Chicago housing market recovering slowly, unevenly
BY FRANCINE KNOWLES Sun-Times Media
John VanDermeir bought his four-bedroom, two-and-a-half bath home in 2001 for $400,000, and was pleased he was able to sell it this year for $475,000. The home is in the Edgebrook community, which is an area of the city that has seen price appreciation this year. | Rich Hein~Sun-Times
John VanDermeir has reason to smile. He recently sold his four-bedroom, two-and-a-half bath home for $475,000 — $75,000 more than he paid for it.
For Yossi Wainhaus there’s reason to smile and cry; he was finally able to unload his two bedroom condo, but he bought it for $185,000 and could only get $50,000 in a short sale.
Their homes were only about five miles apart.
The two reflect the tale of a Chicago area housing market that is off the critical list and no longer on life support, but where recovery, while under way, is far from even, varying city by city, neighborhood by neighborhood, ZIP code by ZIP code. And it’s a trend that’s expected to continue next year.
“It’s extraordinarily uneven,” said Stan Humphries, chief economist with consumer real estate information service Zillow Inc. “Generally we’re seeing a very uneven housing recovery across the U.S. from metro area to metro area and even within most of the metros we’re seeing uneven recovery there as well. Chicago is no exception to that rule.”
Indeed, VanDermeir’s home was in Edgebrook, where the median price rose 8.8 percent in October from a year earlier, according to Zillow, and the average time on market for homes sold this year was about four months, data from real estate information technology company FNC Inc. shows.
In Rogers Park, where Wainhaus sold his home, the median price sank more than 24 percent, and the average time on market was about 17 months.
Time on market averages for most ZIP codes ranged from a low of just over two months to more than three years throughout metro Chicago. Sixty to 90 days is considered average during a healthy market.
Meanwhile, Zillow data shows the area around downtown Chicago still showing annualized declines in home values.
“Then as you head further out of the city, into Arlington Heights, out into DuPage County, the northern part of Cook County and then the southern periphery . . . down into the northern part of Will County, those places are actually seeing some flat or positive year-over-year gains, and then it reverses as you get much further out,” Humphries said.
He noted communities in McHenry County, DeKalb, Kendall and Kenosha are still experiencing year-over-year declines.
Areas that are struggling the most tend to be those where there’s greater prevalence of upside down mortgages, foreclosures and failed condos, real estate market experts said.
But against that backdrop recent data still point to an overall Chicago area market that is on the right track, although the median price remains 38 percent below its 2007 peak:
♦Home sales in the city of Chicago spiked more than 53 percent in October from a year earlier, and the median price jumped 8 percent, the Illinois Association of Realtors reported last month.
♦Throughout the Chicago area, sales spiked 44 percent in October from a year earlier, and the median price rose 2.1 percent. Year-to-date sales are up more than 26 percent.
♦Permits for residential building construction of single-family homes in the Chicago area rose to 4,784 through October, up from 3,517 during the same period a year earlier.
♦In Cook County, 2012 permits through October were issued for 921 residential buildings, compared with 803 buildings for all of last year and 773 for 2010.
“I think that this year was one of the best years in probably the past six or seven,” said Nicole Flores, real estate broker associate with Baird & Warner in Edgebrook.
“Things seem to be moving quicker. A few of my Edgebrook listings have sold within three, four, five days.”
“We have a lot more multiple offers,” said Lisa Sanders, also a real estate agent in the Edgebrook office for Baird & Warner.
VanDermeir said when he put his home on the market in January, “at the first open house we had 11 people come through, which was unusual for January. I’m happy I sold the house and made money on the house.”
Besides Edgebrook, year-over-year median price gains were seen in October in the Chicago communities of Avondale, up 5.3 percent; North Lake View up 3.5 percent and South Uptown, up 3.5 percent, according to Zillow data.
In the Chicago suburbs, among communities experiencing price gains were Elmhurst, up 6.7 percent; Deerfield, up 5.8 percent; Arlington Heights, up 5.6 percent; Willowbrook, up 5.3 percent; and Wheaton, up 3.9 percent.
But double-digit declines were seen in the suburbs of Zion, Cary, and Woodstock.
And problems persist in the South Loop neighborhood where it’s taking on average 934 days for homes to sell and the median price is down 9.3 percent; and in the South Shore neighborhood, where the median price is down 14.6 percent and the time on market is an average of 426 days. Both areas have foreclosed condos.
“If you look at South Shore, probably 75 percent of that market is condos,” said Realtor Zeke Morris president of the Chicago Association of Realtors and operating principal and managing broker with Keller Williams Realty in Chicago.
“You have failed condos, and with failed condos, it’s very difficult. You’ve got to rebuild the [condo] association before you can then have a condo for sale where you can actually get financing. So what you wind up having is most of your sales are cash deals. Those limit your sellers.”
The problem is similar in Rogers Park, said Genie Birch, broker associate with Koenig & Strey. For condo sellers, she said it remains, “a very tough market.”
Wainhaus would agree. He said he and his wife put their condo on the market and took it off several times when it wouldn’t sell.
“The first time we probably had it out there for like $160,000,” he said. “At that point, we were still hoping to get that. Not till the third or fourth time did we realize that wasn’t going to happen. Obviously the market had changed.”
During the boom, a lot of the residential rental buildings in Rogers Park became condos, Birch noted, adding, “That’s the whole problem, the amount of properties that went condo that have gone bust.
“If you’re looking at single-family homes, it’s a strong market. If they’re priced right, the houses are selling.”
Humphries said higher end markets have been faring better.
“The top tier of housing has held its value much better than the housing recession in the bottom tier,” because they’ve had far fewer foreclosures, he said.
Looking forward, he said, “I do expect the ZIP code by ZIP code disparities to continue, mainly driven by the rates of negative equity,” which often lead to foreclosures, he said.