Here’s my Monday Morning Update along with my outlook for the remainder of 2010. We’ll be using this time to also lay the groundwork for the upcoming market in 2011. Here’s your first interesting stat of this update: my company does 50% of its business during the first quarter of the year. That should give you an idea of the importance of Spring Market.
Obviously it’s slow. The National Association of Realtors reports an uptick in sales activity, and an uptick in prices throughout the U.S. But we’re not so fortunate in Chicago. In Chicago, sales in October, 2010, were down 39.5% from October, 2009. That’s pretty tough. And although most other major markets seem to have hit bottom as far as prices go, Chicago prices are still soft. Prices for Chicago were down 14.9% in October compared to October, 2009.
Charts for Lakeview, Lincoln Park, Bucktown, Ravenswood, Uptown and Rogers Park are posted at the end of this article.
I would surmise that this is due to the pragmatic Midwestern ethic. The Midwest certainly did not see a run-up in prices as high as California, Arizona, Las Vegas and Florida. But Midwesterners still feel that there was some over-exuberance in pricing and are waiting for prices to settle before putting their money on the line. An aggravating factor is the sluggish employment outlook in Illinois. We have lost 600,000 jobs since 2000, and the outlook for those jobs to be replaced is grim.
In your neighborhood, your most stable employers are those that involve healthcare (Northwestern Hospital, Children’s Memorial Hospital, Illinois Masonic Hospital, Loyola Hospital and others); education (Northwestern in Evanston and the Loop, DePaul University, Loyola University, and the myriad of others) and newly hired attorneys with the larger law firms. Government employees also represent a stable pool of buyers, but I currently do not have any modestly priced single-family homes in stable outer neighborhoods of Chicago.
Most of my clients’ listings are positioned well as move-up properties and move-down properties. Young couples who are renting or live in smaller condos would be well served to choose any current listings. And downsizing singles and empty nest couples certainly may enjoy a city residence like these as they move out of their large suburban house. This is backed up by experience: visitors have fit these profiles consistently.
The normal cycle of real estate is seriously disrupted. Therefore I am recommending that if you can bear the thought of remaining on market during the month of December and through the Holidays, that you do so. In a normal market, I could predict the cycle of buying activity. That normal cycle is completely changed and is now dictated by other factors. A variety of factors could trigger a surge in activity even though December and early January would be considered slow periods:
· Any economic report showing a surge in consumer confidence or spending.
· An increase in interest rates could spur buyers to act before rates go higher.
· A decrease in interest rates could spur buyers to jump off the fence.
· A surge or a decrease in the stock market could either increase confidence or inspire buyers to move money into real estate.
· Any report indicating that prices have bottomed out could inspire buyers to jump off the fence.
Any buyers that actually do go out looking are serious buyers, so it is wise to accommodate a buyer request during the upcoming month. The employers mentioned above also finalize their hiring decisions during December after budget preparation. I expect to see a few highly qualified doctors, educators and associate attorneys entering the market through the end of the year and in greater numbers early in 2011.
Finally, as Spring Market approaches, I will perform another Market Analysis to examine pricing for your property. The strategy that is having the most effective approach is “Ruthless Pricing.” Ruthless pricing will place your property within 1% of the expected sale price of your unit. The only properties that have closed recently in your market area have been homes priced within 1% of their eventual sale price. “Fudge Pricing” – pricing between 2% to 5% of the eventual sales price has resulted in extended market times, and ironically, sales prices below properties priced ruthlessly. And “Speculative Pricing” (also known as “sell at my price or hold it forever”) – pricing 5% to 10% above the expected sale price – simply adds to the clutter of unsold inventory.
Please give a call if you would like any further information! The next five weeks are laying the foundation for a successful 2011. Thank you!
Lincoln Park Median Price:
Lincoln Park Supply & Demand:
Lakeview Supply & Demand:
Bucktown Supply & Demand:
Ravenswood Supply & Demand:
Uptown Supply & Demand:
Rogers Park Price:
Rogers Park Supply & Demand: