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...

Shorts sales - how much do you save?

In my post from yesterday I wondered what the price difference is on units that are shorts sales vs. non-short sales. As I was digging in, I realized there aren't enough short sales in the market to get good data. But I did do a quick analysis anyway. Here's what I found:

Short sales by the numbers (Chicago north side, condos):

• 3.84% = percentage of short sales listed
• 5.40% = percentage of total sales since 01/01/2009 that are short sales
• $226,250 = median price of non-short sale 1-bedroom on the north side
• $224,500 = median price of short sale 1-bedroom on the north side

To conclude:

1. Short sales represent about 1 in 20 sales
2. Short sales represent about 1 in 25 listings
3. You can save about 1% if you buy a short sale

Back to our regularly scheduled analysis...