I've been monitoring our MLS activity (MLSNI, which is the primary MLS service in the Chicagoland area), and our total sales were way down in 2007 (to around 98,000 transactions) which is about as low as any time in the prior 10 years or so. The highest was in 2005 where we had roughly 140,000+ transactions (I'm talking just about single family detached homes and attached units like condos, townhomes, duplexes, quads, etc.).
Currently there are about 95,000 homes (and townhomes, etc.) on the market. About 6 months ago we had more like 135,000 homes for sale...so inventory has dropped considerably, though at roughly 95,000 homes, we still have about a year's worth of inventory to move. More and more of them are foreclosures and pre-foreclosures, which CAN represent a great savings....though not necessarily. In addition, many, many sellers have become "believers" that the seller's market of 2 years ago is long gone, and are repeatedly dropping their prices to attract buyer activity. There are good deals to be had.
The question always becomes "why are you buying"....is it for investment potential, or is it because you want a "home". Obviously, we all want our home to be a good investment...and of course you should take precautions in your selection not to purchase in declining areas (drive up and down the streets....are the homes well cared for as a rule, or does the area look tattered and neglected). If the homes in the area are generally well cared for, that should reflect well on the home you're interested in as well.
Also pay attention to the basics....like floorplan, location, etc. Location means things like does it back to high tension wires, or a water tower, or a highway, or train tracks? Or does it back to forest preserve, pond, golf course. And if there is a pond, how high above water level is it. If there's a golf course...is the house in the "line of fire" for stray balls. You need to consider all of those things, too.
But if you find a property you like, and you like the area, and the floorplan makes sense for your lifestyle (and for resale potential), and you've done your due-diligance about recent market activity, pricing, seller concessions....and you anticipate being in the house for several years (to endure what might continue to be a steady downturn for the next couple of years), housing is still a great investment! If you are not selling your home at a given point in time, the "downturn" is only on paper...during which you are still able to benefit from the tax benefits of home ownership!
Good luck in your search
Truth is: there are deals to be had now. But rather than freak out about whether or not you are buying into a depreciating asset (because - who knows for sure?), plan ahead by realistically anticipating a possible further decline in the market (yes, there are more foreclosures to come - these do drive down prices). Do this by planning to hold at least several years, buy smart (love it enough to live there for a while, make sure there are desirable amenities that another buyer would want in the future, consider any unfixable negatives as they are forever attached to the property) with future resale in mind, don't pay top dollar unless the asking price is adjusted to today's market; if it IS adjusted to today's market and even below, be careful of getting too greedy. Instead, if you've done your homework, and the numbers look right, grab the opportunity.
How will you know what's right and what isn't financially? First of all, trust your gut. Along with that, have cold hard data at your hand to support your gut feeling. Careful monitoring of recent activity with the help of a resourceful and watchful agent will help you feel more confident that the move you are making is the right one for you.
Click on the link provided, scroll down and click on a link called:
"December 26, 2007: Historical Values"
This will download an excel spreadsheet with the historical values of the S&P Case Shiller index for as along as the index has been tracked, for the 20 largest US metro markets.
The index is tracked monthly, with the value of the index for the pre-previous month available on the last Tuesday (i.e., on Dec 27th, the values for October came out). In late January, the values for November will come out.
Here are values for San Diego and Chicago for the past few months:
Month SD, CA Chi, IL
November 2005 250.34 162.44
December 2005 248.55 163.16
January 2006 247.46 163.98
February 2006 247.89 164.67
March 2006 248.09 164.89
April 2006 249.35 165.58
May 2006 249.15 166.61
June 2006 249.60 167.10
July 2006 249.05 167.57
August 2006 247.30 167.99
September 2006 246.60 168.60
October 2006 244.04 168.59
November 2006 242.11 168.18
December 2006 238.07 167.65
January 2007 237.16 167.52
February 2007 235.54 167.49
March 2007 233.28 167.04
April 2007 232.64 165.87
May 2007 231.80 165.68
June 2007 231.37 165.94
July 2007 229.67 166.13
August 2007 226.73 165.77
September 2007 222.82 164.42
October 2007 217.02 163.12
BTW, all the markets were normalized to 100 on Jan 2000, i.e. 100 in SD is not the same as 100 in Chi in absolute terms, but the returns, i.e. change from previous month should be comparable.
Your local RE associations might provide data that is more recent, i.e. you might be able to get sales price data for Nov and Dec well before the Case Shiller index for that months comes out.
Is waiting a smart move? I don't know - that's up to you to decide.
A couple of questions you may wish to consider as you prepare to find a condo -
where do you wish to live (specific neighborhood),
what size home do you desire, and
what is your price point?
Sure, there is a plethora of places currently on the market. But typically no matter what your price point there will be about 5-7 places on the market that truly match your criteria. That may not be the experience of other brokers, but that's mine whether my clients are looking at $400k condos or seven figure single families. As this is my experience it colors my response to you - when you find what you want be prepared to make a fair value offer.
Today's market has more than a few buyers trying to find steals. And yes their are steals to be had as the increase in short sales and bank-owned properties indicates. However, the average seller isn't so different from you or me. Again, speaking from personal experience - my selling clients are interested in moving on to their next residence. BUT they aren't going to commit to making an offer on a property until we negotiate the sale of their current residences. Since these sellers are not desperate we are willing and set to wait until our commodity receives a fair value contract. I am sure you can empathize if you were selling a property.
As far as how Chicago compares to other markets - we are similar in that we have experienced sluggishness in 2007 and parts of 2006. Like other markets we have an inundation of units on the market and longer market times . Where we differ, though, is that Chicago never had outrageous "value" gains that precipitated a devastating decline. In truth, though the death knell of the market has been sounded prices in Chicago rose in 2007.
Finally, you are the best source with respect to your question. The one thing that troubles me with respect to today's environment is the overall economy and how it relates to individual job security. Knowing your specific circumstances, if you are ready to move forward do so with the understanding that you seek a good match for you. And once you find it, whether it's today or in June, move forward judiciously toward making it your new home.
Best of luck.
Good luck in your decision...
You just described to the T what I just spent the last year doing after moving up here from CA. You are so right about every neighborhood being different. I finnaly pulled the trigger and landed a deal on an investment property that will be turned into a rental in a great area. I'm happy to brag that I got it 30k under the comps and 25k under the last sold townhouse in the division.
Chicagoland has pleanty of deals. You just have to be patient and search them out. It would help if sellers were more realistic with the pricing, but I am seeing more price drops than new properties going on the market so who knows what's going to happen.
"The Case-Shiller Index shows that San Diego home prices fell 7.8 percent between November 2005 and July 2007, the most recent data available. Toscano estimates that the index continued to decline through September, but not as sharply as the median. Neither Case-Shiller nor the median tell the whole story about home prices, because they don't adjust for inflation, he said.
After adjusting for inflation, San Diego homes have lost roughly 13 percent of their value since July 2005, Toscano said."
You can read the whole article here:
Like you, I am in the market to buy here in the Chicago area. I moved up here from CA in the fall of 2006 and am looking for investment properties. Although Chicago did not see the big gains in property values like CA, they did see a significant amount of gain and as they say "What goes up, goes down". Prices in the Chicagoland have come down a little but I find that the sellers are still holding out as if their property is still worth the same for what the "Jones" sold for a year ago.
The Realtors I find, seem to believe that the purchasing price needs to be within 3% of the asking price. Thats all fine if the property is priced correctly.
I have pulled the trigger on 4 properties with offers that were within 3% of the asking price only to get out bid by another buyer paying not only full price, but a little over (I'm guessing the over amount is being credited back to the buyer at closing).
Now that I look back at these 4 properties I realize that they were priced 5-10% under market and I should have gone at it at the full asking price or closer which was under the market to start with.
I am currently making an offer ( All Cash, thinking that will entice the seller) on a townhouse in the Shaumburg area. The propoerty is owned by a Relocation company so the emotion of the seller is not a factor. The price has just dropped $20k under the comps so I made the all cash offer within 3K. Now I'm playing the game that selling realtors like to play when they think that they have a serious buyer on the hook by saying "Oh, we just got another offer so give us your final best offer"
My only advice to you is to find a good realtor that will be patient with your search and have them e-mail you the listings that come up so you can start searching. You can do alot of searching on the Internet and not waste anyones time. I do believe that the Chicagoland market is at the cusp of a price correction, although not as severe as CA and FL. If you have the time then take that time to shop. More places will be coming back on the market in Feb and March as the new sales seasons starts up again so you will have more selection.
My suggestion is to begin your search now - if you have a specific area in mind, start looking at properties. I believe the well priced properties will continue to go quickly as I believe there are buyers waiting to find the right property at the right price.
I understand its impossible to predict but as the experts in this field what would your gut feeling tell you? you have seen the highs and lows over the past year and is our market trending upward or continuing downward?