Home Buying in Highland Park>Question Details

Starting From…, Home Buyer in New York, NY

Why are prices on high end homes in Northbrook & Highland Park not adjusting, I note they have been on the market over 6 months..The inventory is

Asked by Starting From Scratch, New York, NY Thu Dec 3, 2009

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Anna Brocco’s answer
A home is worth what someone is willing to pay for it; it doesn’t matter what the seller “needs” or potential buyers can afford to spend. Market conditions do matter as does the immediacy for a transaction to take place. Unfortunately some people haven't arrived at that conclusion yet.
1 vote Thank Flag Link Mon Dec 14, 2009
BEST ANSWER
One big reason is many of the homes listed were bought or built during the bubble. That means sellers are going to have to take a loss to sell at market price.

If you look at the listings on this site or on Redfin, you can see what they last sold for and when. At least in Highland Park (and I suspect most suburbs around here), the majority of the listings were last purchased or built between 2001-2007. Bubble. Bubble. Bubble.

Currently, selling prices seem to be around the 2003 level. Now add in 6% in agent fees. Other selling fees. And, uh, think about how many "owners" took out HELOC's, used 0% down or took out Option ARM loans that allowed them to pay less than the interest owned (while the loan balance increased).

These are not listing prices. These are prayers. The North Shore is full of sinking Titanics. The "owners" can't afford to lower their prices. It's not uncommon to see the most stubborn listing prices of this year become the short sales and foreclosures of next year.

I have heard-- off the record, of course-- a very surprising number of "owners" have paid NOTHING on their fine homes in YEARS and are still living in them. The industry person who confided this was not speaking of low-end homes, they were telling the dirty secret of the high end ones.

Why?

The banks are probably horrified of what will happen to all their the high-end loans if the market for luxury homes suddenly tanks. So they're not foreclosing. Taking a hit on a twenty $200k loans gone bad is one thing. Take a hit on forty six figure houses is another thing entirely. I've already seen newly built Sheridan Road luxury homes-- still empty-- go to foreclosure auction. The banks have to pace this out or their losses will be even greater.

Shall I go on? On November 19, Lake County published the list of homes to be auctioned for back taxes. The list was very long and high end north shore homes were well represented. Luxury homes in tax sales. That says it all.

If you are not familiar with what is predicted to happen to high end homes nationwide with the coming recasts and resets of Option ARM loans, I suggest you do some research. Until the prices shake out, I wouldn't touch a north shore house with a ten foot pole. We got here a couple of years ago with money to buy. 27% later, we're renting till things stabilize.

Warren Buffet said, "It's only when the tide goes out that you learn who's been swimming naked." As the Option ARM crisis unfolds, I suspect the shores of Lake Michigan will be known for nude beaches.

Caveat emptor.
1 vote Thank Flag Link Mon Dec 14, 2009
The simple answer is seller motivation. Motivated people sell their homes, unmotivated people list their homes.
Web Reference: http://www.realtyfreak.com
1 vote Thank Flag Link Thu Dec 3, 2009
Believe it or not the price have come down, but many sellers are still not realistic with their pricing. In 2008 the average list price in those areas was 1.16 Million. Homes listed today in those areas is now $815k. That's a $300,000 drop in listing price. The average sales price has also dropped by 27% in the same time period. Builders I work with in that area have been dropping their prices by similar amounts in the last year or two. That said, many sellers still aren't realistic and their homes are sitting there, many times vacant. Sometimes it takes a realistic offer being placed on their home in order for them to come down to Earth on pricing and the current market. I have a list of motivated sellers of homes between $750,000 and $1.5M in Highland Park and Northbrook. Is there a place I can e-mail it?

Thanks,
Mike

p.s. I work with a lender who has amazing new Jumbo loans available.
1 vote Thank Flag Link Thu Dec 3, 2009
Hi starting from scratch,
It is not unusual in these times for a home to be on the mkt for over 6mos. Maybe you can send me some more information on the areas of these towns you are looking in.What exactly r you considering "high end"? Both are very, very nice suburbs, but there might be some more that may be of interest as well? Deerfield? Are you relocating from New York? I am a native New Yorker myself. Long Island.
If you would like some more specific information pls feel free to call or e-mail me. You can reach me directly at 847-277-8415. And thanks for your question.
1 vote Thank Flag Link Thu Dec 3, 2009
I agree with the over saturated market in Northbrook and Highland Park. I actually live in Northbrook and some sellers tend to lower their listing prices after so many months without receiving any offers, others are confident with no motivation to sell unless a certain price point is met. Some may owe more than the worth of their home and is not willing to take a loss.

As far as realtors goes, most SHOULD be able to show you, in black and white, comparable sold properties and pricing trends in the area. These figures should provide the facts you need when putting an offer together. Talk to a few and see which ones stand apart from the rest. With that said, Ill put my name into the hat.

Good Luck in your search!

Cherrie Catama
Newman Realty
cherrie@newmanrealtyillinois.com
0 votes Thank Flag Link Fri Dec 4, 2009
Interview a few before u make a decision. I'm sure you know this already.
Thanks. Coleen
coleen.grenier@bairdwarner.com
0 votes Thank Flag Link Thu Dec 3, 2009
I think you just answered your own question about what someone relocating needs in an agent.

I live in Highland Park and I would love to interview for the job of being your agent. Here is a link to my bio: http://www.endeavorrealty.com/downloads/Articles_12320091225…
0 votes Thank Flag Link Thu Dec 3, 2009
I am looking for a realtor, an assertive, well trained buyer's agent who understands how to analyze and utilize comps, pricing trends...is not afraid to put in good faith offers at realistic prices and advocate on client's part.
0 votes Thank Flag Link Thu Dec 3, 2009
I saw a home 6 months ago in Northbrook...it was listed just under $900,000 the realtor said it was listed to sell and would sell quickly. They bought the home a few years before at around $500 and did work. I said it would sell for around $600. The realtor said the Chicago market was healthier than the New York market...REALLY? It is now listed for low $600's. How can a relocating client feel confident putting in an offer a market w/so much inventory?
0 votes Thank Flag Link Thu Dec 3, 2009
A few are probably turning down offers but properties that are grossly overpriced tend not to get offers.

Consider the home buying process; home buyers will search the market for homes that meet a set of criteria. When they find a property that meets most of that criteria AND they FEEL they can't get the same for less by continuing their search, they will make an offer.

Even if a home meets most of the criteria of a buyer, the buyer will continue to look if they feel that home is available for less someplace else (and it usually is).
0 votes Thank Flag Link Thu Dec 3, 2009
These listings maybe getting offers. No way to find out unless, maybe you get yourself a good buying agent.:)
0 votes Thank Flag Link Thu Dec 3, 2009
so...are these listings getting offers that they are turning down...or are they not getting offers?
0 votes Thank Flag Link Thu Dec 3, 2009
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