The Sun-Times had a weekend cover story about how great the housing market is for buyers, especially first time home buyers.
For home buyers, it remains a dream market, and Realtors say they’ve seen a pick-up in activity as buyers look to take advantage of low interest rates and still-sinking prices.Twenty-five-year-old Sandra Becerra closed in February on a three-bedroom, 1½-bath tri-level home in Burbank she snapped up for $145,000. She said it originally listed for $220,000 two years ago. She put 5 percent down and got a 30-year, fixed-rate FHA mortgage with a 3.875 percent interest rate.
“It’s basically a new house except for the frame,” Becerra said. “It has new doors, new siding, a new roof, new floors, new kitchen appliances, cabinets. Both bathrooms are all brand new. That’s why I went for it because I just thought it was such a great deal. I didn’t really want to pass it up. I think it’s a very, very good time to buy.”
But as we’ve chattered about here at Crib Chatter, a large percentage of the sales are made up of properties that are REO or short sales.
“You have two basic people that are selling,” said Zeke Morris, operating principal and managing broker at Keller Williams Realty in Hyde Park. “One is folks that have owned in excess of 10 years and they can still have the ability to get out and make a reasonable return on their original investment. And then you have the other folks that are in some type of distress.”
About 70 percent of the sellers he has worked with in the past couple of years fall into that latter category, he said.
Among sales that took place in the Chicago area last year, 22 percent were bank-owned or in foreclosure, according to RealtyTrac. That’s an improvement from 2010, when 34 percent of sales fell into those categories and from 2009 when 40 percent did. But the dropoff last year is linked to a slowdown in foreclosures because of improper documentation, and the number is expected to rise this year because of a legal settlement with major banks.
This year, “more sales are going to be in the foreclosure and short-sale area,” said Loretto Alonzo, president of the Realtors association.
“The traditional seller, unless they have to sell their house, they’re still going to hold onto it because they don’t have the equity they need to move up into another house or they’re not just willing to accept the devaluation of the homes lately,” said Alonzo, broker owner of Century 21 Alonzo & Associates in La Grange Park. “They’re saying, ‘I will stay where I’m at’.”
But no one that the Sun-Times interviewed was ready to call a bottom just yet. In fact, just the opposite. Median price is expected to drop by another double digits.
As for median sales prices, he forecasts they’ll drop between roughly 8 to 12 percent from March through June and slide from about 4 to 7 percent in July and August, giving buyers more reason to enter the market as others have already done this year.
“Sales volume, the total contracts written, is up 67 percent in February of 2012 vs. February of 2011, pretty significant,” Bob Dohn, assistant manager at Coldwell Banker in Schaumburg, said of his office. “We’re seeing more and more activity. I’ve been busier than a one-armed paper hanger.”
Two things stick out from the article:
- The examples were all suburban buyers (where there appear to be some great deals)
- The two buyers they highlight are women (granted, just a small sample for the article’s sake, but interesting nevertheless)
Is it a dream market for buyers if prices continue to fall and/or they’re subjected to buying properties in some kind of distress?
What would be a true “dream” market?
Home buyers face dream market as house prices fall to new lows [Sun-Times, Francine Knowles, April 7, 2012]
