In the last 3 to 6 months we have noticed a massive shift or pivot in our current real estate market here in Chicagoland, quality inventory has been extremely difficult to come by for our buyers. Inventory that shows really well and is priced right will sell in a few days. This means buyers really need to be on their toes and about their wits in this market. For sellers, the better the property shows, the faster it will sell, assuming it is priced right of course.
How did this come about…couple reasons, the correction and over correction in the market are one reason, housing usually appreciates a few percentage points each year as it has pre-Great Recession. The old adage what goes up must come down and vice versa certainly applies. Another reason of significance is the lack of construction over the last 5 years, this coupled with a rising population(Generation Y coming of age and immigration). Another reason is homeowners delaying moving, the average homeowner moves every 7 years typically, due to lack of movement and people not wanting to lose equity this has caused for a lack in inventory. The first rounds of short-sale and foreclosure victims are hitting the market again also. All of this coupled with the lowest interest rates in history add up to the results we are seeing.
Right now what we are really seeing is classic supply & demand economics at work. Where does this mean we will go? Only time will tell, but I can for sure say that if this trend continues, prices are bound to go up due to the supply and demand economics. I think you will see builders begin to look at developing again at some point soon. Number of sales will begin to go up simply due to the hold outs during the Great Recession, as well as homeowners following the typical 7 year pattern, along with Generation Y entering the marketplace(whose numbers are anywhere from 72 – 81 million people). All promising signs for the housing market
Patrick Binning is a licensed real estate broker with RE/MAX All Pro in Bloomingdale, Illinois. Patrick specializes in both buyers and sellers, along with more specialized transactions like Short Sales, Luxury, and Foreclosures.
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Happy New Year as we welcome in 2013. 2012 was a great year and I am optimistic that 2013 will be better than 2012. I have 5 predictions about what will happen this year in the Chicagoland Real Estate Market and the homes that are for sale in the marketplace.
#5: Shortage of Quality Inventory: I have been saying that our marketplace has a shortage of quality inventory(inventory that is priced right, shows well, has new upgrades, etc) This is the type of home that the buyers in the marketplace are eating up right now.
#4: Rents continue to rise: With short-sales and foreclosures still occurring, along with Generation Y/Millennials turning another year older and starting to move out of their parent’s homes, this will continue create the demand that we have seen the last several years.
#3: Short Sales Continue to Occur, Bank-Owned Properties Continue to Appear, Both with Less Frequency: I still expect to see many short sales and many bank-owned properties come on the market in the marketplace, just at a lower frequency than previous years due to the fact we are through many of the expected resets and defaults.
#2: Sales Will Be Up Again This Year Over Last Year: I think that sales will be up again this year, due to people having a compelling reason to buy or sell, people who have put off moving for the last several years.
#1: Pricing will rise…: *Pricing will go up in areas due to demand and depending on the area. I expect pricing if it goes up only to go up by fractions of a percent.
Bonus #1: Appraisal issues: I think we will see appraisal issues due to lack of inventory and multiple offers, as a result homes might sell for over perceived market value and as a result create a snag in the appraisal process.
Bonus #2: More Builders Beginning to Build: Many Builders have been building in the current market, but many have sat out. I predict we will see more builders entering the marketplace in order to satisfy demand.
This is a quick post today…I had a customer and possibly future client ask about listing a whole lot as being subdivided(because they intend to subdivide it. This is something that cannot be done unless the property has been subdivided and gone through the appropriate process through the County, and assigned a PIN Number. Then the subdivided lots can be listed as such.
Kudos and Credit to Houzz
The Houzz App and Houzz.com is an absolutely incredible concept, great for new homeowners, long-term homeowners, and investment flippers.