Ten more years. Ten more years.
No, this isn’t a political rallying cry. It’s the mantra of about 25,000 Realtors who last week wrapped up their convention in Orlando, fueled by another blue-skies forecast from their chief economist.
David Lereah, like most housing economists, sees no hard landing for the industry. Indeed, he told members of the National Association of Realtors that the real estate market should continue to expand for another decade, carried along by immigration, constraints on supply, strong buyer demographics, and a steady stream of lending innovations.
However, Lereah predicts that America’s stunning rate of home-price appreciation is going to turn, slowly, into a blissful memory for some, or perhaps a relief for others who have found themselves priced out.
Lereah said that price appreciation nationally has averaged 7 percent to 8 percent in recent years. A more sustainable rate would be 5 percent, he said.
“We want healthy growth so the market can be sustained, not frenetic, double-digit growth that can’t last,” he said.
Real estate agents say this appears to be happening in the Chicago area, though there’s a lingering gap between price perception and reality.
The Tribune’s ongoing, occasional glimpse into what’s happening in neighborhood and suburban real estate suggests that for some, business in general appears to be catching its breath — maybe because of shifts in the market, maybe because it’s the slowest time in the real estate year.
Here’s what’s happening in agents’ back yards, in their own words.
CHICAGO
South Loop
Susan Devlin, Rubloff Residential Properties
“There’s a huge number of condos on the market, and there’s definitely competition out there. For [a seller] who bought two or three years ago, it’s a tough market because buyers can also buy brand-new from a developer. I’m seeing price reductions in the past year.
“For a two-bedroom, two-bath condo in the South Loop, prices would tend to be in the $300,000 range, though there might be some that are less.
“Market times are definitely longer. Now, when I take a listing, I ask for a 120-day contract. A year ago, I was doing 90.
“That said, lofts are still pretty strong. And Printer’s Row is strong, even though parking is an issue there. People there don’t seem to care.
“I’m hearing from people who are weary of the congestion in Lincoln Park [and are looking at the South Loop]. People who have lived in Lincoln Park for a long time say they’re done, that they can’t take the congestion any more. One [Lincoln Park] client went to Taylor Street, and people are still talking all the time about Pilsen. Bronzeville is huge, and North Kenwood.”
Bronzeville
Brenda Clayter, Keller Williams Chicago Consulting Group
“One type of property is going gangbusters — the two- to four-unit building. And if they have graystone fronts, they go for a premium. It may be an aesthetic thing [for buyers], but the graystones tend to be larger. They’re longer, and with three to four bedrooms. With two- to four-unit buildings, if they’re priced right, the market time is short, two weeks or less, with multiple offers.
“For single-family homes in Bronzeville, the low end is $300,000. We have a lot of brick homes there, and that’s probably why there has been so much demand. The buyers tend to be move-up buyers, not first-time buyers. First-time buyers are buying condos. Buyers who feel priced out here tend to look in Washington Park, just south of us.”
“Where we are, it’s mostly rehab, instead of new construction. We’re seeing a lot of investors, who will buy a single-family home that’s in foreclosure and needs lots of work. They’ll turn that over or maybe rent it out.”
Edgebrook
Katia Craig, Prudential Preferred Properties
“We’re definitely going into a changed market. There’s a lot of inventory. It’s turning into a buyer’s market.
“Lately, a lot of properties priced above $350,000 haven’t been moving, but under $350,000, properties are selling. Condos are doing better than they were, and the two-bedrooms are the ones that are moving.”
Lincoln Park, North Side
Mark Goldberg, Koenig & Strey
“Right now I’m finding the market very quiet. It’s always notoriously quiet from Halloween through the second or third week of January, but it’s quiet, even for a fall market.
“Houses priced north of $1 million are on the slow side, and that’s been going on much of the year. Houses priced $300,000 to $600,000 are the bulk of the market, but they need to be priced properly.
“The pricing isn’t quite balanced. We came through years of a boom market where the seller named the price. Now we’re seeing market times of 60 to 100 days, and the seller is having a hard time with the idea of taking less money.
“I’ve seen some houses with extended market times where the sellers are reducing prices just to offload them, but I’m not seeing prices in general coming down.”
Ashburn, Auburn Gresham
Jacquelyn Hollyfield Williams, All Property Realty
“Last year at this time, we thought the market would slow down, and it didn’t. But this year, it is a bit slower.
“Ashburn continues to be a very desirable area. Prices are still competitive, but leveling off. In Auburn Gresham, where my office is, that area is being revitalized, so property values are increasing, but not as greatly as in Ashburn.
“I’ve had more requests for investment property recently. They see a sure investment in real estate, because it’s not as volatile as other types of investments. So two-flats are extremely popular and hard to come by.
“There’s not a whole lot of new construction going on, but there has been a lot of renovation, more rehabbing. Large apartment buildings are seeing a lot of rehabbing, and are being turned into condos.”
SUBURBS
Park Ridge
Paula LaBree, Keller Williams
“What I’m seeing that marks a difference is that people are buying cosmetics — the decorating. If they come into a house and it’s got very `today’ colors, and if it’s very Pottery Barn, very magazine-like, with certain area rugs and certain kinds of furniture, it sells pretty quick, over the plain vanilla comparable house that may even be bigger or in better shape.
“It’s a huge shift. I’ve been doing this 15 or 16 years, and it used to be windows, roof, furnace, taxes. That isn’t it any more. Ultimately, those questions are asked, but they’re secondary to the granite countertops. Everybody is working, everybody is tired, and to replace countertops and repaint an entire home, that’s time they’d rather not spend.
“New construction is the second thing I see here. That’s going very strong. I’ve been involved in six deals this year, with prices up to $1.35 million, where market time was short and more than one purchaser was ready to pull the trigger.
“But everything here has to be priced right now. For the most part, until recently, multiple offers would produce the full asking price, or over. That’s not happening now. I’ve seen multiple offers where the full asking price never came out. That’s unusual.
“The prices builders are paying [for teardowns] are having an effect on people’s perceptions. I worked with a woman who [believed she’d] have to pay $450,000 and up for a house that’s ready to be torn down, and that she couldn’t afford anything here. But we got her a beautiful house for $425,000. It’s got some panache and curb appeal, though it’s not in the kill zone. The lower end of the single-family range for a nice home that probably needs a little updating is $420,000 to $450,000.”
Glenview, Northbrook
Georgia Pierini, Baird & Warner Evanston office
“It’s still a busy market, in general terms. Single-family homes are selling, but for townhouses and condos, first-time buyers are still very much into it.
“The higher end is moving more than it was, although for the million-dollar-plus homes, it’s only in rare instances that they’re selling. You have a much smaller base of buyers. The price range that goes quickest is $450,000 to $650,000.
“On lots where builders have put up a new house, they’re not getting [the sales prices] they think they’re going to get. They have inflated ideas of humongous profits, and I believe they’re negotiating.
“Condos that are in the walk-to-train, walk-to-town locations, those are going quickly. It’s a good, strong market. They’re attracting first-time buyers or people who are downsizing. These are buyers who want no maintenance.”
La Grange
Joan Smothers, Joan Smothers Realty Group
“It’s a transition market, almost all the way into a buyer’s market. That’s sometimes a hard time for sellers, because everyone is not really aware that that has happened. Still, houses that are in good condition, priced right, are seeing 45 to 60 days on the market.
“We’re not seeing prices go down yet. We’ve had a number of years of price appreciation, and I think when we get to the end of this year, we’ll see that except for some niche-type homes — maybe first-time-buyer homes or new construction — a flattening of appreciation, to 2 or 4 percent, not the 15 percent appreciation we’ve had for so many years in a row.
“Fifteen years ago, there were a ton of rehabbers here. The houses that needed work, those sold quickly. Now we have young buyers coming out here — mostly from the city or transferring in from out of town — and they want to walk into a house that’s turnkey, to see a kitchen that’s already the way they want it to look. They buy those quickly and will pay up for those houses. The houses that need updating, that aren’t Crate & Barrel, those homes sit for a while.
“They want to have a house that’s already done. That’s what made our new construction grow exponentially, year after year. Now, new construction on a 50-foot lot, that’s in the high $900,000 range or over $1 million. People who are already living here are adding on, to get a bigger house.”
Gurnee, border areas
Char Cook, Re/Max Showcase
“The more expensive homes are taking longer to sell. If you called me and said, `Would you rather sell million-dollar houses or $200,000 houses,’ I’d rather have 20 of the $200,000 houses. I’d estimate there’s a five-year inventory for million-dollar houses.
“People are always calling and saying they want the farmette, the house on a little piece of land, but that’s gone. The hot places are around Russell Road, where you can get an acre, along country roads.
“People are out there buying, although [sellers] think that nobody is looking right before Thanksgiving. But a lot of transferees are looking at this time. They might bring their whole family in to look because they have a Thanksgiving vacation, and a lot of times, you’ll sell a house the day before Thanksgiving, because those buyers have a limited time to look.”
Elmwood Park
Gabe Caporale, ERA Caporale Realty
“Business is excellent. A lot of people are buying small, older houses, tearing them down and putting up new.
“So prices have gone up for the average buyer. In some places a lot of people who would have been buying starter houses are buying condos.
“There’s nothing that I could describe as `not hot,’ but the longer market time is for houses that are over $400,000. That shows how prices have inched up. Two years ago, the higher-priced houses were in the $300,000s.
“I’m seeing people start to move back into our area. Demand is being caused by higher gas prices and people are tired of commuting, tired of being way out in the boonies.”
