WHEN WILL THE 2020 SPRING REAL ESTATE MARKET START IN CHICAGO?

I’m asked often “When is a good time to list?” when talking about the spring market. Or when is a good time to start looking at houses? Some of my clients will think the spring market is literally just that, in the spring time. Others will think it is when the weather warms up which in Chicago could be June or even July. But the reality is the “spring market” has been starting earlier and earlier in Chicago for years. This has nothing to do with the weather. Surely, we all know the weather is not getting any warmer in January or February, at least if last year was any indication. So when does the spring market really start?

I advise all the agents on my team to be ready for the spring market January 2nd. January 1st people are still hungover from the night before, but January 2nd people start making moves on whatever they talked about over the holidays. You know this. Walk into any gym on January 2nd and its packed. A similar mindset takes place in real estate. However, that mindset can quickly change, just like New Years resolutions fade into memory so too can the idea of moving. However, with real estate there are a few additional influences that will cause the spring market to start in January this year and why you should be ready as a buyer or a seller sooner rather than later.

Low Inventory Inventory continues to remain low throughout the city, especially good inventory. There is some junk on the market, sure. Especially a good handful of places that have not been updated in 15/20 years but are priced too high to justify rehab work. But for the most part, good quality inventory is limited. Therefore, the old saying “the early bird gets the worm” comes into play here. You have to be ready early. Hence, January 2nd.

Low Inventory Might Not Last Too Long… This year I think we will see low inventory numbers but we will start to see a slightly increased influx of inventory sooner rather than later. Last year for instance in January we saw a lot of pocket listings that were coming to market at the end of February or March, but were not actually on the MLS. Under new NAR guidelines, such pocket listings (unless only marketed in-house) are now illegal as of January 2020. Therefore, if someone wants to get early exposure to the whole market they have no choice but to list on the MLS. So while inventory levels will start off low I do think we will see an increase because of this new regulation. With this being said, it means that instead of just competing against a handful of buyers for a “pocket listing” you’ll now be competing against the entire market. Be ready!

If you’re looking to list your home it means you need to be ready sooner. As a pocket listing we can get away with no photos or imperfections because the listing is “special,” it is “exclusive” so buyers will go out of their way to see it because they feel like they’re privy to information no one else has. When you have to go live on the MLS you better have all your ducks in a row.

Social Media is more powerful in the real estate business than ever before. Real Estate brokers cannot wait to post what they have put under contract. We’re a fragile bunch. We like our egos inflated as much as possible. But here is the thing…sales forecast for this upcoming year are relatively flat for the overall market, even chicago expects a small decline in sales with less than a 1% growth in prices in 2020. This means Realtors are going to be networking harder, posting more on social media, and doing more to drum up business to compete with last years numbers. I think this year Realtors will come out of the gates running earlier than ever before and I do believe this will have an affect on the start of the spring market.

Lease End Dates Over the past 5 years more and more landlords have refused to take leases ending in the winter time and have pushed tenants to take longer term leases or odd lease lengths in order to end in the spring time. There are more leases now ending in March, April, and May then we ever have had before. This means if you want to purchase and close on a home before the end of your lease that end in April, you really should start looking at the start of the year. Listing agents know this and are starting to push sellers to list early because of this, especially with properties that are attracting first time homebuyers.

Now I’m not saying January 2nd we’re going to see an influx of inventory or lines at open houses. What I am saying is that now more than ever you need to be PREPARED early for the spring market. Be ready to jump on what you like if you’re a buyer and if you’re a seller make sure you start making arrangements in your home. Get those improvements made if you’ve been putting them off. Make those small repairs. Figure out your plans and where you want to move next.

Paul Blackburn is an Illinois Licensed Realtor and Broker with @properties in Chicago. He can be reached at anytime via e-mail at Paul@PKBlackburn.com or visit www.PKBlackburn.com

New Construction in Chicago

New Construction condos and single family homes are still in high demand throughout Chicago but some developers are coming to the rescue with smaller projects throughout the city. The biggest problem, however, is that many home buyers are unaware of new projects until they’re mostly sold out. The question is, why?

Many real estate brokers and developers are marketing their new construction to their own clients first and only later listing the property for sale in the public market. While many may scream this is unethical, it actually makes perfect sense. It allows developers to gauge interest from the market and set proper pricing for future units and it allows agents to do right by their buyer clients by bringing them something exclusive.

Many small new projects are popping up around the city but many are not in the staple neighborhoods that you might think such as Lakeview and Lincoln Park. Instead, Ukrainian Village, Logan Square, Bucktown, Wicker Park and even Uptown / Andersonville are seeing new developments from condos to townhomes.

What sort of budget should you have?

If you are looking for a new construction 2 Bed / 2 Bath condo your budget should be up to $500,000 to be able to choose from an array of options in the above mentioned neighborhoods. If you’re looking for a new construction town home, you may find a few under $500,000 but $600,000 to $700,000 would definitely be a better bet.

If you’re looking downtown, well you are pretty much out of luck. There is very limited new construction in areas such as River North, Gold Coast, etc. 4 E. Elm is a new project marketed by our company and the units are starting at $2.1 Million.

Be able to buy off of plans

Many new buildings, even smaller ones are starting to sell primarily based on floor plans or during construction when framing may be the only thing you can check out. Be prepared to make decisions based on floor plans, artistic renditions, etc.

If the developer is established in Chicago they may have models of other projects they’ve completed that  you can tour in order to get a feel for their craftsmanship and an idea of the types of finishes they plan to use.

 

Paul Blackburn is an Illinois licensed broker and Realtor with @properties in Chicago. He can be reached via e-mail at Paul@PKBlackburn.com

Chicago Condos Still Selling Fast!

Buyer demand, in Chicago’s “hottest” neighborhoods, has continued this spring and will likely continue throughout the summer and fall. Inventory levels remain low throughout Chicago’s best neighborhoods such as Streeterville, River North, Gold Coast, West Loop, South Loop, Lincoln Park, Lakeview…need I go on?

We are seeing many first time buyers enter the market, but they are not the same first time buyers we saw years ago. The last real estate crash scared many away from buying for a significant period of time. Therefore, we are seeing many first time buyers that have established families and excellent income levels. Many think when we say the “first time buyer market” is hot, we are only talking about cheaper condos priced between $100,000 and $300,000. This is no longer the case. Many first time buyers are now couples with children who are purchasing larger units throughout the city at, and even well above, $500,000.

In-Town buyers are back again in full force as well. What we thought may have just been a fad when interest rates were at 3.5%, second home buyers continue to pick up property in Chicago. To clarify, what I mean by “In-Town” buyers are people who have their primary residence elsewhere and are purchasing a home in the city to use on the weekends and holidays, etc. These buyers are not just purchasing small studios, but instead are purchasing everything from high level, large One Bedroom condos (think Trump or The Pinnacle where 1 Beds sell for $525,000 on up) and even single family homes!

If you follow national on the real estate market you will see random stats such as new home starts are skyrocketing but at the same time builders confidence level is decreasing. Some stats are showing that there are less first time home buyers than a year ago. I can see this being true, but after all we had so many people sit on the fence for several years that it would only make sense we would see one year (last year) with an abnormally high amount of first time home buyers. We can’t compare every year to last year! Though, economists always love to do that.

In conclusion, what should you take away from this? The condo market in Chicago is very healthy. Supply is low, demand is high across the board from various types of buyers and buyers that are interested in various types of products. This means the market is healthy; it is as simple as that.

HOW TO CHOOSE A REALTOR IN CHICAGO

How do you choose a Realtor (Real Estate Broker) in Chicago whether you are looking to buy or sell? What should you look for?

Real estate brokerages would love you to believe that it is difficult to become a Realtor. I’ve been in the business for 7 years and I can easily tell you, based on the experiences I have had with other agents, that almost anyone can enter this business. Whenever the barrier to entry is low, no matter what the field is, you are bound to attract…..idiots. The fact remains that many people in the real estate business, should NOT be in the real estate business. A Real estate broker is helping you with the purchase or the sale of one of your largest assets, if not THE largest asset you will own. So what should you look for when choosing an agent? How do you pick out the idiots from the heard so you know to avoid them?

An agent that Shuts Up:

An agent should not try to talk your ear off right away. Instead, they should shut up and listen to you. They should listen to your needs and your wants. They should ask you questions and just as important; they should know what questions to ask you. Your agent should not be there to SELL you, instead, they should be there to advise you (and sell your home if that is what you hired them to do).

An agent that is all-knowing:

Surely, an agent can’t know everything and any agent that says they do is a load of crap. What I mean by “all-knowing” is that your agent should UNDERSTAND all aspects of the business. They need to understand how mortgages work, from application through the underwriting process. They should understand the basics of real estate law and contract law. They should understand basic accounting so they can help you evaluate the financials of a condominium association. They do not need to be experts in these fields, but they need basic knowledge in all these fields.

In each transaction it is my job to act as a facilitator. I am here to make sure the attorney is doing things properly, to make sure the mortgage broker is doing things properly, to make sure the condo association is turning over the proper paperwork to my client, and to make sure the agent on the other side of the transaction is doing things properly. Your agent is likely not an attorney nor a mortgage broker, but they should strive to learn as much as they can about these topics. They need to be your advocate throughout the entire transaction.

Knowledge of the market

Real estate is extremely localized and in Chicago there are neighborhoods, within neighborhoods which influence everything from pricing to schools to the overall “feel” of the neighborhood. Your agent needs to know these neighborhoods like the back of their hand. If they don’t, then they should not be working in that neighborhood. They should be able to give you at least rough pricing off the top of their head. While specific pricing may require your agent to look up comparable sales; your agent should be able to at least give you a price range for sale or if you’re a buyer tell you if something is over priced off the top of their head. If they cannot, then they do not know the market well enough.

Not a side job

Your agent cannot be part time. I am sorry, but these agents just piss me off. Helping someone with such a large purchase or sale is NOT a part time gig. If you had $100,000 to invest would you go to a “part time” financial adviser? If you were sick would you go to a “part time” medical doctor? No you wouldn’t, so don’t go to a part time agent.

Your agent needs to be on time

Your agent needs to be on time. If your agent is constantly late, they don’t respect your time. But more importantly, if they can’t manage their time how can they manage anything else? Precision and details are important in this business. If you are buying a home for $500,000 do you want your agent to do things with precision?

An agent that discounts themselves

There was a trend a while back, which is thankfully going away, where agents would greatly discount commissions and kickback large amounts of their commissions to buyers. I will not name the services in this blog, but instead, all I will say is you get what you pay for. The most successful and knowledgeable agents in Chicago do not need to discount their services. Would you trust a doctor that advertised a $25 physical exam? I’m thinking not so much. Same is true with the real estate profession. By the same token, however, hold your agent to high standards. Understand that they are getting paid to represent you and you should expect nothing but the absolute best from your agent.

MY ADVICE TO FIRST TIME BUYERS IN CHICAGO

First Time Home Buyers always have a lot of questions. Listed below are some of the most common questions and concerns I hear working with home buyers in Chicago.

What Neighborhood in Chicago is the best investment?

Chicago is extremely diverse with so many different neighborhoods each offering their own “feel.” The old saying is real estate is “Location, Location, Location.” This saying continues to be very true, but not just for your pocket book. If you are buying a home to live in, then YOU need to enjoy the location. Try not to get too wrapped up in “How much will this area appreciate in the coming years” but instead focus on “What will I enjoy about this neighborhood while I live  here?” Many buyers don’t give themselves enough credit. The things in a neighborhood that you love or hate, are likely the same things that the next buyer will love or hate as well. Focus on what you will love about the neighborhood first and then focus on what appreciation you may see in the future. After all, if you don’t like the location, then are you really getting your money’s worth?

How much space do I really need in Chicago?

Do you want a two bedroom or a one bedroom? What is more important to you: Space or Quality? Sure, it is great to have both but if price remains the same quality will decrease as space increases. Many people may say “One Bedrooms are not good for resale” In some areas this may be true, but overall I do not find this to be the case. Instead, you need to ask yourself the question “OK, this is only a One Bedroom but what do I like about it over some of the Two Bedrooms I have seen?” Chances are the quality is better, the living room space may be larger, the view may be better. Are these things important to you?

Transportation

How close are you to Transportation? Do you use the CTA or no? While that six block walk to the red line may seem wonderful in the summer time, it will feel like hell in the winter time so keep that in mind. If you are the kind of person that doesn’t mind walking a mile to the train in the freezing cold then your options can be much broader. If you are like me a despise walking even two minutes in the cold then your options will need to be more constrained.

Stay within your means

You may love the amazing condo that is pushing your budget but what good is it if you can’t afford to furnish it properly or enjoy the wonderful restaurants and bars down the street. Be conservative with your budget. Sometimes you can spend less money on a purchase and then some money on great renovations or furnishings and end up with a place that is perfect for you.

Chicago Real Estate Market Condo Market Update!

Well, it is that time of year again. The season is changing which means it is time for me to send out my quarterly letter to my past and present clients. Here is what is being placed in the mail this weekend.

 

Chicago Real Estate Market Update

Fall is here. How will the real estate market react?

The spring and summer real estate market in Chicago was very interesting. Inventory levels were at record lows and buyers were coming out of the woodwork. Multiple offers became the new norm. Listings that sat on the market for more than a couple weeks were assumed to have something wrong with them. It felt like 2006 all over again!

While the market rebounded nicely this summer it was also nice to see that hysteria did not take hold. While many places sold for above list price with multiple offers there were still many places sitting on the market for months. Listings that have poor floor plans or were simply not in “ideal locations” still were not selling. While demand did pick up with great force, it did so with caution and common sense, something that was greatly lacking during the real estate boom. The new question is: Will this market continue as we head into the fall and winter season?

I believe the market will remain strong through the fall and winter mainly because inventory levels will remain low. While prices have increased year over year they have not increased enough for many people who purchased in 06 and 07 (the peak of the market) to cover their losses. While demand will remain high, I do believe we will see less multiple offers and less units selling at or above list price this fall and upcoming winter. There were many buyers who had been sitting on the sidelines for a while and many decided to take the plunge this past spring and summer. This surge of buyers in the market, coupled with rapidly depleting inventory, is what fueled the crazy buying frenzy we saw. I do believe strong demand will continue, just at a slower pace. This in turn should make a healthy market for both buyers and sellers as we enter 2014.

What is going on with interest rates?

Just in case you don’t follow the bond market much, interest rates have increased significantly over the past few months. Rates on a 30yr fixed went from the 3.7% range up to 4.8% and even higher. What caused this? As you may remember the fed starting pumping more money into the system….again! This time it was called QE3.  The fed did this by purchasing X amount of Mortgage Backed Securities each month which in turn pushed down interest rates to the crazy lows of 3.7% and 3.6% for a 30yr fixed. A few months ago the fed started running its mouth and said it may “taper” their bond buying; in other words buy less, if the economy continued to improve. Naturally the bond market freaked out and almost instantaneously started trading as if bond buying by the Fed was already screeching to a halt.  The Good News? The good news is the fed recently announced that they will continue their bond purchasing and will not “taper” for the time being. Long story short interest rates on 30yr fixed mortgages should start to hover around 4.25 to 4.5. At the time of me typing this letter rates are averaging around 4.37% APR for a 30yr fixed. Hopefully these rates will last into 2014.

What is going on with the rental market?

The rental market is still strong but I believe we have definitely hit a price ceiling. New inventory is starting to hit the market downtown and inventory levels will continue to increase through 2014 and even 2015 as new projects are announced on a weekly basis. I’ve personally noticed that market times for rentals have started to increase even in some of the most desirable neighborhoods and buildings. This does not yet mean we will see rents falling however, it does mean is we are at the peak of the rental hysteria that we have seen since 2011.

Is it a good time to buy or sell?

In typical realtor fashion I will say it is a good time to do both! What is most important, however, is to understand your goals and your time constraints. If you are a buyer in today’s market you need to understand that inventory is low. Therefore, you will likely not be able to find that perfect place in only 30days so be sure to budget plenty of time to find the right place. How much time? I would say budget at least 3 months plus 30 to 45 days to close.

If you are a seller now is a good time to test the market since inventory levels are low. Prices have increased year over year and should continue to do so. Keep in mind pricing has not sky rocketed, however, most areas of the city have weeded themselves of the pesky low priced short sales and foreclosures that were killing values and lender appraisals. While buyers are out in the market in full force they still do not want to over pay. Pricing your listing 20% above your competitor won’t get you any more money. If anything, it will only hurt you.

 

I hope you enjoyed the summer and enjoy the fall weather that is slowly falling upon us! As always if there is ever anything I can do for you, your friends, or your family please do not hesitate to reach out or pass along my name and number.

 

 Paul Blackburn is an Illinois Licensed Realtor and Broker with @ Properties in Chicago. He can always be reached on his cell or via e-mail at Paul@PKBlackburn.com  Also visit http://www.BuyingInChicago.com for information if you are a first time buyer in Chicago!

Dog Friendly Condos in Chicago – Dog Friendly Condo Buildings

Chicago is a very dog friendly city but how many condo associations are dog friendly? How many condo buildings are dog friendly in Chicago?Here is a quick little guide about some things to watch out for if you are a dog owner and searching for a condo in the city of Chicago.

First off, if you’re new to the city it is important to note that Chicago is VERY dog friendly. Many shops and small restaurants will put dog bowls and dog treats outside in the summer time and some businesses have even started use “pet safe salt” to salt their sidewalks in the winter time. Many condo buildings are also dog friendly, however, one small “incident” can change the way a condo association views pets. With this being said the “dog friendly” environment in condo buildings can change quickly.

Aggressive Breeds

I don’t want to get into a debate here about what breeds are “aggressive.” Personally, I don’t agree with many people’s view points on “aggressive” breeds but lets skip the arguments for now. Insurance companies typically set the standard for aggressive breeds. Condo Associations have insurance not only for the building (fire/hazard) but also for liability. While many insurance companies may cover aggressive breeds they do so only at an increased cost. Therefore, we many condo associations have a “No Aggressive Breed” exception in their condo bylws.

Aggressive breeds contain the stereotypical Pit Bull, but may also include dogs such as Siberian Huskies, Chows, Rottweilers, Akitas, Great Danes, Staffordshire Terriors, and even German Shepherds. If you own one of these dogs it is important to check with the condo association as soon as possible to see if these dogs are allowed.

Weight Restrictions

Some condo associations have weight restrictions on dogs. The most common limit I’ve seen in building is 35 to 40lbs. This is typical for buildings in the Gold Coast area. Some condo associations will simply have the rule in place and as long as you don’t walk in with a mastiff you’re fine. Other condo associations will want to see a letter from a vet verifying your dog’s weight.

Special Entrance / Exit

Don’t be surprised if your condo association asks you to use a special entrance or exit for your dog. This is done not because they don’t like your dog but because likely one or two irresponsible owners may have let their dogs leave a little surprise in the lobby or the main elevator and failed to clean it up. Don’t be made at your association, be made at your fellow neighbors for this one. Some buildings say you can use the common elevator but you need to carry your dog while in the elevator.

Pet Number Restrictions

Most buildings limit the number of dogs to two dogs per unit. Some buildings may have a combined weight total. For instance one building I know of in the west loop has a weight total of 80lbs. You can choose to have two 40lb dogs for instance or one 80lb dog.

Some Buildings are not dog friendly at all

Some buildings have adopted a no dog policy. These buildings are rare but you will see them here and there. Some co-ops ban dogs and even the John Hancock no longer allows dogs. These policies come about for many reasons. For instance, in the John Hancock there was an incident a while ago where a larger dog decided to….eat a small dog. Since that time no new dogs were allowed to be adopted by any owners.

While I be the minority if I own a dog in downtown Chicago?

Absolutely not! Many many condo owners have dogs. This is up to everyone’s personal preference. There are plenty of dog walking and dog sitting services to handle the most discerning and loving dog owner. Just remember to let your Realtor know what kind of dog you have or what kind of dog you are thinking about adopting so you can look for condos that will accept you and your four legged friend!

 

New Apartment Buildings Still Going Up In Chicago!

Well, the craziness continues. Another apartment developer just acquired a piece of land in the west loop on Jackson and plans to break ground by November on a new apartment building. Buildings that broke ground at the beginning of the rental boom are now finally open and filling up quickly but the question still remains how long will this craze last?

Personally, I’ve seen market times increasing for rentals in Chicago. I’m observing this from my own personal listings only and have not run my own data analysis but I would assume market times are slowly increasing across the board. Prices increased a great deal over the past couple years but I cannot see any large year over year increase in 2014 as thousands of new class A rental units hit the market.

What I find most amazing are the amount of developers who continue to push forward and investors who continue to acquire large scale apartment projects as cap rates continue to decline as prices rise….when will it end? Many apartment developers continue to use to the phrase “apartment demand is sustainable” but for those of us who have a half way decent memory we heard this phrase plenty of times from developers in 2005, 2006 and even at the end of 2007 when the condo boom was coming to a screeching halt. Will we ever learn?

Smart Money: I saw smart money move over a year ago from apartment buildings back into condo development. Right now they’re sitting pretty selling out even before completion of their small projects.

Sure, there will always be demand for apartments but if there is one thing the real estate market has taught me, it is that when demand is for 2,000 units developers love to build 4,000.

The New Reality of Real Estate in Chicago

The housing market in Chicago has taken a dramatic turn from where it was a couple years ago. Condos and Single Family Homes in Chicago’s hottest neighborhoods are moving fast in all price ranges. Where is the sweet spot? The hottest section of the market is currently between$300,000 and $500,000 but we are also seeing higher end properties sell in only a matter of days.

Over the weekend I put a 2/2 loft under contract. My clients had to pay more than $7,000 above list price. We put an offer in after the property was only on the market for a day. Our goal was to get the property under contract by the weekend. We were up against one other buyer but we knew if it dragged into the weekend we could easily be up against multiple buyers. This property was in Bucktown.

Another property down the street in Bucktown had 22 showings in a 2 hour period last weekend. My buyers looked at this property on Sunday (the first day of showings for this new listing). On Wednesday they e-mailed me saying they wanted to make an offer. Unfortunately it already sold. Of the 22 showings the property received 3 offers from buyers. More than likely it sold for above list price as well.

A colleague of mine was showing a home in the $600,000 to $700,000 range in Old Town. She was one of 6 agents with buyers submitting offers. Her clients went $30,000 above list price….guess what? They didn’t get it. While we don’t know the exact sale price it has been eluded that it likely sold for almost $50,000 above list.

The most obvious question people may have is “What the h*ll is going on?!” Is this sustainable? Well here are my thoughts on the subject.

Currently in Chicago, in the more desirable neighborhoods, we have an inventory problem. Inventory has decreased to all time lows and buyer demand has increased dramatically. Lets start with demand, however. Why has demand increased?

The Hangover Effect: After 2008 everyone had a hangover in the real estate market. Just like in real life, when you wake up with a hangover the last thing you want is another shot of tequila that you had the night before. This hangover lasted in the market for several years. People simply wanted nothing to do with the market. Granted, many people did not have the finances to buy and many were worried about their jobs and lending (the bars) were not very open.

Now the “hangover effect” has mostly lifted. The economy is rebounding and consumer confidence in the housing market is back. During this hangover period many people rented and saved cash. Now, as they have seen the market stabilize we are seeing a rush of buyers into the market. With increased confidence we are also seeing record low interest rates and property values are back to normalized levels.

It is important to note that in distressed areas most of the demand is made up of investors. However, in prime “Class A” areas the majority of demand are first time, Second time and second home buyers who plan to use the property.

Where is all the supply? There are a couple reasons for low supply. First, we haven’t seen any new construction for condos or single family homes in almost 5 years. Only now is construction starting to pick up again and it is doing so at a slow pace.

The largest reason supply is low is due to many homeowners still underwater on their values. Many “would be” sellers simply cannot afford to sell their homes. Many homeowners are still refinancing using HARP and similar programs and some are still completing mortgage modifications. These homeowners are not selling anytime soon.

Who is selling now? I’ve noticed that many current sellers were buyers back in the early 2000’s before prices ran up. Some were buyers at the peak in 06 but put more than 5% down so they can at least walk away from the sale with some cash.

What is most interesting are tenant occupied properties selling. Many of the condos I have been showing in Lakeview, Lincoln Park, Near North, etc. have tenants in them. These are not standard “investment” condos for the owners but instead were their primary residences they could not sell back in 08, 09 so they rented them. They are now able to unload them for what they feel is a “decent” price.

What does the future hold? The inability for developers to obtain financing on large buildings is a good thing. This will help supply remain low. Interest rates will likely stay low for a while. The FED is talking about slowing or limiting their purchase of MBS however they will likely continue for a short while. The MBS market is in recovery mode especially with treasuries at record prices (low yields).

At the end of the day interest rates should remain low through 2015 and supply will likely remain low. This will start to push up pricing in your better markets which will slowly allow those who could not sell before to start to sell. The hope is that supply will be introduced slowly into the market.

Chicago Housing Market – Spring Market Update!

2013 Spring Market Update!

Inventory is at all time lows and demand has surged as new buyers have entered the market. The pendulum has swung the other way and we do not have enough properties on the market. Do you want to sell? Now might not be a bad time. With demand so high and inventory so low the question then becomes: “Why are more people not selling?”

I hoped that we would see more properties come to market this spring but we have not. The main reason is that many homeowners are still underwater on their homes. There are also those who do not want to sell because they cannot get what they WANT for their homes.  This has lead to many multiple offer situations and properties selling within only a few days on the market if priced appropriately.

Have prices increased?

Yes and no. It depends on how you measure price levels. Some foreclosures sold at very cheap prices in recent years. So if we are comparing current sales to distressed sales then yes prices have increased. However, if we look at the market as a whole, year over year prices have only increased a small amount.

Aren’t investors the main cause for demand?

If you’ve watched the talking heads on CNBC and all the “real estate analysts” you may have the impression that investors are the main cause of increased demand. This may be true in certain markets and may even be true in certain buildings in Chicago but as a whole, in Chicago’s more desirable neighborhoods, investor demand is not driving the market. First time and second time home buyers are what currently make up demand.

What are the hottest neighborhoods in Chicago?

The Near North side is doing very well which includes Streeterville, River North, and Old Town. However the hottest areas have been Lincoln Park, Lakeview, Wicker Park, Bucktown, West Loop and even the South Loop. Areas such as River West and West Town have also seen a great deal of demand.

If demand is so great why aren’t developers building condo buildings?

Financing is next to near impossible to obtain to build a large condo project. But, it is very easy to obtain to build apartment buildings. This is where developers have been focusing their energy especially with the rents increasing throughout the country. There are still developers building condos but they are doing so on a smaller scale focusing on 4, 8, and 12 unit style buildings. Some larger projects, up to 40 units are in the plans for areas such as the West Loop. Chances are they will do fairly well.

What about rentals? What is going on with rent prices?

Rent prices remain in an upward trend. While they are not increasing by double digit gains they are increasing steadily. We will probably see a 3 to 5% year over year increase in 2013 and perhaps slightly higher in the downtown / near north side market. Rental inventory remains low but may spike soon as roughly 5,500 Class A rental units hit the market between now and the end of 2014 in the downtown area.

My recommendations

If you have been holding off on selling and want to “test” the market, now is a good time to list your home, as you will get instant feedback on the pricing and desirability of your home.

If you are looking to buy it is still a great time to buy, as prices haven’t jumped. However, you must be prepared to view places as soon as they come on the market. You also need to be working with an agent from a large firm that has access to “off market” properties as these are some of the better deals that are transacting.

Still pay particular attention to the condo association you are buying into. While most have recovered from the issues of the crash there are still some broken associations dealing with repairs from poor construction to poor management. It is extremely important to understand when you buy a condo you are also buying into the association.