What’s It Like To Be A Chicago Home-Seller These Days?

What’s new in the March stats and trends?  Not much, as the story continues to be that of low inventory and bidding wars on hot, well-priced homes.  While the number of homes for sale in Cook County was up 8% month-over-month, the jump in demand outpaced that of supply, as the number of homes sold increased by 26%.

What’s keeping would-be sellers from unleashing much needed inventory onto the market?  It could be that despite bidding wars driving prices up on individual homes, the price just isn’t right.  Many homeowners, especially those who are under water on their mortgages, are watching the trends in home prices and waiting to start to see a solid upward trend, but seeing prices continue to hover around year-long lows.

So what’s motivating those who are choosing to sell now?  Today’s sellers are the ones who feel most confident in the strength, and particularly the speed of the market.  During the first quarter of the year, 19% of Chicago-area listings sold within three days of their market debut.  If you’ve got a home to sell that’s in good condition, and we price it right, it will go quickly.  So for those looking to make a lot of money on a sale, now might not be the right time for you, but a motivated seller can really benefit from today’s bidding wars.  “Bidding wars can be stressful for sellers too. The last two open houses I held drew more than twenty groups of people and several offers for the sellers to choose from with pressure from the buyers who needed to know soon whether they won the home or should give up and move on,” said Redfin Chicago’s Listing Specialist Jenna Smith. “But today’s sellers tend to have the upper hand, with a choice of buyers and often the privilege of dictating the terms of the sale. In my last sale in Wicker Park, we were clear about the specific settlement date the sellers needed, so all four offers came in with that closing date and identical financing terms, within $2000 of each other. In the end, we went with the highest bidder.”

For a complete picture of the Chicago area market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Chicago-Real-Estate-Market-Report-March-2012.

Case-Shiller: A Brutal Winter for Home Prices

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Chicago area* as of January:

Sixteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between December and January (one less than between November and December): Washington DC joined Phoenix and Miami with an increase. No data was available for Charlotte in January. Oddly, San Francisco had the largest drop at 2.5%.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Chicago’s tiers fell in January. Month to month, the low tier was down 1.9%, the middle tier fell 1.7%, and the high tier decreased 1.8%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Another gain here, with the best January showing since 2006, when 11 markets were increasing.

Read the rest of this entry »

Redfin Brings Transparency to Title, Inspection, Mortgage, Staging

Big news! Today, Redfin Chicago is launching a major expansion to our charter as a technology-powered real estate broker: Redfin Open Book, a local reviews site for lenders, inspectors and title companies.

Later this spring, we’ll add the stagers, landscapers and handymen used by sellers to get their home on the market.

Our goal is to ensure our customers get the best service at every step of a deal, by bringing together the best local team and holding that team accountable for the best result.

The Goal: Better Service
Unlike Angie’s List, Open Book is completely free. And unlike Yelp, it’s completely focused on the folks who serve our customers when buying or selling a home.

There are no kickbacks from anyone we include or recommend. In fact, there’s no revenue model at all for Open Book, not now nor in the foreseeable future.

The goal is simply better customer service. The best real estate agent in any market is good because of her own skills, but also because of her team, and her ability to hold that team’s feet to the fire when a loan or a listing is on the line.

As Redfin’s online traffic and transaction volume grows, our influence over all the folks who provide real estate services grows too. We want that influence to lead to better performance across the board for our customers.

This means that our focus is quality, not quantity. We don’t want to be the phone book, showing every lender or inspector in town. We want to be a reliable guide to the partners you should actually use, in any market we serve.

Today, people mostly take their agent’s recommendation for an inspector or a lender. But we think customer recommendations are important too, in finding an inspector who will tell you when to walk away from a crumbling house, or a lender who will steer you toward a cheaper loan, even if it pays him less.

This is crucial information, which is why Open Book, while intended for our own customers, is available to everyone browsing our site.

Our Advantage: Redfin-Certified Reviews
No one else could build such a reliable reviews site for real estate vendors.

Because we honcho a transaction the whole way through, hundreds of times a month, we know which inspectors and lenders our customers are using. Redfin’s online Deal Room, for tracking who is supposed to do what to close on time, stores information about thousands of vendors in a big database.

And we already survey every customer, deal or no deal, so it’s easy to ask each customer about his lender, inspector or stager. This means that we can validate every review, to avoid the bogus reviews from vendors’ friends and competitors that plague most review sites.

At some point, we’ll probably solicit reviews from the general public, but we’ll always highlight the reviews that came from actual customers, just because we can verify that the customer did in fact use the vendor she’s reviewing.

Our Investment: Redfin-Certified Partners
As with our brokerage, we aren’t just offering technology; we also offer a human touch. The inspectors, lenders and stagers who get the best reviews qualify for an additional level of certification, as Redfin partners.

Redfin has hired a team of former Redfin agents to interview potential partners, briefing each one on Redfin’s mission and our service expectations. We then monitor the partner’s performance. The ones that make the grade are certified as official Redfin partners. In Open Book, a tiny Redfin ribbon appears beside their profiles.

These are the folks our agents are most likely to recommend to our customers.

Over time, we’ll ask each certified partner to deliver premium service to our customers. This may entail attaching digital photos to an inspection report, or offering to refund the inspection fee if an unexpected repair crops up within 60 days of the closing.

We expect to drive plenty of customers toward our partners; if history is any guide, we’ll have to be careful to ensure no one gets overwhelmed.

And of course we’ll also be careful to strike a balance between ensuring our partners build a profitable business, and giving Redfin customers premium service. Inspectors, stagers and lenders who want to apply to be a certified partner can email us at openbook (at) redfin (dot) com.

Markets Launching Today: Boston, Chicago and Seattle
Until today, the reviews had been available only in the Bay Area and Washington DC. Today we expand the service to Boston, Chicago and Seattle.

To find Open Book, just click the “Buying” link at the top right of any page on Redfin.com, and choose “Open Book” from the menu. As we capture more reviews in the coming months, we’ll launch Open Book in more markets, for a wider range of services.

‘Unusual’ is the New Norm in Bucktown

“Last month didn’t feel like February, but unusual has become the norm in this market,” explains Greg Whelan, Redfin Agent in Bucktown. The lack of quality inventory and the soaring demand made it seem more like a typical May or June. “Specifically, within Bucktown, where there were 25% fewer homes on the market last month than there were a year ago, nearly every non-distressed single family home that hit the market was subjected to multiple offers, especially below that $800K sweet spot.” But, within West Town and Logan Square, the market is becoming more and more balanced with just about a six months’ supply of homes for sale, which is pretty much ideal—neither a buyer’s nor a seller’s market.

As we move into the true spring months, we expect inventory to follow its normal upward trend as more sellers but their homes on the market.  “Prices may be low, but it would be hard for someone considering selling to ignore all the reports of inventory shortages and multiple offer situations,” Greg said, “but, I don’t expect to see inventory take a bigger than normal jump to meet demand over the next few months.”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Chicago-Real-Estate-Market-Report-February-2012. Want to know how the Chicago real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

Case-Shiller: Chicago’s Low Tier Took the Biggest Hit in December

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – December data is released in February).

Here are the basic Case-Shiller stats for the Chicago area* as of December:

Eighteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between November and December (one less than between October and November): Only Phoenix (for the third month in a row) and Miami saw an increase. This month Detrioit beat out Chicago and Atlanta for the bottom spot, falling 3.8% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Chicago’s tiers fell in December. Month to month, the low tier was down 3.3%, the middle tier fell 1.5%, and the high tier decreased 1.7%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Tiny improvement, better than a year ago, but worse than December 2009, when 5 cities saw an increase.

Read the rest of this entry »

What Would An Agent Do? Long-Time Agent as First-Time Home Buyer

Guest post by Greg Whelan, Agent, Near North Side

Deciding It Was Time to Buy

After helping more than two hundred people buy and sell homes during my last decade as a real estate professional, I decided last spring that it was time to become a homeowner myself.  I had been quite content renting my very reasonably priced apartment for the last several years, but I was finally starting to crave more space. After reviewing available rentals, I realized that renting the type of apartment I wanted would cost nearly as much as a monthly mortgage payment on a comparable place.  It was a perfect storm: low interest rates and declining home prices combined to make home ownership an affordable option.  It just felt like right time for me to buy.

Touring and Negotiation Processes

I had my eye on a house in the Ukrainian Village that my friend had lived in a few years ago. It had been pulled from the market as a short sale and was in the process of becoming a foreclosure. When it was finally relisted as a foreclosure in September, I got in to see it right away.  After spending an hour and a half touring the house, I realized it just wasn’t what I remembered it to be. It had been pretty badly beaten up in the foreclosure process and needed new floors and windows among many other repairs. This was a lot more work than I wanted to do, and it made me realize I really wasn’t in the market for a fixer-upper.

I expanded my search a couple neighborhoods up the EL to Logan Square where I found the two-flat (a two story building with separate apartments on each floor) I eventually bought.  After touring the home, I wandered the neighborhood at various times of the day and night, on bike and on the EL. I took the advice I give my clients: I ate at the little café on the corner, walked to the EL, and had a drink at the neighborhood bar to make sure I really liked the location.

I did a Comparative Market Analysis (CMA) and found that the home was significantly overpriced, so I came in with what I deemed to be a fair offer at twenty percent below list price. I justified my offer with comparables, knowing that the seller might take offense at my “lowball” offer. Next ensued a week of fierce back-and-forth negotiations culminating with us agreeing to meet halfway at ten percent off the list price. The process taught me a lot about myself and my role as an agent. I repeatedly found myself becoming angry when the seller wouldn’t respond quickly or agree to my preferred terms (or simply accept my offer). When I’m representing a client, I know that to them, it’s way more than just a deal, but coping with my own feelings gave me a  greater understanding of how important my job is to not only represent my clients in a professional manner, but first and foremost to advocate for them and their feelings.

Inspection

I wish I could report that once we had settled on a price it was smooth sailing. To the contrary, the inspector uncovered several minor items that needed repair and one huge problem: the underground crawl space was not sealed off, leaving the house un-insulated and vulnerable to pest infestation.  For me, this was a deal breaker, but the seller refused to pay the cost of sealing it off.  I threatened to back out of the transaction using the inspection contingency and told the seller I’d be happy to watch the home sit on the market through the winter. The seller backed down and agreed to cover the cost of this major repair, and the deal moved forward to a successful closing.

What I Learned

As a Redfin agent, advocacy has always been a core value of mine, but the emotionally charged process of negotiating on my own behalf instilled in me a much greater appreciation for the fact that my role as an agent is not just to be a cool, calm and, when necessary, fierce negotiator. My most important task is to advocate for my clients to not only get them the best deal possible, but also to get them what they want out of the deal, whether it’s a fair price from which they can’t budge or a repair they can’t live without.

After devoting so much time and energy in helping others become homeowners, I’m proud that I can now call myself one too.  I called my mom as I was pulling into my new garage after closing and said to her, “Coolest thing about buying this place, I got a house for my car!”

Services and Service Providers I Used

Inspector: Larry Robbins
Lender: Erik Johansson
Attorney: Jason Schram
To List Rental Unit: Craigslist
Tenant Screening: TransUnion SmartMove

DuPage County Single Family Home Prices Up 6.8% in January; Home Tours Skyrocket

The news is pretty typical for the month of January: sale prices for single family homes (SFH) in almost every county across the area fell last month. This is what we expect to happen in the wake of the holidays and the season slowing down with the colder weather.  But in DuPage County, prices increased by 6.8% from December to January.  Inventory in DuPage hit its 2011 bottom in December when the number of SFH for sale dropped below 4,000.  Redfin’s DuPage Agent Patrick Lusk explains that “low supply caused fierce competition over the homes that were available, and the bidding wars that ensued drove prices up the following month when the transactions closed.”

Meanwhile, January was a huge month for Chicago area buyers.  The weather was mild, so people who have decided that this is the year they are going to buy skipped their winter hibernation and got a head start on the market.  “If demand continues on its current path,” Patrick said, “we can expect prices to take similar hikes, especially if inventory doesn’t pick up dramatically.”

For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Chicago-Real-Estate-Market-Report-January-2012. Want to know how the Chicago real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:

The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:

• MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
• $YOY = Year-over-year change in the median price per square foot.
• Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75

Case-Shiller: Another Winter for Home Prices

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for the Chicago area* as of November:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between October and November (the same as between September and October): Only Phoenix saw an increase, for the second month in a row. This month Chicago bumped Atlanta out of the bottom spot, falling 3.4% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Chicago’s tiers fell in November. Month to month, the low tier was down 4.9%, the middle tier fell 2.0%, and the high tier decreased 2.9%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just five months ago, all twenty cities saw month to month gains. Now just one is not the red.

Read the rest of this entry »

Case-Shiller: Seasonal Slide in Home Prices Continues

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – October data is released in December).

Here are the basic Case-Shiller stats for the Chicago area* as of October:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between September and October (vs. eighteen from August to September): Only Phoenix saw an increase. Wait, Phoenix? Yup, Phoenix. Atlanta fell the most in October (again), falling a whopping 5.0% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

All three of Chicago’s tiers fell in October, but the middle tier took the biggest hit. Month to month, the low tier was down 1.5%, the middle tier fell 1.7%, and the high tier decreased 1.3%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just four months ago, all twenty cities saw month to month gains. Now just one is not the red.

Read the rest of this entry »

Should I Wait Until Spring to List My Home? – Chicago Edition

Over on the national blog, we just posted another big analysis of hundreds of thousands of listings and sales. Here are the numbers for Chicago, where winter is still a winning time to list your home for a quick sale, a better chance of selling, and a better price: