up stinks. would be *ok* for stand-up video-gaming in that spot, but even that would sound off. And, again, that sort of room–with the huge ceiling and the ‘balcony’ in the hall above–will be like a bad Embassy Suites lobby.
“DZ’ing to see next post.”
Same. Maybe it’s Sabrina’s technique to increase traffic.
“bad Embassy Suites lobby”
is there a good embassy suites lobby? like being in a panopticon.
“is there a good embassy suites lobby?”
It’s all relative. Some are not as cacophonous as others. Also, have been in at least two that have a (smallish) lobby truly separate from the panopticon.
“Maybe it’s Sabrina’s technique to increase traffic.”
Possible. Seems that not having the lag is more likely to get more comments, but what do I know?
“Maybe it’s Sabrina’s technique to increase traffic.”
“Possible. Se…”
So we gotta start summarizing posts at the beginning in 70 or fewer characters (or however the cutoff is set).
“Some are not as cacophonous as others.”
Worst place I ever stayed at in this respect was the tribeca grand when it was newish. If it felt as if there was a nighclub outside your room, that’s bc there was.
“Seems that not having the lag is more likely to get more comments, but what do I know?”
Other technique is to keep commenting so you are not timed out.
“Other technique is to keep commenting so you are not timed out.”
If forums still existed, could stay logged in.
“If forums still existed, could stay logged in.”
Sounds like there should be a hack.
“Every generation blames the one before.”
Hey- isn’t this lyrics to a song?
“Other technique is to keep commenting so you are not timed out.”
What’s it doing???
Sorry I’ve been away but like I said several months ago, I’m out of the country and with the time change and lack of good internet and other things going on, it’s hard for me to chime in consistently. But I’ll be back in Chicago after the winter is over in a few weeks. Yipee! I got to miss some of this nasty winter. Yay.
I’m also seeing a bunch of listings come on the market that we’ve chattered about before. So if I can get some free time, I’ll be posting those over the next few days since I already have pictures of those properties. Check in tomorrow and Friday for those.
This is the big month. We’re supposed to be getting a lot of listings but it seems like slim pickings to me. I know the weather is still bad so maybe everyone is holding off until April. Sales will be down year over year but no one should be surprised by that. Hovnanian said today that its sales started to dive in late summer of last year. They’re still not as bad as a few years ago but they have fallen compared with year over year comparisons.
Did sellers miss out on their one chance to sell at top dollar by not selling last year? We’ll have to see how this selling season plays out.
“What’s it doing???”
If you are not “logged in,” comments show with a maybe 30 min delay. We can see it on the most recent posts ticker, but when you click through you don’t see the “last 30 min” comments, just the older comments. You stay logged in (the name and email fields remain filled) when you have posted recently and you can see . After a while something times out, you are not logged in, and you can’t see the “last 30 min” comments. Ideal solution would be like it was in the golden days when you could see all comments without being “logged in”. Hard to have a discussion as it is.
“Did sellers miss out on their one chance to sell at top dollar by not selling last year?”
No.
Thanks DZ. I had no idea it was doing this. It works differently for me. I had no idea you still had to be “logged in” in that way to comment. You should just have to use your same e-mail and user name like before. I’ll see if I can find out how to fix it because that is REALLY annoying.
“I had no idea you still had to be “logged in” in that way to comment. You should just have to use your same e-mail and user name like before.”
To be clear, you CAN comment putting your name and email in the boxes above the comment box. When you do that, the name/email boxes stay populated with your info for a while. While they remain populated, it seems as if you can see other comments as they are posted. But this times out after a while, which it did not use to. After it times out, there seems to be a lag in being able to see comments from the last 30-60 minutes. You will see a comment that was made in that timeframe on the recent comments ticker when you’re on the main page, but when you click on that comment, it takes you to the thread but doesn’t show that comment. And that comment also no longer shows on the recent comments ticker.
The issue seems to be a little better this AM. Not 100% fixed, but better.
“The issue seems to be a little better this AM. Not 100% fixed, but be…”
Posting to see if the issue @fo is referring to is the post lag, which certainly isn’t fixed for me. I suppose it could be “be…”
Post lag seemed a bit better, but maybe it was misperception on my part. Site keeping me ‘logged in’ longer, at least in chrome.
“Post lag seemed a bit better, but maybe it was misperception on my part. Site keeping me ‘logged in’ longer, at least in chrome.”
Could be, and I didn’t look back to see what an upper bound on timing out, but, from above, times out sooner than 48 min and takes longer than 16 min to show a post when not “logged in”.
“times out sooner than 48 min”–for me, was kicked out far faster than that. Better today.
“Better today.”
That may be, though my numbers were just upper bounds based on what I could infer from post times. Well, I guess now I know that it keeps me “logged in” longer than 29 min.
‘upper bound’–yeah, but I had been getting better results that yesterday. but kicked me out this time.
When I came back and tried to post, I had this issue every time.. this made fun things, like instigating Chuk, much less fun. so stopped commenting.. posting this at 11:32 CST…
…seems all better… y’all have a nice weekend…
dz’ing, bc not actually better.
“…seems all better…”
Only so long as the site keeps auto-populating your name/email. And to get it to do so, one *must* post something.
“I had been getting better results that yesterday”
active posting bias
Are there going to be a bunch of listings this week now that it’s a little warmer (if you ignore the days there’ll snow)? Or would people wait so they can get nice not snow covered outside photos?
I don’t think muddy brown grass is any more photogenic than snow… I would expect more listings coming online though the next coming months as selling season kicks off
” would people wait so they can get nice not snow covered outside photos?”
That won’t happen til May. Best day near term for pix would be right after fresh snow–cover up the dirty snow, and dead grass, etc.
“I don’t think muddy brown grass is any more photogenic than snow”
“That won’t happen til May.”
CAn’t you photoshop that (more easily than starting from snow covered)?
“I would expect more listings coming online though the next coming months as selling season kicks off.”
This IS selling season. Mortgage applications peak in March- of course some of those apps won’t be used until April and May.
Yes, some of it may have been delayed by the weather. But it should be in full swing right now (only it’s not.) The number of listings is still horrible and a lot of the “new” listings I’m seeing coming on were listed last year so they’re really just old properties. Where’s the new fresh stuff?
There won’t be many fresh listings until spring. And with 4 new inches of snow and ice last night, we’re not yet in spring. The ‘average’ temp for this time of year is in the 40’s which means that statistically a good number of days should be in the 50’s – great outside weather for looking at houses. It’s supposed to be in the 30s for the next ten days (other than this weekend’s one 50 degree day). That’s NOT house buying weather for most people.
“Yes, some of it may have been delayed by the weather. But it should be in full swing right now (only it’s not.)”
Maybe you are somewhere warm and exotic, but it really is pretty dreadful here still. If I were selling, I’d be torn between listing now and taking advantage of the lack of inventory or waiting for better weather.
I thought the peak selling season was April-July because people with kids want to move during summer break and since the entire world revolves around “the kids” these days
“I thought the peak selling season was April-July”
Peak *closing* yes, but peak contract has to start earlier to make that happen.
Activity should be ramping up. but sellers aren’t really listing and I doubt that buyers are doing more than kicking tires. The same is happening with cars right now too. car sales have been atrocious because few want to trek through the snow to test drive and overpay for a used car. Who wants to trek through the snow to test drive and overpay for a used house?
From what i’ve seen having been in the market for many months now, Buyers are out in droves and swarming what little inventory there is. They are often serious, I know I am, but so many properties are asking laughable top-of-market prices and those will languish in some cases, but well-priced semi-attractive properties are going very quickly. Lack of inventory just sucks.
“From what i’ve seen having been in the market for many months now, Buyers are out in droves and swarming what little inventory there is. They are often serious, I know I am, but so many properties are asking laughable top-of-market prices and those will languish in some cases, but well-priced semi-attractive properties are going very quickly. Lack of inventory just sucks.”
A few months ago a realtor came here and complained that buyers were being unreasonable! You must pay within 10% of the listing price and you shant make any demands!
“so many properties are asking laughable top-of-market prices and those will languish in some cases, but well-priced semi-attractive properties are going very quickly.”
I agree w this. I’m not seriously looking but I do notice that places that seem priced at prevailing prices or even slightly above go under contract quickly. Places that are 15 percent above don’t. Some go under contract eventually. I haven’t followed closely enough to see where they close. There are certainly enough buyers for the amount of inventory out there.
““so many properties are asking laughable top-of-market prices and those will languish in some cases, but well-priced semi-attractive properties are going very quickly.””
I’d hate to be a buyer right now. There’s so much ridiculously priced inventory right now. There was a small window to buy in 2010 and in 2012 where there were some ‘deals’ so to speak but those days are long, long gone. Even in retrospect, those ‘deals’ were hardly deals at all, but compared to pricing since 1999, yes, they are deals. There’s no way I could replicate my purchase in 2012 w/o spending an additional $100k. Because that’s what the ‘comps’ have sold for in my area in Long Grove.
its madness out there right now, holy cow… glad i found something that will work for us
dz’ing…
“an additional $100k. Because that’s what the ‘comps’ have sold for in my area in Long Grove.”
Having trouble finding area of Long Grove that has places selling ~$100k less 2.5 years ago AND subject to flooding in 2013.
Find plenty of places like that in Des Plaines, tho.
Pork ridge too
“pork ridge, too”
Sub-neighborhood of Armour Square? Or Back of the Yards?
Not sure if homes in Back of the yards sell for 100k
Des Plaines sucks, it’s one of those forgettable suburbs that Helmut Huffer loved to hate.
It really is like the site is trying to drive people away.
“It really is like the site is trying to drive people away….”
Maybe it is a demonstration of our insanity for attempting to use and communicate via the site. You know you’ve hit rock bottom…
I miss y’all. whose red-e for a cribchatter meetup at haymarket tomorrow after work? anyone? hell-0?
” one of those forgettable suburbs that Helmut Huffer loved to hate.”
Only the ones populated by ‘bad’ sorts of immigrants.
“I miss y’all. whose red-e for a cribchatter meetup at haymarket tomorrow after work? anyone? hell-0?”
No wonder you were dropping clues.
Milkster is up, when she is in town. I have an obligation tomorrow already.
can you reach Bobbo and Jenny? If so, I would modify my plans for tomorrow.
I have no idea how to reach those people! We’d just have to set it out for a few weeks to give time for the stragglers to find it. Keep your plans for tomorrow lets aim for a few weeks, maybe it will be little warmer.
“can you reach Bobbo and Jenny? If so, I would modify my plans for tomorrow.”
I have unmodifiable plans but I would also modify them for tomorrow.
“I’d hate to be a buyer right now. There’s so much ridiculously priced inventory right now.”
Sales are declining because inventory is low and mortgage rates and prices have both jumped.
So instead of paying $2000 for your 2/2 you’re now paying $2400 for the same thing. Some are having second thoughts about buying and some are just, frankly, priced out.
Where will it all shake out? With low inventory, prices in the GZ could continue to go up but eventually people simply won’t pay it (or can’t pay it.) Incomes have been stagnant.
If mortgage rates go above 5%- then what? Maybe they won’t this year, who knows. But if they don’t, it’s because the economy is weakening.
But why does everyone think it’s good prices surged 20% in one year? It’s only distorted the market further. And STILL massive amounts of people are underwater- even with the surge.
Either way- it seems likely we’ll see lower home sales this year. Mortgage apps dropped again last week. They would have to really soar to get us back to anywhere close to last years levels. We could see lower sales but much higher prices as the rich continue to buy but there’s nothing selling on the lower end.
“There’s no way I could replicate my purchase in 2012 w/o spending an additional $100k.”
HD: you’ve summed up the problem perfectly. It’s not like anyone is getting raises. So who can pay the $100,000 higher price? No one.
Hence, sales are declining.
“From what i’ve seen having been in the market for many months now, Buyers are out in droves and swarming what little inventory there is.”
No they’re not. Sales are down. First everyone blamed the weather (i.e. “no one will buy in the snow and cold!”) Now they’re blaming “low inventory.”
“The same is happening with cars right now too. car sales have been atrocious because few want to trek through the snow to test drive and overpay for a used car. Who wants to trek through the snow to test drive and overpay for a used house?”
Sales were down 8% in the Bay Area in February and there was no snow there. Sales were down double digits YOY in both Las Vegas and Phoenix. No weather problems there. Everyone is blaming the weather. But that’s bullshit. It’s higher prices AND higher mortgage rates. It’s all about affordability.
Wages are stagnant on the low end. Not everyone has stagnant income. 20% rise in prices is more a reflection of what’s selling.
“No they’re not. Sales are down. First everyone blamed the weather (i.e. “no one will buy in the snow and cold!”) Now they’re blaming “low inventory.””
Um how are you supposed to buy something that isn’t for sale? Low inventory is clearly the issue, look at market times!
“Sales are declining because inventory is low and mortgage rates and prices have both jumped.”
mortgage rates have not jumped, if anything since your “soldidly above 3% call” they have dropped, yes since january-may 2013 they are higher but those were extremely low and rates are still historically low even at 4.25%
“HD: you’ve summed up the problem perfectly. It’s not like anyone is getting raises. So who can pay the $100,000 higher price? No one. ”
wtf are you talking about? I know lots of people who’s incomes have increased in the last 12 months, thats an idiotic statement If I have ever read one right here^
Sabrina, buyers ARE out there. I’ve seen a number of “shared” showings and open houses that have been madness, with swarms of people converging on places new to market. But the buyers are not chumps for the most part, we recognize that most properties are either 1) priced at gouging, or at least unrealistic, levels by those who wish to take advantage of low inventory (or their greedy/delusional realtors) or 2) simply undesirable properties for various reasons that have been on the market for many months, if not on and off the market for many years. Again, any half decent, fairly priced property is selling in a reasonable timeframe and in the ballpark of ask. My experience is strictly on the north side of Chicago, can’t speak for other areas. The number of frustrated buyers is extremely high right now-no buyers and no sales are two different things.
Wow, the continued strong market has driven Sabrina to new levels of delusion.
“Wow, the continued strong market has driven Sabrina to new levels of delusion.”
Chuk- it’s not even close to being a “strong market”. What do you base that on? This week we will get February sales which will be weak. This is the peak selling/buying season and it’s not happening. Mortgage applications continue to be at 20 year lows. If 2014 was going to be a “hot” year, we’d be seeing it nationally. Most of the other major metropolitan areas had weak Februarys. I’m assuming Chicago will be the same. Heck, San Francisco had its worst February since the Great Recession.
Median prices may continue to go up because there are more properties selling in the upper bracket than the lower bracket. With interest rates about 1% higher than a year ago, it has really put a halt onto last year’s spring gains. But most of the slowdown happened over last summer right after the rates rose dramatically.
As I’ve said for many months, you can’t get blood from a stone. Middle class Americans aren’t getting pay raises. How do they afford higher house prices? They don’t.
“Sabrina, buyers ARE out there. I’ve seen a number of “shared” showings and open houses that have been madness, with swarms of people converging on places new to market.”
Sure there are buyers. But they are fewer than last year. Crain’s said today that inventory in the Chicagoland area is up 6% from last year. In some neighborhoods, that’s probably not the case (depends on where you are located.) But it is already better than last year because sales are down.
What is a “half decent, fairly priced property”???? If it doesn’t sell within days, does that mean it’s not “fairly priced”?
What about this house in Sauganash. It’s been on and off the market since last September. It must be overpriced, right?
http://www.redfin.com/IL/Chicago/5836-N-Kingsdale-Ave-60646/home/13515189
What about this 2/1 in Roscoe Village? Is it not “priced fairly”?
Why hasn’t it sold yet?
It’s been on the market a month. It’s a Fannie Mae property. You can put down just 3.5% so you don’t even really need a downpayment. Easiest financing out there right now.
It has C/A and washer/dryer in the unit. No parking.
http://www.redfin.com/IL/Chicago/3237-N-Oakley-Ave-60618/unit-1N/home/12793148
Fannie finally lowered the price after a month. It’s now listed under the 2004 price.
I thought bank owned properties were hot? I thought they sold like hotcakes? I thought every property was selling within 72 hours with multiple offers?
“mortgage rates have not jumped, if anything since your “soldidly above 3% call” they have dropped, yes since january-may 2013 they are higher but those were extremely low and rates are still historically low even at 4.25%”
Mortgage rates are about 1% higher than the spring buying season last year and they’re only going to continue to go higher UNLESS the US economy goes into the tank and then no one will be buying real estate anyway because we’ll be in another recession.
It’s pretty obvious when you look at what happened to sales nationally starting in May of last year that the slowdown in the housing market was due to rising mortgage rates. And they didn’t even go that high. Imagine what happens when they’re over 5%? OMG.
Incomes haven’t risen across most income levels in the last 5 years. I don’t have time to link to all the economic charts that show this to be true but if you read any of the housing journalists (such as those at the Wall Street Journal and other respectable news sites) you’d see that there has never been a time in history where housing prices have jumped 20% in one year (or 13% or whatever Chicago was last year) and incomes were flat to lower. But that is exactly what happened last year. It’s not normal. The Fed distorted housing, once again, by manipulating mortgage rates. Unfortunately, rates won’t stay that low.
Oh- and not to beat a dead horse- but associate attorneys are the perfect example of this. We’ve discussed it before. They have not seen an actual pay increase since 2007. That is 7 years with stagnant incomes. And if you really adjust for inflation, biglaw attorneys are making considerably less than their counterparts did in 2000-2001. Sad- but that is what has happened across most of the economy.
They’re already talking about how many homeowners who DID buy with the low rates last year (or even just re-fied) will now be stuck in their homes because any new property will be considerably more expensive due to rates rising and their own property will be more expensive for any new buyer (regardless of home appreciation or not.)
“Wages are stagnant on the low end. Not everyone has stagnant income.”
Go look at the economic data. It’s not like doctors are making more than 5 years ago either. But yes, the worst of the stagnation is in the middle class. That is why the $1.5 million Lakeview home is still selling right now but the $250,000 Jefferson Park house is not. The rich are also helped tremendously by the rising stock market.
” if you really adjust for inflation, biglaw attorneys are making considerably less than their counterparts did in 2000-2001″
$125k in 2000 is $170k now. Dunno if 5.9% is “considerably less”.
“It’s not like doctors are making more than 5 years ago either.”
Clio bait!! But true; if anything, a ‘typical’ doc is making less, with higher school debt.
Doctors, Lawyers pay is down but what about the webpreneurs, tech consultants, finance people? Their pay is way up! This isn’t manhattan or the west coast either, its not exactly difficult to afford a place here compared to there.
“Doctors, Lawyers pay is down but what about the webpreneurs, tech consultants, finance people? Their pay is way up!”
Finance is still awful and bonuses way down. MBA starting salaries have been the same since 2008 – around $93,000 a year- because of the cuts in finance salaries and lack of bonuses. Some of the jobs in the old line industries have seen a jump up.
Salaries are flat and have been for a long, long time. Does anyone really think a biglaw attorney will see a pay raise before 2020? The firms are barely holding on even as is and there are still far too many lawyers. No need to pay them more. It’s the same in many professions. The lack of income growth over the last 20 years has been masked due to asset bubbles. Middle class Americans have felt richer because of 401ks expanding and then because of their house. If you take those two away (which happened over the last 5 years) and not many are getting ahead.
They also can’t come up with the down payment to buy a house anymore. That’s why the first time homebuyer is missing from this “recovery.” The agents keep talking about how mortgage approval is still “tight.” Yeah- it’s only tight if you don’t even have 5% or 10% to put down. Not enough do. And as housing prices rise, the first time homebuyer is completely priced out.
I disagree, incomes have risen for some people, even though they may have declined for others. I’ve seen the 2013 w-2’s for new car salesmen that would cause you visceral feelings of envy and jealously and regret why you ever took a salary job in the first place. I know guys in the trades who are busier than ever – many of whom are buying new trucks. I’ve seen the 2011-2013 taxes for a few C level exec and their incomes have been going up too. Heck, the average realtor is making more money these days! Even my new endeavor has has fruitful beyond what made even as recently as 2012. Biglaw billings may be down and doctors may have issues; but a lot of corporate bonuses have been up, and plenty of people are lateraling from job to job, which is a good sign for the economy. Sure, there’s the low skill half of the economy which stinks to high heaven, and those that have been left behind, will probably be left behind permanently. I don’t know if this is sustainable, I don’t see any large bubble on the horizon other than student loans….the current RE prices – I hate to seem like a bubble denier now that I bought – but are more in line with supply/demand than in years previously. For example, I saw a short sale today listed in my area for about $300,000 which is a lot of money for a tiny little ranch. I would never pay that much. But it originally sold for $485,000 in 2007. That’s bubble pricing; the $300,000 price today is aggressive but is not a bubble. And buyers are giving resistance to aggressive pricing, which is why some properties sit for a LONG time and others sell very quickly.
Sorry to post crappy suburban properties but this might be slight evidence of a bubble in ”renovated’ homes. This to most people is a lot of money and it’s not all that impressive of a house
http://www.redfin.com/IL/Park-Ridge/919-N-Prospect-Ave-60068/home/13649719
“Sorry to post crappy suburban properties but this might be slight evidence of a bubble in ”renovated’ homes. This to most people is a lot of money and it’s not all that impressive of a house.”
All you have to do is look a few miles to the east in Norwood Park. Same thing going on there.
As it’s tax season, the numbers are at my finger tips. My family’s income has increased more than 40% since 2008.
Sorry about the double post. This site is so slow.
300 percent for us since 2008… lol
“new car salesmen that would cause you visceral feelings of envy and jealously … C level exec”
If G were here, he suggest that the market is going to be saved by car salesmen and the C-Suite?
Basically we’ve covered why Oak Brook is ok, but who’s buying the $450k house?
“Sorry to post crappy suburban properties but this might be slight evidence of a bubble in ”renovated’ homes.”
That particular one is bubbly to me. That looks like a $275k house with $50k of lipstick. And is there really not a bathtub at all?
Check out streetview, tho. directly across the street, the driveway has a Benz *and* a Porsche, so you know you’re on a fancy block. Then go two houses south and check out 900–$100k of the value of HD’s house is tied up in being on the block with fancy people like that.
” That looks like a $275k house with $50k of lipstick. And is there really not a bathtub at all?”
It’s more than that. the town’s median is roughly $225 psf so 2000 sq ft x 225 = about $450,000. But it’s no $599,999
My block is particularly crappy. There’s a few nice homes and a few mcmansions but it’s not nearly as nice as that block. There’s some areas of PR that are more normal, and then east and north it gets super fancy.
“the town’s median is roughly $225 psf so 2000 sq ft x 225 = about $450,000.”
My calculus was: $100k for the dirt, $100 psf * 1750 sf (from the listing) + $50k in lipstick.
Backing out from your number: $450k – lipstick – $100 psf = $200k for the dirt.
I get that actual vacant lots sell for more than that, even ones of about the same 10,000 sf size, which makes the $350k + implied value here not too far out. But still kookoo to me, at least for the smaller lots–should have a $1m (total) house on a $350k lot.
“$100k for the dirt”
No way, the dirt is worth more than that. a 95 x 100 foot lot is worth a lot of money because the FAR ratio allows for a 4,000 sq foot house PLUS basement. Them big lots for this town. Most people live on double city lots at 50ish x 125ish. I’d buy the lot for $100,000 today in cash if I could.
This lot has different dimensions but similar sq ft . The country club area is the closest you can get to the NS this far west of the north shore.
http://www.redfin.com/IL/Park-Ridge/914-Hastings-St-60068/home/40369556
$545,000.
“No way, the dirt is worth more than that”
Yeah, but your pricing put the dirt at $200k, and it’s worth more than *that*, too. It’s “worth” about $300k, and so your pricing model makes the place “worth” something like $525-550, and a ~8-12% premium for “I don’t have to do anything” isn’t very much, really–basically it’s the cost of having a *good* builder build the house vs someone who can do it w/o f’ing up, but that you need to spend effort on.
“914 Hastings”
Better location (backing up to the course), less desirable lot size (less space from neighbors) probably make it somewhat more valuable than the Prospect dirt–call it 50% better, the Prospect dirt is worth $350, and then the $599 price is suddenly 100% justified.
“Tax season, so it’s fresh in my mind. My families income has gone up over 40% since 2008.”
…even mine has gone up… and that’s being unemployed the entire time.
… and anon.. try the new South Park game.. you get to fight your so revered under pant gnomes.. just need to be careful when your characters dads testicles start swinging at your head…
“you get to fight your so revered under pant gnomes”
I assume it goes:
1. Fight underpants gnomes
2. ???
3. Profit!
“And is there really not a bathtub at all?”
Didnt’ nyt tell us bathtubs are out now? Okay maybe not really but I feel it’s coming.
dz’ing, but with a guess on the content–
It also has at least one wood-burning fp, so it’s right out by nyt standards, regardless of the tub situ.
“I assume it goes:
1. Fight underpants gnomes
2. ???
3. Profit!”
hey it works for global politics as well …
1. Drill for Nat Gas in U.S.
2. ???
3. Front run Russians by selling LNG gas in Europe
Amazing that without the gov’t, no dumbass at an energy company ever saw such a profitable/ risk free opportunity by themselves… thank god for big gov’t!!!
“Amazing that without the gov’t, no dumbass at an energy company ever saw such a profitable/ risk free opportunity by themselves… thank god for big gov’t!!!”
Now you’re putting out a bunch of bait for other (former) regulars. Not going for it, myself.
AON, what are you going to do with that 777 you kidnapped?