Chicago Housing Bubble

Short sales to finally live up to their name

Short sales are a pain in the ass. Plain and simple. 

Oh I get it - the idea sounds good: "Wow! We can buy this property for less than market value, the seller avoids foreclosure, and the bank stops losing money on the loan! It's a win/win/win!"

And that's true. In theory. There's just one problem: banks can never seem to get their act together in a timely manner about the offer a buyer is making. And in some cases they never answer at all.

This new legislation should help. If banks were required to answer within 10 days on short sale properties, our market in Chicago will be crazy in 2010 as the short sale inventory finally gets eaten up. 

Wait - I think the inventory will get eaten up. But what will that mean to prices? If buyers are more inclined to buy short sales and banks are willing to take lower offers, doesn't that hurt the overall market (for sellers)? Hmmm...

Realtor.org shares useless "market" information

I want to re-iterate the PRIMARY rule of Chicago Housing Bubble: real estate is a LOCAL business. I'll never understand how national numbers are helpful to anyone, anywhere.

Tomorrow I'll be sharing the month/month numbers over the past 5 years in our watch neighborhoods. What you'll see is that November and December were up dramatically from 2008. And January should be interesting to see as well (but we don't have a Delorean, so we'll just have to wait).

Meanwhile, here's the excerpt/link:

Contract activity for pending home sales fell after a surge of activity in preceding months to beat the original deadline for the first-time home buyer tax credit but remains comfortably above a year ago, according to the National Association of Realtors®.

via www.realtor.org

Home selling season starts before the Superbowl

Mary Umberger hits the nail on the head in this piece from the Trib. If you're thinking about hanging around until the Superbowl (Saints vs. Colts?) to put your place on the market, you're waiting too long.

As we discussed last year, February ranks in the top half of when buyer decisions are made (at least in the condo market). Waiting until March is probably waiting too long. And anecdotally, I can tell you that I've sold plenty of listings in previous Januarys.

On Thursday this week we'll have the month/month breakdown of contracts written in Chicago over the past few years.

Warren Buffett buys Chicago real estate firm

You know, I'm a real estate agent and all, but I'm a self-loathing real estate agent. Most news about brokerage is boring and (for the most part) inconsequential to the lives of buyers and sellers (much less, the market as a whole). But when Warren Buffett is involved, I can't help myself.

Here's the news - big guy bought Koenig and Strey. Full story here. I love my brokerage (like, a lot), but this still makes me a little jealous. I want to work for Warren Buffett!

This month in Real Estate - July

The latest "This Month In Real Estate". Enjoy.

Keepin' it real

Hello Gapers Block readers!

We noticed a spike in traffic over here in our little corner of the WWW. Low and behold, one of my favorite sites said something nice about Chicago Housing Bubble!

I've been meaning to do this, so now is as good a time as any to share the ground rules here at CHB:

1. Real estate markets are local. They should be talked about and analyzed in a local context. Let me put it to you this way - if you own a condo in Buena Park, your local market is different than that of someone who owns a single family home in Lincoln Square. No poorly-researched report that you're going to see on The Today Show or Fox and Friends is going to help you understand your local market. Long story, short - we keep it real.
2. With locality in mind, we pay close attention to Chicago's northside market. Specifically, when we share studies about trends, supply/demand, prices, etc., we talk about: Near North (Gold Coast, Streeterville, Old Town), Lincoln Park, Lakeview (including Wrigleyville and Buena Park), North Center (Roscoe Village, St. Bens), Lincoln Square, Ravenswood, Uptown, Edgewater, Andersonville, Bucktown, Wicker Park, Albany Park, Irving Park and Logan Square. Sometimes I'll throw in an Evanston...
3. While this is where our focus is, we take requests. Wanna know what's happening in the West Loop? Go ahead and ask. I'll whip something up.
4. Everything is homemade here. I might refer to the Case-Schiller index or some crappy article I saw in Crains, but when I put together numbers and talk about trends, they are from the Multiple Listing Service of Northern Illinois. I take raw data, boil it down and show trends that tell the REAL story of our market.
5. My methodology is no secret (and never should be - remember that next time you read a generic real-estate article on MSN). If you're not sure how I derived numbers, just ask. I'll be happy to explain.
6. We cover the single-family home and condo markets.
7. Truth and accuracy are more important than being interesting.
8. Opinions of all kinds are welcome.

I guess that's it.

I have a new study on single-family prices coming out tomorrow. See you then?

*THIS* is the bottom?

"Welcome to the bottom: Housing begins slow rebound"

The AP is breaking CHB's rules all over the place in this horribly under-researched and generalized look at the housing market.

What rules, you ask?

1. Real estate markets are local and should be studied at the local level

Actually, that's the only rule. How can these guys talk about being "at the bottom". Are we at the bottom in Chicago where we've seen a demand reduction of 43% in condos and 30% in single-family homes THIS YEAR?! Is Detroit at the bottom with their prices at 1995 levels (and slipping)? Are we at the bottom when unemployment has not stopped climbing and financing continues to be extremely challenging?

Let me take some of this back. These hack journalists *did* get one of the miserable, stoner interns to pull some boring/general data from some website to report some regional numbers (maybe I missed it, but did they cite their source of all this data? I didn't see it. Well done guys. No wonder people don't buy newspapers anymore.)

Read it if you must. But don't assume we're at the bottom here in Chicago. We have about 12 months to go.

The Trib knows what they're talking about

Actually, that's not exactly true. Most people in the world DON'T know what they're talking about when it comes to real estate. But Ilyce Glink had something in the Trib today that made *some* sense in an otherwise senseless market. She put together the "6 reasons your house won't sell". It's a quick read and a reminder of the fundamentals of home selling.

You know why agents get paid? Because most people don't want to learn SIMPLE RULES about how houses get sold. Like Gene Hackman told those boys in Indiana - it's all about the fundamentals...

(P.S. I dare you to challenge me on this point: Hoosiers is the best sports movie ever.)

Chicago's index defys all odds and... BOUNCES

Yesterday, the Case-Schiller report surprised me by announcing that Chicago was UP (yes, UP) in it's index from April to May. I was shocked. The Sun-Times carried the story and talked about the "glimmer of hope" we're seeing in the real estate market.

I quote the Case-Schiller index all the time. It's probably the simplest view of the real-estate market here in Chicago and the other 19 cities that have their own indexes. It's not perfectly accurate, but it's usually pretty close.

But I don't understand how Chicago is seeing a drop in demand of over 40% and suddenly the market on the north side BOUNCES? Any economist will tell you that when a market has momentum, it can't turn on a dime.

And yet, here's the index graphically in all it's bouncing glory.

I don't get it. More to come on this.

Forbes thinks they know what's going on in Greektown

In their never-ending quest to save their horrible publication, Forbes has published another boring list of stuff-that-no-one-should-lend-any-credit-to.

This time it's the list of neighborhoods where home-prices have fallen the most. Usually I don't like to give these kind of crap sandwiches any attention, but I had to this time because Greektown (in Chicago) is listed.

According to Forbes, the neighborhood home prices are down 50% year-over-year. As usual, I'll be doing some independent analysis to check their work. Something tells me that if home-prices are down 50% in Greektown from last year, we would have heard about it by now.