Quality schools continue to drive suburban home sales

Real estate sales in the Chicago-area market were very strong in April because the federal income tax credit, which expired at the end of that month, encouraged prospective buyers to move quickly.

"But we won't know until late June where the market has stabilized," said Tim Greene, executive vice president of John Greene Realtor, an 80-agent independent realty company with offices in Naperville and Oswego.

"There was definitely less demand during May than April," he said. "And there was more supply coming on the market as sellers saw the market starting to move.

"But quite honestly, our agents are so busy with closing the sales made in April, that it will take a couple of months for everything to shake out," Greene said.

Fortunately, mortgage interest rates remain low.

"We expected interest rates to rise by now. But the confusion in Europe has been keeping them down so far," he said. "History has shown, however, that when they finally start to go up, they will go up fast."

How does the Chicago area market compare to the national market?

"We have challenges here like the rest of the nation. As long as supply is more than demand, the only way to get it all in line is through appropriate pricing. That is simple high school economics.

"The only way that you can get a clear picture of the nuances of this market is by hiring a good company with knowledgeable agents."

How is your particular market faring?

In the Naperville, Oswego, Plainfield area, Greene has seen prices drop, but the market remains very attractive to buyers because of the high-quality schools, libraries and programs for children.

"It is unbelievable how important schools are. That's why most people move here. To get a similar education in the city would be cost prohibitive for many people."

Generally speaking, he said, the farther you get from the core of the city into the growth areas, the more prices have dropped during this recession because there is more new construction to compete with existing housing.

What effect has the recession had on the real estate business?

"During the 1970s, '80s and '90s, families and banks were very comfortable borrowing/lending people as much as 21/2 times their annual income for a mortgage. Between 2000 and 2007, in the Chicago area that amount rose to 31/2 times a borrower's annual income, which was too high, and now we are in the process of getting back to that 21/2 times figure."

Greene called the pain associated with this current price correction a "necessary evil for the long-term health and stability of the real estate business."

"Prices were getting out of control and that was affecting banks' lending practices. The amount they were willing to lend increased 35 percent in only seven years.

"Now we are getting back to the affordability constant that worked from 1970 to 1999, which is a really long time."

Have you seen first-time buyers taking advantage of the low prices and the tax credit?

First time buyers made up only 30 percent of the recent buyers in the Naperville region, according to Greene.

"There were a substantial number of other buyers out there, too. When houses are priced right, people don't need a lot of help figuring out that there are good deals out there. When they are secure in their employment and aren't too worried about the stock market, they will buy."

How do gas prices affect where people are willing to buy?

"It depends upon where they work. Home values in places like Oswego and Plainfield are so attractive again, thanks to the recession. People are amazed how much they can get for their money.

"That is why many people working in places like Naperville and Lisle are willing to drive to those growth communities."

What things still need to happen for the real estate market here to become strong again?

"Supply needs to come more in line with demand."

What are you doing to prepare for the future?

John Greene Realtor has recently undergone a major re-branding effort and its technological side has been upgraded. In fact, its new website (johngreenerealtor.com) was just ranked as one of the top two real estate company websites in the country by the Leading Real Estate Companies of the World organization, thanks to the ease with which users can search the site and its outstanding Naperville lifestyle video.

Founded by Greene's father, John, in 1976, John Greene Realtor needed to be updated when the second generation became active in 2007.

"My dad is still active and he helps oversee the company, but we have made lots of changes with the help of consultants," Greene said.

They have also hired national experts to come into their office and work one-on-one with their entirely full-time staff of agents.

"In order to successfully achieve sales, we are obligated to guide both our buyers and our sellers through this tough market as best we can, and this training has had an enormous impact. We are seeing the positive effects.

"It takes much more time and effort to sell a home than it did five years ago. That is why we are making sure that all of our agents are fully aware of the economics involved and able to communicate them to their buyers and sellers. That is also why we do not hire moonlighters."