Distressed property bargains create glut in chicago housing market
The Home Front
10/27/2010 9:55 PM
The Great Recession has put for-sale signs on a large number of distressed properties in the Chicago area, and as a result this could also be the year of unusual real estate bargains, experts say.
The RE/MAX Northern Illinois real estate network reports that the average price paid for those homes that changed hands in September in the metro Chicago real estate market was $238,592, down 4.6 percent from the average price a year earlier.
“Home prices are still under pressure from the large number of distressed properties on the market,” said Jim Merrion, regional director of the RE/MAX Northern Illinois. In September, distressed properties accounted for 2,239 sales in the metro Chicago area, or 42.5 percent of all closed sales.
“That is the highest percentage of distressed sales, relative to total sales, that we have seen since March and helps explain why prices looked softer in September than in August,” said Merrion.
He noted that for detached homes the percentage of total transactions represented by properties selling for less than $150,000 rose to 38 percent this September from 32 percent a year earlier.
The high percentage of distressed sales and the large number of homes changing hands at the low end of the price range, “suggest that investors, who are often attracted to these types of properties, were quite active in September,” Merrion said.
Year-to-date home sales in the metro area through September remain 14 percent higher than during the first nine months of 2009. A total of 5,264 homes changed hands in September compared with 6,893 in September of 2009, a 24-percent decline that is quite similar to sales levels seen in July and August.
“We believe that over the next several quarters the metro Chicago real estate market will hold at current levels, relative to year-earlier volume, and then we expect activity to increase substantially as the jobs picture improves,” said Merrion.
Record low mortgage interest rates and more affordable home prices is creating a buyer’s market this fall, according to the Illinois Association of Realtors.
“An extraordinary buyer opportunity should continue as 30-year fixed mortgage rates remain in rock-bottom territory as they were just last week averaging 4.19 percent for our region,” said Realtor Sheryl Grider Whitehurst, president of the IAR.
The city of Chicago the median home and condo price in September was $180,000, down 20 percent from $225,000 a year ago in September of 2009. Year-to-date sales remain up 11.1 percent January through September 2010 with 15,285 sales compared to 13,760 home sales for the same period in 2009. The year-to-date median sales price for the city of Chicago is down 7.9 percent to $210,000 from $228,000 for 2009.
“With condo sales in the city of Chicago up more than 11 percent year-to-date from the same period in 2009, we see an expansion of choices for potential buyers to jump in the market now and find great value for homes they may have not otherwise been able to afford,” said Mabel Guzman, president of the Chicago Association of Realtors.
Don DeBat’s weekly real estate column is syndicated by DeBat Media Services. For more home-buying information visit his website at: www.dondebat.net.