STATISTICS, BEHAVIOR Indicate Chicago Real Estate Market Has Not Yet Reached a Bottom!
BUYERS STILL WAIT ON THE SIDELINES, SOME SELLERS DENY REALITY, AND STATISTICS STILL SHOW HIGH LEVELS OF HOME INVENTORY!
In some areas of Chicago, the Real Estate Market appears to be stabilizing - even improving. In many other Chicago Neighborhoods and Suburbs, however, the opposite still seems true.
Here's a bit of observational analysis we posted recently on ActiveRain.com, a blog community geared to the Real Estate Community, and those interested in sharing and commenting on the latest Real Estate Market Trends, nationally and locally.
Let's start with some psychological observations, and follow with some current statistics -
1. Buyers are still waiting on the sidelines for prices to dip further - several of our current buyer clients appear to be stalling now. Some fear they won't qualify for a loan, and are waiting to save more money and/or pay down more debt before they chance pre-approval.
2. Buyers who do offer often submit a lowball. Then, during the inspection, they often make ridiculous demands - asking $10,000 for a new roof, when the inspection report indicates it has several years of life left in it, or asking for unwarranted cosmetic repair, upgrade or improvement. The most brazen simply ask for a large wad of money at closing.
3. Sellers often hold back putting their house on the market, if they can afford to do so. They've heard all of the horror stories from others, and have seen the often year-old signs in front of the homes of their neighbors.
4. Fewer sellers are buying a new home without getting a solid contract on their current home. Many don't want to bear the probable financial risk of owning two homes. Others feel they can't qualify, even if they wanted to buy contingent on sale.
5. There is less negative reaction to a market-based Broker's Fee, especially if they previously tried to sell with a less-than-full- service, or discounted-fee broker, without success. (That being said, however, there are still many RE agents willing to "Buy the Listing," for low compensation, and at a too-high price - because they are desperate for business).
6. Hey, have you seen the price of gasoline lately? Milk? Bread? Even beer and pizza? Sky high! Many folks have the attitude - "How can I even CONSIDER a new home - I can't even afford to fill up my car, or feed my family!" Hard to prove any direct relationship - but the mood and attitude is clear - "We have to wait!"
Now, take a look at these current market stats from the North and Northwest Sides of Chicago, and select Chicago Neighborhoods in which we do the bulk of our business. The following numbers are based on single family, condominium, and small multi-unit sales (2-4 units), comparing two dates in 2008 - the week ending Sunday, June 8th, and roughly three months earlier - the week ending March 9th.
| | w/e 03/09/08 | % OF ACTV | w/e 06/09/08 | % of ACTV | % CHANGE |
| | | | | | |
| ACTIVE LISTINGS | 4,480 | | 5,201 | | 116.09% |
| NEW PEND SALE | 72 | 1.61% | 72 | 1.38% | 86.14% |
| CLOSED | 64 | 1.43% | 105 | 2.02% | 141.32% |
| AVG SALE PRICE | $340,268 | | $372,456 | | 109.46% |
| AVG MKT TIME | 178 | | 131 | | 73.60% |
| TOTAL VOLUME | $21,777,205 | | $39,107,880 | | 179.58% |
| | | | | | |
| ABS RATE (3 MOS) | 43.72 | | 27.26 | | 62.35% |
| % SOLD 180 DAYS | 21.65% | | 22.57% | | 104.25% |
This data, from MRED LLC (formerly the Multiple Listing Service of Northern IL), is mainly observational - it is not a full-blown scientific study of all the market trend numbers here in Chicago. But it does suggest the following -
1. Active inventory for sale is up a modest 16% in the last three months, but the Percentage of Properties going "Sale Pending" is actually DOWN nearly 14%!
2. Sales volume is strong - 79% up in the past three months, but average sales price is up only about 9.5%. It would appear that the gain in volume is primarily coming from lower-priced properties that sell.
3. Days on market here on the North and Northwest Sides of Chicago has decreased over 26%, but is still very high - over 4 months, on average.
4. The Absorption Rate here - or the theoretical inventory level of properties for sale - has dropped 38% in the past three months, but is still unacceptably high. The percentage of homes selling within a normal six-month marketing time frame - up only a wee bit, still very low - at just under 23%.
It is late Spring/early Summer here, and the weather is warm in Chicago. If this were a "typical" Chicago home selling season, it would be Prime Time.
But the lackluster stats, and the continued standoffish buyer and seller behavior, indicates there is likely a way to go before we see a true bottom in the Chicago Real Estate Market.
Call or write our Team if you'd like to further discuss, or feel free to comment on this post.
DEAN MOSS & DEAN'S TEAM CHICAGO
