Hope we are all enjoying a great holiday season. I'm back in the loop... at least writing again... barely legible, but writing.
Good story written by Mary "Zillow" Umberger titled "A market in need of a push: Home buyers and sellers must break stalemate for sector to move beyond post-boom doldrums", in the Chicago Tribune Business section today. If the link goes dead, Google the story. Balanced, but as usual, a little sarcastic bent to the negative.
However, the premise is pretty good and the theory posited has been discussed for the better part of the second half of 2006. Sellers are hanging on to "that last comparable condo/home sold for this much" attitude and buyers on the other hand are looking for the deal of the century. We have short memories... and if you bought almost anything in many of Chicago's neighborhoods in the last 10 years prices appreciated... a lot. So, we remember the "a lot" part. Reason being, Chicago is 100 times better to live in than 10-20 years ago.
But, we hit the "top" for some condos and single family homes and things are balancing. There are winners and losers and this will remain the case. The predictions are all over the board for 2007... some suggesting modest price increases overall and increased sales transactions. Others think it will take another year to see the shake out and correction.
My take is, well, on a case to case basis. Depending on the home, neighborhood, list price, equity of the seller... my buyer clients and I will try to get the best deal. My seller clients will have to look seriously at what I present to them, as far as market competition, and decide if they want to start below the comps or price with them and hang on and see.
For example, I have a listing now that is approaching 90 days. There are not comparables priced lower in the immediate neighborhood, or, in neighborhoods that are comparable in quality. We went on in the late fall, so... the slowest time in the market. Our price and location has attracted a heavy amount of showings... a couple second showings. We are going to hold tight because, even if it takes 6 months, we are confident the buyers will see there are not a bevy of cheaper alternatives for the location.
It's a great neighborhood and condo, and if we went to a "certain" price, the place would fly out the door... and the people who have seen it, have not exactly ran out to buy other places. They'll be back or someone else will snatch it up because leases come up in the spring! So it's worth holding there. The buyers are finally gonna get it... there just isn't a lot of supply in certain great areas to live. If you want to be there, it's costs a certain amount.
Another example is a 6 unit building in the same general neighborhood. The new conversion building priced under the current market for its comparable product and sold out in 30 days! So, the buyers I took there and passed because they didn't believe the numbers I presented them are regretting it. Other units for sale, and there is not a lot, have stayed at the "comp line" and my buyers wait.
But this will play over and over in each neighborhood, on each street, for each unit. Rogers Park for example has a ton of two bedroom, one bathroom condos on the market... most with no parking, limited outdoor space etc... Those who bought similar units two years ago will be lucky to break even due to the competition. This is not the case in Lakeview where very tiny shifts in the last comparable price can sell a unit quickly.
From my personal take on the market, and I've written on this blog, Yo Chicago and other sites, that indeed I see a pick up in serious buyers. And I'm doing all I can do to keep up with their demand and put the best product in front of them, negotiate the best deal, and fit them into a place and neighborhood they will enjoy. Just ask them.
By the way... this story, New home sales rise more than forcast by Bob Willis of Bloomberg News, also ran in the Tribune online with the November numbers. Better than assumed in Umberger's story.
The moral... buy and sell for the right reasons. To move up to the next place for your needs, to plant roots, to improve your own home, to live with other owners that derive social benefits of being in this terrific "club"... and buy a place you can afford so you may build equity, or, make the sacrifices involved in buying a little above your means. But don't buy because you want to make 50K on a two bedroom, one bath condo in a couple years (although, this still happends if you rehab a place to that extent!). If you're investing, that's another can of worms we can open.