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.
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.