Sweet Home Chicago

Sales improving, but inventory increasing at faster pace

Market Watch: Highland Park, Deerfield, Northbrook and Glenview Illinois

Sales of existing homes (excludes new construction) in all 4 suburbs is picking up slightly.  During the 12 weeks endeing June 1st, 17 single family homes sold (closed) per week, on average.  This is an increase over the prior 12-week period where 11 homes were sold each week.  With a similar trend, we saw an average of 25 homes go under contract each week during the most recent 12-week period.  This was an increase from an average of 11 homes going under contract each week druing the prior 12 weeks.  Details for each community are in the downloadable chart below.

Inventory levels, however, continued to rise.  During the one week ending June 1st there were well over 1240 single family homes available for sale in all 4 suburbs combined - with an average of 1,172 homes available for each week during the most recent 12-week period.  The prior 12 weeks the average number of homes for sale was 981.

The median price of the homes sold and going under contract have been increasing slightly each week.  At first this puzzled me.  But then I realized that since in general prices of homes have been going down, the best way to interpret this increase in the median price is as follows:

Most of the people making purchases recently did not have a property to sell, since these are peole lease affected by the current makret slump.  Many of these are probably first-time home buyers, purchasing smaller, less expensive homes.  As these first-time buyers make their purchases, this then allows the sellers to turn around and purchase larger homes.  So that increase in the median price just shows that the smaller homes are selling first.  Hopefully this will continue to trickel up through all of the price ranges.

Download market_watch_6.08 chart.docx

Thanks for reading!  nsk

Sales of New Construction Homes Sluggish

I looked at all new construction single family homes in Deerfield, Highland Park, Northbrook and Glenview, for the 24 weeks ending June 1^st 2008 (MLS data only).

 

PRICE:  the median price during the most recent 12 weeks was $1,233,000.  This is higher than it was during the prior 12 weeks at $964,000. (I also looked at re-sale homes and there too I am seeing the median price increasing from the most recent 12 weeks to the current 12 weeks, but the numbers are even lower than these.  This confirms what I have felt for a while, that the lower priced homes are selling first, and then people that are upsizing will be able to start getting into the market after they sell their smaller homes).

 

SALES:  The average number of homes sold (closed) each week increased during the most recent 12 weeks to 2 homes per week, from 1 home per week the prior 12 weeks.  The average number going under contract each week was the same during the entire 24 weeks, at 2 homes per week.

 

INVENTORY:  The average number of new construction homes available for sale each week in the MLS dropped during the most recent 12 weeks versus the prior 12 weeks.  It was 171 during the prior 12 weeks and it dropped to 167  during the most recent 12 weeks. This is in direct contrast to the re-sale homes which continue to have a steady increase in the number of homes available for sale each week.  I think this is because there aren’t many new construction projects coming onto the market right now.  The existing inventory of new construction homes is selling – slowly but surely – and there many (if any) new ones hitting the MLS.

 

My next post will be about re-sale homes.

 

Thanks for reading.

nsk

Sales Trends in Deerfield

The good news is that the trend I noted for both Highland Park and Northbrook is also true for Deerfield.  That is, sales in the past three months appear to be stronger than the prior three months.

Here is how it breaks down...

During the past 6 months 45 homes sold for under $1.2 million in Deerfield.  Seventy five percent of those sales (34) were in the past 3 months - so there is a good trend here.  With 162 homes currently on the market for under $1.2 million, this means it could take over 14 months for all of these homes to sell (162 divided by the 3-month sales rate of 11.3 homes per month (34/3 = 7.5)).   For Highland Park inventory for homes in this price range is around 10 months, and it is even lower in Northbrook.  So if the sales rates stay the same, it could take longer for Deerfield to "recover" from the high inventory levels that we are seeing.  Over 80% of Deerfield homes currently for sale fall into this price range.

There were a total of 9 luxury homes sold (priced over $1.2 million) in Deerfield in the past 6 months; 5 of those sold in the past 3 months.  So the three-month sales rate is 1.5 homes per month.  With 43 homes on the market in this price range, there is over 28.5 months of inventory.  Highland Park and Northbrook inventory levels are higher with over 30 months of inventory for luxury homes in both areas.

Please keep in mind that all of this "analysis" that I am providing assumes that the sales rates stay the same as they have been for the past three months.  We can see from looking at the full 6-month period, that the sales rates are not static.  This is just a snapshot in time, and it provides a way to compare what has been going on in each of these suburbs on the north shore.  It is not particularly a prediction of what is going to happen.

I hope that you find this info useful.  I will continue to look at more of the suburbs on the North Shore as time permits.  I'd plan to take a look at the condo stats as well. I am actually working with several buyers right now, and my time with clients (buyers and sellers) takes priority over blogging!!   

Thanks for reading!!  Your comments, questions, requests are welcome.

Northbrook Single Family Home Sales Increasing

Overall sales activity in Northbrook was similar to Highland Park over the past 6 months.  Sales activity picked up during the past three months.  As in Highland Park the less expensive homes had a stronger showing, with 80 out of 87 sales in the past three month priced at less than $1,200,000 (about 92% of the sales).  Seventy percent of the sales in the past three month were under $700,000.

Assuming that the sales rate for the past six months remains that same (I hope not!) there is almost 17 months of inventory in Northbrook right now (316 homes on the market, with 18.7 selling each month, on average).  If I use the 3-month sales rate, the inventory level is a little better, with just under 12 months of inventory (316 homes available with 29 selling each month).

Breaking it down by price range and using the 3-month (more optimistic) sales rate, here are the details:

Northbrook homes priced less than $600,000 have 6-7 months of inventory.

Northbrook homes between $600,000 and $1,200,000 have almost 9 months of inventory.

Luxury homes (priced over $1,200,000) have over 32 months of inventory!

Please give me a call if you want more information or if you have any questions.

Thanks for reading.

nsk

Sales Rate Trends in Highland Park, Illinois

A simple analysis of MLS data shows that sales have picked up in Highland Park over the past three months versus the prior three months.   There were 121 single family homes that sold (Attorney Review/Inspection, Pending, or closed) during the past 6 months;  73 of those sales (over 60%) were from the past 3 months, or 24.3 homes per month.

There are currently 360 single family homes for sale in Highland Park, as of close of business today.  So, on average that translates into between 14 and 15 months of inventory, if the sales rate for the past three months stays the same (360 divided by 24.3).

If you look at this by price range, the picture is quite different.  For luxury homes (over $1.2 million) only 12 homes sold in the past three month, or 4 per month.  With 123 of these homes currently for sale, that translates into over 30 months of inventory! (123 divided by 4).

For the less expensive homes, the sales rate is slightly over 20 homes per month, which tranlsates into about 10.7 months of inventory. 

All of these numbers are better than they were a few months ago - so the overall trend is where we want it to be, heading up.

Thanks for reading.

nsk

p.s. Best of luck to my clients that just sold this Highland Park gem (we closed on 4/28/08)!!  They are moving to Boston shortly and I will miss working with them!

Lenders "Calling In" Home Equity Lines?

In the wake of falling home values, I guess this was bound to happen.  I'm sure some people have been thinking about the possibility - and now it is here.  A friend of mine called yesterday.  She was wondering if I could pull up some information about recent sales in the area of homes comparable to hers.  The reason - her bank wants to have her home re-appraised. The bank suspects that the line of credit they've given her (a home equity loan) exceeds the equity in her home.  I'm assuming that the bank will want to lower the size of my friends line of credit, depending on the appraisal (that they want my friend to pay for!)   The good news for my friend is that she hasn't used up the entire line of credit...though she was hoping to have it available for college expenses in the coming year, or just for possible emergency use.

I have a home equity line too, as I'm sure many people do,and I've been wondering if the banks were going to start taking a look at their level of risk in these loans and what they would do to manage the problem.

Obviously, I'm not in the banking business, so I don't know all of the legal issues involved here.  So, what I'd like to know is this:

What if my friend, or I, or anyone for that matter has actually used their full line of credit and they now owe more than their home is worth.  Even without home equity loans to consider there are many home owners facing a similar situation - they're upside down on their mortgage.  What are banks allowed to do in these situations?  If someone is upside down on their mortgage, can the banks require them to remedy the situation and pay the difference? As long as these people can continue to make their payments on their primary mortgage and any equity lines, is there really a reason for the bank to take action.  I understand that the banks need to have collateral to guarantee their loans...but where does the line get drawn?

I would love to hear from any one that knows more about this so that I can tell my readers what to expect in the coming months.  I'm sure that many people with conventional (30 year fixed) mortgages have been feeling somewhat smug as the news goes on and on about the sub-prime mortgage crises.  This issue is much closer to home for many people (excuse the pun).

Thanks for reading.

Buying a Home in Today's Market

I just read a good article that was posted on Bankaholic.com This is great read for anyone that is interested in buying a home in today's "down" market.  It tells you some simple things you can do to make sure that you are making a fiscally responsible decision to purchase.  Here is link to 5 Tips For Buying a Home in a Down Market.

Here on Chicago's North Shore, there are other things that you need to consider.  The buyers that I am working with are mostly concerned about over-paying for a home.  They don't want to buy something today and then find that the price for comparable properties in a couple of months is lower.  My advice is simple (not in any particular order):

1.  Do your homework (and work with a Realtor that will provide you with the necessary information).  Determine what comparable homes are selling for today, and try to buy for slightly less.

2.  You need to have a long-term perspective.  No one has a crystal ball - but if you are planning to live in your next home for 5 - 10 years, experts are saying that you should be able to see  some appreciation.  So if the prices do go down slightly after you make your purchase, you shouldn't be concerned that you've "blown it" or made a bad decision. Also, the tax benefits of home ownership can be significant if you are currently renting, depending on your income and other financial considerations - this may overshadow a slight savings that you might have realized by waiting several months to make your purchase (check with your tax adviser for details on this one).

3. When you find a home you like, be ready to "walk" if you can't get the seller to come down to your price. Before the negotiation starts, discuss your objectives with your Realtor (and your spouse - make sure you are in agreement on this before you make your offer!!).  In fact it is a good idea to have a second choice house in your back pocket. I have had a couple of transactions where my buyer's stopped negotiating when we hit their top price - and the sellers didn't want to budge.  But then if BOTH cases, before we wrote up the offer on their second choice houses, the sellers had a change of heart and called the next day to accept the last offer. 

4.  Negotiation isn't just about the price. There are other negotiation points do have VALUE for the buyer or seller.  So, you and your Realtor need to be creative to get you the best deal - maybe you can get the seller to pay your closing costs, or maybe they will agree to a lower price if you can be more flexible on a closing date.  Don't be afraid to offer the seller choices during the negotiation... one price and we close on this date, or another price and the seller pays closing costs, or we'll pay a little more if the seller includes the custom bar stools that you like, etc.

5.  Shop for a mortgage and get pre-approved before you start looking.  I have several lenders and mortgage brokers to recommend.

6.  If the house you are considering needs some work or updating, bring in a contractor BEFORE you make an offer so you have an idea of what it will cost to transform  this home the way you want it.  If the home appears to be need some major work, it may be prudent to have an inspection on the home BEFORE you make an offer -  this way you can confidently make an offer because you'll already know what major expenses, if any, may be required within the first few years of ownership.

What is really going on?

So, what is the market doing?  That's the question I get every day...

There are some new listings, and there are some homes coming back on the market that were off for a few months.  And the good news is that we finally have some homes going under contract.  January and February were VERY dry on the North Shore.  Not a lot of properties went under contract.  But we are starting to see some homes going under contract again.  I have some closings scheduled this month.

Prices are down from last year. One of the most difficult things that Realtors are facing right now is pricing.  Usually we look at recently sold properties to get a good idea of what a house will sell for - the problem now is that nothing sold in the past couple of months, so there aren't good comparable properties.  And prices from November and December aren't really good indicators of what homes will sell for now.

For my listings, I am constantly looking at what is currently on the market.  I want to price a home so that it is appropriately priced versus the other homes on the market.  But then I like to take the price down a bit from that.  I want my listings to be the obvious choice for buyers because they are a BETTER than the other homes out there.  I'm not asking my clients to "give" their homes away for nothing.  The reality is that buyers are looking for a good deal - so your home has to be priced as a "more for the money" than the competition. 

Even though I am pricing this way, some buyers are still reluctant to make a purchase in the current economic atmosphere.  They don't want to purchase today, and then find that the value goes down next week, or next month.  I understand their fears...on the other hand, the lack of market activity due to this "fear factor" could actually result in a self-fulfilling prophecy of more price declines.

Personally, I think that prices for the most part have come down to where they need to be (yes, there are plenty of homes still over priced).  The homes that are selling, seem to be closing at reasonable (not fire sale) prices.  What do you think???  Would love to hear from you.

Thanks for reading.

nsk

                                                                  Stop by my next open house, Sunday April 6th, 2 - 4pm

                                                                                               3915 Crestwood, Glenview

Thinking about Buying a Foreclosured Home? Think again!

This article by Ilyce Glink at InMan News is a great first step for anyone considering purchasing a foreclosed property.  Click Here to Read: Look Before You Leap

This article confirms something that I have been telling my clients for over a year - while there are some good deals out there in foreclosures, you need to do a lot of homework in order to find those deals and make them happen.  For your average homeowner, the investment of time that is required just isn't worth the savings.  And in many cases, once you've purchased your "great deal," then you've still got a ton of work to fix it up before you can even move in. And some cases, you can't even get inside the house before you buy it! 

Meanwhile, prices have been coming down, and there are some good opportunities to be found without going through the extra investment of time and energy required for a foreclosure. 

AND, as you know I am the perennial optimist, I really think that things are picking up.  There has been a flurry of properties going under contract over the past couple of weeks.  I have one contact pending now.  I had another one, but the deal fell through during the attorney review and inspection period - the buyer got cold feet.  And I have been negotiating another deal all day long today - I hope to have that one tied up later this evening or first thing in the morning.

Stop by my open house at 368 Ridge in Highland Park this Sunday from 12 - 2pm - great ranch on over 1/3 acre!!  www.368Ridge.com.

As always, thank you for reading!  

Media reports out of synch with market!

Over the past 2 weeks I have seen many listings going under contract in Highland Park, Northbrook and Deerfield (these are three areas that I look at every day).  There is a lot of activity in these three suburbs - the buyers are starting to take action.  I am having an increase in the number of showings on all of my listings and one went under contract after only 3 weeks on the market.

Meanwhile the media is busy talking about what a terrible January we had.  Yes, it is true that January was very slow.  We had very few showings, very few homes went under contract - it was SLOW. 

But things are picking up, at least here on the North Shore. 

So, don't be scared by the media reports on January sales figures.  There are buyers out there and they aren't just window shopping any more!