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Date: December 13, 2009
Section: Homes Plus
Page: 1
As tight credit eases, larger homes begin to sell again
Jean Murphy Daily Herald Correspondent
Things are looking better on the residential real estate front in the battle against a floundering economy. According to Debora McKay of Coldwell Banker in St. Charles, "the market has really been improving over the past 14 to 30 days.
"I have written a couple of contracts on high-end properties that have been on the market for quite awhile. One of the properties even had two interested buyers," McKay said.
"One house is in a killer location and the buyers saw it as a once-in-a-lifetime opportunity," she continued. "We had made adjustments to the price, based on what has happened to the market, and we finally found someone willing to pay a fair price for it.
"Not too long ago we had 10 years worth of inventory in the $1.5 million price range. The market for those houses just vanished last October. But now that inventory is starting to move as credit for jumbo mortgages has started to loosen up," McKay explained.
"Today you can get a jumbo mortgage in the 4.75 to 4.85 percent range with 20 percent down. Before this, mortgage companies were asking for 30 to 40 percent down payments on jumbo mortgages. So things are really improving," she continued.
If this atmosphere continues, McKay predicted that buyers will come out of the woodwork and begin buying.
"These are the people who have sat back over the last year and just waited to see what was going to happen," she said.
How does the current Chicago area market differ from the current national market?
"The Chicago area market has always been more stable than other areas of the country like Las Vegas and Florida. This is a conservative area so we haven’t had the major high and lows that other areas have had.
"The Chicago area is in the Top 10 for foreclosures, so we haven’t escaped all of the problems that other areas have experienced, but you see much less of a swing here than
you do elsewhere.
"Here we have seen price adjustments of 20 and sometimes 30 percent. In other areas like Las Vegas, their adjustments have been more on the order of 50 percent."
McKay said the blame for much of that can be laid at the feet of speculators who drove up the market in those areas in an effort to make a quick buck and then had to withdraw when the downturn came.
Some of this phenomenon can even be seen in the downtown Chicago condominium market, she said.
Do you see any more movement in one type of housing — i.e. single-family homes vs. townhouses or condominiums?
"Single family homes are definitely selling best right now."
Townhouses priced in the $200,000 to $250,000 price range are also selling pretty well because there aren’t too many of them and they are affordable, she said.
Higher priced townhouses, on the other hand, are not selling because they bring with them higher tax bills and are more expensive.
But much of that depends on the specific geographic area.
There is an overabundance of new townhouses on the west side of Elgin and builders there are lowering prices to flush out their inventory, and this is affecting everyone’s prices and sales prospects, she explained.
As for condominiums, McKay said, "lots of people are trying to sell them and it is tough to get financing on them. So they aren’t selling well and, as a result, owners are renting them out and that compounds the problem because if lenders see too many renters in a building, they won’t lend money on a unit."
What differences do you see between the city and suburban markets?
"The city market will always do well because people are attracted to the big city.
"We are finding that people are willing to live in smaller places closer to the city or in the city instead of moving west and having to deal with the gas cost and the commute time. Those issues have weighed heavily on places like Elburn and Sycamore. In fact, it has affected all of the western markets.
"Before, people figured they would head west and get more house for their money. Now places in Hinsdale and other closer-in areas are selling much easier than our homes in St. Charles."
McKay said she is fortunate that much of the market in St. Charles is local people wanting to move up or move down.
Are first-time buyers who have no home to sell taking advantage of the low prices and tax incentives?
"First-time buyers have started driving the market and the result is a domino effect that is helping all sellers," McKay said.
Now the midpriced homes are starting to sell to the people who sold their homes to the first-time buyers, she explained.
Prices have dropped to the point that homes are very affordable now and those who have decent credit can finally get a mortgage again, according to McKay.
"Now we are seeing two or three offers on homes if they are priced right and in good condition and that is a wonderful change," she stated. |
