Foreclosures still putting downward pressure on housing prices
People who have been reluctant to sell now realize they will be paying less for their next home, said broker Dawn Froberg of Real Living Properties in Gurnee.
Paul Valade | Staff Photographer
A virtual hurricane hit the American housing market four years ago and, while the cleanup is well under way, there is still a lot of work to be done with the glut of foreclosures and short sales being slowly cleared out and sales beginning to normalize.
"The number of sales we are making is improving," said Dawn Froberg, broker and director of operations for Real Living Properties in Gurnee. "Closings are up 28 percent over last year and you can feel the better attitude out there with multiple offers coming in on the lower-priced homes, and the average time on the market coming down by 9 percent. But prices are also down 5 percent year-to-date."
Since the height of the market, prices in northern Lake County are down an average of 25 percent, she said. However, depending on the condition of the home and the number of foreclosures and short sales in a given neighborhood, that number can worsen.
How does the local market differ from the national real estate market?
"I believe that the current situation in northern Lake County is worse than what is being reported in the national media about the country, in general. Other parts of the country suffered sooner and are recovering sooner.
"We do a lot of work with Freddie Mac and they have told us that there are still quite a few foreclosures to come in Illinois. That is the bad news. The good news is that more homes are selling again.
"Sellers are now willing to take less for their home than they expected to get. They are used to that reality by now. Others feel that they have put off selling their home for so long that they can't wait any longer and they realize that while they will sell their current home for less, the purchase they make will also be cheaper."
Do you see more movement in any specific sector?
All sectors are moving again, but single-family homes are still selling best, said Froberg, a 28-year real estate agent.
"The problem with townhouses and condominiums is that many are no longer qualified for FHA loans, so the buyer has to get a conventional loan and they can't get mortgage approval because many of the homeowners in the association are behind on their assessments."
Are first-time buyers who have no home to sell taking advantage of the low prices and low interest rates?
"It used to be that a quarter of our buyers in this area were first-time buyers. We are back to that again.
"I am amazed at how many of them are cash buyers. They are buying inexpensive homes that need work and are putting down cash so that they don't have to deal with qualifying for a mortgage. Just like their parents saved in order to buy a house, they are getting used to the new, logical reality that you need to have money to put down in order to buy a home."
What needs to happen in order to help strengthen the Chicago area real estate market?
"We need to get rid of all of these foreclosed homes and short sales. They are the biggest obstacle and that is holding the housing market down and unfortunately, it appears that it will be several more years before they are totally cleared out."
The banks and mortgage companies have gotten a bit better about processing short sale requests, but Froberg said she warns all of her buyers who are interested in a short sale that they may or may not get the home and they need to be prepared for disappointment.
"I don't want them to get their hearts set on a particular house and then be really upset when the bank doesn't communicate, strings them along and doesn't agree to the deal in the end."
Much depends on the how the sellers handle their financial difficulties.
"Some people face up to the problem right away, start the short-sale process and move on with their lives. Others wait until the last minute, hoping they can pull a rabbit out of the hat — and by the time they ask for a short sale, the mortgage company has already invested time and money in the legal foreclosure process.
"Getting a bank or mortgage company to agree to a short sale is difficult no matter what, but if the seller waits until the last minute, it probably won't happen."
Froberg can be reached at (847) 360-9700 or online at www.realliving.com/homes-for-sale/IL/Gurnee.
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