The real estate market over the past year has changed, and it is changing dramatically for the better in many suburbs, a local broker says.
In the Fox Valley, and more specifically the Huntley area, buyers are out looking and shrinking the once large surplus of houses for sale, said Tom Hall, managing broker and owner of Huntley Realty.
"A year ago we had a 13-month supply of inventory on the market here and over the past year we have managed to work that down by 25 percent," Hall said. "Today we only have a 9.4-month supply."
Hall said people have been reluctant to move because of the down economy.
"Fear kept people sitting on the sidelines for a long time, but they are coming out again and they are buying," he said.
Last spring and during the early summer, in particular, Hall and his colleagues saw nice, well-maintained homes that had been sitting on the market for many months suddenly getting multiple offers within 24 hours of each other.
"They were suddenly getting gobbled up," Hall said. "That has cooled off but we expect it to happen again next spring.
"We still have a one-year supply of shadow inventory (homes that are owned by the bank or are in pre-foreclosure proceedings, but are not yet on the market). That is about 300 homes in the Huntley area," he said.
"But we feel that the worst is behind us. Nationally in 2012, we had between $35 and $40 billion worth of mortgages resetting. In 2013 that number is predicted to be under $5 billion nationally. So, most of the owners who were going to get into trouble have already done so," Hall said.
How does the Chicago area market differ from the national real estate market?
There has been lots of positive news coming from real estate markets all over the country, Hall said, but the Huntley area does not have one thing that many large cities have -- international buyers.
"Miami, Tampa, Phoenix and even Chicago are "on sale" for international buyers because of favorable exchange rates. So they are attracting buyers from Canada, Europe, Asia, everywhere. We don't see those kinds of buyers in Huntley," he said.
""Our market is 99 percent local or transplants coming back to the area," Hall said. "We also see some transferees coming here."
Do you see more movement in any specific sector?
The Huntley area has only a handful of condominiums. Single-family homes there outnumber townhouses two-to-one in the Carpentersville/Huntley/Dundee area, and by three-to-one in Huntley itself.
"So, naturally, we sell many more single-family homes than we do townhouses. But all of them are selling again," Hall said.
How does Huntley area real estate compare to what is happening in Chicago?
Properties in Chicago, especially those in premium locations, are selling very well, Hall said. Some are causing bidding wars because of lake views or other attributes that people value.
"A friend of mine recently sold a premium property along Lake Shore Drive for more than the asking price. Two different buyers wanted the view. Emotion purely drove that sale," Hall said.
Are first-time buyers who have no home to sell taking advantage of the low prices and low interest rates?
"First time buyers are doing a lot of comparative analysis because they understand that if they buy now, they can lock in a great long-term interest rate. Interest rates of 3 (percent) to 3.25 percent are just unbelievable."
Hall has had buyers purchasing single-family homes for $100,000 and, with such low rates, they are getting principal and interest payments of only $325 per month. In Huntley, two single-family homes and six townhouses are now on the market listed for less than $100,000.
In Carpentersville, you can get even more for your money, he said. Nice homes that just need some tender loving care like paint and new carpet are selling for $50,000 and up. Handyman specials that need much more work can sell for between $30,000 and $40,000 there.
"We just had the shell of a home on the border of Crystal Lake listed for $19,900. It had been stripped of the furnace, cabinets, floors, etc., but you could buy the land and shell for the price of a car," Hall said.
Rising rental prices are also convincing young buyers to purchase and Hall is working with several lenders who are helping young buyers clean up their credit so they are able to qualify for mortgages.
"Rental prices have continued to climb the past two years as people with damaged credit have been forced to rent instead of buy," Hall said. "So that (demand) drives up the cost for everyone."
Investors are also paying attention to this trend so they are buying properties because they see an opportunity to make money by renting them to others.
What needs to happen in order to help strengthen the Chicago area real estate market?
"We just need some time. If interest rates continue to stay down and barring any acts of God, the pendulum will continue to swing and within 18 to 24 months, I predict that the fire sales of real estate will be gone and prices will begin to rise," Hall said.
"Real estate goes in cycles and I believe that this cycle is nearing the end."
Huntley Realty is located at 13320 Village Green Drive. For more information, call (847) 669-4010 or visit online at www.huntleyrealty.com.