By: Markus Azadeh • August 25th, 2010 •
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Market conditions for residential real estate in Edgebrook, Sauganash, and North Gladstone Park were on a firm rebound course in the second quarter of 2010. Well, Edgebrook and Sauganash at least, but we’ll get to South Edgebrook and Gladstone Park in a little bit. Overall, it looks like we may have reached the bottom of the market in 60646, if I may cautiously speculate. Even Zillow seems to support this viewpoint.
Distressed properties still pose a problem in most neighborhoods of Chicago, but the good news is – and this is based on my daily observation of and interaction with the market – that there are buyers / investors / rehabbers for distressed properties. If it wasn’t for them cleaning up the pool of distressed inventory, we’d really be in deep trouble. Banks (sellers) on the other hand, are readily and steadily trimming the prices of their assets to which they have no emotional connection whatsoever. All this creates a perfect market, although home values of others may suffer in the process. On with the Q2 2010 stats…
| The Edgebrook residential real estate market made further progress in Q2 2010. Not only because 15 more homes were sold vs. Q1 2010, but more importantly, because six more homes were sold vs Q2 2009.
Moreover, at $460,000, the median sale price in Q2 2010 increased by 3.1% over Q2 2010. Even better, the average market time of homes in Edgebrook dropped in Q2 2010 by almost 18% to 156 days, vs. Q2 2009. Is it just me, or do the Q2 2010 figures for Edgebrook bear some resemblance to the Q2 2007 figures?
List-price-to-sale-price ratio improved as well in Q2 2010: A 2.7% increase vs. Q2 2009 to 92.7%. And this despite the fact that out of the 24 sold homes in Edgebrook, only two were short sales, and none were bank-owned (REO) sales. Edgebrook home values starting to find their way back to old glory?
With 68 homes currently for sale in Edgebrook, the MSI-Index (Months Supply of Inventory) stands at 8.5 months which means that if no other homes came on the market for sale, it would take 8.5 months to sell off the existing inventory of homes in Edgebrook. This is a very reasonable absorption figure that is trending towards a balanced real estate market. |
| Good news first: The 23 homes sold in Sauganash in Q2 2010 make this the best second quarter in at least the past five years. The so-so news: Out of the 23 sold homes in Q2 2010 in Sauganash, four were REO (bank-owned) homes, and one was a short sale. Together, these 5 transactions accounted for $1,236,000. With a total Sauganash Q2 2010 market volume of $10,295,000 this represents exactly 12%. Ouch, stings a little.
In Q2 2010, the median sale price in Sauganash declined by 6% to $400,000 vs. Q2 2009. Average market times though, declined as well from 266 days in Q2 2009 to 187 days in Q2 2010. The five distressed properties certainly contributed to that.
The sale of the five distressed properties also helped bump up the sale-to-list-price ratio by a good percent vs. Q2 2009. Excuding these five sales, the ratio would have been 92.3%, almost exactly the same as in Q2 2009. Still, not a bad result, considering that we’re not out of the woods yet.
With 62 homes currently for sale in Sauganash, the MSI-Index (Months Supply of Inventory) stands at 8.1 months. Again, this is quite a reasonable absorption figure that is pointing towards the direction of a balanced real estate market.
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| Just like in Sauganash, in Q2 2010, South Edgebrook / Gladstone Park obliterated the unit sales figures of its past five second quarters. 15 homes were sold/closed here in April, May and June 2010. Nice! However, five of them were REO (bank-owned) sales, and two were short sales. These seven distressed properties accounted for 39% of the total Q2 2010 sales volume in South Edgebrook / Gladstone Park.
The fact that almost half of all homes sold in South Edgebrook / Gladstone Park in Q2 2010 were distressed properties also made an impression on home values in this section of 60646: The median home price plummeted to $200,000 which is a decline of 40.3%!!!! vs. Q2 2009. It’s like I said before: Banks just want to get these non-performing assets off of their books. If you think you might get caught in this “crossfire” with the sale of your non-distressed property, perhaps you ought to consider delaying the sale of your real estate, if you can. And that’s because appraisers are no longer excluding “non-armslength” transactions from comps. When it rains, it pours, so incidentally, average market times in Q2 2010 increased as well to 153 days vs. 90 days in Q2 2009.
Again, a sale-to-list-price ratio of 96.7% comes as no surprise, considering that three of the five bank-owned (REO) properties sold in South Edgebrook / Gladstone Park in Q2 2010 sold above listing price, and three other distressed properties sold above 95% SP-LP. It looks good on the chart though.
With 60 homes currently for sale in South Edgebrook / North Gladstone Park, the MSI-Index stands at 12 months. Not a terribly high absorption figure, but still indicating a strong buyer’s market.
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How does the end of the tax credit factor into your cautious speculation that the market has reached a bottom? How does the current traffic of “traditional buyers” for non-distressed homes compare to spring? I know the investors and rehabbers would have been unaffected by this, but figured the regular homebuyer was now on the sidelines. Or perhaps this segment isn’t driving the market anymore?
Great questions, JB. In my view, there hasn’t been any significant correlation between the conclusion of the tax credit and real estate market activity in 60646. If there was, logically, I would have had to conclude that we’re still in a state of decline. I’m suggesting that we may have reached bottom, because (a) Edgebrook home values are up compared to the past two second quarters, (b) Sales volume is up in all sub-neighborhoods of 60646, even though home values are still somewhat declining in Sauganash, and taking a downright beating in South Edgebrook / North Gladstone Park. But keep in mind that distressed properties are being sold, hence we’re cleaning the slate for a recovery. This is a good thing, and a sign that we’re leaving the valley.
The Edgebrook market is being driven by move-up buyers, mainly. This group is not on the sidelines in Edgebrook. They are fortunate to be able to afford a move-up residence here, and they take advantage of the market conditions, with or without a tax credit. In other 60646 sub-markets, the unfavorable job market may be a reason why “traditional” home buyers haven’t come out in droves yet. Neighborhoods in 60646 haven’t lost any of their natural attraction, so I’m chalking it up to uncertainties with people’s jobs. Let’s wait until the spring of 2011.
Fair enough. Thanks for all your work on these quarterly reports and for sharing them.