Shedding Some Light on Chicago Real Estate (October Insider Report)

Howdy Chicagoland Redfinnians!

Welcome to the first ever Insider Report for the Chicago area. This is your peek behind the scenes at what is really going on in the local real estate space — we’ll tell it like it is using on-the-ground insights backed up with cold hard stats from the industry’s most comprehensive database of broker- and owner-listed homes, as well as public records and our own brokerage activity. We hate sales mumbo jumbo as much as you do, so we’ll leave that part out. If you’d like to receive the report via email each month, just sign up!

By now, even the most forgetful should have turned their clocks back. And, speaking of ‘falling back’, let’s take a look at the most recent market data.

Everyone’s Treading Water

In the six counties reported below, the number of October transactions declined 19.5%, from September, and 40% from the same month last year. Leading the way, with a whopping decline of 57.8%, is Will County. Kane County fared the ‘best’, with a 26.9% annual decline.

County Compared to Sept. 2010 Compared to Sept. 2010 Adjusted for # Weekdays Compared to October 2009 Compared to October 2009 Adjusted for # Weekdays
Cook County -19.4% -15.5% -37.6% -34.6%
DuPage County -6.9% -2.5% -30.1% -26.8%
Kane County -17.9% -14.0% -26.9% -23.4%
Lake County -22.2% -18.5% -29.7% -26.4%
McHenry County +4.8% +9.8% -34.8% -31.7%
Will County -44.7% -42.1% -57.8% -55.8%

Change in # of Houses That Sold in October 2010

Greg Whelan, a Redfin agent who specializes in Lincoln Park and Lakeview, noted that “buyers are aware that they have plenty of options and are willing to wait for the best deals,” and Patrick Lusk, who specializes in the Western Suburbs, added “there is no buyer urgency in this market. It’s all about the “deal.” Buyers who don’t get their desired price move on to sellers who are more willing to negotiate.”

What’s going on with Redfin’s business in Chicago has borne this out. While the number of offers submitted was 29.4% higher in October than September, the number of accepted offers remained virtually unchanged. It seems buyers are willing to throw stuff at the wall to see what sticks and, if nothing does, onto the next…

Final Count Down

Although month-over-month inventory declined, due to sellers beginning to take unsold homes off the market until spring, year-over-year inventory has increased, with DuPage County leading the way.

County Compared to
September 2010
Compared to
October 2009

Cook County -0.8% +5.7%
DuPage County -0.9% +11.7%
Kane County -2.3% +8.5%
Lake County -1.8% +1.9%
McHenry County -1.7% +9.1%
Will County -1.3% +6.7%

Change in # of Houses for Sale on October 31st 2010

One observation made by several Redfin agents, is that many buyers appear to be looking at the same homes. Not only have Redfin agents shown the occasional home to multiple customers but, if a home seems to be priced aggressively, it does generate decent traffic and, in many cases, multiple offers. This goes to the old adage that you don’t stumble across great deals (at least uncontested); you negotiate them. It’s best to look for the most desirable place, even if the list price doesn’t indicate anything special, and try to negotiate a great deal for it.

For their part, “sellers seem to be getting more realistic about the selling environment and have been more open about pricing their property aggressively,” Dario Medina, a Redfin agent specializing on the Far North Side and North Shore, has observed. He went on to say “I believe they’ve noticed their neighbors’ “For Sale” signs all summer and don’t want to be in their shoes in six months.”

Cash is King

Naturally, this increased supply, along with the precipitous drop in demand, has led to the continued downward pressure on prices that we’ve all come to know and love, or loathe, depending on which side you’re on.

County Median Price in
October 2010
Median $/SqFt Change
since Sept. 2010
Median $/SqFt Change
since October 2009
Cook County $160,000 +1.6% -10.0%
DuPage County $270,000 -2.7% -5.9%
Kane County $180,500 0.0% -7.7%
Lake County $225,000 +9.0% -6.2%
McHenry County $184,500 -4.0% -5.0%
Will County $183,000 +7.4% -1.9%

Change in Median Price of Houses That Sold in October 2010

Although both prices and interest rates are low, another compelling reason for the lower numbers of transactions is the fact that fewer buyers can get their hands on these funds, due to more stringent lending guidelines. This has presented great opportunities for those strong borrowers and even better opportunities for those with their own funds. Greg noted, “Those with cash aren’t as affected as the clients who need financing, and these folks are keenly aware of their negotiating position.”

For those with buying power, the upcoming holiday season could bring more opportunities for good deals. Sellers who keep their homes on the market, during this time, normally do so because of a compelling motivation to sell, while the competition of other buyers normally shrinks, since many decide to take this time off, until after the New Year.

If you want even more data including specific cities, town and neighborhoods, be sure to download our master spreadsheet and dive into all the data you ever wanted. If you have any questions or feedback about our report, just leave them in the comment section below.

But, before you go, we wanted to let you know that Redfin just launched a bunch of new features including a nifty new way to cluster listings, an interactive Good Faith Estimate, an interactive HUD-1 statement, and an inspector’s report with tell-all photos. We also opened Las Vegas and Austin, so if you know anyone who wears cowboy boots — tell ‘em about Redfin!

Best,

Mark Reitman
Chicago Market Manager

  • http://www.nosnivelling.com/ daveschappell

    Glenn’s spot on. TeachStreet’s much stronger because of having lived through the recession — if we had ‘gone big’ on hiring and growth we’d still be living with legacy (hidden/unknown) issues that we’d likely never shed. Instead, we cut to the core, and focused on (existing & new) user experience, at the expense of sheer customer acquisition, and have been rewarded with booming conversion and retention metrics, and less technically, a much more kick-ass customer experience. I’m not saying I’d like to experience it again anytime soon, but I know that we’re massively better positioned for having gone thru it. And, I hate grape-nuts too.

    • http://blog.redfin.com/ GlennKelman

      TeachStreet was one of the other companies I had in mind as I wrote this Dave… :-)

  • http://www.PhoenixCommercialRealEstate.com Marc Brodeur

    The only constant is change right? I think change simply happens faster and adaptation is more the norm than it ever was. Gone is the company you can work for your entire career and retire from with a fat pension. The same is true of careers. They say the average college graduate now will have 7 different careers. I think its about being prepared for change and being able to adapt to it. Keeping ones eyes on potential threats is critical…..or you will get spanked again and again. Its better to be proactive than reactive.

    • http://blog.redfin.com/ GlennKelman

      Excellent point Marc! I’m trying to have as few careers as possible…

  • http://www.DesertMountainRealEstateAZ.com Desert Mountain Scottsdale

    The growth that redfin has accomplished in the past few years is a testament to how quickly the real estate business is changing.

  • http://www.mn-houses.com/white-bear-lake.php White Bear Lake Homes for Sale

    This is a very uplifting article. I believe that every successful company, whether it’s a one man/woman show, or a 40,000 employee monster company…has to be constantly adjusting its “financial rope”. You need to give a little slack here (to invest and build), but pull the rope taut there (tighten down on expenses). Great post…thank you!

  • Mhw

    The characterization that buyers are deal hungry and are throwing out offers to see what sticks might be misleading. Perhaps many buyers just don't want to overpay so they are not stuck underwater. The opinion above makes it sound like buyers are simply lowballing sellers. While that probably occurs, it seems more logical to conclude that homes are still overpriced and prospective buyers don't want to be upside down on a home just because the seller “can't give the house away.”

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    Interesting, would not have thought about it that way myself.

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