CHICAGO HOME SELLERS! DO THEY HOLD THE ANSWER FOR CONTINUED HOUSING MARKET BLUES?
CHICAGO HOME SELLERS! DO THEY HOLD THE ANSWER FOR CONTINUED HOUSING MARKET BLUES?
DESPITE FALLING HOME PRICES MORTGAGE INTEREST RATES AT HISTORIC LOWS SELLERS HESITATION TO "GET REAL" MAY BE PART OF THE REASON FOR CONTINUED DOLDRUMS.
Have you read all the news?
The U.S. Economy is improving. Indicators are positive. Unemployment Rates both across the U.S. and here in Chicago are down. Optimism is building.
So why is the Housing Market in Chicago still floundering? According to some the attitude of Home Sellers may hold the key!
Last week in an article posted by Chicago Tribune Real Estate Columnist Mary Umberger Mary interviewed Syracuse University Professor Gary Engelhardt. Mr. Engelhardt seemed confounded by the continued negative attitude of today’s home sellers as well as those homeowners contemplating whether or not they should sell.
According to a study recently completed by the Research Institute for Housing America and the Mortgage Bankers Association 80 percent of those surveyed felt now is a good time to buy a home.
Polling home sellers however provided a far different answer. Today only an estimated seven percent feel now is a good time to put their home on the market to sell! During better days in the real estate market as recently as 2005 as many as 60% of home sellers harbored positive feelings about selling their homes.
Across the U.S. the inventory of homes for resale by individuals (not by banks who foreclosed on them) is down more than 20% over the past year. Perhaps Engelhardt says many prospective home sellers don’t believe it is in their best interest to sell at this time.
Many of course are underwater owing more on their outstanding mortgage balance than their homes are worth today. (Depending on which Chicago Neighborhood or Suburb you are looking at as many as 42% of homeowners may now be under water according to National Association of Realtors estimates). Most homeowners do not have the funds to bring to closing to pay the deficit – even those who can bridge the mortgage gap are unwilling to do so.
Others may still have not gotten realistic as to the value of their home in today’s market. Indeed several Dean’s Team clients refuse to realize that their home’s value may be far lower than what they originally paid perhaps over a decade ago. Comparable property pricing from even a year ago still is higher than the market bears today.
Many say they are waiting for price levels to improve according to Engelhardt. But that wait will likely be a long one as many project. The Mortgage Bankers Association sees essentially flat pricing over the next couple of years as a "shadow inventory" of low-priced distressed and bank-owned homes lay in wait to hit the market.
But when the market eventually sees higher pricing or when sellers are forced into selling by family or financial circumstances will the number of potential buyers still be as strong? Hard to predict he says.
What might turn things around? Engelhardt points to the obvious – the number of underwater sellers has to decline the employment picture has to improve along with salary levels. So does the general level of optimism that better times lie ahead.
It seems however that these changes are likely to come slowly. Here in the Chicago Neighborhoods and Suburbs our Real Estate Team serves we’re seeing a pick up of homes and condos under contract. But those selling are doing so at low prices and many of these sellers have Short Sales – often the only way out when you owe more on the mortgage than your home is likely to sell for.
DEAN MOSS DEAN’S TEAM CHICAGO
