Big drop for area home sales - `Stubborn' sellers keep Chicago prices up so far, analyst says
Big drop for area home sales - `Stubborn' sellers keep Chicago prices up so far, analyst says
By Mary Umberger
Copyright © 2006, Chicago Tribune
Published October 26, 2006
Chicago-area home sales plunged last month, though prices managed to hang in there. That disparity drew experts into a debate on whether the worst of the post-housing boom hangover has played out or is yet to come.
The sales numbers were particularly ugly: Illinois existing-home sales fell about 20 percent in September, with Chicago-area sales plummeting 26 percent from last year's record levels, according to an Illinois Association of Realtors monthly report released Wednesday.
Chicago-area condo sales were off 18.7 percent in September, though the median price was up 2.5 percent compared with the year earlier.
Yet prices generally remained steady. The median for a single-family home in the nine-county area declined $1,000 from last year's median, to $269,000, the Realtors said. Statewide, prices fared less well, with the median dropping about 8 percent.
That Chicago prices have not declined as precipitously as the sales figures may be due to a number of factors, experts say, and some warn that prices may be poised to head south.
"The sellers in Chicago are very stubborn," said David Lereah, chief economist of the National Association of Realtors. "They're not bringing their prices down, so sales are going down."
But David Thorpe, for example, has lowered the price on his Glen Ellyn residence to $389,000 from $429,000 in March. He took it off the market Oct. 1, and he and his wife, Norma, who have moved to Naperville, will dress it up before relisting it in January.
"I just don't think there's any action out there right now," he said. "We had so few people look."
Leah Rarick and Renee Creamean, next-door neighbors in Lockport, have not found showings to be a problem.
"I think an average of two showings a week seems pretty good," Rarick said. She and Creamean listed their houses about a month ago. "While it sounds like the market is bad, my husband comes from a family of six siblings, and three of them have purchased homes in the last three months. I know people are buying."
Creamean has lowered her price to generate interest in the home.
"I'd say the market is saturated," she said. "It's not that people aren't buying homes; they just have so much to choose from."
Lereah says Chicago prices are in the typical pattern after a boom. "Price always lags, so as sales drop off, prices will follow," he said. He also said he doubted that the sales data for Chicago was correct.
"Chicago shouldn't be down that much, year-over-year," he said. "I would look at two or three months in a row to see where Chicago is. I suspect you will get better numbers in the next couple of months."
Pete Flint, chief executive of Trulia.com, a residential real estate search engine based in San Francisco, said speculative buying had fueled the price run-up in the last several years. Those investors generally have fled the market now, he said.
"Investors or speculators have disappeared completely," Flint said. "On a median basis, prices seem to be relatively steady and firm" because control of the market has reverted to ordinary consumers.
Nationwide, existing-home sales also declined, though less dramatically than in Illinois. The NAR reported Wednesday that sales nationally were off by about 2 percent and that prices had dropped, for the second consecutive month, by 2.2 percent.
Year-to-date sales are down 14.2 percent, and the trade group said median prices are unlikely to rise until early spring. Sales were at a seasonally adjusted annual rate of 6.18 million homes, the lowest since January 2005, and slightly worse than many economists had forecast.
But Lereah sees the market as improving.
"This is likely the trough in sales," he said. "We are going to see some more declining prices, but on sales, we're close to bottoming out. Buyers are coming back, and inventories have really stabilized nationally.
"We've had three months in a row of 7.3 months' supply of homes for sale, and that's very good news," he said. "It looks like the worst is over."
Not so, said Ian Shepherdson, chief U.S. economist for High Frequency Economics, a data analysis firm in Valhalla, N.Y. He expects the market to worsen and take prices with it.
"The longer-term downward trend in mortgage applications and sales should reassert itself over the next few months as people balk at using borrowed money to buy depreciating assets," he said.
He expects "a steep and prolonged downturn" in housing, with sales and housing starts dropping 50 percent or more from their peaks.
The national price drop in September was "the worst performance since the data series began in 1969," he said. "High and rising inventory is killing prices."
About 96,000 residential properties were for sale in the Chicago market the week of Oct. 17-23; a year ago there were about 69,000, according to the Chicago Association of Realtors.
Chicago real estate agents say the market is stronger than the Wednesday data suggest.
"I'm surprised that the numbers are showing that much down," said broker Mike Golden, co-founder of AtProperties in Chicago. "We're seeing more supply on the market but not a downtick in demand and activity.
"We haven't seen the floor drop out on pricing, and we don't expect to see it," Golden said. "The market is by no means dead."
As grim as the Wednesday figures for Chicago were, they were grimmer elsewhere. Existing-home sales sank nearly 32 percent in California; Florida's dropped 34 percent, the same rate of decline as in August.
In Jacksonville, Fla., where sales were down 23 percent, Pulte Homes, a national builder, said Wednesday that it is laying off one-third of its workforce.
----------
mumberger@tribune.com
By Mary Umberger
Copyright © 2006, Chicago Tribune
Published October 26, 2006
Chicago-area home sales plunged last month, though prices managed to hang in there. That disparity drew experts into a debate on whether the worst of the post-housing boom hangover has played out or is yet to come.
The sales numbers were particularly ugly: Illinois existing-home sales fell about 20 percent in September, with Chicago-area sales plummeting 26 percent from last year's record levels, according to an Illinois Association of Realtors monthly report released Wednesday.
Chicago-area condo sales were off 18.7 percent in September, though the median price was up 2.5 percent compared with the year earlier.
Yet prices generally remained steady. The median for a single-family home in the nine-county area declined $1,000 from last year's median, to $269,000, the Realtors said. Statewide, prices fared less well, with the median dropping about 8 percent.
That Chicago prices have not declined as precipitously as the sales figures may be due to a number of factors, experts say, and some warn that prices may be poised to head south.
"The sellers in Chicago are very stubborn," said David Lereah, chief economist of the National Association of Realtors. "They're not bringing their prices down, so sales are going down."
But David Thorpe, for example, has lowered the price on his Glen Ellyn residence to $389,000 from $429,000 in March. He took it off the market Oct. 1, and he and his wife, Norma, who have moved to Naperville, will dress it up before relisting it in January.
"I just don't think there's any action out there right now," he said. "We had so few people look."
Leah Rarick and Renee Creamean, next-door neighbors in Lockport, have not found showings to be a problem.
"I think an average of two showings a week seems pretty good," Rarick said. She and Creamean listed their houses about a month ago. "While it sounds like the market is bad, my husband comes from a family of six siblings, and three of them have purchased homes in the last three months. I know people are buying."
Creamean has lowered her price to generate interest in the home.
"I'd say the market is saturated," she said. "It's not that people aren't buying homes; they just have so much to choose from."
Lereah says Chicago prices are in the typical pattern after a boom. "Price always lags, so as sales drop off, prices will follow," he said. He also said he doubted that the sales data for Chicago was correct.
"Chicago shouldn't be down that much, year-over-year," he said. "I would look at two or three months in a row to see where Chicago is. I suspect you will get better numbers in the next couple of months."
Pete Flint, chief executive of Trulia.com, a residential real estate search engine based in San Francisco, said speculative buying had fueled the price run-up in the last several years. Those investors generally have fled the market now, he said.
"Investors or speculators have disappeared completely," Flint said. "On a median basis, prices seem to be relatively steady and firm" because control of the market has reverted to ordinary consumers.
Nationwide, existing-home sales also declined, though less dramatically than in Illinois. The NAR reported Wednesday that sales nationally were off by about 2 percent and that prices had dropped, for the second consecutive month, by 2.2 percent.
Year-to-date sales are down 14.2 percent, and the trade group said median prices are unlikely to rise until early spring. Sales were at a seasonally adjusted annual rate of 6.18 million homes, the lowest since January 2005, and slightly worse than many economists had forecast.
But Lereah sees the market as improving.
"This is likely the trough in sales," he said. "We are going to see some more declining prices, but on sales, we're close to bottoming out. Buyers are coming back, and inventories have really stabilized nationally.
"We've had three months in a row of 7.3 months' supply of homes for sale, and that's very good news," he said. "It looks like the worst is over."
Not so, said Ian Shepherdson, chief U.S. economist for High Frequency Economics, a data analysis firm in Valhalla, N.Y. He expects the market to worsen and take prices with it.
"The longer-term downward trend in mortgage applications and sales should reassert itself over the next few months as people balk at using borrowed money to buy depreciating assets," he said.
He expects "a steep and prolonged downturn" in housing, with sales and housing starts dropping 50 percent or more from their peaks.
The national price drop in September was "the worst performance since the data series began in 1969," he said. "High and rising inventory is killing prices."
About 96,000 residential properties were for sale in the Chicago market the week of Oct. 17-23; a year ago there were about 69,000, according to the Chicago Association of Realtors.
Chicago real estate agents say the market is stronger than the Wednesday data suggest.
"I'm surprised that the numbers are showing that much down," said broker Mike Golden, co-founder of AtProperties in Chicago. "We're seeing more supply on the market but not a downtick in demand and activity.
"We haven't seen the floor drop out on pricing, and we don't expect to see it," Golden said. "The market is by no means dead."
As grim as the Wednesday figures for Chicago were, they were grimmer elsewhere. Existing-home sales sank nearly 32 percent in California; Florida's dropped 34 percent, the same rate of decline as in August.
In Jacksonville, Fla., where sales were down 23 percent, Pulte Homes, a national builder, said Wednesday that it is laying off one-third of its workforce.
----------
mumberger@tribune.com
posted by Carlos T Mock @ 2:46 PM
0 Comments:
Post a Comment
<< Home