Market Watch

MARKET WATCH – April, 2008

It was with little regret that we finally said goodbye to the cruel, protracted winter we endured this year. We looked forward to April with great expectations for warmer weather and some signs of rebirth in the real estate industry. Residents in the Barrington area may have kicked off April in a number of ways. Whether they attended one of the Barrington Youth Baseball and Softball (BYBS) games with 150 teams and over 1,700 participants or planted a tree in honor of Arbor Day, their activities most likely took them out of doors.

Similarly, the real estate market usually sees a seasonal surge, but that was not the case. The numbers for the sold units in the entire Barrington area in April 2006 was 47 (0 Vacant Land, 15 Attached, 32 Detached), while April 2007 declined to a total of 39 units (2 Vacant Land, 9 Attached, 28 Detached). April 2008 saw a slight increase from the year prior with 42 (0 Vacant Land, 7 Attached, 35 Detached). The average market time had clearly risen from 118 days on the market in April 2006 to 231 Days in April 2007, then decreasing in April 2008 to 190 days. Despite the fact that the market was in a period of correction, we saw the average list price increase from $555,699 in April 2006 to $632,897 in April 2007, then increase again to $634,425 in April 2008. The average sale price in April 2006 was $535,758, rising to $598,739 in April 2007, compared to $586,432 in April 2008.

How to Survive The Real Estate Apocalypse – Challenging the Media

Before we consider the latest economic forecasts, let’s start by separating Fact from Fiction. Here are some of the FICTIONS born from the buzz about today’s Real Estate Market:

• It is impossible to sell a home today and make a profit.
• Property values have stopped increasing and started decreasing throughout the Chicago Suburbs.
• Your home won’t sell unless it’s under-priced.

Here are some of the FACTS we’re facing in today’s Real Estate Market.

• Specific areas in the Chicago Suburbs are still seeing property values steadily rise, though not as rapidly as in recent years. 
• The most competitively priced properties are selling first – at a faster pace and with more appreciation in Chicagoland compared to many cities throughout the country.
• Today’s buyers are passing up on properties that are not in pristine condition or are priced for yesterday’s market.
• Market times are rising. The number of detached single-family homes listed for sale in October was enough to last 10½ months at the current sales rate. (National Association of REALTORS.)
• Existing home sales are nearing 5.67 Million for 2007, the 5th highest on record. That’s down from 6.48 Million in 2006, 7.08 Million in 2005, 6.78 Million in 2004, 6.18 Million in 2003 and about on par with the 5.63 Million sold in 2004. (National Association of REALTORS.)
• Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier – the biggest year-to-year decline since April of 1991. However, the same study shows that home prices in Chicago (as a whole) are only down 3.2%. (S&P/Case-Shiller home-price indexes.)

In the Standard & Poor’s Home Prices report that was just released, researchers looked at recent home sale prices in 20 cities. They included statistics from the Chicago real estate market in their analysis. The GOOD NEWS is that Chicago (which saw a -3.2% change from 2006 to 2007) did NOT top the list of cities where property values have dropped the most. That unfortunate distinction goes to cities like Miami (-12.4%), Tampa (-11.8%), Detroit (-11.2%), San Diego (11.1%), Las Vegas (-10.7%) and Phoenix (-10.6%). The BAD NEWS comes in the form of a quote, which is attached to the report. Yale economist and creator of the home price indexes, Robert J. Shiller says, “No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim.” The chart below shows how Chicago compares and illustrates an interesting and important point.

Single Family Home Appreciation Comparison by City
(Source: Standard & Poor’s Data Through October, 2007)

Do you see Chicago? It’s the green line kind of close to the middle that doesn’t spike very high or very low. Since 2000, Chicago’s line increases steadily, with a relatively mild turn in 2007. The Chicago line mirrors that of our nice and stable Midwestern region, as a whole, which has been spared the extremes seen in the real estate markets that led the housing boom, like California, Florida and Arizona. And what about the cities that are in the best shape, according to this study, like Charlotte (+4.3%), Seattle (+2.2%) and Portland (+1.9%)? Home prices are still up from a year ago in these cities, but we don’t hear much about the places where the real estate market is steady and strong.

Having spent ten years as a journalist, I understand all too well what’s happening here. It has more to do with what reporters choose to highlight and what the media chooses to focus on. Speaking from experience, the worst or saddest news of the day is typically the lead story, especially when people are suffering.

We understand that these times are difficult for home owners who can’t afford their adjusting mortgages and are losing their homes due to foreclosure. We have clients whose homes are taking much longer than “normal” to sell and, like you, we’re taking a concerned look at how all of this impacts our own personal homes and investments. The tides are turning and the market is in the thick of a necessary and overdue correction. But we believe the media’s “one-size-fits-all” mode of reporting has contributed a great deal to the problem.

Just consider these headlines, excerpts, quotes and key words from some recent real estate news stories: “War? Disaster? Nuclear ambitions? What could derail the housing market?” “Falling House Prices are the Number 1 Danger to the Economy,” “Few are Optimistic,” “Brace Yourself for Real Estate Aftershock” “Mortgage Meltdown” and “Collateral Damage” top the list. Even economist Robert Shiller has said that “the collapse in home prices might turn out to be the most severe since the Great Depression.” Yet just last week the government reported that consumer spending in November grew at the fastest pace in 3½ years. Maybe we’re just too short sighted to panic about what the media might call the impending Armageddon here. We have definitely seen a change in the pace of appreciation. We can’t ignore the rising market times. We have conversations with frustrated sellers daily. But if our business is any indication, real estate remains a sage and steady investment for Chicago Suburban home buyers and sellers.

Looking back, real estate events in 2007 were, without argument from us, “unprecedented.” Many areas of the country saw declining house prices as buyer demand decreased and housing inventory increased to the highest level nationally in 22 years. Additionally, chaos in the mortgage industry resulted in lower home sales and a rise in foreclosures, compounding the market’s underperformance. It is likely that many of the problems plaguing 2007 will continue into 2008. However, as December draws to a close, we are optimistic that 2008 will be slightly improved with market conditions stabilizing and home sales regaining strength.

According to Lawrence Yun, the National Association of Realtor’s chief economist, “The worst of the credit crunch has already worked its way through the data and the strength of the Midwest market which is affordable and possibly even undervalued, will help raise the national median existing home price slightly in 2008.” Existing home sales for 2007 will most likely total 5.67 million, the 5th highest on record, and rise to 5.70 million in 2008, in contrast to 6.48 million in 2006. The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates. Recent forecasts of a recession are tempered by a look at today’s unemployment rates, currently at 4.6 percent for 2007, unchanged from last year. Economists predict the rates will rise, though slightly, to 5.0 percent for 2008. Inflation as measured by the Consumer Price Index will likely be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. And as more home owners default on their loans, throughout the country, many are going back to renting. The home ownership rate in the third quarter stood at 68.2% of households, down from a peak of 69.2% in 2004. It’s a bitter pill for this group of home owners, but a trend to watch for those in the business of buying investment or rental properties.

Although the economy is fundamentally sound, unemployment relatively low and jobs gaining, our real estate outlook for 2008 is guarded. We agree that buying a home continues to be the single best long-term investment people can make. The fact that housing prices having adjusted downward over the past 18 months and interest rates remain relatively low bode well for a gradual recovery in the home sale activity beginning in 2008.

Written by Suzanne & Liz Luby
Coldwell Banker Residential Brokerage
303 East Main Street Suite 100
Barrington, IL 60010
Suzanne’s Cell: 847-922-7773
Liz’s Cell: 847-691-3150
Website: TheLubyGroup.com

Tags: Chicago Northwest Suburbs, Barrington, Inverness, Illinois, Real Estate, Homes For Sale, Market Trends, Real Estate Forecast for 2008, Appreciation Rates, Home Sale Prices, National Comparison, The Luby Group, Suzanne and Liz Luby, REALTORS

Barrington Area Real Estate – Market Snapshot – November, 2007

Barrington Area Market Data: 2005 Through 2007 – Single Family Homes, Townhomes & Condos

In an effort to help home buyers and sellers analyze the real estate market data that impacts their properties, we’re going to regularly post the latest market statistics right here on BurbFeeder.com and on TheLubyGroup.com. We hope you’ll visit us again for updated statistics and to help keep us on our toes. The data will be here!

“Torture numbers, and they’ll confess to anything.”
~Gregg Easterbrook

The chart below goes back three years to show a more recent comparison of properties that sold per month in Barrington. You’ll see the number of Units Sold, the Median Sold Price, Minimum Sold Price, Maximum Sold Price and Total Volume per month in 2005, 2006 and 2007. We have access to a wealth of real estate sales data for specific suburbs and neighborhoods. If you would like us to provide a statistical analysis of home sales in your community, please fill the details of your request in the contact form below. We’ll follow up right away. Thanks, Liz Luby

Tags: Barrington, Real Estate, Market Data, Statistics, Sold Properties, Median Sold Price, Median Sale Price, Minimum Sold Price, Maximum Sold Price, Total Volume

We are Proud to Introduce – STATS CHICK

Finding real estate statistics for recent homes sales in your neighborhood or suburb has never been easier. Visit The Luby Group’s StatsChick page or StatsChick.com for analysis of the most recent market activity near your home.  You can hear Stats Chick’s explanation of The Luby Group’s Market Data Service by clicking on the triangular “Play” button below her.  For a more specific review of your area or for our interpretation of the statistics, please contact Suzanne & Liz Luby at 847-922-7773. Thanks for your time and please let us know your thoughts about Stats Chick.