The Wheels Are Spinning, but the Market Can’t Seem to Get a Grip (April Insider)

Redfin’s monthly Chicago Real Estate Insider Report draws from our proprietary database of information on homes for sale and that just sold, along with insight from our agents to get a sense of what’s going on in the market right now. If you’d like to receive the report via email, just sign up.

Greetings Chicago Redfinnians!

As we approach the peak selling season in the Chicago area, inventory is up across the board compared to the previous month — as well as compared to the previous year. But even though inventory is surging, closed sales aren’t keeping pace.

A Boom in Inventory, but a Whimper in Sales

We expect strong inventory numbers in spring; the warmer weather prompts sellers to get their homes on the market, and the buyers start to get more serious about their shopping. At least, that’s the story most years.

County Compared to Mar. 2011

Compared to April 2010
Cook County +5.3% +4.4%
DuPage County +11.0% +6.3%
Kane County +9.2% +12.5%
Lake County +9.2% +3.1%
McHenry County +9.1% +4.3%
Will County +5.7% +6.2%

Change in # of Houses for Sale on April 30th 2011

We can see from the chart above that sellers are indeed entering the market in greater numbers, but overall closed sales are up only slightly from last month, and are down across the board compared to April 2010.

Why? We believe that last year’s tax credit prompted many buyers to purchase sooner than they otherwise might have. Many of the homes that normally would have sold this spring were snapped up last year to take advantage of the expiring tax credit; in other words, we “used up” a lot of 2011′s buyers in 2010.

County Compared to Mar. 2011 Compared to Mar. 2011 Adjusted for # Weekdays Compared to April 2010 Compared to April 2010 Adjusted for # Weekdays
Cook County -1.2% +8.2% -24.2% -20.6%
DuPage County -7.4% +1.5% -29.4% -26.1%
Kane County +0.6% +10.2% -26.3% -22.8%
Lake County +12.6% +23.3% -12.6% -8.5%
McHenry County +16.9% +28.1% -20.7% -17.0%
Will County -16.1% -8.1% -33.7% -30.5%

Change in # of Houses That Sold in April 2011

On the bright side, Chicago Agent Dario Medina has seen evidence that the market is getting much busier. He’s witnessed the change first-hand, and his observations have been backed up by the other agents he interacts with. “I’ve seen more offers and more multiple-offer scenarios,” says Dario. “On my own listings, sellers have noticed the increased traffic and have become a bit more confident. We’ve held firm on a few negotiations and the buyers have ended up coming in higher than we initially expected.”

Stories of sellers successfully holding their ground have been rare in the past few years; it’s been much more common for buyers to have the upper hand in negotiations. But before sellers throw themselves a victory party, it’s important to remember that not everyone should expect these results.

“There seem to be two types of inventory out there right now,” observes North Shore Redfin agent Dave Yocum, “stale homes that are either over-priced or show poorly — which everyone’s taking a pass on — and new listings that are priced right and show well. The second type is getting snapped up quickly.”

Investors Jumping Back In

Another change is the increased interest from investors. Greg Whelan, a Chicago Redfin Agent, has “taken on more clients looking to purchase properties for investment, not just owner-occupant buyers.”

Personally, I’ve recently seen long-time property owners diving in head-first and picking up buildings like they’re Monopoly pieces. It’s understandable, given the market’s 32.8% decline from peak prices. At some point (although it’s anyone’s guess as to how soon that point will arrive) home values will begin to swing back in the other direction.

County Median Price in
April 2011
Median $/SqFt Change
since Mar. 2011
Median $/SqFt Change
since April 2010
Cook County $160,000 +11.8% -11.5%
DuPage County $243,500 -1.5% -8.3%
Kane County $145,250 +3.5% -12.0%
Lake County $216,650 -0.9% -13.5%
McHenry County $165,000 +0.0% -14.4%
Will County $169,900 +1.1% -9.0%

Change in Median Price of Houses That Sold in April 2011

Buyers Going Green

As an interesting side note, Northwest Suburban Redfin Agent Carie Cox has seen an increase in the number of buyers specifically seeking ‘green’ homes. For those putting homes on the market, going green when possible may be one way to gain an advantage over the competition.

Want to know what’s happening in your neighborhood? Download our comprehensive spreadsheet and dig into the data for yourself! Inside you’ll find county, city, and neighborhood information galore. To learn more about how we calculate these numbers, check out our methodology page. You can also liven up the place by posting a comment below.

Best,

Mark Reitman
Chicago Market Manager

  • S Steinkamp

    Maybe more sellers should  ”hold their ground” instead of accepting low-ball offers out of desperation.  Of course,  this is best done if the home is priced right to begin with.  Another help would be that Realtors could be a bit more flexible with the commission they charge so as not to add “insult to injury” when the seller is possibly taking a loss to get his home sold.

  • Pingback: If U.S. real estate inventory is so “overwhelming,” where is it all hiding? | Redfin Corporate Blog