Alan May,
Broker, Evanston, IL
Ryan, properties in the Chicago area have tended to sell (on average) for anywhere from 90% of list to 96% of list price. But those can be very deceptive figures, because they don't take into account any price reductions that the sellers have taken, so the number, in effect could be lower... we just don't know.
The percentage off the list price is going to vary individual seller, to individual seller. Each seller has their own motivation, they've been on the market different lengths of time, they have different reasons for selling, some of them don't need to sell at all, and are merely testing the market.
Roscoe Village, North Center and Lincoln Square are all popular areas, loaded with condos and townhomes with plenty of properties to choose from. Rather than worry about "how much they'll come down"... find yourself a property you like, work with a buyer's agent to determine it's true market value, and try to purchase it for that value.
The percentage off the list price is going to vary individual seller, to individual seller. Each seller has their own motivation, they've been on the market different lengths of time, they have different reasons for selling, some of them don't need to sell at all, and are merely testing the market.
Roscoe Village, North Center and Lincoln Square are all popular areas, loaded with condos and townhomes with plenty of properties to choose from. Rather than worry about "how much they'll come down"... find yourself a property you like, work with a buyer's agent to determine it's true market value, and try to purchase it for that value.
John the Bruce,
Home Buyer, Connecticut
Ryan,
Great question. I thought about sitting back to see how many Realtors™ would chime in stating that now is a great time to buy. But, that wouldn’t be useful to you, now would it?
Rent versus buy. Here’s a recently published scholarly paper on just that topic, published by the Center for Economic and Policy Research (CEPR).
http://www.cepr.net/documents/publications/ownrent_2008_04.pdf
In brief, the study found that “for several cities with bubble inflated house prices such as Los Angeles, Boston and Washington the cost of homeownership is likely to be two or even three times as high as the cost of renting a comparable unit.” The study concluded that Chicago was one of those cities.
How about costs to buy in Chicago? They ranged between $1335 and $1794 per month, depending on interest rate assumptions. Renting the same place? $944.
Given current market conditions and the continuing horror show in the real estate market, the study concluded that buyers in Chicago can expect to sit on $24,000 in NEGATIVE equity at the end of the study’s 4 year term.
Take it for what it’s worth. The purchase versus rent data is pretty compelling though.
Fun fact: the foreclosure rate has increased for the past 27 months, year over year. March 2007 to March 2008 - foreclosures up 57%. Don’t believe anyone who says Chicago is different or anyone who says that we’ve bottomed out. Not even close, on either count. The downturn is accelerating; the data is irrefutable. I suggest that you don’t use this forum as the prime element of your decision process, as it can be a little biased.
When you can buy the average home for less than it costs to rent it – then it will be the time to buy. It will happen, and we’ll be getting there faster than anyone thought.
Good luck to all,
-John
Great question. I thought about sitting back to see how many Realtors™ would chime in stating that now is a great time to buy. But, that wouldn’t be useful to you, now would it?
Rent versus buy. Here’s a recently published scholarly paper on just that topic, published by the Center for Economic and Policy Research (CEPR).
http://www.cepr.net/documents/publications/ownrent_2008_04.pdf
In brief, the study found that “for several cities with bubble inflated house prices such as Los Angeles, Boston and Washington the cost of homeownership is likely to be two or even three times as high as the cost of renting a comparable unit.” The study concluded that Chicago was one of those cities.
How about costs to buy in Chicago? They ranged between $1335 and $1794 per month, depending on interest rate assumptions. Renting the same place? $944.
Given current market conditions and the continuing horror show in the real estate market, the study concluded that buyers in Chicago can expect to sit on $24,000 in NEGATIVE equity at the end of the study’s 4 year term.
Take it for what it’s worth. The purchase versus rent data is pretty compelling though.
Fun fact: the foreclosure rate has increased for the past 27 months, year over year. March 2007 to March 2008 - foreclosures up 57%. Don’t believe anyone who says Chicago is different or anyone who says that we’ve bottomed out. Not even close, on either count. The downturn is accelerating; the data is irrefutable. I suggest that you don’t use this forum as the prime element of your decision process, as it can be a little biased.
When you can buy the average home for less than it costs to rent it – then it will be the time to buy. It will happen, and we’ll be getting there faster than anyone thought.
Good luck to all,
-John
Ryan,
**..But those can be very deceptive figures, because they don't take into account any price reductions that the sellers have taken, so the number, in effect could be lower...**
This is an excellent point made by Elvis -- and it can make all the difference in the world.
Right now I'm tracking 33 different homes (not in Chicago) ... some of those homes have been on the market for 13 months, some have been on the market 5 months ...
It's not so important how long they've been on the market, it's how much the price has been reduced in that period of time - and what the "pure comps" have done sitting beside them ...
As an example only .. one listing might show a particular home was priced at $480,000 and it was reduced by $24,000 last month to $456,000 so it will show 95% of listing price ... but in reality, it was on the market since June 2007 at $525,000 and the true listing price is has been reduced by 13% - or 87% of listing price .. (with all variables being equal)..
Your job, is to know the difference ... you're 4 or 5 months out - yes.?
You should be tracking everything that catches your eye and pocketbook, then boil that list down when you get there .. never bid on a home unless you've studied the market and you have "at least" 3 other homes in your back pocket that you would move into for the right price and value ..
If choice #1 goes dead, you have options - many options ...
I never saw a home I couldn't live without ....
Good luck and happy hunting ..
: ^)
**..But those can be very deceptive figures, because they don't take into account any price reductions that the sellers have taken, so the number, in effect could be lower...**
This is an excellent point made by Elvis -- and it can make all the difference in the world.
Right now I'm tracking 33 different homes (not in Chicago) ... some of those homes have been on the market for 13 months, some have been on the market 5 months ...
It's not so important how long they've been on the market, it's how much the price has been reduced in that period of time - and what the "pure comps" have done sitting beside them ...
As an example only .. one listing might show a particular home was priced at $480,000 and it was reduced by $24,000 last month to $456,000 so it will show 95% of listing price ... but in reality, it was on the market since June 2007 at $525,000 and the true listing price is has been reduced by 13% - or 87% of listing price .. (with all variables being equal)..
Your job, is to know the difference ... you're 4 or 5 months out - yes.?
You should be tracking everything that catches your eye and pocketbook, then boil that list down when you get there .. never bid on a home unless you've studied the market and you have "at least" 3 other homes in your back pocket that you would move into for the right price and value ..
If choice #1 goes dead, you have options - many options ...
I never saw a home I couldn't live without ....
Good luck and happy hunting ..
: ^)
John the Bruce,
Home Buyer, Connecticut
Pat,
Read the study before you’re so quick to dismiss it. It compares apples to apples, which makes the conclusion all the more relevant. No NAR drivel, CEPR doesn’t have a dog in this fight. They used non-biased numbers from the Census Bureau and HUD, amongst other government entities. Don’t fear the data.
I find it comedic that sellers and Realtors™ think that a 30-50% decline, following a 100% run-up in prices over 4-5 years, is somehow impossible. Then again, if you listened to Realtors™, you’d believe that prices never go down. I guess that tag-line went to the scrap heap as I have all but stopped hearing it. We know it goes down – now everyone knows – and go down more it will.
It’s not just sub-prime anymore, Pat. Prime borrowers are getting in on the jingle-mail act.
Anyone who purchased in 2005 or 2006 is a risk to walk away. The worst part? There is absolutely no correlation between credit score and the willingness of borrowers to continue paying the notes on upside-down residences. I don’t have the link on that either, but I believe I’m paraphrasing Wachovia’s chief economist, IIRC.
It’s going to get a lot worse before it get’s better. Plan accordingly.
Good luck to all,
-John
Read the study before you’re so quick to dismiss it. It compares apples to apples, which makes the conclusion all the more relevant. No NAR drivel, CEPR doesn’t have a dog in this fight. They used non-biased numbers from the Census Bureau and HUD, amongst other government entities. Don’t fear the data.
I find it comedic that sellers and Realtors™ think that a 30-50% decline, following a 100% run-up in prices over 4-5 years, is somehow impossible. Then again, if you listened to Realtors™, you’d believe that prices never go down. I guess that tag-line went to the scrap heap as I have all but stopped hearing it. We know it goes down – now everyone knows – and go down more it will.
It’s not just sub-prime anymore, Pat. Prime borrowers are getting in on the jingle-mail act.
Anyone who purchased in 2005 or 2006 is a risk to walk away. The worst part? There is absolutely no correlation between credit score and the willingness of borrowers to continue paying the notes on upside-down residences. I don’t have the link on that either, but I believe I’m paraphrasing Wachovia’s chief economist, IIRC.
It’s going to get a lot worse before it get’s better. Plan accordingly.
Good luck to all,
-John
Patrick,
Both Buyer and Seller, 60563
I'd like to see that $944 rental....probably 500sq ft. Not too many places at that price point in desirable areas.
John likes to flash the stats that all newspaper love to front page.....FORECLOSURES UP 50%, HOMESTARTS LOWEST IN 17 YEARS, etc.
I dont have the source or line...but it goes something like 90% of mortgage ARE NOT subprime and 85% of those that are subprime are PAYING ON TIME. Further, 30% or so of the housing market does not even involve mortgages.
Further, all thes housing start stats are POSITIVE. If we saw housing starts going up - it would be awful news for the housing market. Less housing starts begins to bring the market into balance by lessening the amount of inventory coming online.
So while I agree, the market is slow and down, you are simply not going to get a $650k place in Lincoln Square for $375k two years from now. Prices DO NOT have tons of room to fall (with the exception of SoCal).
John likes to flash the stats that all newspaper love to front page.....FORECLOSURES UP 50%, HOMESTARTS LOWEST IN 17 YEARS, etc.
I dont have the source or line...but it goes something like 90% of mortgage ARE NOT subprime and 85% of those that are subprime are PAYING ON TIME. Further, 30% or so of the housing market does not even involve mortgages.
Further, all thes housing start stats are POSITIVE. If we saw housing starts going up - it would be awful news for the housing market. Less housing starts begins to bring the market into balance by lessening the amount of inventory coming online.
So while I agree, the market is slow and down, you are simply not going to get a $650k place in Lincoln Square for $375k two years from now. Prices DO NOT have tons of room to fall (with the exception of SoCal).
John the Bruce,
Home Buyer, Connecticut
Tman,
That's a great story in your profile. It brought back some memories of my Grandfather - thanks.
God Bless,
-John
That's a great story in your profile. It brought back some memories of my Grandfather - thanks.
God Bless,
-John
Brian Johnson,
Agent, Chicago, IL
I'd say renting is probably you're best bet for a short-term situation as it's unpredictable what sort of return you'll get on your investment -- that is, unless you're willing to buy a fixer and put some money and/or time into it. If that's your plan then certainly start looking now.
As for pricing, every home is different. You'll need to determine the market value of a home in the neighborhood you're looking in and determine an offer price based on that. That being said, I'd have an agent run you off a list of homes meeting your criteria that have closed in the past 12 months and use that as a guide to what price the property you're looking for SHOULD be listed at. As they say, real estate is local, so there is no tried and true percentage that will work for every neighborhood in every city. I usually start my first search to about 5%-10% higher than your upper limit just to include things on the shoulder of your max, but once you get down to the nitty gritty, it's all about what the comps in the area have sold for recently.
As for pricing, every home is different. You'll need to determine the market value of a home in the neighborhood you're looking in and determine an offer price based on that. That being said, I'd have an agent run you off a list of homes meeting your criteria that have closed in the past 12 months and use that as a guide to what price the property you're looking for SHOULD be listed at. As they say, real estate is local, so there is no tried and true percentage that will work for every neighborhood in every city. I usually start my first search to about 5%-10% higher than your upper limit just to include things on the shoulder of your max, but once you get down to the nitty gritty, it's all about what the comps in the area have sold for recently.
Kelli Geddeis,
Agent, 33948
Ryan,
Although I spend alot of time in Rockford, I live and work as a professional realtor here in Florida. IF the market is doing the same up there (albeit not quite so sharply) as it is here, your best bet is to contact a professional realtor there and ask the questions you have. They can run statistics on their MLS system telling you what the average sale to listing price is - that will give you the best idea of how much of a drop listing prices are taking when selling. Although not always a guarantee the days on the market can give you some insight too - if it has been on the market longer than the average days and they have made no reductions or very little that is an indication that the seller may not be that motivated to move off of their price. If you were to find one that has been on the market a while with many reductions - that seller appears to be more motivated to move it. It is not unusal in our market here to see homes selling at appx 10% below asking price which, given your scenario above, would mean looking up to $650,000 with the hopes of buying around $600,000. Having said all that it would still be your best bet to contact a local professional realtor to provide you with this information, if they won't - find another realtor - that is our job!! If you have any interest in being referred to someone in that area you can reply back to me(check my profile) and I would be happy to do so. Remember aside from the above advise - when you buy a home it should be one you love and that feels right the first time you walk in - then you determine the value to you!! Good Luck!!
Although I spend alot of time in Rockford, I live and work as a professional realtor here in Florida. IF the market is doing the same up there (albeit not quite so sharply) as it is here, your best bet is to contact a professional realtor there and ask the questions you have. They can run statistics on their MLS system telling you what the average sale to listing price is - that will give you the best idea of how much of a drop listing prices are taking when selling. Although not always a guarantee the days on the market can give you some insight too - if it has been on the market longer than the average days and they have made no reductions or very little that is an indication that the seller may not be that motivated to move off of their price. If you were to find one that has been on the market a while with many reductions - that seller appears to be more motivated to move it. It is not unusal in our market here to see homes selling at appx 10% below asking price which, given your scenario above, would mean looking up to $650,000 with the hopes of buying around $600,000. Having said all that it would still be your best bet to contact a local professional realtor to provide you with this information, if they won't - find another realtor - that is our job!! If you have any interest in being referred to someone in that area you can reply back to me(check my profile) and I would be happy to do so. Remember aside from the above advise - when you buy a home it should be one you love and that feels right the first time you walk in - then you determine the value to you!! Good Luck!!
Richard,
Agent, Dallas County, TX
How much can I reasonably expect a list price to fall during negotiations?
Every transaction will be different, so that's a difficult question to answer. Keep in mind some homes are overpriced to begin with, others are listed for a quick sale.
Every transaction will be different, so that's a difficult question to answer. Keep in mind some homes are overpriced to begin with, others are listed for a quick sale.
Ruthless,
Just Looking, 60558
Ryan:
I'm posting here because I am sure that you had to remove your profile and email contact (if you ever had it listed) as a result of your other question that has rocked the world of Trulia. I am NOT a real estate agent. I WAS over a decade ago in NC for only one year before I was "run out of town" for "stealing food from their babies mouths" because I was a skilled and knowledgeable Northerner who refused to tow the local line.
I also spent about 6 months in 2006 attempting to do the foreclosure real estate investing in the Chicagoland area. Luckily, I never won one of those foreclosure bids. I have been extremely successful in the past 20 years with FSBOs, "as-is" properties AND using Realtors in the Chicagoland area. I am a Top Voice on Trulia and believe I have earned the respect Realtors, consumers, observers and angry anti-Realtor terrorists alike. I am currently "in a pickle" with a bad real estate INVESTMENT as well as a positive cash flow Michigan 2-Flat rental. My husband wants to BUY MORE rental property because aside from our ONE bad investment, the positives out weigh the negatives. Our past 20 years as everyday consumers buying and selling our own homes and fixing them up has been extremely rewarding allowing us to have a better life than our "real job" paychecks would allow. My father died a multi-millionaire because he started as a builder and became a real estate developer without ever having a real estate license.
Sorry to give so much history, I'll get to the point now. Please read my profile and contact me. I would like to give you some perspective. If you do not want to, let me simply say - it will almost NEVER be a good time to buy IF YOU ARE ANGRY. It will almost ALWAYS be a good time to buy if that is the dream you want to achieve and you have good logic and council.
What provoked me to want to talk with you (via email, phone or in person), was your post (currently on page 3 of the other question) starting with "I hope Trulia never shuts down this thread." Can you believe you received 10 TUs and not one TD on that post? Can you believe that YOU who has only asked 2 questions and answered only 6 has received 131 TUs? You are experiencing an awakening or rebirth when it comes to your own personal beliefs as well as anger toward the establishment feeding you lies. I have been there. I'd like to help. I would not be offering this to someone who wasn't moving to the Chicagoland area as it relates to more than just real estate.
Sincerely,
Ruth
I'm posting here because I am sure that you had to remove your profile and email contact (if you ever had it listed) as a result of your other question that has rocked the world of Trulia. I am NOT a real estate agent. I WAS over a decade ago in NC for only one year before I was "run out of town" for "stealing food from their babies mouths" because I was a skilled and knowledgeable Northerner who refused to tow the local line.
I also spent about 6 months in 2006 attempting to do the foreclosure real estate investing in the Chicagoland area. Luckily, I never won one of those foreclosure bids. I have been extremely successful in the past 20 years with FSBOs, "as-is" properties AND using Realtors in the Chicagoland area. I am a Top Voice on Trulia and believe I have earned the respect Realtors, consumers, observers and angry anti-Realtor terrorists alike. I am currently "in a pickle" with a bad real estate INVESTMENT as well as a positive cash flow Michigan 2-Flat rental. My husband wants to BUY MORE rental property because aside from our ONE bad investment, the positives out weigh the negatives. Our past 20 years as everyday consumers buying and selling our own homes and fixing them up has been extremely rewarding allowing us to have a better life than our "real job" paychecks would allow. My father died a multi-millionaire because he started as a builder and became a real estate developer without ever having a real estate license.
Sorry to give so much history, I'll get to the point now. Please read my profile and contact me. I would like to give you some perspective. If you do not want to, let me simply say - it will almost NEVER be a good time to buy IF YOU ARE ANGRY. It will almost ALWAYS be a good time to buy if that is the dream you want to achieve and you have good logic and council.
What provoked me to want to talk with you (via email, phone or in person), was your post (currently on page 3 of the other question) starting with "I hope Trulia never shuts down this thread." Can you believe you received 10 TUs and not one TD on that post? Can you believe that YOU who has only asked 2 questions and answered only 6 has received 131 TUs? You are experiencing an awakening or rebirth when it comes to your own personal beliefs as well as anger toward the establishment feeding you lies. I have been there. I'd like to help. I would not be offering this to someone who wasn't moving to the Chicagoland area as it relates to more than just real estate.
Sincerely,
Ruth
MVP'08
Ken Dooley CIPS, ABR, TRC,
Agent, Chicago, IL
Ryan,
The 3 areas that you're interested in appeal to a number of buyers. Based on land value, the exact same house built on a standard 25 x 125 lot in Roscoe Village will be more expensive than North Center which in turn is more expensive than Lincoln Square. Not knowing your exact requirements other than price, it's difficult to guide you but I can say whether it's a condo a townhouse or a single family home, you'll have more to choose from as you move further north from Roscoe Village.
Nobody knows where the market in general is going but I can tell you that buyers and sellers are actively doing deals in Chicago irrespective of the cloud that currently hangs over real estate. Some buyers need more space than what they currently have, some are relocating into the city due to a job transfer, whilst others have decided to stop paying someone else's mortgage in the form of rent. These buyers have the means to buy and are comfortable buying. Yes, some people are in over their heads and localised horror stories do exist but overall sellers aren't selling because prices are going down just as plenty of owners didn't sell when prices were going up. They're selling and buying to meet their current needs.
The first signs of stability are starting to emerge with Wall street reporting better than expected earnings in the first quarter, a stimulus package from Washington, increases in loan guarantee limits by Fannie Mae and Fredie Mac and not least the billions that have been pumped into the financial system to control the worldwide credit crunch. The unravelling of sub-prime and the mess created was due to inflation and the Feds desire to control it. The resulting problems whilst not dealt with immediately have since been eased with unprecedented support from the Fed and world central banks to prevent a financial meltdown. In short, a lot of people are now working to put things back on track. If banks are confident to lend, a stronger economy and all that goes with it should emerge.
Based on the time it takes to gather all the stats, the economy is often coming out of a recession by the time economists actualy call it one. The same can be true for housing in that the bottom is often long gone by the time people realise it. It's worth pointing out that even though Foreclosures are up 57%, there were still plenty of Foreclosures when the economy was firing on all cylinders. It didn't grab the headlines then as it does now but it happens even in the good times!!!
If I were you I'd check out each of the three neighborhoods and buy a home that works for you. Each seller is different but if they truly want to sell, they should be looking at the same general market stats to price their home as you would use when buying their home. If the sellers feel they've priced accordingly, are getting good traffic and are seeing sales in and around their price, don't expect them to hand over the keys without a fight. Alternatively, if they're unrealistic and asking too much, write up an offer and see where it goes.
Best of luck, Ken.
The 3 areas that you're interested in appeal to a number of buyers. Based on land value, the exact same house built on a standard 25 x 125 lot in Roscoe Village will be more expensive than North Center which in turn is more expensive than Lincoln Square. Not knowing your exact requirements other than price, it's difficult to guide you but I can say whether it's a condo a townhouse or a single family home, you'll have more to choose from as you move further north from Roscoe Village.
Nobody knows where the market in general is going but I can tell you that buyers and sellers are actively doing deals in Chicago irrespective of the cloud that currently hangs over real estate. Some buyers need more space than what they currently have, some are relocating into the city due to a job transfer, whilst others have decided to stop paying someone else's mortgage in the form of rent. These buyers have the means to buy and are comfortable buying. Yes, some people are in over their heads and localised horror stories do exist but overall sellers aren't selling because prices are going down just as plenty of owners didn't sell when prices were going up. They're selling and buying to meet their current needs.
The first signs of stability are starting to emerge with Wall street reporting better than expected earnings in the first quarter, a stimulus package from Washington, increases in loan guarantee limits by Fannie Mae and Fredie Mac and not least the billions that have been pumped into the financial system to control the worldwide credit crunch. The unravelling of sub-prime and the mess created was due to inflation and the Feds desire to control it. The resulting problems whilst not dealt with immediately have since been eased with unprecedented support from the Fed and world central banks to prevent a financial meltdown. In short, a lot of people are now working to put things back on track. If banks are confident to lend, a stronger economy and all that goes with it should emerge.
Based on the time it takes to gather all the stats, the economy is often coming out of a recession by the time economists actualy call it one. The same can be true for housing in that the bottom is often long gone by the time people realise it. It's worth pointing out that even though Foreclosures are up 57%, there were still plenty of Foreclosures when the economy was firing on all cylinders. It didn't grab the headlines then as it does now but it happens even in the good times!!!
If I were you I'd check out each of the three neighborhoods and buy a home that works for you. Each seller is different but if they truly want to sell, they should be looking at the same general market stats to price their home as you would use when buying their home. If the sellers feel they've priced accordingly, are getting good traffic and are seeing sales in and around their price, don't expect them to hand over the keys without a fight. Alternatively, if they're unrealistic and asking too much, write up an offer and see where it goes.
Best of luck, Ken.
Web Reference: http://www.KDRchicago.com
Kelli Geddeis,
Agent, 33948
The truth in real estate is that a home is worth what a buyer is willing to spend. How much a list price will fall during negotations is based on the seller's motivation, of which you are usually not fully aware. Start at an asking price you are comfortable with and then have your agent check on how many days that home has been on the market. That will not guarantee they will come down more than another, but if they are truly wanting to sell then they have to consider all offers. The other side of that coin is (not in all cases) but if it's been on the market more than the average days on market, they aren't willing to be realistic about what homes are selling for in their area. It is up to your agent to help you determine what homes in the area have been selling for but that doesn't mean you ca offer below that "average" number. It has to be your financial comfort level and what the value of the home is to you and your family. That can be a number above or below what is currently selling.
It will vary from home to home. When you find the right home have your Realtor determine what the current value of that home is right now based on similar sales in the area.
Web Reference: http://www.nilhomeseller.com
