Northwest Chicago Suburbs – A Tale of Two Markets

I wanted to share a quick insight into what I see in the northwest suburbs as a bifurcated housing market.  The upper end of the market* appears to be oversupplied while the lower end** is in balance and getting close to being undersupplied or having a shortage of inventory.

The following charts illustrate this point.  I looked at 3 northwest Chicago suburbs (Park Ridge, Glenview, and Northbrook).  In this first chart, you can see the lower end of the market has supply of inventory of around 3-4 months.  This is why it is not uncommon to see multiple offer situations when we appraise homes in this price range ($300,000-$400,000).  


In this chart, you can see the upper end of the market has supply of inventory of around 9 months.  Due to the increased competition, the average market times for homes in this price range ($700,000+) is around 160 days vs. 75 days on the lower end.  


KEY TAKEAWAY

In the past, supply has been a leading indicator of where prices may be heading.  If that continues to be the case, we could see what is the beginning of a correction at the upper end, and may see continued price increases and multiple offer situations at the lower end.

Bonus Takeaway - Attn: Real Estate Agents - If you are in a multiple offer situation, "Tell the Appraiser!" (Click for more information on why you should alert the appraiser to multiple offers).  


* - The upper end of the market was defined as 4 bedrooms or more, and 3 baths or more.

** - The lower end of the market was defined as 3 bedrooms or less and 2 baths or less.​

Definition of Months Supply per Infosparks - The inventory of homes for sale at the end of a given month, divided by the average monthly Pending Sales from the last 12 months. Also known as absorption rate.

The Housing Value of Every County in the U.S.

The Housing Value of Every County in the U.S.

I recently came across this map posted on Twitter by Max Galka of Metrocosm.com.  It shows a map of the U.S. with the land area of each of the individual counties being substituted by the total market value of the housing.  Keep in mind that this is the sum of the values for each county, which is going to be skewed by population; nevertheless, this GIF is way too cool not to share.  


I found this map is really hypnotic.  Several times while typing this post I have found myself zoned out just staring at it.  Anyone else?

Also, I would love to see this type of map that separates out all of the Chicago neighborhoods and suburbs.  My guess would be the North Shore, downtown and Lincoln Park in Chicago, and the Hinsdale/Oakbrook area would be the largest.



Best Time to Buy or Sell Chicago Real Estate

 

I recently read an excellent blog post by Gary Kristensen (click here to read).  I thought I would similarly take a look at the Chicago market and try to graphically depict the best time to buy or sell in the Chicago real estate market.  As we all know real estate is seasonal in most markets with the school year being a big factor, but more so in Chicago due to the blustery winter months.

I exported every monthly data point from the S&P/Case Shiller Home Price Index dating back to 1986 (that’s 336 total data points and 28 monthly data points which should be a large enough of a sample to account for any outliers).  I then averaged each month and charted the results…..

 

Chicago Case-Shiller Chart

 

 

As you can see, it appears as if the worst times to sell would be January through April (all below the yearly average).  Also, keep in mind that these are closed sales which most likely went under contract 1-3 months prior.  So while August appears to the best, those homes most likely went under contract in July and originally listed for sale in April or May (assuming a 60-90 day marketing time).

As Gary astutely points out in his post, most people who are selling a home are also buying a home.  Therefore, in these cases, trying to time the market isn’t necessary.  For those who are only selling, it looks like listing in May or June would be best (assuming we add 60 day marketing time and 2 months to close).  I have also heard an interesting thought from one Realtor who said he loves to list a home and have an open house the Sunday in February after the Superbowl.  He said he does this to get ahead of the market and also he gets a tremendous amount of traffic.  He thinks it is because many women who want to get a head start looking at homes are finally able to get their husbands out of the house on a Sunday. This is clearly anecdotal evidence (and kind of funny), but an interesting approach nonetheless.

Oddly, December had the second highest average that I could not account for.  I showed this to a few other real estate appraisers.  They weren’t sure either and thought this could be corporate transfers coming in prior to years end for write offs to people trying to close before the snow comes.  If you have some thoughts are what is causing this spike, please add them to the comments below.  Also, when is your favorite month to sell.

 

Rowe Appraisal Group specializes in appraisals for divorce, estates (date of death), pre-listings and more throughout the Chicagoland area.  If you have any questions, please call us at (847) 863-5776 or email paul@roweappraisalgroup.com.

 

 

Lincoln Park Single Family Housing Market

Lincoln Park Single Family Housing (5)I recently analyzed the Lincoln Park Condo market to get to see where condo prices might be heading.  This time I will be looking at the Lincoln Park detached single family market in Chicago.  I again compared the current median sales prices vs. those that are under contract and are expected to close in the next 30-60 days. First lets look at a few charts to see how the market has performed over the last year.

 

 

Year-Over-Year Median Sales Price (Rolling 12 month average) – As you can see below, the overall detached single family market is up 15.4% year-over-year and the upward trend appears to be continuing with the most recent data showing a median sale price of $1,500,000.

 

 

Months supply of inventory – Supply of inventory is around 5 months and has remained around this level for some time now up.  Anything between 3-6 months is considered to be a balanced market.

 

Average Market Time – The average time it takes to sell a house is significantly less (down 21% year-over-year).  This is also a healthy number and is a sign of a strong market.  For a little perspective, that number peaked at an average of around 221 days on market back in 2010.

 

 

List to Sales Price Ratio – The amount the home sells for vs. what it was most recently listed for has remained stable year-over-year at around 95%.

 

Distressed Sales – As you can see below,  the number of REO (foreclosures) and Short Sales are almost non existent in Lincoln Park and have not been a factor for quite a while.

 

 

 

As noted in the previous post, these are “rear view mirror” statistics.  As I analyze the market to help homeowners determine an appropriate  listing price for their home, (click here for more info on that process) I analyze forward looking indicators in an effort to be aware of what may be in store for the market.

After noting the current median sales price of $1,509,000, I compared that data point to a more forward looking data point, pending sales.  The current median list price of the units currently under contract is $2,195,000.  That number is significantly higher than what has sold over the last 12 months.  With the exception of a few hot markets, homes very seldom sell at list price.  Over the last 12 months, the list to sales price ratio is approximately 95% (see chart above).  Even after the 5% is removed from the pending sale to anticipate the final sales price, there is still a projected significant increase in median sales prices for those homes currently under contract vs. the current 12 month median sales price. Due to their only being approximately 41 units in the pending/under contract data, I expanded the data to include all active listings as well.  That included 148 homes and brought up the median list price to $2,095,000.   It is more than likely that there is a larger mix of larger, newer construction homes in the pending/listing data that could be inflating the projected overall increase, but based on that data combined with other market factors analyzed, the single family market appears to be strong and should remain so over the next few months.

In summary, the overall detached single family market has been strong over the last 12 months and the Lincoln Park neighborhood is not showing any signs of slowing.   It will be interesting to see what happens over the next several month.   For more Lincoln Park charts check out our Lincoln Park Page.  If you have any questions, please feel free to call us anytime at (847) 863-5776.

 

Chicago (Lincoln Park) Condo Market

Lincoln Park Condo MarketBased on recent speculation in the national news about a cooling housing market, I recently analyzed the Park Ridge market to get to see where prices might be heading.  This time I will be looking at the Lincoln Park neighborhood in Chicago.  I wanted to compared the current median sales prices vs. those that are under contract and are expected to close in the next 30-60 days. First lets look at a few charts to see how the market has performed over the last year.

 

 

Year-Over-Year Median Sales Price (Rolling 12 month average) – As you can see below, while the overall condo market is up 5.6% year-over-year, the upward trend appears to be flattening out and the market appears to be stabilizing.

 

 

Months supply of inventory – Supply is down to 2.9 months of inventory but is slowing creeping back up.  (down 6.8% year-over-year)  Whenever supply is below 3 months of inventory we consider the market to be under supplied.

 

Average Market Time – The average time it takes to sell a house is significantly less (down 27% year-over-year) but this indicator is also flattening out with the last 4 months having an average market time of 57 days.

 

 

List to Sales Price Ratio – The amount the home sells for vs. what it was most recently listed for has only increased about 0.6% year-over-year and has leveled off at a strong  98%.  (This can sometimes be skewed as many condos are listed with parking “not included” and then the final sales price includes a $10,000-$25,000 deeded parking space.

 

Distressed Sales – As you can see below the number of REO (foreclosures) and Short Sales haven’t been a big factor in Lincoln Park over the last few years but still show a positive sign as they are down 49% and 64% year-over-year.

 

 

 

Overall, while the market has had a good year, these statistics are considered to be in the “rear view mirror”.  As I analyze the market to help homeowners determine an appropriate  listing price for their home, (click here for more info on that process) I analyze forward looking indicators in an effort to be aware of what may be in store for the market.

I decided to use 2 bedroom/2 bath units in an attempt to break out the extreme high end and low end of the market and compare apples to apples.  After noting the current median sales price of $408,000, I compared those two data points to a more forward looking data point, pending sales.  The current median list price of the units currently under contract is $394,000.  That is approximately 3% lower than what has sold over the last 12 months.  With the exception of a few hot markets, homes very seldom sell at list price.  Over the last 12 months, the list to sales price ratio is approximately 98% (see chart above).  Therefore, once the 2% is removed from the pending sale to anticipate the final sales price, there is still a projected decrease in median sales price of 5-6% for those units currently under contract vs. the current 12 month median sales price. Due to their only being approximately 50 units in the pending/under contract data, I expanded the data to include all active listings as well.  That brought up the median list price to $400,000 (2% higher than the “under contracts”).  But keep in mind, these listings could still experience a lowered list price as they are still not under contract, which could account for the 2% bump.

In summary, while the overall market has been strong over the last 12 months, the Lincoln Park condo market in Chicago does appear to be slowing.  However, with such a low supply of inventory on the market, things could turn back up.  Also keep in mind that we will soon be heading into the seasonally slower fall and winter months.   For more Lincoln Park charts check out our Lincoln Park Page.  If you have any questions, please feel free to call us anytime at (847) 863-5776.

 

Park Ridge Single Family Housing Market

Park Ridge Home valuesThere has been a lot of discussion in the national news about a cooling housing market.  As a real estate appraiser with my office in Park Ridge Illinois, I’m providing a little insight into how we can dig deeper into the local market to get an idea of which direction home prices may be headed in the near term.   I looked at several different metrics for single family homes in Park Ridge (charts attached are interactive).

 film Sandy Wexler 2017

 film Sandy Wexler 2017

Year-Over-Year Median Sales Price (Rolling 12 month average) – As you can see below the trend is still headed higher (12.6% increase year-over-year)

 film Sandy Wexler 2017

 film Sandy Wexler 2017

Months supply of inventory – Supply is down to 4.1 months of inventory (down 13.6% year-over-year)

 film Sandy Wexler 2017

Average Market Time – The average time it takes to sell a house is significantly less (down 41% year-over-year)

 film Sandy Wexler 2017

 film Sandy Wexler 2017

List to Sales Price Ratio – The amount the home sells for vs. what it was most recently listed for is also improving (approximately 96%)

 film Sandy Wexler 2017

 film Sandy Wexler 2017

 film Sandy Wexler 2017

Overall, these are all positive signs, but they are statistics that are in the “rear view mirror”.  As I analyze the market to help homeowners determine an appropriate  listing price for their home, (click here for more info on that process) I analyze forward looking indicators in an effort to be aware of what may be in store for the market.

After noting the current median sales price of $394,000 and average sales price of $450,000, I compared those two data points to a more forward looking data point, pending sales.  The current median list price of the 82 detached homes currently under contract is $439,000 and the average is $498,000.  Those are a combined average of 11% higher than what has sold over the last 12 months.  As we know with the exception of a few hot markets, homes very seldom sell at list price.  Over the last 12 months, the list to sales price ratio is approximately 96% (see chart above).  Therefore, once the 4% is removed from the pending sale to anticipate the final sales price, there is still  a projected increase of 6.6% over the current 12 month sales data.

In summary, while the overall rate of increase in sales prices in Park Ridge appear to be slowing, the trend appears to be still pointing up in the near term.  The majority of these pending sales should close in the next 30-60 days, so it looks like Park Ridge should have some much needed momentum heading into the seasonally slower fall and winter months.   For more Park Ridge charts check out our Park Ridge Page.  If you have any questions, please feel free to call us anytime at (847) 863-5776.

 film Sandy Wexler 2017

Chicago’s Luxury Housing Market

Chicago Appraiser 499The luxury home market started heating up last year. Based on the Chicago area MLS (this does not include private sales and those not listed on the MLS), in 2013, there were 365 homes (including condos) that sold for over $1,500,000 in Chicago. That’s a 20% increase over 2012. In the surrounding suburbs there were 353 homes that sold for over $1,500,000 which was a 29% increase year over year.

I personally have seen an increase in appraisal requests for these high end properties as well. In 2013, I appraised 26 homes that were valued over $1,000,000 while in 2012 I only completed 17.
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