The Chicago housing boom has shifted south.
Property on the South Side and in the south suburbs is hot, with price appreciation in the year ended June 30 exceeding the 10-year average annual price growth in many metro neighborhoods and towns.
At the same time, however, one-fourth of 319 Chicago-area communities saw home appreciation drop below their 10-year annual averages, according to a Tribune analysis of data supplied by the Chicago Association of Realtors.
Prices in most of those communities are not dropping, according to the analysis. They just have not gone up recently at their former pace.
Prices on the South Side and in the south suburbs historically have lagged other parts of metropolitan Chicago. Now, a surge in home building and a wave of buyers seeking affordability have made it the price-appreciation leader.
“Where else are you going to find two bedrooms and two baths, brand new, for under $200,000?” Dave Jasudowicz, a south suburban real estate agent, said of Harvey. The town saw a nearly 31 percent appreciation in the last year, putting the average home price at $73,032 versus $43,364 10 years ago.
“In 35 years in real estate, I’ve never seen such an up market,” said broker Dick Sebok of Flossmoor, where the average home sale price had catapulted to $285,355 at the end of June from about $194,000 in 1995.
Flossmoor’s appreciation in the last year hit 5.1 percent versus a 10-year average of 3.9 percent, according to the data, which include houses, condos, townhouses and small multifamily buildings.
But Hyde Park homes, which have appreciated an average 9.2 percent annually over 10 years, saw prices decline by 3.7 percent in the last year.
Real estate agent Margie Smigel said sales there are meeting resistance because there’s relatively little new construction and because buyers perceive condo assessments in its lakefront buildings to be too high.
Activity in much of the South Side, though, is strong, Smigel said, citing new construction and condo conversions among the draws.
The area is attracting its own residents to new construction, as developers discover opportunities in formerly overlooked areas. It’s also attracting buyers from elsewhere on the trail of an affordable home.
The data bear this out.
Neighborhoods like West Englewood, Morgan Park, South Shore and Auburn Gresham showed home-price appreciation in the last year that far exceeded their 10-year average annual growth. The same was true for such south suburbs as Harvey, Lansing and South Holland.
Chicago’s recipe for price growth–a boom in condos and new construction, robust investor activity and favorable mortgage rates with friendly loan terms–mirrors the one that has driven sales figures around the country in recent years.
But most experts tend to place Chicago in the “less likely” category for a bubble whose pop could send prices lower. That’s because Chicago-area appreciation is 7.7 percent in the last year, according to the Tribune’s analysis, and the metro area pales in comparison to such places as Phoenix, where prices have shot up 30 percent in the last year.
Flossmoor agent Sebok said sales of houses and condos continue steadily in his south suburban area, particularly in the first-time buyer range of $150,000 to $250,000. He said much of the recent activity seems motivated, in part, by anxiety.
“Many buyers now are making quicker decisions because they see higher rates coming,” he said. “With what [Federal Reserve Chairman] Alan Greenspan is saying [about raising rates], and the increase in fuel prices, people are saying, `Now is the time to buy.'”
But Bill Biros, whose real estate firm is based in Evergreen Park, said, “Buyers don’t seem to have the same sense of urgency they had nine months ago. Now, they’ll look at a property and ask what else is out there.
“There are a few more homes on the market but a few less buyers. Prices aren’t going up at the same rate as a year ago.”
More Top Picks Pfds
“If the rate of increase is slowing down, that’s not necessarily a bad thing,” said John Veneris, a Downers Grove broker who is president of the Illinois Association of Realtors. “We’re still seeing the volume, the number of sales, at a record pace in 2005, the fifth straight record year.”
Buying pace easing
Veneris predicts a slowdown, though largely seasonal, that will continue through the rest of the year, and many area agents say that’s what they’re seeing.
Biros says buying activity is easing off in Evergreen Park, as well as in nearby Oak Lawn and in Southwest Side neighborhoods such as Beverly.
But those communities’ home-price increases still are running well ahead of their 10-year average annual pace.
On the North Shore, agent Cha McDaniel said the average market time for her sales is 73 days, “about a month longer than last year.”
“One thing that hasn’t slowed down at all is land sales for teardowns, and that is selling at a premium,” McDaniel said. “There has been a trend away from the do-it-yourself and more to buying the finished product.”
Many agents say they’re busy, largely because mortgage interest rates haven’t climbed significantly from the historic lows of the last couple of years, and because of a wave of new types of mortgages with relatively easy qualification terms.
But that enthusiasm isn’t shared by everyone. Interviews with real estate professionals and consumers turned up tales of frustration: buyers who found themselves fanning out across broad expanses of geography in order to nail a manageable price, and sellers who found themselves waiting much longer than they expected to land a sales contract.
Zach and Sarada Weber, for example, longed to escape the congestion of the lakefront neighborhoods as they searched for their first home. As the Uptown residents took their hunt farther west in the city, they ran into a wall of high prices, they said.
They turned considerably south and bought a two-bedroom, two-bath condo at 47th Street and Forestville Avenue in the Grand Boulevard neighborhood for $225,000 and with a deeded parking space, he said.
Karen Golden and fiance Tom Schultz started their house hunt on the Northwest Side, but after a month they’re “looking pretty much all over the place, from Arlington Heights to Elmhurst,” in search of a house at the right price, Golden said.
They’d like something under $450,000, with three bedrooms, two baths and a yard. They thought they had found the right house near Foster and Nagle Avenues, but their offer was turned down.
“The problem was the bid was contingent on the sale of our condo,” Golden said.
Her two-bedroom, two-bath condo in a 10-year-old building is on the market for $289,900. Thus far, it has been shown to just two potential buyers, and she’s wary of competition from a building that’s under construction next door.
“We’re hoping our place sells soon so we’ll be in be a stronger position as buyers,” she said.
Also nervously holding on to a condo are Brandee Kopta-Tavano and Tony Tavano. The couple owns two homes, though not by choice.
In August, they bought a five-room raised ranch for $385,000 that had been advertised as “the lowest-priced house in Lincoln Square,” where they had lived in a condo for seven years, and where the average price of residential property has jumped to $370,557 as of June from $152,293 a decade ago.
“We always said we’d love to stay in the neighborhood,” said Brandee. “We decided, `Let’s take a chance.’ We kind of jumped on it.”
The Tribune analysis shows Lincoln Square with an annual average home appreciation of 9.8 percent over 10 years, but the rate slowed to 5.3 percent in the last year.
And they’re not having much luck selling the condo. They listed their two-bedroom, one-bath unit for $265,000, though after three open houses and several showings they’ve dropped the price to $247,000.
She said it’s hard to compete with new, or practically new, condos. Their home went on the market just as two other nearby buildings began selling 50 remodeled condo-conversion units boasting such amenities as in-unit laundries and central air conditioning, which her place lacks.
The bumper crop of condos on the market emerges repeatedly in snapshots of local conditions. Chicago’s downtown alone has 10,000 units under construction or on the drawing boards. The Loop, however, saw a rise in average prices of about 19 percent in the last year, far above its 10-year average annual appreciation.
Investors shrinking
Many area real estate agents say they’re seeing less investor activity in recent months, after it seemed to reach fever pitch last year. Though their influence on the market is anecdotal, their zeal has been credited with helping to nudge prices higher across the board.
Bernie Miller is a would-be investor who has been scouring North Side neighborhoods for three-flats. He intends to hold the buildings for the long term.
He’s experiencing some sticker shock but said that after running the numbers, he concludes that’s just the way it is.
“I feel like they’re hitting the market a little overpriced,” said Miller, sales manager for a mortgage banking company. “However, the areas I’m looking in, Andersonville and Lincoln Square, the [listing prices are] within 4 percent of what they’re selling for.
“These property values are continuing to increase at a good pace, they’re not out of hand,” said Miller, who is familiar with sky-high appreciation in Florida and California because his company does business there. “That’s where you see the crazy stuff. But we see stable appreciation here in the city.”
———-
[email protected];, [email protected]; [email protected]; [email protected]; and [email protected].
For detailed information on more than 300 towns and neighborhoods, go to chicagotribune.com
– – –
Housing sales data since 1995 analyzed to calculate averages
To determine rates of real estate appreciation in 319 communities in the Chicago area, the baiduhai analyzed 11 years of data compiled by the Chicago Association of Realtors and the Multiple Listing Service of Northern Illinois.
More Top Picks Kitchenaid Classic Plus Ksm75wh
If a community was missing sales data from 1995, the Tribune calculated a rate based on 10 years of data.
The MLS data does not include sales in some planned communities because that information is not reported to the listing service. Likewise, properties sold without the use of real estate brokers and not reported to the MLS were not part of the analysis.
The Tribune obtained advice on analyzing the data from a number of economists in academia and government.
The yearly sales averages are based on a year that runs from July 1 to June 30. So the 2005 figures include the last two quarters of 2004 and the first two quarters of 2005.
The Tribune excluded from the analysis communities that had fewer than 25 property sales in any year, or that did not show sales figures for 1995 through 1997.
Some communities were missing from the MLS data and, therefore, are not included in the analysis.
Other communities are not tracked specifically by the MLS but aggregated into broader categories. For example, Barrington and Barrington Hills are both included in the MLS’ Barrington Area category.
In the map accompanying this story, communities like Barrington were assigned the sales characteristics of the broader area that they are a part of.