The title above is a link to the Case-Schiller report in the Sun-Times this morning.  By and large, the data mirror what I’ve been reporting for Evanston, Wilmette and Winnetka and the North Shore – house prices are trending down.  There is a large inventory, credit is still tight and sellers are reluctant to price down to meet the market.  But I think there are success stories that are lost in the data which give us hope for a stronger market:

(1) There are buyers ready to buy IF THE PRICE IS RIGHT. I don’t mean prices that are drastic reductions that understate the value of a home or that imply financial distress. (2) Sellers who opt for a smart price find that strategy creates a strong value proposition relative to comparable homes. (3) These sellers get many (and I mean 30-40 in seven days) more showings and contracts within days.

So, while broad area statistics continue to trend downward, there are properties selling in Evanston, Wilmette and Winnetka.

DS

Why Prices Will Soften in the 1st Half of 2011

by The KCM Crew on January 13, 2011

The big question facing real estate in 2011 is which direction are home prices headed. We agree with most experts who believe prices will continue to soften for the first half of the year. Supply and demand will determine this. Let’s look at where real estate sits entering this year compared to the beginning of 2010.

Demand

1.) Last year, The Home Buyers Tax Credit was both extended to the end of April and expanded to include move-up buyers. This increased demand to some degree. However, most now believe that the tax credit simply dragged demand forward from later in the year. What took place was a surge in sales prior to the deadline and then a dramatic fall off after April.   (Read more…)

Have a great day.

DS

If you have any questions don’t hesitate to call or email me.

DS

Overall, it was a mixed bag last month. Average prices dropped for single family homes in Wilmette ($683,000) but rose in Evanston ($588,725). Distressed sales activity was basically flat.In Wilmette there seems to be activity, I think it is positive and buyers are really “buying”.  In Evanston, it appears the data are supporting a stabilizing market. Let’s see.

The ratio of Sold Price to List Price for both towns is something to watch.  This ratio is a measure of how much buyers are willing to pay versus what sellers are willing to negotiate.

Also, the deals we see here are ones that were reached in August, September and Early October.  Data for November will give us a better look at how the market will fare going forward.

DS

We’re all waiting on the housing recovery but for the time being, a slowdown in the construction of newer and more expensive homes is not what we need. I’ll post some new construction data this afternoon.  Check back then.

DS

One day he randomly picked up a file and after a brief review noticed there were some irregularities. The short story is: he was able to stop the foreclosure process on this house, challenge the way banks were “robo-signing” documents (including affidavits about their process and familiarity with the documents) and set off (contribute to) the nationwide freeze in foreclosure activity. Here’s the article. (you can also find it in “Interesting Articles” on this site.)

BUT, I’m more concerned with WILMETTE and how the housing market has faired locally.  Earlier this week I posted a five-page review of the Wilmette market to date. If you read it you know I am mildly positive if certain conditions happen. Looking deeper, I generated some stats I thought might be interesting. I wanted to see the impact of  distressed sales are on our housing stock. Here’s a summary chart:For the time being it appears that

1. The vast majority, over 90%, of home sales in Wilmette are traditional sales;
2. The data above are absolutely in line with sales trends over the last 24 months in Wilmette, which actually has a positive year-over-year story!
3. Better: PENDING SALES list prices are HIGHER than those that have already closed.
4. The impact of financial distress on a property’s price (our real focus) may be as much as $240,000 when listing and $200,000 when it closes;
5. Yet, there are no distressed sales in the pipeline for Wilmette. There will be but as of now, none are showing up.

Wilmette is not “the National Average” and, right now, it is a well-functioning marketplace. If you’ve read any of my rantings over the past year, you’ll know I subscribe to the belief that having a strong value proposition (PRICING WELL) is the key to a strong market and a successful sale.

So the next time you hear, “Our property prices are getting hammered by distressed sales in Wilmette” , please reply emphatically, “No we’re not.”

More to come on this topic.

DS

To me this is one of the worst decisions anyone can make. Our economy relies on the underlying principle of Trust. (And, yes, I intended to use the capital “T” for Trust.) Even if we consider bankers who received large sums of taxpayer bailouts and then paid themselves insanely large bonuses an unscrupulous group of so-and-so’s, defaulting on a loan is not the answer. Yet a line of logic is developing in which the homeowner  MUST default to protect his or her family … because it makes FINANCIAL sense.

During late 2008 and into 2009 the concept of Moral Hazard was discussed by all the financial and political talk shows.  The gist was, without a consequence (being fired, arrested, forced to give up something) society does not discourage bankers’ illicit or “stupid” behaviors. To me personal Strategic Defaults create the very same Moral Hazard and this time among a much great population. If strategic defaults were to gain momentum the danger I see is that the movement would handicap a critical source of funding in our economy.  Banks must be able to project with confidence, a home buyer’s commitment to honoring the terms of his loan. Without that trust, and predictable cash flow, the whole economy would be at risk.

I am not a fan of the major banks. I think happened in the last 24 months was grossly unfair to teh american public. However, if our economy loses a major underpinning – Trust – the ultimate evolution of this recession/recovery will be vastly worse than any predictions so far.

Here’s the article on strategic defaults and the various implications.

DS

The reason for this is sellers train buyers to WAIT. Buyers often do not have to buy; they want to buy. And they want to buy at their price. So, when they find a house they like, they simply wait the seller out. I’ve used the phrase, “Buyers vote with their feet.” Buyers wait for the price reduction (-s) that ultimately bring the selling price into alignment with their valuation and then they write purchase contracts. In all of this, Sellers go through long periods of time with only a few showings, they may even get “low ball offers”. It creates a stressful experience.

I was talking about this with a friend at the office. I shared with him a spreadsheet I created that highlighted the difference between a well-priced house that sold and one that required multiple price reductions and much more time. He came up with another angle that I think is terrific. In this spreadsheet he examines the Cost Of Ownership during a listing.

Here’s a screen shot of the spreadsheet.

If you’d like to try it, click on the link below. Try it – put in really high prices and more accurate prices. Look at the “hidden costs of selling a home”.

http://sheet.zoho.com/publish/donshea/monthly-cost-sheet-1

The point of this exercise is to highlight the costs of mis-pricing a property.  We all want to maximize the net proceeds but too often we forget that hidden costs bleed away the real NET in the transaction.

As always, check back for more info in coming days.

DS

A stately approach to a magnificent building

We are thrilled to start the project and on a beautiful sunny day. The sales team, Alan Meyerowitz, Heidi Ziomek, Marty Walsh and Amy Corr and I, spent time in the building this week with Reuben Warshawsky and David Rosen, partners/owners, getting up to speed and learning about the project.  Every unit has a unique layout, high-end finishes and lots of room.

I’ve noted that over the last several years, many new building projects have launched with a lot of noise and attention only to falter and go by the wayside.  Even in Evanston, with a much larger population to support new building, many have failed or are in a permanent holding pattern.  In this respect, Mallinckrodt stands alone. It is nearly completely sold with 59 of the units sold, the next 22 offer a great opportunity to move into this building.

Alan and I begin the final push to close out the building.  We;d love to have you come by to see us and this extraordinary building.

DS

About Mallinckrodt in the Park:

Mallinckrodt’s five-story, 180,000 square foot Italian Renaissance structure has been a celebrated fixture on the Wilmette landscape since 1918. Designed by Hermann J. Gaul, one of the most prolific church and institutional architects of his time, Mallinckrodt was originally created as a convent and college. It held a long and close association with Loyola University. Mallinckrodt’s landmark exterior features a magnificent stone entry with cupola, bell tower, and graceful Romanesque curves. The stunning exterior has been largely kept intact, with its signature cream-color brick and limestone detailing. The interiors are beautifully renovated to accommodate modern tastes and preferences, however, tremendous efforts have been made to preserve the stunning original architectural details.

Click here to see an article About the Owners. Check back for progress on this building.

DS