I Love Snow – well up to a point

It’s nice to look at; it makes the dull browns of winter “bright and cheery” … but we still have to shovel it. So after digging out my front yard (50′ of sidewalk and 30 feet or front path)  and both cars, I took a drive around town. NO ONE was on the streets. It was great.  I also went over to the lake and you could see waves 20+ feet in height way off in the lake.

But really, when was the last time you saw Green Bay Road EMPTY in the middle of the day, on a Wednesday.  Really, no one for a 1/2 mile in either direction.

Now for the cold weather.

By the way, have you checked on Team #MBteamGL on Twitter and Facebook. They’re in second place and need help catching up! Log on and Tweet away.

DS

Year End Review

The end of a difficult year. From apparent recovery to a quiet letdown and all in twelve months.  Real estate is one of the hardest hit industries in America and it has wreaked havoc on the finances of all families.  Demographics (our age, income and profession) and macro-trends (job markets, financial markets, etc.) had a profound effect and slowed chances for a recovery in our markets.

But all is not terrible.  There are some highlights to the 2010 real estate markets.  Below is a review of the year, including a review of sales by “Number of Bedrooms”.

The New Trier Report

DS

 

November – A Cold Month for Sales

November and December tend to be “quieter” months in the real estate business.  It’s really the beginning of the year end holiday season and many people don’t want to put up with the trouble of either getting a house ready to show or braving the elements to see another house.  And that’s exactly what we saw – a slow down in

• Appointments and showings
• New listings
• Contracts and, most importantly,
• Closings.

Unfortunately, historically it’s also a time when more people ought to be looking because sellers tend to “deal more” in these two months. Sellers don’t want to go into the New Year with a home they’ve been trying to sell. They are much more inclined to deal simply to “get it done.”

But, obviously, sale contracts rely on buyers and in November many people seemed be more conservative despite reports of increased consumer spending. The conservatism reflects the continuing uncertainty in the recovery, the persistently high unemployment rate and the high levels of risk in the global financial markets. The price of gold has rocketed up in the last 12 months; the US savings rate is higher than anyone can recall.

Prices in Wilmette continued to drop for the fourth month in the last six. We are now below January’s average sold price and volume was weak.  I’d love to report more optimistic news but the reality is that we seem to be in a “New Normal”.   Click here for the Report on Wilmette real estate sales.

Have a wonderful and safe holiday season.

DS

The Shadow Inventory

Over the last year a new phrase has entered the real estate lexicon – “shadow inventory”.  Even to industry insiders this phrase can be puzzling and frustrating. I understand it to be the number of homes in financial distress – 90 days past due (“pre-foreclosure”), in foreclosure or REO (Real Estate Owned by lenders). What is really confounding is that these three definitions vary, have exceptions and are used almost interchangeably.  So, I opt to simply say, these are properties in financial distress.

Jo Ann Theriault–Fazio, a vice president with Guaranteed Rate who does a lot of business with @properties, sent this article around late last week. It’s a research piece written by Core Logic, a data services company located in California. This is a good explanation of the “shadow inventory” issue NATIONWIDE. I am not a big fan of broad statistics.

I was curious about what the shadow inventory might be in Wilmette. This is a much more relevant question to residents and potential residents. Using a data source I subscribe to I calculated that, as of Tuesday November 30, 2010, there are 24 properties listed in the pre-foreclosure status, with an average indebtedness of $416,275.  There are an additional 32 properties in foreclosure with an average $393, 500 indebtedness. These homes are in every Wilmette neighborhood – from the lake/Central School to just west of the highway/Avoca West, and Isabella to Chestnut.

I matched this list up against properties listed for sale in the multiple listing service and found very few actually listed. That leads me to estimate that the “shadow inventory” in Wilmette is 56 homes. That makes our inventory potentially as high as 200 homes, or 30% greater than currently listed.

For people who are selling or about to sell, pricing could not be more important. Buyers will buy  homes that offer a strong value proposition, or that have priced the home based on the competitiveness of the marketplace.

For people who are interested in buying, I strongly urge caution when looking at financially distressed properties. The buyer in a Short Sale or pre-foreclosure transaction has very little leverage with the real owner of a property – the bank. There is an entirely different dynamic in a bank’s decision process. You are working with (not negotiating with) a corporation; they are filling our forms and assessing how much a loss on a mortgage will affect their quarterly P&L. Decisions will be made for which there will not be a rational explanation (at least to you.)

I have seen some great deals, I have participated in a several and I have been burned in a few. I always suggest to buyers that it is much more worthwhile to negotiate hard on a property not in distress, in which you deal directly with the decision maker, the homeowner.

If you have questions about the properties in distress in Wilmette, drop me a line.

DS

Wilmette Sales Through October 2010

Not a reassuring month – there was a slowdown in key segments of Wilmette in October.  On the positive side, there were transactions happening and buyer sentiment seems to have continued to improve since the Summer.  In Q3 and into October, sales of 5+ bedroom homes bolstered the upper end; but transactions for 3- and 4-bedroom homes remained at lower levels.

Here is the report.

Over the last two weekends we have seen many more “serious” buyers visit open houses indicating that there is some life in this market. Many people read the newspapers and express concerns that financially distressed sales will hurt the value of their homes.  In reality, the number of distressed sales is extremely small and will have only a nominal impact on pricing. More importantly, Sellers need to price their home competitively to attract buyers and be ready to negotiate in earnest.

As always, call with questions and check www.WelcometoEvanston.com for the report on that town.

DS

October Sales in Wilmette

October brought a mixed set of sales results for Wilmette.  I’ll have a more complete analysis by the end of this week but the topline numbers are:

Sales are up – Good; Average List price is down by almost 25% – that’s a bit worrisome and the time it takes to sell (“Market Time”) is also up.  Also, there is very little distressed sale activity happening. That’s not to say there are no distressed properties in Wilmette; rather, very few are getting through the pipeline.

Check back; I’ll have a full analysis by Friday.

DS

FORECLOSURES – The Inside Story in Wilmette

This morning an article ran in the NY Times (yes, still my favorite newspaper) about a semi-retired attorney in Maine.  This guy had spent a career foreclosing on builders who had pledged their homes as collateral for loans.  His life took a beating – the business was tough, he hated what he was doing, his marriage fell apart, etc. You get the picture. Then his employer, a Maine bank owned by overseas bank, recently went out of business.  He “got out of the foreclosure business.” As a means of making up for “taking”, he joined a non-profit to counsel people about to lose their homes. He found it was much better to be on this side of that transaction; not good but better.

One day he randomly picked up a file and after a brief review noticed there were some irregularities. The short story is: he was able to stop the foreclosure process on this house, challenge the way banks were “robo-signing” documents (including affidavits about their process and familiarity with the documents) and set off (contribute to) the nationwide freeze in foreclosure activity. Here’s the article. (you can also find it in “Interesting Articles” on this site.)

BUT, I’m more concerned with WILMETTE and how the housing market has faired locally.  Earlier this week I posted a five-page review of the Wilmette market to date. If you read it you know I am mildly positive if certain conditions happen. Looking deeper, I generated some stats I thought might be interesting. I wanted to see the impact of  distressed sales are on our housing stock. Here’s a summary chart:For the time being it appears that

1. The vast majority, over 90%, of home sales in Wilmette are traditional sales;
2. The data above are absolutely in line with sales trends over the last 24 months in Wilmette, which actually has a positive year-over-year story!
3. Better: PENDING SALES list prices are HIGHER than those that have already closed.
4. The impact of financial distress on a property’s price (our real focus) may be as much as $240,000 when listing and $200,000 when it closes;
5. Yet, there are no distressed sales in the pipeline for Wilmette. There will be but as of now, none are showing up.

Wilmette is not “the National Average” and, right now, it is a well-functioning marketplace. If you’ve read any of my rantings over the past year, you’ll know I subscribe to the belief that having a strong value proposition (PRICING WELL) is the key to a strong market and a successful sale.

So the next time you hear, “Our property prices are getting hammered by distressed sales in Wilmette” , please reply emphatically, “No we’re not.”

More to come on this topic.

DS