There are some signs that housing market is finally starting to recover. I am cautiously optimistic - the experts (and I) are not suggesting that it will come roaring back and that we will see 2006 numbers right away.  Here are some positive statistics:

• National Association of Realtors released their December Existing Home Sales Report this week. The report showed a 12.3% increase in closed transactions over the month before.
• Also this week the Census Bureau reported that privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Both of the above reports are promising.  However, not all the news in the reports was positive.

• Existing home sales were slightly down from the same month last year.

You may recall that home sales were artificially inflated at the end of 2009 because of the First Time Homebuyer Tax Credit, which was set to expire at the end of the year.  So comparisons between Q4 of 2009 to 2010 are somewhat murky.

So overall, these reports seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry. 

There is still a huge amount of visible and shadow inventory (homes in foreclosure and other sellers that have been waiting to sell their homes) which will continue to put downward pressure on prices.  It seems that buyers are beginning to realize that there are tremendous opportunities in the market.

My biggest concern about the recovery is the banking industry.  In addition to the foreclosed properties that are expected to come onto the market, the other side of the equation is the availability of mortgages.  I heard recently that Fannie/Freddie will be initiating "risk based" pricing adjustments this week.  This means that:

• Clients will now have to put down 25% regardless of property type and have at least 740 credit score to receive best pricing. 
• Rates will be higher for home buyers with less than 20% down for conventional loans and for "combined loan to value" loans, (with second mortgages).

Right now, the rates are still very good, but how many home buyers will qualify?  Here are rates this week, quoted by one of my mortgage brokers:

• 4.625% for a 30 year fixed "perfect" loan, (40% down, paying escrows with mortgage). 
• With 20% down, we're at 4.75%. 
• With "risk based" pricing, we would be at 4.875% with 20% down and a 720 credit score. 

Thank you for reading

Click here to search for your next home on Chicago's North Shore.

I am always looking for good articles and topics to generate ideas for my own blog posts.  I found this one blog post today that is very good, nothing I would change, and it perfectly reflects my opinion and approach to my real estate business:

June 22 KCM Blog - Five Things by Steve Harney

Thanks for reading! 

To view my primary blog where I write (more often) about eco-friendly living, and real estate on Chicago's North Shore go to Sweet Home Chicago.

To find any property for sale in the Chicago area, go to:

KarpRealEstate.com or Teardowns.com

Many people have heard that the real estate market is "bad" and so they are sitting on the sidelines and waiting for it to get "better" or to "recover." The real estate market is not inherently good or bad right now, it is different. The dynamics of the market have changed and savvy buyers and sellers are not sitting on the sidelines. They are using readily available information to anticipate where prices are going and they are planning their buying and selling decisions accordingly.

If you want to move to a different place that will better meet your needs (bigger, smaller, new location, etc. ) you may regret waiting until things are "better." First of all it could be several years before prices are anywhere near the prices we saw just a few years ago. Do you really want to put off moving on with your life and being where you want to be? Some people think prices are going to go back to "normal" in a few months or maybe a year. I am afraid that is not going to be the case. In fact I believe that prices will continue to decline as we proceed further onto 2010. And the facts are clear - prices are still going down. Better to sell now than wait until prices go down more.

I have personal experience with this and I know first hand that getting on with your life is much more important than the money. We lived in the far western suburbs of Chicago for a while and came to the decision that we wanted to move back home to the North Shore (this was before I became a Realtor). We just weren't happy where we lived and our employment circumstances had changed so we had no real reason to stay there. While the entire economy wasn't in turmoil at that time, the local real estate market where we lived had excess supply of new homes on the market. Our home was only 5 years old and in terrific shape, but we couldn't compete with all of the new construction in the area. It took us a long time to finally agree with our real estate agent to lower our price, but I am so glad that we did! We lost money on the sale, we bought a smaller house on a smaller lot, but with the benefits of being closer to family and friends, better schools, and a community with a better fit for us made it all worthwhile. My only regret is that we didn't do it sooner. One key difference between my personal story and the current market is that if you sell in this market you also get to take advantage of great prices and low interest rates, no matter where you go. But beware, experts are predicting that interest rates ate going to begin going up. (in fact that is one of the reasons that prices are expected to continue to decline). Thanks for reading!

To find any properties for sale in the Chicago area go to: www.KarpRealEstate.com www.ForeclosuresOnTheNorthShore.com www.teardowns.com

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 last post was about re-sale homes in the same areas.

Thanks for reading.

nsk

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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 ending June 1^st, 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 during the prior 12 weeks.  Details for each community are in the chart below.

The inventory levels, however, continued to rise. During the one week ending June 1^st 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:

People that do not have a property to sell have been making purchases, since they are less affected by the current market 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 people the sellers to turn around and purchase a larger home.  So that explains the increase in the median price.  Hopefully this will continue to trickle up through all of the price ranges.

Thank you for reading!!! Your comments are welcome.

(My next post is about new construction in these same suburbs.)

nsk

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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.

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

Home below is for sale in Glenview/Northbrook development called Willows West.  Needs some work. Contact me for details.

In spite of the rain, the Earth Day Festival in Highland Park was well attended. Since the crowds were less then anticipated, they didn't need my assistance as a volunteer.  I took advantage of the time (no appointments with clients, no family commitments) to check out the festival myself.

I learned about a new line of paints from Benjamin Moore - they are eco friendly, hypo allergenic, and they also cover better than the regular paints.

I learned about a new solar energy program that will be coming the the North Shore (eventually - timing tbd).  The deal is that this company determines what type/size solar panel you need, and then they install it on your roof.  You pay monthly to rent it out.  Your electricity then comes primarily from the solar panel, and if you need any additional energy, you still get it from ComEd.  You don't have to switch it back and forth, it all works together seamlessly - at least that is what they told me. 

A local business that provides theraputic massages services is also selling eco-friendly cleaning supplies.  They started out using the products for their shop, and now that they've moved into larger quarters they decided to start selling the products themselves.

Kudos to the planners of this fist-time event.  I think it was a success!

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

On Saturday May 3rd from 11-3 is the first Highland Park Earth Festival.  There will be food, music, demonstrations, lectures, kids activities and more at the Ravinia Train Station and across the street at Jens Jensen Park.  The Festival is to raise awareness of sustainability and recycling and how we can all make a difference by doing small things every day.

I am volunteering in the afternoon - hope to see lots of familiar faces at this worthwhile event!

Please check out the website at http://www.hpearthfestival.org/.