[Chicagoland] 2Q 09 Windy City Real Estate

Posted by Jonathan J. Miller -Tuesday, July 28, 2009, 12:38 AM
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This quarterly market report is provided by Chip Wagner of A.L. Wagner Appraisal Group, Inc. I have had the pleasure of knowing Chip for a large part of my appraisal career. He’s just released market stats for 2Q 09. The reports are not up on his site yet, but here are some compelling charts listed below:

Windy City Update: Chicagoland 2Q 2008

Posted by Jonathan J. Miller -Tuesday, August 26, 2008, 12:01 AM
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This quarterly market report is provided by Chip Wagner and Robert Headrick. I have had the pleasure of knowing them for a large part of my appraisal career. They are both very active in appraisal industry matters having held many leadership positions. Their respective firms have been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and mortgage appraisals as well as slayers of appraisal myths. Chip and Bob author a series of market reports on the Chicagoland real estate market and Chip writes a column on our other blog, Soapbox called Chip Shots.

…Jonathan Miller

View the report

And their commentary…

What now?

In 32 of the 184 communities (about 17%), there was an increase in average sales price from second quarter 2007 to second quarter of 2008. Over 82% of the Chicagoland market has seen a decline in the average sales price.

An interesting observation shows that many of these areas that saw increases were higher priced communities. This is an interesting anomaly in the statistics. In every area, there has been a noted increase in the Months Supply of Inventory (increase in active listings, combined with a decrease in under contract and annual sales volume). What this tells us, in the higher priced communities where fewer homes are selling, and the mean (or average) sales price of these homes appear to be increasing because a few higher sales that are still occurring, influence the mean number as the sample size decreases.

Believe it or not, some significant asking price reductions on multi-million dollar homes are contributing to the appearance of increasing mean sales prices (i.e. a builder is asking $3,500,000 and after 2 years on the market will take $2,200,000). There are many deals out there – at all price points. Unfortunately, many of the deals are as a result of somebody’s misfortune.

Furthermore, in some communities where tear-down activity may be taking place in that market, the market has slowed significantly for these modestly priced homes, again, influencing the mean sales price in the area by removing the lower priced home sales making it appear that there is increasing average.

I would caution users of this report, that having done doing appraisals in these market areas, that there is evidence of declining values when analyzing Sale/Resale data, and the higher priced housing is especially volatile. This is true with every community. The change in mean sales price may or may not represent truly the community’s increase or decrease in values. Statistics are a great tool, but they can be interpreted and misinterpreted in different ways.

Again, real estate is local, so some areas are doing better than others as we caution these statistics are macroeconomic data. And indeed, there are some pockets and many instances where prices have increased in the past year, but this is few and far between, not the norm.

Windy City Update: Chicagoland February 2008

Posted by Jonathan J. Miller -Sunday, March 23, 2008, 9:19 PM
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This market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Consulting Group in their monthly eNewsletter. I have had the pleasure of knowing Chip and Bob for a good part of my appraisal career. They are both very active in appraisal industry matters having held many leadership positions. They also each have their own firms: Chips’ firm is A. L. Wagner Appraisal Group, Inc. and Bob’s firm is Robert E. Headrick & Associates, Inc. and have been covering the Chicagoland market for many years. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisal myths. Chip writes a column on our other blog Soapbox called Chip Shots. …Jonathan Miller

LOOKS RIGHT AND PRICED RIGHT

…The oversupply of inventory makes it very difficult for homeowners to sell their home. Many agents are telling me there are more buyers active right now as we are enter our Spring market, yet it remains a challenge. The buyers have many residences to look at. Homes are still selling – but unfortunately the types of homes appear to fall into two major categories: Looks Right and Priced Right, everything else in between is sitting unsold.

The houses that Look Right are those that stand out above the competition. They have positive attributes that their competitors cannot match. This may include Location/Site features such as a cul-de-sac lot with reduced front yard traffic, or a view of the park or Forest Preserve. It could also include homes that have been remodeled that stand out above its competition; e.g., adding trendy features such as granite countertops and stainless steel appliances to the kitchen. Or it could be about the impeccable condition of the property with brand new carpeting, recently refinished flooring and a fresh coat of neutral paint. Good interior staging is going a long way to make the home show the best that it possibly can. The homes that look right are being purchased, those that have a couple of faults here and there, are being overlooked and sitting on the market. This is exactly what happens when there is an oversupply and it is a Buyers Market.

The houses that are Priced Right are also getting a lot of attention. These are the homes that are sometimes called ‘short sales,’ or ‘quick sales.’ They might be properties where a seller has to sell because of a job transfer or a job loss. They could be properties in pre-foreclosure where the owner is distressed to get out of the property before they must turn the keys over to the bank. It could be a corporate-owned home, either by a bank, or a corporation who moved their transferee. These are some of the most motivated sellers on the block.

Or, it could be the builder who is willing to ‘wheel and deal’ and give away the spec home at an unbelievably low price, just to keep their sub’s paid, and able to work on that next home. I recently met a transferee who could not sell his home which was priced under the market at $325,000 when all of the comparable homes were over $350,000. He told me the feedback received was that people are choosing new construction of more expensive homes – of homes originally priced $400,000 to $450,000 that builders were selling for $350,000 with the discounts and concessions. It remains a difficult resale market in areas where sellers are competing with builders…..

Here are the reports…

eNewsletter February 2008
Detached Property Inventory: February 2008
Attached Property Inventory: February 2008

Windy City Update: Chicagoland 1Q 2007

Posted by Jonathan J. Miller -Monday, April 23, 2007, 12:01 AM
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[This quarterly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their eNewsletter. I have had the pleasure of knowing them for a large part of my appraisal career. They are both very active in appraisal industry matters having held many leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisal myths. Chip and Bob author a series of market reports on the Chicagoland real estate market and Chip writes a new column on our sister blog, Soapbox called Chip Shots. …Jonathan Miller

…The first quarter statistics show that listings are climbing fast, contract pendings are not keeping pace with the prior year, and the sales volume (previous 12 month period) is declining. With all these forces taking place, the inventory level has increased 78.5% over the same period from last year. An interesting observation shows that the average list price has declined 5.6%. This shows that pricing may be in the process of becoming more realistic in the difficult marketplace, and the oversupply is placing pressure downward on home prices. The good news is the average sales price has increased a modest 3%. This is far from the 5% to 10% (or greater) annual increases that we were accustomed to the first half of this decade. But it is also contrary to some of the national housing reports suggesting some markets are declining in year over year sales prices….

For the remainder of the 1Q 2007 report as well as other statistics, go here. There’s a lot of good information.

Windy City Update: Chicagoland MarketPulse February 2007

Posted by Jonathan J. Miller -Thursday, March 22, 2007, 12:01 AM
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[This monthly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their monthly eNewsletter. I have had the pleasure of knowing them for a large part of my appraisal career. They are both very active in appraisal industry matters having held many leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisal myths. Chip and Bob author a series of market reports on the Chicagoland real estate market and Chip writes a new column on our sister blog, Soapbox called Chip Shots. ...Jonathan Miller

...some areas seem to be improving, while other areas continue to suffer from extended marketing times and oversupplied inventory levels. It seems as though communities that have strong competition from new construction are the areas that continue to have a difficult time with competition. So the good news is contract pendings have heated up. This is expected at this time of the year. At the same time, actual inventory continues to grow as homes continue to enter the marketplace...

Here are the hard stats for the month in the following reports.

Headrick-Wagner Chicagoland March Report [pdf]
February Condo MarketPulse [pdf]
February Detached Housing MarketPulse [pdf]

Windy City Update: Chicagoland MarketPulse January 2007

Posted by Jonathan J. Miller -Wednesday, February 21, 2007, 9:17 AM
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[This monthly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their monthly eNewsletter. I have had the pleasure of knowing them for a large part of my appraisal career. They are both very active in appraisal industry matters having held many leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisal myths. Chip and Bob author a series of market reports on the Chicagoland real estate market They tell me they are also working on a big revamp of their web site as well.] …Jonathan Miller

This month, after licking their wounds from a Chicago Bears (“Da Bears”) Super Bowl loss to the Indianapolis Colts, they did what any good appraiser would do, analyze the situation and correlate it to the real estate market. They did this in a recent post in Chip Wagner’s new Soapbox column “Chip Shots” called Superbowl Mythbusters: Confirmed, Plausible Or Busted?

Here are the hard stats for the month in the following reports. I’ll link them directly to their new web site when its finished:

Headrick-Wagner Chicagoland February Report [pdf]
January Condo MarketPulse [pdf]
December Detached Housing MarketPulse [pdf]

Windy City Update: Chicagoland MarketPulse December 2006 Plus Year End Review

Posted by Jonathan J. Miller -Monday, January 29, 2007, 12:03 AM
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[This monthly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their December eNewsletter. I have had the pleasure of knowing them for most of my appraisal career. They are both very active in appraisal industry matters having held a large number of leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisal myths. Chip and Bob also author a series of market reports on the Chicagoland real estate market They tell me they are also working on a big revamp of their web site as well.] -Jonathan Miller

WHAT IS HAPPENING NOW?

For the third consecutive month, the Months Supply of Inventory has decreased. Again, it is premature to assume our market has changed as the less-motivated sellers remove their homes from the market during the holidays.

Although there are nearly 3,000 fewer homes listed from last month, almost 8,500 fewer homes on the market from the previous quarter, it is still nearly 11,600 more homes than the same period one year ago. Furthermore, we have not yet seen an increase in the homes under contract or a reverse in the downward trend in the pending and sales volume.

The year end reports are attached o this e-mail and they remain inconclusive as where we are going in the future. The year over year indication continues to show the market today is weaker than it was one year ago. After what we observed in 2006, this is no surprise. The fact that we are seeing positive indications from the previous quarter is welcome.

To put these statistics in perspective, from the 3rd quarter in 2005 to the 4th quarter in 2005, there was a 8.6% decline in active listings. From the 3rd quarter in 2006 to the 4th quarter in 2006, there was a 17.5% decline in active listings. The recent drop in active listings is nearly double the previous year’s drop. This is the first positive that we have actually been able to measure statistically, that indicates 2007 could be a better year than 2006.

WHATS IN STORE?

The Million Dollar question. Hopefully, in the coming months we will be able to see the decline in the Absorption Rates continue.

Buyers that were sitting on the fence, cautious as to making a move in the real estate market appear to be ready. Media reports on the housing sector are not “all negative” and we are seeing some positive reports coming out. Prospective buyers hoping to wait until the real estate markets bottom out may believe it has bottomed out and it is time to buy.

The economy is strong, unemployment is low and job growth is strong. Indications are that mortgage interest rates will continue to be favorable in 2007.

Early indications are suggesting that 2007 will be better than 2006 was. The market needs to begin eliminating some of the supply, and a better indication would be an increase in pendings which shows buyer activity. We continue to closely monitor the sales activity, and hopefully there will soon be clear indications that the real estate market has reversed its 2006 doldrums.

Until then, our opinion of 2007’s Chicagoland real estate market, like many other professionals is “cautiously optimistic.”

Here are some additional market reports:

Headrick-Wagner Chicagoland Report [pdf]
December Condo MarketPulse [pdf]
December Detached Housing MarketPulse [pdf]
Naperville Area Single Family Housing [pdf]

Windy City Update: Chicagoland MarketPulse November 2006

Posted by Jonathan J. Miller -Monday, December 18, 2006, 12:01 AM
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[This monthly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their November eNewsletter. I have had the pleasure of knowing them for most of my appraisal career. They are both very active in appraisal industry matters having held a large number of leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisals myths. Chip and Bob also author a series of market reports on the Chicagoland real estate market They tell me they are also working on a big revamp of their web site as well.] -Jonathan Miller

NOVEMBER LISTING INVENTORY DROPPED

This is the first time in 2006 that the Months Supply of Inventory has decreased. Although this is a good sign, it is too early to draw any conclusions that the market is improving, as we are in the period between Thanksgiving and New Years when many less-motivated sellers remove their homes from the market. Hopefully, in the coming months we will be able to see a decline in the Absorption Rates, reflecting the market either beginning to eliminate some of this supply, or sellers who are in no immediate need to sell will remove their property from the market allowing demand to catch up with supply.