A look at Fox Valley housing sales

Stephanie Doherty, Realtor with Coldwell Banker Residential Brokerage in St. Charles, loves a challenge and still enjoys her job, even though the real estate market has dropped dramatically over the past several years.

So she hates it when people look at her with sympathy in their eyes and act as if the real estate business is dead.

“Don't worry about me. I am still selling and I still love doing this job, the 17-year veteran of the Fox Valley residential real estate business said. “In fact, I sold four houses last week.

“I still love to see my buyers' faces when I get them a great deal and to see my sellers' faces when they know I worked very hard to squeeze every dollar out of the buyer for them, Doherty said.

“There are still some very positive things about real estate and if you have the money and feel secure about your job, there has never been a better time to buy a house.

What are you seeing in the overall real estate market in the Fox Valley?

Doherty admitted that even though houses are selling, they are sitting on the market longer and their sellers are not happy with prices they are getting.

“Most of my current sellers are in distress because of a job loss or they are people who are just generally worried about the economy and are choosing to downsize.

“Now I often get calls from former clients who tell me they just lost their job and won't be able to afford to stay in their home for long, so they want me to come over and tell them what they can get for their house. It seems as if everyone is trying to cut their expenses by buying smaller houses, even if they haven't lost a job. They are worried about all the uncertainty in the economy, and their motto now seems to be: ‘I can live with less.'

That is why the bigger houses are taking bigger hits when it comes to price, she said.

“But I still do occasionally get transferees coming in, looking for a large house. I just don't see as many of them as I once did.

The details?

“Since 2007, prices in this area have dropped 30 percent. In the Fox Valley right now our prices are down to November 2002 prices. So anyone who purchased their home after that is selling short or bringing money to the table at closing.

“People who bought during the housing bubble in 2005 or 2006 are so under water right now. Prices here rose very fast during those years and now we are paying for it.

For instance, during 2006, only 4 percent of the homes sold in St. Charles were sold at a loss. But so far in 2010, 40 percent of the homes sold in St. Charles have been sold at a loss, Doherty said.

Other than those homeowners who have owned their homes for many years and still have equity in them, “the only ones making money on their houses right now are those who have purchased short sales or foreclosures and put some money into them and resold them.

What is your perspective, looking at the market in hindsight?

“I was helping people buy houses back during the bubble when banks were anxious to lend large amounts of money to everyone and I remember warning them at the time, not to overdo it. Just because the bank was willing to lend them X amount of dollars didn't mean they had to take all of it.

She reminded clients they would want to be able to go out to dinner and take an occasional vacation and they wouldn't be able to do that if they committed too much of their income to a mortgage payment.

“And when it came to new houses, they chose to forget that they would need to purchase things like window treatments and landscaping.

All of that overextension came home to roost, as they say, when the bottom fell out of the market.

“I remember noticing at the end of 2006 that the phone was ringing less and showings were down. If you knew the market, you could just feel it happening.

“And now when you go to a title company for a closing, it is like a ghost town. To quantify that decrease, in July of 2006 there were 80 homes sold in St. Charles. In July of 2010, on the other hand, only 38 homes were sold in the charming river town.

How does the real estate market in the Fox Valley compare to what you are hearing about the national market?

Nationally, real estate sales are down 29 percent, which is almost identical to the 30 percent sales drop in the Fox Valley, Doherty said. But there is a wide variance across the nation.

“According to the Case-Schiller Price Index, 2006 was the price peak throughout the United States and since then, prices in Las Vegas are down 57 percent and in Phoenix prices are down 51 percent. Boston is in much better shape, however, with prices only down 13.5 percent and things are best in Dallas where prices have only dropped 4.2 percent.

Are first-time buyers taking advantage of the current low prices and interest rates?

“I have been very disappointed with the first-time buyer market. They were coming out of the woodwork last spring before the tax credit expired, but now they are gone because they feel it is no longer advantageous for them to buy.

But that is not true, she said.

“If someone had purchased a $300,000 home four years ago, they would have spent $60,000 on a 20 percent down payment and would have gotten an interest rate of 6.6 percent, so their monthly payment would have been $1,533.

“Today that same house would probably cost them $213,000 so their 20 percent down payment would only cost them $42,600 and they could get a 30-year fixed rate mortgage for 4.2 percent, so their monthly payment on that very same house would only be $833.

“This is a great time to buy I cannot emphasize that enough.

Do you see a difference in the way different segments like single-family homes, condominiums and townhouses are selling?

“It used to be that young families who could afford to buy a home for $225,000 would not be able to buy a nice single family home in a nice area, so they chose to purchase a five-year-old townhouse instead. Now that prices have fallen, that same couple can buy a decent single-family home in the Fox Valley for that price, so they are buying a single-family home instead of a townhouse.

But townhouses and condominiums are still a hot commodity with empty-nesters who want to downsize, especially townhouses with first-floor master bedrooms, Doherty said.

How do you feel about the future?

“I don't think things have bottomed out yet and most people I talk to agree with me. The market will continue to decline because employers are not hiring due to the uncertainty out there.

“The confidence of the American people needs to become strong again. They need to believe in our economy and our government again, and until people feel secure in their jobs and feel positive about their cash flow, there won't be a turnaround.

“Yet I still believe that real estate is your best bet for an investment because sooner or later inventories will shrink and the market will come back. So if you feel confident about your job and you have the money, there has never been a better time to buy.

Doherty can be reached at (630) 587-4656 or stephanie.doherty@cbexchange.com.