As it has come up in several conversations with my clients over the last week or so, I thought it was worth sharing with you as well. What can we expect during the month of August while our house or condo is on the market?
I happen to have a lot of one bedrooms in Lincoln Park and Lakeview for sale at the moment. The remainder of my inventory is mixed between townhomes, houses, condominiums in various neighborhoods and a commercial condo. With the one bedrooms representing a hefty chunk of my inventory, let’s take a look at what’s going on from that perspective.
Historically, the month of August is slow. This is the month that most Chicagoans realize that the days of summer are numbered, folks leave town for vacation, and otherwise people simply don’t pay a lot of attention to real estate. Buyers that needed to have a home selected in time for the start of the school year did their shopping in late Spring and early Summer. There were a lot of July closings and a few more closings to take place in August.
The economy is also dealing the real estate market a one-two punch. Illinois’ unemployment is higher than the rest of the nation’s at 10.4%. And the banking crisis, or the leftovers of it, make it challenging to get a mortgage even though rates today are at historic lows (Guaranteed Rate is offering a 30 year, fixed, conforming, loan at 4.375%!)
In a strong economy, studios and one bedrooms are strong sellers. In a weak economy, demand for studios and one bedrooms falls off. Demand for buying a studio or a one bedroom falls off even more. This happens as fewer people can afford to live alone and start doubling up in larger units such as two and three bedroom apartments and condos. The economy also removes a large section of people from the market as their purchasing power is diminished.
Figures for the end of July tell a striking tale:
In Lincoln Park and Lakeview, combined, for the month of July, about twice as many two bedroom condominiums sold as one bedrooms. The same ratio holds for properties that went under contract – or pending sales.
July 2010, one bedrooms, pending sales = 38
July 2010, one bedrooms, closed sales = 36
July 2010, two bedrooms, pending sales = 65
July 2010, two bedrooms, closed sales = 70
You can expect that traffic will be lighter than you have experienced in June and the first three weeks of July. Traffic will stay light until the first weekend after Labor Day when buyers come back out shopping during the fall market. This fall most Realtors are expecting a better fall market than last year’s and better than the Summer Market.
The expiration of the buyer tax credit is far enough back in history that the “pulled forward” demand for homes should be exhausted. And as the economy improves, though slowly here in Chicago, there are some folks relocating to Chicago, expanding their families, and needing to choose new housing. We’re expecting demand to increase from “weak” to something even better than perhaps “tepid.” Certainly nowhere near “blistering” by any stretch of the imagination.
During the month of August, while we have the time, it’s a good idea to have me, or your Realtor, prepare a new Market Analysis for your property. If there are any new strategies to implement, or price changes that need to me bade, having the decision made during the slow month will allow the change to made promptly on Tuesday after Labor Day. Expect a call from me in the coming days to set up an appointment to get together to go over the new Market Analysis.