I still have the feeling that sellers in the Chicago suburbs feel that the Midwest and our little market in Northern IL isn't as badly affected as some of the other states such as Florida, Arizona, Nevada (especially Las Vegas), etc. But IL is 8th out of the top ten states regarding foreclosures and it affects supply and demand which then affects price.
For the first half of 2009, here are the state foreclosure stats:
1. Nevada (1 property in every 16 is in foreclosure)
2. Arizona (1 in 30)
3. Florida (1 in 33 which surprises me as I thought Florida was faring worse than Arizona, although they're very close)
4. California (1 in 34 - again a surprise as I thought California would be first)
5. Utah (1 in 69)
6. Georgia (1 in 70)
7. Michigan (1 in 74 - again, I thought this would be higher based on bad news I've heard, but since this is the entire state, we're not just talking about hard hit Detroit)
8. Illinois (1 in 76)
9. Idaho (1 in 79)
10. Colorado (1 in 80 - another surprise as I haven't read any bad press for Colorado)
I've said it before, when I go out to prepare a Comparative Market Analysis in some areas the only comparable sales that have sold and closed were all foreclosures or short sales. Unfortunately, that sets the price for that particular area. Some sellers ask why we can't go back 12 months or farther. It's because appraisers make the final decision (well, nowadays some underwriters are doing that much farther down in the transaction, but that hasn't happened to any of my sales yet) and we have to understand that they only go back 6 months. In fact, in a declining market they try to go back only 3 months, but with the lack of sales that isn't always possible.
I am very busy with buyers but most of my recent closings have been foreclosure properties (investors and first-time buyers) and one of my recent transactions is handling a short sale for an Orland Park home for sale. These distressed properties are in all areas and all price ranges. I am waiting to get confirmation to show a short sale of a brand new home in Lemont that isn't 100% completed and is priced over $800,000. If these short sales do not get accepted or fulfilled in a specific time frame, these homes will go into foreclosure.
This affects current and future sellers as it can set future market value. Although short sales can be a good value, foreclosures are usually even better, although the property might be in worse condition because it sat longer with no care or maintenance (and some damage does occur while sitting). When buyers can find and get financed for a great foreclosure deal, many of them opt to make offers on those homes rather than spend a higher price on a regular sale, where they might still have to put some money into it to bring the property to their satsifaction.
What happens is foreclosures are getting multiple offers while regular sales are sitting with few to no showings, and no offers. If a seller is truly motivated to sell, they need to keep reducing price to keep up with these foreclosures.
This is great for buyers because they can now afford homes they wouldn't be able to before. I just sold a nice home to a first-time buyer that wouldn't have been able to get such a nice home for what he paid. I sold a home to a first-time buyer in a popular village that she could never have afforded to purchase a home in until foreclosures started appearing.
Did these homes need work? Yes, a little. But the difference in those prices and the prices of regular sales made it well worth the work that needs to be done in each property. Again, these buyers would not have been able to purchase anything as nice or in a particular area had it not been for the distressed sale.
Bottom line, and I've been repeating this for a while now, it's a bad time for sellers and if you don't absolutely have to sell (unless you're moving up) then maybe you should wait. For how long, I have no idea. But if you're a buyer this is a great time to buy with low prices and low interest rates. Get off that fence because you might regret not buying down the road when things get better.
If you're ready to buy please fill out my Home Finder Form or call me at 708-536-8200. If you have to sell give me a call.