By: Markus Azadeh • July 16th, 2008 •
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We’re three weeks into the second half of 2008, and it’s time for a recap of residential real estate activity in Edgebrook and Sauganash, as it happened in the second quarter.
While sipping my coffee this morning, I was reading an article on the front page of the Chicago Tribune, that talked about the “summer of discontent”, citing inflation, job losses, and financial industry meltdowns. I’m thinking, how much worse can it get (ok, if Starbucks or the Corner Bakery go belly up, we have a problem, Houston). “But seriously, it’s not like home values in Edgebrook or Sauganash are going downhill, are they”, asks Christina on the other end of the phone line? “Of course, home values in Edgebrook and Sauganash won’t … wait, what?”
This post, Edgebrook and Sauganash homeowners, I’m afraid to say, will do nothing to make your summer of discontent more bearable. On 60646 Blog, we don’t habitually serve the “The housing market is fine”-Kool Aid that some members of our national and regional Realtor associations often serve. You need to know the facts, because (a) as Realtors, it’s part of our job to confront you with the cold hard facts about home values, and (b) you need to be informed about general market conditions, prior to selling or purchasing a Sauganash or Edgebrook residence. And then there is the Comparative Market Analysis that we prepare, for when you’re really ready to “pull the trigger”.
Sales volume took a real beating in Edgebrook in the second quarter of 2008: Only 16 closed transactions which represents almost a 38% decline year-over-year, and less than half of what was closed in Q2 of 2005. Tighter lending guidelines? Buyer’s market? Sellers who are unwilling or unable to settle for anything less than what they perceive to be the market value of their properties? Your guess is as good as mine. It still doesn’t change my perception of Edgebrook as being one of Chicago’s top notch neighborhoods.
My most recent updates on Edgebrook market conditions have always been of a “good news/bad news” variety, with declining sales volume being the bad news, and steady or rising home values being the good news. Alas, this time around, the party seems to be over on the home value front, as well. Q2 2008 ended with an average sale price of $436,338 (Median: $434,450) for a single family home in Edgebrook which for the first time, in a very long time, marked a decline, year-over-year. -18% vs. Q2 2007, to be exact. In Edgebrook, we’re almost back to 2005 average home values. This is not super tragic, as long as you bought your home before 2005 and have managed to maintain some equity in it. These data confirm what I’ve been informally observing (with my jaw dropped) on the MLS in the past few weeks: Price reductions of up to $50,000 on some active listings are not an uncommon occurrence in Edgebrook, any longer. To make matters worse, average market times have risen as well: 199 days in Q2 2008 vs. 152 days in Q2 2007, and 68 days!! in Q2 2006. With the current market conditions, sellers in Edgebrook should not be surprised to find their agents request a minimum 6-month term on the listing agreement.
The only (dim) light at the end of the tunnel in Edgebrook was the fact that average sale price/list price ratios held somewhat steady at 94.6% in Q2 2008 vs. 94.8% in Q2 2007. In the spring/summer of 2005 however, sellers in Edgebrook managed to sell their homes for an average of only 2.5% below their asking prices. What goes up, must come down?
With 87 single family homes currently for sale in Edgebrook (not including homes that are being sold based on a contingency), we are looking at a supply of inventory of 16.3 months. |
With 16 closed transactions in Q2 2008, sales volume in Sauganash was on par with that of Edgebrook’s. However, year-over-year, Sauganash suffered “only” a 20% decline, the reasons for which might be found in the same grab bag as Edgebrook’s. But again, if you’re a Sauganash resident, you know that crime, for example, is certainly not a reason why relatively fewer homes sold in your neighborhood in Q2 2008. What I’m trying to say here is that as a Sauganash homeowner you live pretty close to, if not in paradise.
While home values in Sauganash followed the (downhill) lead of Edgebrook’s in Q2 2008, the decline in home values was not as unexpected and steep as it was in Edgebrook. In Q2 2008, average home values dropped by 5.4% year-over-year, after previous 0.7% and 5.2% year-over-year losses. Average market times in Sauganash continued to climb though, and registered at 227 days!!! in Q2 2008.
For the third consecutive year, average sale price/list price ratios in the second quarter have been declining as well in Sauganash, to the point that in Q2 2008 home sellers in Sauganash on average were only able to sell their homes for 94% of their asking prices vs. 98% in Q2 2005. Definitely, the sign of a fierce buyer’s market.
With 65 homes currently for sale in Sauganash (again, excluding CTG’s), it would take 12.2 months to sell off the existing inventory, assuming that no other homes would enter the market for sale. |
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great article you live in a beautiful area 
Fair enough. Thanks for all your work on these quarterly reports and for sharing them. 
Great questions, JB. In my view, there hasn't been any significant correlation between the conclusion of the tax credit and ...
I appreciate the numbers you are able to compile, and I understand that they are all you have to work with. But I wonder how valid the statistics for the second quarter are when you are dealing with such a small sample.
In Edgebrook, the average sales price seems to be dragged down by some real “dog” houses that happened to close during the most recent quarter — 6794 N Keota and 6332 N Leroy, for example.
Shortly after these closings, I did see some other houses in better condition begin to come on the market at lower than expected prices, so there has been some give among some sellers.
But I will be interested to see if the third quarter numbers show a rebound since few “dogs” have gone under contract in recent weeks — mainly because they’re all still overpriced. Again, thanks for your efforts.
Hi JB,
The numbers are what they are, although 16 closed sales do allow for a glimpse into the “housing value structure” of a neighborhood, imho. Remember, appraisers usually only require two or three additional comps to arrive at the value of a particular subject property.
Having said that, I will concede that my stats for Edgebrook have traditionally come in somewhat lower than one would expect, because I also include the stats for South Edgebrook and “south/southwest of South Edgebrook” (=Gladstone Park). Property values in these areas of 60646 are relatively lower than say, Old Edgebrook, Middle Edgebrook, Wildwood, or even North Edgebrook. However, in Q2 2008, there were only two properties that closed in (technically) Jefferson Park: 5720 N Mason at $225K and 5917 N Manton at $287.5K. These two were (not surprisingly) at the low end of the stats. For arguments sake, let’s remove these two and the two highest sales in Edgebrook in Q2 2008 (6257 N LeMai at $535K and 6860 N Wildwood at $765K), and you’ll arrive at an average sale price of $430,742 and a median of $434,450. That’s about $5,600 less on average and still a $434,450 median. Not a significant difference on 12 sales.
6794 Keota was a “fixer” whose final list price was $369K and ended up fetching $320K. Not a bad deal for a Wildwood location, even though it’s close to the Metra tracks and Lehigh Ave. 6332 N Leroy in Middle Edgebrook is pretty much a similar story: An estate sale, listed for $399K which sold for $$370K. A Georgian (2-story) style house in Chicago that needs work for $370K??? Yep. Not bad for a “dog house”, as you put it.
The problems are not the fixers JB, because fixers will eventually be fixed and end up contributing to the rise in neighborhood values. The problems are short sales which are starting to creep into our market (more so in South Edgebrook and Gladstone Park and even in Sauganash than in Edgebrook). As Realtors, not too long ago, we used to dismiss short sales and foreclosures in our market analyses as transactions that aren’t at “arm’s length”, hence not comparable. As we see more and more of these daily, guess what: Now they are comparables.
Good points all.
Since you include South Edgebrook, do you think that closings in Edgebrook Glen had helped to keep your averages higher in previous quarters. I would assume if $535K was #2 in Q2, there were no new-home closings there.
I am surprised to hear 6257 LeMai was that high and #2 in the whole neighborhood — that was a partial fixer, too. I think that buyer overpaid. But generally, I feel it’s the fixers that are brining the averages down. In addition to the 370K and 320K sales mentioned above, there was the Navajo house that came in at 332K. Just a year or two ago, there were homes on Legett and Loron that went for 400K each — I believe to flippers. Those guys are on the sidelines now, so similar houses are slipping well into the 300s. And you’re right that short sales and foreclosures will be the real tipping point if they arrive in the heart of Edgebrook/Wildwood. For now it seems that they are mostly on the fringes — Caldwell and Touhy addresses, where the buyers were probably straining to get into neighborhood to begin with.
Thanks again
Edgebrook Glen sales haven’t really played a big role in my stats, at least not in the 2008 figures. According to MLS data, 3 sales were recorded in this subdivision almost exactly one year ago at 5232 W Seminole ($813K), and at 5701 and 5705 Lockwood for $724K and $740K. There is one listing in the MLS at the moment at 5242 W Seminole for $750K that indicates that this house shall be sold at a sealed bid auction on 8/24/08. The developer, CA Development, has been reducing prices drastically in this subdivision. That is not to say that they haven’t sold more homes there, but perhaps just not through the MLS.
Also, keep in mind that alot of the housing stock in Edgebrook has not yet been rehabbed, relative to say, Lake View or Lincoln Park. But as more and more buyers “discover” this neighborhood with its suburban characteristics, they don’t mind buying fixers and paying a pretty penny for them, which goes back to the old adage of location, location, location.
the return of the flippers ….
well just when I mentioned that speculators were out of the market, I see at least one recent new offering that indicates they are back in Edgebrook.
6285 N Caldwell, a foreclosure that looked like it got a classic strip job as the foreclosees went out the door, was recently on the market at a little under 300K. The recent contingent sale closed, and now it’s back on the market at 549K with “needs work” still buried in the description (perhaps erroneously — I would hope so considering that price on a main street)
Then there’s the story of 5925 W Touhy, which closed in March at 417K and is now back on the market at 459K. The MLS listing says it’s a short sale, but the recorder of deeds lists the financing on the property at the same 417K as the sale price (who says no one does 100% financing anymore
?) So is this a flip? Will be hard to pull off, since there are three other houses on the same busy block with listing prices under 400K. No wonder some say short sales aren’t always the best deals.
JB, I’m not kidding you, but I was just going to add a comment here about 6285 N Caldwell, which came back on the market as a flip. You beat me to it. Telepathy? Anyway, I wish them good luck, but it might be challenging, as far as the appraisal.
Re: 5925 W Touhy, not sure if it’s a flip, but again, good luck getting this one appraised, because the previous owners bought it on 2/27/07 for $319K and, as you wrote, sold it for $417K a year later. Perhaps the current agent mentioned a short sale, anticipating that the property might fetch well below what’s owed, once it’s sold.
Btw, 100% financing can still be had at the moment, provided that one doesn’t need it
Short sales might be good deals for some buyers, if they’re not in a hurry to move or don’t mind waiting for an answer from the lender.
I don’t own a house. I know that the market will always shift up and down. we can never tell the limit, and the records are always broken. Today it is tough to go and buy a house, personally I will think it over in a few years.
I hope i will find an honest realtor like yourself or I might give this profession a shot my self.
Regards,
Amanda