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WHERE ARE HOME PRICES GOING?

I was golfing with a friend of mine a couple weeks ago. We were playing in an outing at a beautiful country club named Royal Fox in St. Charles Illinois...

The course is fairly new, and like many newer golf courses is built in the middle of a large subdivision. The subdivision around the Royal Fox is one of beautiful homes...

-a typical home along Royal Fox Country Club

While we were golfing, one of our playing partners noticed a home for sale along the golf course and grabbed a listing sheet. Asking price? $1,300,000.

It didn't really surprise me. The house was big and beautiful, on a wooded lot, and it backed to a nice golf course. But it did get me thinking...

When I returned home that night, I did a little research on our local Multiple Listing Service (MLS). It turned out that there are 77 homes on the market in St. Charles priced at least $1,000,000.

Seemed like a big number to me...

Digging a little further, it turns out that of those 77 homes, none are under contract for sale. And if none are under contract...

Isn't it fair to assume they are overpriced?

And if they are overpriced, won't they need to reduce their prices to sell?

And if/when they are reduced, won't this put downward pressure on the prices of all the homes in St. Charles?

Or will the lower priced homes be somehow insulated from any further price declines?

I am only a student of this game, but it sure has me wondering...

Where are home prices going?

Ken

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Posted by Ken Tracy Realtor Naperville Illinois Real Estate on 08/18/2009 10:35 AM

Comments (6)

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Originally posted at: Ken's Naperville Real Estate Blog : WHERE ARE HOME PRICES GOING?

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6 Comments on WHERE ARE HOME PRICES GOING?

AUG

Good to see you Ken...this is right in my backyard.

Hi Ken, We are a resort/destination market and it seems that the low end of the market is doing very well now while the high end languishes.

Hi Larry and Bill. Thanks for stopping in.

I hear the high end is languishing all over. They will eventually adjust their prices...

And then what happens?

Thanks again,

Ken

Ken, luckily, most of the owners that are in that price range don't have to sell. If one does lower the price, it will be a one off deal, most of the other owners will not adjust their prices as well. They aren't all racing to the bottom. Prices in general on those larger houses will be negatively impacted though in the future as costs of taxes, insurance, electricity (think cap and trade), and simply maintaining a house of that size go up. The trend in many parts of the world, and I am sure in America eventually is towards smaller, more eco friendly houses that are easy to care for, promote family connections, and are cheaper on taxes, utilities, etc.

Hi Brian. Great points.

I am wondering if that trend is only occurring because of the stubborness of high end sellers.

When they do lower their prices (and they will), what will happen?

Thanks for stopping in,

Ken

the market and prices all depends on the price band. Here there are bidding wars for good priced starter homes, but a 40 year inventory at the current sales rates of the high end homes. Brian is right, those high end buyers can set and wait the cycle out before they will reduce their price, usually. We are seeing some foreclosures on SPECTACULAR homes...

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