Thursday, April 12, 2007

Dueling Economic Forecasts in Today's Chicago Tribune


Which to believe? Declining Home Values? Or Economic Fears Exclude Home Values?

I really just wanted to dog-pile on the Trib for perpetuating the hysteria about what is going on with the real estate market, but the rational half (fifth?) of my brain told me I should offer something of value along with the comment.

Admittedly, my perspective is focused on a narrow segment of the marketplace. Namely, Lincoln Park, Lakeview and up through Uptown. For us, your Guides, the first quarter of 2007 has been busy. Busier than any quarter of last year.

We listed $5,496,000 in inventory in January, February and March. Of this inventory, $2,229,000 is already under contract. $495,000 in previously listed inventory from 2006 is either sold and waiting to close or already closed. Buyers have purchased an additional $1,124,900 in inventory not listed by your guides.

To break this down: $3,478,000 in contracts written in Q1 2007. Plus: $5,496,000 in new inventory listed.

This will be a fine year for us, and for our sellers.

We are predicting that there will not be price depreciation in our market. The actual prices that buyers pay for real estate in the next month or two WILL be lower than the price paid last Fall, and here is how these two statements coincide.

All of our sellers have owned their property for at least two years. Most of our sellers have owned their property for at least three years, and many since 2000 or the late 1990's. There has been price appreciation each year - some years better than others.

However, with higher levels of inventory today, our sellers are making price reductions, and we are seeing price reductions on much of the inventory in our area. Therefore buyers can expect to benefit from aggressive pricing of property as it passes 30, 60 and 90 days on the market.

This by no means translates in to sellers losing money on their property. A property purchased in 1999 for $384,000, listed in January for $570,000 and today reduced to $555,000 still equates to a 44% increase in value.