In today's market, with 24/7 information, PDAs & Smartphones which can instantenously provide data, and a herd of firms all supplying their version of local market data, it is easy to be caught up in the 'winds' of change.
Granted, it may be a light breeze or it may be a gale force, but nonetheles, it can be quite easy to lose track of the overall picture. Given that Chicago, the third largest metropolitan area in the US, is experiencing a slower rebound than the coastal areas, it is worth noting that the recent positive talk of improving trends and increased transaction velocity is not evenly spread across all areas and all price points.
There are signs of improvement in the market one month here and another month there, but the bulk of that 'improvement' is concentrated at the ends of the spectrum of types of real estate. In essence, there is a “barbell effect” occuring and it has the middle of the market still being relatively weak and the prospect for a full recovery indeed a long ways off.
Yes, those with money can and are buying. And yes, those investors / rehabbers are snapping up deals. And yes, banks are being told how much inventory they can release to the market by the government/fed. And yes, the typical homeowner is not regularly abreast of the market vagaries. Therefore, it is no surprise that a little data can get 'pumped' out to a lot of people and create the perception that 'good' things are happening all around. When in reality, they are happening in a segment that may or may not be applicable to the market as a whole. Granted, I do wish it was widespread and like the water level in the tub, all rubber duckies would rise up as the water level in the tub increases. But alas, it is not. There is a disproportionate share of property owners who cannot take advantage of low rates due to either insufficently high credit scores, too high LTV or upside mortgage position, or insufficent income to quality for today's stricter lending requirements.
Yes it is going to be a while and the 'barbell' really looks more like a peppermint candy wrapped in clear celephane, with the bulk in the middle and a little bit on the ends.
Michael Hobbs, PahRoo Appraisal & Consultancy