New Year and New Beginnings for Chicago Real Estate!

Happy New Year!  I never get tired of sending this good wish to all.  I guess it stems from my natural optimism about the promise of a new year, and new beginnings.  

It would seem to many that home affordability should be at an all time high.  With most markets, including the Chicago real estate market, experiencing a 30% drop in value from the highs of 2007, one would think that affordability would be a factor that was showing improvement.  Recent statistics seem to bear this out.  November pending sales rose 7.3% to an index of just over 100 based on the National Association of Realtors Pending Home Sales Index.  This index  which tracks pending (under contract) sales figures, does not reflect closed sales.  It was established in 2001 at 100.  During the “bubble years” the index rose way above that point, but in recent years, has only exceeded 100 in April 2010 when it rose to 111 as a result of the termination of the homebuyer tax credit.  The ascent of the index to over 100 in November is encouraging news since there was no artificial stimulus, such as the homebuyer tax credit, and the new level is just a reflection of a better, more confident economy.  

One side note is that the cancellation rate, which usually hovers at about 10%, rose to 30%.  My feeling is that this is due to short sale and foreclosure fall out, and not a reflection of traditional sales cancellations.  Distressed properties bring their own set of challenges to both the investor and owner occupant, and the deal that is too good to be true, usually is.  Chicago real estate investors need to examine their holding and rehab costs, and owner occupants need to have both time and capital to bring the property up to their standards.  There are many little known expenses, such a local ordinances which may require a new owner to pay back assessments, and fees.  If you are interested in perusing distressed property, be sure you are working with an expert in the field.  Both Louis and I have both classroom and practical experience in successfully purchasing both short sales and foreclosures.  We would be happy to discuss your real estate aspirations.  

It bears noting that sales of the lower price points properties are surging.  Nationally, the upper bracket appears to be languishing and perhaps still declining.  The good news is that here in Chicago, the upper bracket is definitely improving.  For example, in Lincoln Park (60614), there were 64 detached single family homes that closed between January 1, 2011 and June 30, 2011.  The average sale price was $1,504,504 and the median sale price was $1,299,500. Three of these sales were foreclosures and three were short sales.  For the same area, there were 79 detached single family closed sales between July 1, 2011 and December 31, 2011.  The average sale price was $1,543,562 and the median  sale price was $1,425,000.  Of these, three were foreclosures and seven were short sales.  This shows an increase of just over 2.5% on average sale price.

In Streeterville (60611 zip code) for the same time periods, there were 99 closed sales of condominiums with at least three bedrooms and at least 2 ½ baths between January 1, 2011 and June 30, 2011.  The average sale price was $1,530,409 and the median sale price was $1,225,000.  Four of these sales were foreclosures and one was a short sale.  There were 91 closed condo sales of at least 3 bedrooms and 2 ½ baths in the same area between July 1, 2011 and December 31, 2011.  The average sale price was $1,689,040 and the median sale price was $1,200,000.  Of these sales, four were foreclosures and one was a short sale.  This shows a whopping increase of over 10%!  These are certainly statistics that we will continue to monitor. 

It is also interesting to note that 2011 wound up with sales in the last quarters which were much stronger than usual in Chicago real estate.  Over the last 23 years, I have seen the sales pattern to be one of early strength (February through August), and find the last third of the year to be very weak in terms of numbers of sales.  2011  proved to start slowly, but picked up steam throughout the fall.  This a contrary to the sales patterns we have seen in years past, and continues to portend a upward swing in both volume and sales price. 

On a personal note, we are celebrating another new beginning.  Our daughter, Ashleigh will be married later this month.  We are thrilled at the happiness that Ashleigh and Dean are sharing.  Some of you may remember that Ashleigh worked with us for a time, and for those of you who have been our clients for many years, you may remember her as my little red headed helper when she was younger.  

Wishing you all a year of joy and good health.    

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