these are just averages, though. some locations will drop more (40%-50% anyone?) while others will drop less, or maybe not even drop at all...(yeah right)
Let's start with the two, very general types of real estate, residential and commercial.
In my view, residential properties, from condos to large multifamily apartment buildings are affected by the overall need for housing. Housing is a need that every human being has, and is subject to the supply of housing vs. the demand. Housing need, thus far, does not seem to have decreased in Chicago. How people are resolving their need for housing has shifted. A lack of mortgage products and a lack of consumer confidence (generated by declining home prices and economic conditions) has pushed would be home buyers into renting. The cost of renting in most areas appears to have increased (anecdotally), while the cost of buying has defiantly decreased. It is my opinion that now the after tax cost of buying is lower than renting in many areas. It's hard to believe that prices will continue to fall in these areas if mortgage products to help finance buyers continue become more available and cheaper. It doesn't make sense to rent for more than it cost to own. If the cost of renting goes down, there's the risk. For large residential investment properties, many property owners have had to sell because of various reasons (need for liquidity, no financing alternatives, etc.) I'm working with a few investors that are seeing larger cash flow and better cap rates on large residential buildings available to them on the market. For them, it's a great time to buy.
In short, at some point it makes sense to buy to fill a housing need and buy real estate for investment purposes.
Commercial real estate is not my forte, but is subject to larger economic variables. As rents for retail and commercial space decline with poorer consumer spending, the value of the asset will also decline. I'm not sure where this is heading, but right now it doesn't look great.
I certainly wish you the best of luck. I would encourage you to look at your alternatives and decide what is best for you. I also noticed that you indicated you are a seller and a buyer. Think of it this way. When you sell in this market, you may not get as much as you'd like, but how much of a deal will you get when you buy?
Also of note, buyers are getting more comfortable with short sales and foreclosures. Realtors are getting used to the common nature of this transaction. It used to be, very recently, that short sales and foreclosures would scare off would be buyers. Now buyers are moving forward with these sales and the stigma is diminishing. The market will become balanced at some point. The question is when.
Another point, while there are certainly many "bottom feeders" out there taking advantage of owners in distress, it is my experience (35 years worth) that the better properties are not the ones to be foreclosed on.
If your looking for a home for yourself, or a nice "2nd home", rather than just any old distressed property,
chasing foreclosures might not be the best strategy.
I have found that market conditions have clarified the minds of most sellers, and they have taken the fat out of their pricing and are willing to make resonable concessions in price or terms.
The best place to start with pricing in 2009 begins in January, and in real estate parlance January is now.
I have several properties that we listed in the past week. In past years we would have waited until the first week or so of January to come to market. However, because of a general uptick in activity after the election, it was critical to take advantage of any degree of momentum. The result has been, has been the case through the entire year, that right-priced properties are getting showings and ultimately offers.
What does this mean with respect to pricing? I and my professional colleagues are predicating our list prices on exacting comparable market analyses that reflect specific location and specific timing guidelines. In general this works out to be within a half mile and within the last three months. There will be deviations from this, but this tends to be the manner in which properties are appraised.
It is so critical to bear in mind the insularity of the Chicago urban market. This is neither Miami nor Las Vegas, and so as a result we have not had profane surges (and subsequent collapses). And while one respondent proffered that you wait for foreclosures and short sales, what he failed to put on the table is the fact that more than half of foreclosed properties are in states that end with the letter "a." California, Florida, Arizona, and Nevada.
If you have the capacity to adhere to Warren Buffett's advice to act with greed in times of desperation, now is the time to do so in these locations. Chicago, in the meantime, has not been so sorely affected. If anything the recent election of a Chicagoan and the prospect of the Olympics in the not-so-distant future are very positive harbingers for our local housing market.
In terms of an exact timeline... nobody will put a rosy hue on the current economic mess but a so-called re-calibration of the housing market may take place mid-year 2009 to the third quarter. Rates likely will remain subdued and perhaps a stimulation of the economy may be triggered by then
Time will tell. At the end of the day your journey will be best guided by a real estate professional who is conversant with the topics alluded to above.
And, sorry, I do not have any upcoming options at 1250 Dearborn. Feel free to contact me through my profile.
I too, have a Crystal ball like all these Realtors. It's safe to say that with more lay offs in store and a potential 1.5 million auto workers who could possibly lose their jobs that housing WILL go down another 10-20% in 2009 and who knows when it will hit the bottom.
If your buying, and have patients, then stick with buying a foreclosure or shortsale which you can pick up for 20-50% below current market price.
Got to run...closing at 1:00 today on a nice foreclosure that I am picking up for .60 on the dollar!
Generally prices are expected to continue to drop this year. Important to not is since real estate is regional....some areas may not drop, others may drop slightly, while some may decline greatly.
While them price decline for 2008 was in the 30% range, we have been told by economists to expect this years adjustment to be far less.....in the range of 10%.
Our advice to our potential buyers this year will be to buy now but make your best deal that includes consideration for this decline.
We think that everyone is waiting to see what happens during the Spring market (which begins in January). In years past, home prices go up during the Spring market, but in a declining market, do the same rulesapply?
Sorry not to have a more definitive answer for you. If you are interested in buying a home, this time of year is typically a great time to purchase. Good luck!
But if your a buyer, the trick is not necessarily to hold out for the absolute bottom, or you may get caught short by an upswing.
We have a confluence of a lot of inventory to choose from, and historically low rates, and since real estate is a "long term" investment is it really necessary to get the "rock bottom" price if your getting a nice property--as opposed to any old deal--at a decent price and low rates? If you hold for 7 to 10 years or more, you will do well.
But then, I'm a realor!