Chicago is the Top Buyer’s Market
Looks like bargains are blowing in the windy city. Chicago is the nation’s top buyer’s market, according to the Chicago Tribune. For buyers, this means a big stock of inventory to choose from. And with choice comes negotiating power.
The best places to look right now are Downers Grove, Northbrook, Palatine, Buffalo Grove and Orland Park. According to Zillow, homes in the Chicago area were listed for sale for a median number of 182 days. Zillow also said that 48 percent of homes in the city were sold for less than their prior selling price. In May, 40 percent of homes on sale saw a reduction in price.
The statistics make Chicago a very attractive place to invest for buyers, but for sellers it’s an indication that they need to be more realistic about pricing, the Tribune said. The median price cut in May was 6.92 percent, and the average discount on homes sold was 5 percent, the report said.
“This is really saying who has the negotiating advantage,” Stan Humphries, chief economist at Zillow told the Tribune. “Homes are hanging around for a long period of time. It’s really the supply-demand balance in the market. In Chicago, there’s more supply than demand. Some of that supply issue is foreclosures.”
Other buyers’ markets, according to the report, were Milwaukee, Cleveland, New York, Philadelphia, Jacksonville, Providence, Cincinnati, Hartford and Houston. Among the top sellers markets were: San Jose, Calif. followed by San Francisco; Las Vegas; Sacramento, Calif.; Phoenix; Riverside, Calif.; Washington; Los Angeles; Salt Lake City and Austin, Texas. Prices in those markets were driven by investors who were buying up properties and morphing them into rental units.
Mortgage Rates Dive Again
More happy news for buyers. Rates on 30-year loans slipped for the fourth week to another record low, clocking in at 3.56 percent. That’s the lowest since mortgage-finance giant Freddie Mac began keeping records. The average 15-year rate also dropped to a historic low of 2.86 percent.
The news comes at a time when the housing market seems to be waking up from a deep slumber. The low rates are bound to lure more buyers into the market.
“We do have a little bit of a firmer housing market,” Keith Gumbinger, vice president of HSH.com, a mortgage information website, told Bloomberg. “I don’t think anyone would call it wonderful, but it has improved, or stabilized, over the last few months.”
Home sales are on the rise with some markets attracting multiple bids on properties. With the rise in demand, prices also seem to be slowly stabilizing. According to Bloomberg, homes with loans for more than what they are worth dropped to 11.4 million in the first quarter. In the fourth quarter it was 12.1 million.
Rise in Foreclosures Signal Healthier Housing Market
RealtyTrac, Inc. recently said that initial foreclosure notices jumped 6 percent in the second quarter, a sign that the market is on its way to clearing the supply of distressed properties.
“The market has to deal with these distressed properties at some point and I believe we’ve delayed it long enough so seeing these increases isn’t necessarily a bad thing,” Daren Blomquist, a spokesman at RealtyTrac told Bloomberg. “The market has strengthened and is more equipped to absorb this additional foreclosure inventory.”
The foreclosure process slowed down in 2010 when lenders came under investigation for improper paperwork related to the foreclosure process. In February, banks reached settlement with authorities and the process picked up again.
According to Bloomberg, lenders are also trying to work with homeowners to find alternatives to property seizures. They are agreeing to sell properties at a price lower than what is owed on it. As a result, repossessions dropped 22 percent. This has helped stem the influx of distressed homes into the market. A decline in foreclosures would help stabilize inventory levels and prices, two of the most important antidotes for the ailing market.
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I don’t see how mortgage rates can go much lower, so I think now is a great time to buy for just about anyone, assuming they are living within their means!