I am expecting prices to continue to decline over the next several months, for the following reasons:
- the tax credits are GONE
- credit is VERY tight - the banks are making it more and more difficult to qualify for a mortgage. Even people that are pre-approved for financing are having difficulties getting to the closing table!
- while the first wave of foreclosed properties have mostly been sold (these were properties bought by people that really couldn't afford them - the "toxic" mortgages) there is another wave of foreclosures and short sales in the works. These are people that lost their jobs and haven't been able to pay their mortgage for 12 or more months.
All of the above factors will cause prices to decline further. Even without the above factors there is still a high number of homes for sale in relation to the number of homes that are selling, In other words the supply exceeds demand - this means that prices will fall.
For more information, please check out my blog where I provide regular market updates and information on relevant topics such as short sales, financing your home, going green and more: http://www.ChicagoNorthShore.typepad.com. (No ads on my blog!!)
in increasing market time and lower sales prices for many homes. The slowdown
accelerated in 2007, while sales in 2008 fell even more dramatically. The number of
transactions recovered somewhat in 2009 and accelerated in 2010 and 2011. The
recovery has generally continued and, more importantly, strengthened in 2012.
Now, let's look at prices: the median sale price in 2009 was $501,500 and this year's median sale price has been $460,000. A huge difference. The average sale price last year was $623,591 vs. this year's average sale price of $605,928.
So, many more homes have sold in the first 5 months of 2010 than 2009, however, prices have dropped drastically. There could be a few reasons: first of all, the home buyer's tax credit certainly must have something to do with the increase in sales. As for the reduction in prices, well, this illustrates that the housing market is still dropping. I think that in many cases, home sellers have realized that, if they truly want to sell their homes and move on, they have to get realistic about what their home is worth, and sell for what the market brings them.
Prices are also still depreciating due to the large number of distressed properties. These short sales and foreclosures are REAL, and they affect your home's value. A seller is totally beholden to the appraiser, and the appraiser is, in many cases, using these distressed properties as comps, since in many cases, that's all that's out there. So, home values are being forced down. It's taken a while for these prices to reach these low levels; it's going to take a while for them to climb back up...it's like losing your preganancy weight - it took 'ya 9 months to put on those 60 pounds, it's gonna take at least that to work them off!
So, that's the Highland Park, IL housing market in a nutshell! More questions? Contact me any time at Stephanie.Hofman@cbexchange.com or 847-652-1902!
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