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The Chicago-area housing market saw an increase in supply coupled with an increase in early-stage demand in February, while closed sales and prices continued to slip. Winter is winding down and the housing market is beginning to heat up, as it does every year.
Inventory on the Rise All Around Chicago
With spring getting into swing a bit early, more sellers are placing their homes on the market. From January to February, county-wide increases in inventory range from 4.7% to 7.3%.
|County||Compared to Jan. 2011||Compared to Feb. 2010|
Change in # of Houses for Sale on February 28th 2011
Taken alone, this increased supply would suggest a continued downward pressure on pricing. However, the percentage of listings under contract saw an even greater increase over the month, rising 14.6%.
Chicago Redfin agent Greg Whelan notes that the recent increase in interest rates “alerted fence-sitting buyers that rates can, in fact, rise.” The subsequent dip in rates “has motivated many buyers to take advantage of them, rather than risk another, longer-lasting increase.”
Closed Sales Slipping, Pending Sales Gaining Steam
|County||Compared to Jan. 2011||Compared to Jan. 2011 Adjusted for # Weekdays||Compared to Feb. 2010||Compared to Feb. 2010 Adjusted for # Weekdays|
Change in # of Houses That Sold in February 2011
Closings were down significantly in February. However, this is primarily a result of the activity from 2010′s slow fourth quarter. Pending sales increased in January, and did the same in February. As these contracts close, we’ll see an increase in sales.
Data courtesy of Agent Metrics
Weak Winter Demand Drags on Prices
As a result of low Q4 2010 and January 2011 activity, most areas have seen closed prices per square foot decline through February, both since last month and versus the previous year. March closings will hint at the results we can expect from spring market demand.
|County||Median Price in
|Median $/SqFt Change
since Jan. 2011
|Median $/SqFt Change
since February 2010
Change in Median Price of Houses That Sold in February 2011
Patrick Lusk, a Western Suburbs Redfin agent, observes that “negotiations seem to be taking longer. However, in the end, clients are reaching successful agreements at the same rate as before.” It seems both buyers and sellers are dragging things along, hoping for something better. But, once they realize their alternatives are few, “they are reluctantly moving forward with the bird in the hand.” To Patrick, this indicates that both sides are reaching “fair deals” in the end.
For those interested in REOs, North Shore Redfin agent Dave Yocum is still seeing plenty of bank-owned listings. However, he’s noting “fewer McMansions and greater numbers of traditional and blue-collar homes listed by banks.” Patrick concurs, and recently had a client mention that “he has seen fewer million-dollar foreclosures in Hinsdale.” Dave theorizes that “banks may have cleared out their higher-price inventory first.” Also, many of the newer homes were purchased with liar loans by unqualified buyers early in the housing bubble; these homes were among the first to enter into default and to then be processed for resale.
The most successful bargain hunters are the ones who know how to pounce on the right situation — REOs, vacant homes, occasionally short sales and the like. However, anyone hoping to find and win that perfect home should be ready for competition from other buyers or be prepared for a seller who isn’t quite ready to give his house away.
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Chicago Market Manager