Chicago area buyers are searching the market for homes, hoping to cash in on low interest rates and prices, but they aren’t finding much inventory from which to choose, said Mary Beth Lynch.
Lynch, a Realtor with RE/MAX Suburban in Glen Ellyn, said this is why more and more appropriately priced homes are getting multiple offers right now.
The reasons for the low inventory vary, she said. Some homeowners still can’t bear to list their homes at today’s lower prices, so they are not selling.
“Many of those who are deciding to sell are listening to the national news and listing their homes too high, thinking that the prices from yesterday are coming back — and they aren’t in Illinois,” Lynch said.
As for banks, they are not listing all of their foreclosures because they don’t want to flood the market and see prices dragged down further. In addition, lenders are using those properties as assets on their books at the value of the original loan, Lynch said. They don’t have to officially take the loss until the home is sold so banks, too, are trying to wait for prices to increase before selling.
“If you have your house listed this spring and you are not getting any showings, that probably means you have it priced too high,” Lynch said. “If you are getting showings but no offer activity, it is probably the condition of the house. You need to give it a coat of paint or pare down your belongings to make it show better.
“I tell my clients that if the seller won’t reduce the price of the house, the buyer will,” she said.
How is the real estate market faring here?
“It is (nearly) spring and people have that spring market mentality. But I personally feel the economy of the country, in general, and Illinois, in particular, is not ready to take off and show good movement yet.”
Lynch said state’s finances make Illinois’ situation more extreme than in other some other states.
“Many people are still terribly underwater on their mortgages but they are allowed to stay in their houses for up to two years. So they are just ‘using up’ their houses and not caring for them until they are evicted.
“There are some real sad stories out there. Those who purchased or refinanced their homes between 2005 and 2008 seem to be the ones who have lost real money.”
High-priced homes are generally faring better than others because “people who have money to spend will spend it. You see that in restaurants. But most people are not out there spending yet,” she said.
The inflation of gas and food prices only compounds the problem. “Everyone is feeling it.”
Do you see more movement in any specific sector — single family, townhouses, condominiums?
“Single-family homes are absolutely selling faster than condominiums and townhouses right now. Many more multifamily homes ended up in foreclosure and short sales and that causes very complex problems with regard to association fees and taxes not being paid. I have heard that some associations are even giving permission for units to be rented so they can keep association fees coming in.”
Are you seeing many first-time buyers in the market?
Lynch said first-time buyers now make up the largest segment of the market and that is encouraging.
“They need to start the domino effect that will get the whole market moving with some momentum.”
Have buyers’ tastes in homes changed?
“Today’s buyers know that the bigger the house, the more it will cost in maintenance, utilities, furnishings, decorating, etc. So they are no longer choosing to buy the McMansions that used to be so popular. They are buying more within their means. They are also not choosing to move to the faraway suburbs. They want to spend less on their commute to work.”
What needs to happen for the Chicago-area real estate market to strengthen permanently?
“The banks and government need to give some of these homeowners a chance. Let them refinance to a lower interest rate on their current mortgage. Don’t forgive the amount of the loan, but give them today’s interest rates without making them requalify.
“In the past you could qualify if you could sign your name and now those people are really having difficulties. Give them a chance.”
Lynch can be reached at (630) 790-1776 or (630) 620-5336 or via her website at www.marybethlynch.com.Copyright © 2013 Paddock Publications, Inc. All rights reserved.