North Shore Views

North Shore Market Update: 2011 vs. 2010

The other day I posted the market data for 4th quarter 2011. Today I’m taking a look at North Shore stats for the entire year. Home sales were up a modest 1% for the year, while the median price for a single family home on the North Shore dropped 2%. What’s happened is that, over the course of the year, sales have picked up while prices have continued a gradual decline. Looking back at the 1st half of the year, sales were down 11% and prices were up 4% over 1st half 2010, so sales activity has gained some real momentum in the second half of the year.

Glencoe has had a particularly strong year, with volume up 31%. Glenview and Kenilworth also posted gains. Highland Park finished the year behind 4%, but that is actually a good number compared to where it was at the end of June, which was down 27%. Wilmette finished the year down 2%, but that is at least partly due to lack of inventory for sale in the key $600K-$800K price range.

Lake Forest and Kenilworth were the only towns with positive price trends, but keep in mind that Kenilworth is a very small community and the numbers can easily be skewed by one or two large sales.

North Shore Market Update
2011 vs. 2010

Source: MRED LLC – Data for single family detached homes. Deemed reliable but not guaranteed.

Wondering what your neighbor’s house sold for? Just email us with the address of the property and we’d be happy to send you that information (caveat: only if the transaction has closed. Until then the information is not available).

Tags: Home prices, North Shore market data, North Shore real estate trends, North Shore sales trends

North Shore Chicago Market Update: 4th Quarter 2011

Given the low level of market activity during the holiday season, I decided to forgo doing an update for December. Instead I opted for a 4th quarter update, which is a better indicator of what’s really going on.

Overall, North Shore home sales increased 3% over last year, driven by stronger sales in Glenview, Lake Forest and Highland Park. Unfortunately, pricing trends were not as positive, as the median price for the North Shore fell 9% from last year, to $500,000. The greatest drop was felt in Northfield (-32%) and Wilmette (-21%). Market time averaged 5.8 months for homes sold in the quarter, down 8% from 2010.

The two bright spots were Glencoe and Highland Park, the only two communities with increases in both sales and median price. In fact, this is probably the best performance we’ve seen for Highland Park in a while. It is the North Shore community that has suffered the most from the market downturn.

North Shore Market Update
4th Quarter 2011 vs. Year Ago

Source: MRED LLC- Data for single family detached homes. Deemed reliable but not guaranteed.

Tags: Home prices, North Shore market data, North Shore real estate trends, North Shore sales trends

Wilmette Housing Inventory by Price Point

The other day I wrote about the housing inventories on Chicago’s North Shore and how they’ve declined in the last two years. While most towns on the North Shore still had at least a year’s worth of inventory as of the end of January, Wilmette stands out as the one market that has less than six months supply. In fact, at some price points there are actually not enough homes on the market to meet the demand.

Wilmette Active Listings and Odds of Selling

Source: MRED – single family home listings and sales by price

The chart shows how well supply and demand are balanced at specific price points. It also shows the odds of your house selling in the next six months based on its price. For example, in the $600,000-$699,000 range there are more than twice as many buyers as there are homes for sale, given that the number of sales in the last six months was 222% of the number of homes currently listed for sale.

The implication for buyers at this price point: if you see a house you like, you probably ought to go ahead and make an offer. If you wait, it may be gone.

The implication for would-be sellers at this price point: if you are trying to decide whether to put your house on the market right now, the answer is yes. If it shows well and is properly priced, it should sell quickly. If you are at the low end of the $700,000-799,000 range (where there are more listings than buyers), you may want to consider lowering the price to $699,000 so that you can fish where the fish are.

Tags: Home prices, Wilmette

North Shore Home Prices – 4th Quarter 2010

Yesterday I compared home price trends on the North Shore of Chicago to the Case-Shiller Index for the greater Chicago area. The comparison was for the month of October, and on the whole the North Shore looked to be faring better than the Chicago area, where home prices fell 6.5% vs. October of 2009. But then when I looked at individual towns on the North Shore the numbers were all over the board and probably misleading because of small base sizes.

So here’s a look at price trends for the three months October-December 2010. That will give us a much truer picture of what is really going on here on the North Shore.

North Shore Home Price Trends

Source: MRED- Single family average home prices. Deemed reliable  but not guaranteed

The  numbers are still all over the board, with prices in some towns on the upswing vs. last year and others still on the decline. Overall, prices on the North Shore are 3% ahead of last year in the fourth quarter, driven primarily by gains in Evanston, Winnetka and Lake Forest. Kenilworth and Northfield were also positive for the quarter, while Wilmette, Glencoe, Highland Park and Glenview were down.

Related articles

• North Shore Home Prices vs. Case-Shiller Index

Tags: Home prices

North Shore Home Prices vs. Case-Shiller Index

There was a collective shudder in the Chicago area when the S&P/Case-Shiller home price index for October was released on Tuesday. For the second month in a row, Chicago had the distinction of having the worst year over year price decline of twenty cities. Home prices in the Chicago area fell 6.5% vs. October of 2009. A distressing statistic to be sure, but real estate is local so most of us are left wondering how that compares to our own town or neighborhood.

Source: MRED- Deemed reliable but not guaranteed

On the North Shore the picture is not quite so bleak. Looking at averages across nine towns and villages  from Evanston to Lake Forest, sales prices were about flat for single family detached homes and down 3% for attached single family homes (condos and town-homes) in the month of October. Now, this isn’t the same methodology used by Case-Shiller, with matched price pairs and the like. Instead this is a straight average of prices of all the homes sold during the month. When you drill down to look at the individual towns you see more of a mixed bag, with price trends all over the place, some quite positive and some not so positive:

The fact is that data for one month isn’t all that helpful as the base sizes are so small. Better to look at the data for the most recent quarter to see what’s really going on. I’ll do that tomorrow.

Tags: Home prices

HomeGain Survey Says Prices Will Continue to Decline in Illinois

HomeGain just released the results of its 3rd quarter survey of real estate professionals and homeowners for the state of Illinois.

Just about all the agents and brokers surveyed said that home values decreased in the last year. No surprise there. My only question is where does that 2% live who saw home prices increase? I want to go live there!

When asked if prices will continue to fall in the next six months, 69% of real estate professionals said yes and 25% said they expected prices to stay the same.

This is a nifty piece of research. But, as we all know, real estate is local, so how well does this data reflect what’s going on here on the North Shore? Well, I don’t think there were any agents represented from this neck of the woods given the response to another question further down in the survey, which was: what’s the average home price in your area? Only 4% said it was >$500K and 0% said >$800K, so they’re probably not from the North Shore.

I think we’re in better shape than other parts of our state. Our median price (for detached single family homes in nine North Shore markets) for the latest three month period (July-September) is actually up 6% vs. year ago. Does that mean we’ll see a steady increase from here on out? Probably not, but at least we’re not in negative territory.

Tags: Home prices, HomeGain

The Odds of Selling Your Winnetka Home

If you are planning to sell your Winnetka home, chances are your real estate agent has shown you a CMA (comparable market analysis) to support her pricing recommendation.  Basically, a CMA shows you what similar homes in your neighborhood have sold for in the past few months, so that you know where you should price your home to get it sold.

I have found that a helpful supplement to a CMA is an analysis of how many real buyers there are at each price point. For purposes of this  exercise a real buyer is the same as a sold home. Thinking about it this way enables us to get our minds around how many real buyers there are out there in a particular price point, because if someone purchased a home they are certainly a real buyer. Taken together with the number of homes listed at this price, you can calculate the odds of selling your home within the next, say, six months. It’s an easy way to see the level of activity for every price point;  it’s also a good tool for determining your pricing strategy. It provides a pretty compelling picture of how moving from one price tier to another could dramatically improve (or hurt) your odds of selling.

Take the following as an example. The chart shows price tiers for Winnetka single family homes in $100,000 increments. Dividing the real buyers (homes sold) by the number of homes currently on the market, you can get a good sense of your probability of selling, depending on which price tier your home falls into.

In Winnetka, a home that is appropriately priced within the $900-999,000 tier has a very good chance of selling within a six month period (100% according to this chart). A home between $1,000-1,999,999 also has a very good probability of selling (75%). But get over $2,000,000 and the odds decrease significantly because there are more than three times as many homes for sale as there are buyers.

What that says is that if your home is priced in the low $2,000,000’s, you may want to consider rethinking your pricing strategy. Bringing it down to the next tier may be what it takes to get it sold. I recently advised a client whose house had languished for a year on the low end of that $2,000-2,999,999 tier to consider bringing it down to $1,999,999. Once they did, the house sold within two weeks.

Tags: Home prices

Home Prices on the Rise?

The National Association of Realtors just released the latest data on the housing market and the numbers are cause for cautious optimism.   Nationally, home sales rose almost 23% in April for the U.S. In Illinois sales grew 34% over last year. And in the Chicago area home sales jumped 47%.  (These numbers are for single family homes, condos and townhouses).

But  the improved affordability of homes has been a double-edged sword. Great for buyers, but horrifying for sellers as they watched their homes lose value month after month as home prices plunged  from  2006 highs. Now, finally,  prices seem to be starting to  turnaround. Nationally the median home price increased 4% over last April. Illinois home prices rose 5% and in Chicago the median price incresed 3.2%, the first annual increase in nearly two years, according to the Illinois Association of Realtors.  Good news for homeowners, finally.

But what about the North Shore? How did we fare? From a sales perspective, great. Things are moving again and we are even seeing multiple offer situations. Home sales were up a whopping 52%. vs. last April (which was the worst month on record for some North Shore communities). But here on the North Shore prices are not yet making a comeback. The median price for the North Shore overall was down 6% vs. last April. However, looking closer at the individual towns, the results are all over the board. Evanston, Northfield, Glenview and Winnetka were bright spots, while communities to the north (Glencoe, Highland Park and Lake Forest) did not fare so well:

Median Home Price Change (April 2010 vs. year ago)

Evanston   +8%

Wilmette   -16%

Glenview   +40%

Winnetka   +45%

Northfield   +51%

Glencoe   -80%

Highland Park   -99%

Lake Forest   -21%

A word of caution: one month does not a trend make. We will need a couple more months of data before we can draw any conclusions about where prices are headed on the North Shore. Stay tuned.

Tags: Home prices

The 5 Pitfalls of Overpricing Your House

These days I am finding that the “pricing talk” is one of my least favorite parts of the job. I feel for my clients when I have to tell them that their house is not worth what they thought it was or what it used to be. It’s especially hard when I have to tell them that it’s worth less than they paid. And I know how they feel because I am in the same position as they are. Luckily for me, I don’t need to sell my house.

Usually, after I deliver the bad news about where I think we should price the home, I hear one (or more) of the five “buts”:

1. “But the other agent  said it was worth x” (a higher number)

2. “But my neighbor sold his house for x” (a higher number)

3. “But my house is much nicer than the ones you’re comparing it to”

4. “But if I price it that low now, then the buyer will still negotiate it down and I’ll make even less money.”

5. “But why can’t we just start a little higher? We can always reduce it later.”

All of these are natural reactions under the circumstances. But these “buts” can lead to pricing decisions that will ultimately cost you money. Here’s how to avoid these five pricing pitfalls:

“But the other agent said it was worth x”.

I don’t want to say that there are agents who will inflate the price to get the listing, but it can happen. More likely the agent is throwing out a ballpark figure without having (yet) done an in depth competitive market analysis. Don’t ever hire an agent based on the price he or she gives you. Your choice of agent should be based on experience, track record, knowledge of your specific market and the marketing plan for your property. Above all it should be based on trust and confidence that the agent has your best interests at heart.

“But my neighbor sold his house for x”.

When? Three years ago? The fact is, unless his house is almost the same as yours and he sold it last week, it’s an irrelevant comparison. The market has changed and the hard reality is that your house is almost certainly worth less now. You need to do (or make sure your agent does) the research to determine the value of your house today. You should only be looking at comparable homes that have sold in the last three months. AND you should be looking carefully at the homes that are on the market today, as this is your competition.

“But my house is much nicer than the ones you’re comparing it to”.

We all become emotionally attached to our home. It’s our refuge and our haven.We’ve added our personal stamp. We’ve made lots of wonderful memories there. But when you go to sell your house, you have to emotionally disconnect. This is not your home anymore. It is a product for sale and you need to look at it objectively vs. its competition. Then price it accordingly.

“But if I price it that low now, the buyer will still negotiate it down and I’ll make even less money” .

This is one of the most common “buts” and I have to admit I’ve been guilty of it myself.  The problem with pricing a house higher than it should be because you “can always negotiate” is that it will attract less buyer interest because it doesn’t measure up to the other houses at that price point, and you won’t end up having anyone to negotiate with. It seems counter-intuitive, but pricing it lower may actually net you more money in the end, because it will attract a lot of interest and potentially multiple offers and a bidding war.

“But why can’t we just start a little higher? We can always reduce it later.”

This is the slipperiest slope of all if you are in a depreciating market, because you end up chasing the market down and are always higher than you should be. You will end up months later with an unsold house at a list price that is much lower than the price you could have sold for if you had only priced it right from the beginning.

The other thing to keep in mind is that a new listing gets the most buyer interest and activity in the first 2-4 weeks after it goes on the market. If it is priced too high, you are only helping one of your well-priced competitors make a sale. And your home will be invisible to those people who are its most likely buyers, because it is out of their price range. When it doesn’t sell after a few weeks it becomes “stale” and people begin to think there’s something wrong with it. So you reduce it, but you’re still behind the market, and so on.

Like it or not, in this market pricing will be the deciding factor in whether or not you sell your house.  If you really need to sell your house, then you need to price it so that it is the best house at the best price, and not a penny more. End of story.

Tags: Home prices, home selling tips, Pricing your home to sell