Home prices in Northwest suburbs remain quite steady

In this day of nationwide realty companies with massive amounts of media presence and name recognition, the owners of one of the few remaining independent realty companies, Picket Fence Realty in Arlington Heights, say there are plenty of opportunities for niche marketers like them.

In fact earlier this year, Sue and Paul Duchek joined a co-op of top independent realtors from across the country who are pooling their efforts to make sure they get a share of the lucrative relocation market. Number One Experts, as the co-op is called, has a heavy Internet presence and membership is based on individual sales volume.

Picket Fence, with offices in both Arlington Heights and Mount Prospect, is one of the top players in the Northwest suburban market. They have been in business for 11 years.

How is the real estate market in your part of the Chicago area faring?

"In Arlington Heights alone the number of total unit sales has fallen 33 percent from 2007 to 2008," said Paul Duchek. "In 2007 a total of 957 homes were sold in Arlington Heights. By early December that number was only 648 homes in 2008."

And the average number of days a listed home sat on the market increased from 132 days in 2007 to 173 days in 2008, he added.

"But the good news is that prices have not fallen even 1 percent in this area," he said. "Maybe people here are just too stubborn, but the average price only fell from $348,000 in 2007 to $345,500 in 2008.

"Homes are taking longer to sell, but overall, prices are still strong and I think that if interest rates fall for 4.5 percent like they are saying, people will start buying again."

Much of the difference in the selling times has been caused by builders exiting the market, according to the Ducheks. They are no longer in the market for knockdown locations, except in really exceptional locations.

How does the Chicago area market differ from the national market?

"I believe that the media has been our friend in this regard, keeping it in the news that this is a very challenging market," Sue said. "So sellers understand what we are up against. The Midwest has certainly fared much better than the East and West coasts."

Do you see more movement in any specific sector - i.e. single family, condominiums, townhouses?

"Single family home sales remains our strength," Sue said. "But we have also seen good activity in the condo market as those downsizing and the young people enjoy all of the options of living in downtown Arlington Heights, close to the train.

"In the single-family market we are certainly seeing people re-evaluating what they are looking for. They are looking at their particular needs, not just what they can get that is bigger."

And for the last several years, even before the major gas price spike of last summer occurred, people have also been trying to stay close to amenities like schools, shopping and entertainment, she said.

What differences do you see between the city and suburban markets?

"Chicago will take longer to rebound than the suburbs because there is such a big inventory of condos there," said Paul. "Arlington Heights and nearby suburbs, on the other hand, are totally built out, so inventory is not much of a problem."

Are first-time buyers who have no home to sell taking advantage of the low prices?

"Those buyers are very educated and they are watching and waiting for the perceived bottom of the market," Sue said.

"Since there has been talk of 4.5-percent interest rates, they are waiting for that to happen," Paul added.

"And then there is the lending issue. Banks have not been releasing money. If that changes in the first quarter of 2009, I think that you will see the number of first time buyers getting into the market increase," Sue said.

Have you seen your clients have trouble getting mortgages?

"Loans are available and if people qualify, they are getting them. The lenders are just scrutinizing things more and they should," said Sue.

"We have lost a couple of deals, however, because the people couldn't get a loan," Paul continued. "And it is taking much longer for banks to issue pre-approval letters. In addition, people are finding out when they get the letters that they cannot afford as much house as they originally thought, so they have to start the search process all over again."

The Ducheks strongly urge anyone interested in purchasing a house to get their pre-approval letter before they even start shopping since such a letter is now expected before a purchase contract is even written.

What steps need to be taken to help strengthen the Chicago area real estate market?

"Historically, when the economy loosens up, real estate is the first to rebound," Sue said.

"But before that can happen, banks need to loosen up on the money," Paul added. Requiring a credit score of 700 to buy a house is pushing it a bit. Of course, we don't want to go back to the haphazard lending that was taking place a few years ago, but they have to have some flexibility.

"The pendulum has swung to the other extreme and now we have to get back to the middle," Sue said.

"And prospective buyers need to educate themselves about what all of this means to them personally. They may get less for the home they are selling, but there are also better buying opportunities out there for them. They need to take a step back and look at the full picture so they can make the best decision for them," Sue said.