After all the bad economic news we received from Wall Street over the past couple of weeks, it would’ve been nice to conclude the month of September at least with an upbeat post about solid real estate market stats for Edgebrook and Sauganash, in the third quarter of 2008. Alas, the third quarter did not produce any noteworthy results that could make us cheer and forget about the shocker of seeing declining home values in Edgebrook and Saugansh, at the conclusion of the second quarter of this year. To be sure, there was some good news, as you will see shortly, but in this past quarter, Edgebrook and Sauganash were not spared by the generally weak residential real estate market conditions.

The methodology of the analysis: All data is derived from MRED (formerly, Multiple Listing Service of Northern Illinois), for closed single family homes between July 1, 2008 and October 3, 2008. I decided to include the first three days of October, because it is reasonable to assume that closings during that time period were originally scheduled for the end of the month (September) – as is usually the case – but were pushed into the first few days of October for scheduling or “technical” reasons, presumably. All closed homes were in 60646, and closed units in South Edgebrook and Gladstone Park were included in the Edgebrook figures. Next year, at the conclusion of Q1 2009, I am hoping to be able to separate the Gladstone Park figures (i.e. any residence in the Elston/Milwaukee Ave.-Bryn Mawr Ave.-Nagle Ave. triangle) from the Edgebrook figures, so as not to dilute the “true” Edgebrook home values. It’s on my to-do list for 2009.

Edgebrook ↓↑

Year-over-year, sales volume in Edgebrook declined by 21% to 33 closed homes vs. 42 in Q3 2007. However, this figure was pretty much on par with the third quarter results of 2005 and 2006. Given the fact that in 2005 and 2006 we weren’t yet dealing with tight credit guidelines and a shortage of mortgage money, in general, I chalk this one up as a win. Not that it would be statistically meaningful, but still, 33 closed homes in Q3 is a 106% increase over the 16 homes that closed in Edgebrook in Q2 2008. Just sayin’… Now, for the bad news: Market times continued to increase, and worse yet, home values declined for a second consecutive quarter, in Edgebrook. The average “Days on Market” figure in Q3 was 127, up 25% versus the same quarter last year. At the same time, the average sale price took a nosedive to $475,370 which represents a decline of 4.1% year-over-year. Gladstone Park figures were negligible in these stats (only 2 closed homes, and one being an auctioned-off new construction) which actually makes these figures scary, from an Edgebrook point-of-view. Of the 33 homes closed in Q3 2008, only 3 were “short sales” and 2 were bank-owned properties, which still leaves us in the dark as to why average home values in Edgebrook are trending downwards. Until you see this chart: Based on what I’m seeing in the above chart, it appears as though Edgebrook home sellers have finally accepted the fact that we are operating in a brutal buyer’s market, in which buyers ultimately determine real estate values (as is the case in a seller’s market). Notice the gap between average list price and average selling price in Q3 2008: A whopping 6.5%! A year ago in Edgebrook, sellers would not part with their homes if buyers didn’t offer at least 3% below asking price, on average. So, while last year’s Edgebrook buyers finally gave in after 102 days on average, time was on the side of Edgebrook buyers in Q3 2008, which also explains why homes stayed on the market almost a month longer on average, ultimately forcing sellers to accept relatively lower offers than last year’s. With 95 single family homes currently for sale in Edgebrook, the absorption rate (months supply of inventory) measures 8.6 months.

Sauganash ↓↑

Third quarter sales volume in Sauganash was a breath of fresh air as well, ending with 21 closed single family homes, beating last year’s Q3 figure by 9 more sales. Even more relieving was the fact that Sauganash came back from a relative sales drought in the previous (second) quarter of this year when only 16 homes closed vs. 20 in Q2 2007. On the home price front though, Sauganash single family homes – as in Edgebrook – continued to suffer from a decline in average value. 22% vs Q2 2007, to be exact. In fact, Sauganash average home values in Q3 2008 were the lowest among Sauganash Q3 figures in the past four years. The fact that the average market time for homes in Sauganash stood at 204 days in Q3 2008, did not help at all. Or, perhaps, it was an explanation for declining home values in this neighborhood. Interestingly enough, neither one of the closed 21 homes in Sauganash in Q3 2008 were short sales or bank-owned properties which might have been an explanation for declining home values. That is even more puzzling, given the fact that there are a respectable number of pre-foreclosure and some REO and auction-bound homes on the market in Sauganash, at the moment. This tells me that the vast majority of short sales in Sauganash either fail to close, or just take an exorbitant amount of time to transfer title. The list price to selling price ratio in Sauganash followed the same pattern that could be observed in Edgebrook in Q3 2008, except in Edgebrook, it wasn’t a trend at all, at the end of Q3. In Sauganash, we’ve been seeing sellers become more and more negotiable, for the past three years in Q3. Again, this can probably be explained as a result of rather long market times, but in any event, Sauganash buyers were able to negotiate average final home prices in Q3 2008 that were more than 2% below the ones in Q3 2007, for an average total of almost 6% below asking price. At present, there are 63 single family homes for sale in Sauganash which translates into a 9-month supply of inventory. Let’s hope this figure drops or at least stays in the single digit, by the time summer 2009 rolls around.

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