Where do tree hugging, vegetarian liberals belong in north Chicago? (Evanston: mortgage, home equity loan)

[Lookout Kid]

Originally Posted by Nysee53

An article about Greenwich, CT is very irrelevant to Chicago. In Fairfield County and NYC Metro, people are more appreciative of older homes, there are far more new homes being built here and demand is much higher. Construction costs there are also considerably higher than our already high midwest construction costs.

Did you even read that article? What you're saying makes absolutely no sense. The article was all about Greenwich becoming the teardown capital of metro NYC, and how NYC has overtaken Chicago as the teardown capital of the U.S. Higher appreciation of older homes? This article completely contradicts that.

[chet everett]

I concur with Paige65. You have to factor in the "buyer pool". With few exceptions the people shopping in the range north of $700-800K are move-up buyers. They may have already done the improve/rebuild thing with a smaller older home and probably are looking for something a lot more "turnkey".

With 'easy money spigot' turned off you don't have the crazy flippers and "teardown terrorists" competing for homes. There are still plenty of contractors working on both very high end projects AND midrange projects for people who intend to LIVE IN their houses for a long time. Very different. Let's not forget that speculative construction is a very different proposal when inventory is high than when it is very tight. There has been a decade of teardown and improvement without a whole huge mass of new people moving to the region. Housing appetite is much more filled now.
Just like Jaynetarzana has found, some of the place still around are WAY ROUGH, and would require total gutting. If you are a VERY skilled person who could at least be your own general contractor or ideally do most of the work yourself this might represent an acceptable risk/reward. Not very likely to work for Jay, her office working hubby and two very little kids...

neither do I foresee a great mass of buyers that are going to slash their prices. I've said before that offers that are far below the "percentage of selling price" for an area NOT productive for someone who really needs to find a place to live.

If Jay's ceiling is $550K I might look at just just over $600K, but crossing the $650K is unlikely to be a good use of time.

Zillow is a joke. As purely an exercise in how easily it can be manipulated I messed with some its features and managed to pump up a property that I have an indirect interest in (OK it was my MIL's) and was shocked that the "new value" stuck. It is a toy more than tool. Though I do like how easily it associates properties with tax amounts, that is a time saver...

Regardless if someone says a home "has been looked at as a teardown candidate" if Jay needs 3 bedrooms and the house has that and is a SOLID home I believe she would be wise to focus on it. Someone else may be EXACTLY where she is at some point and may specifically want a home that is not immense. It may be foolish to over-improve a home, but some smart updates and improvement could certainly make a smaller home in a terrific location attractive to a great many people down the road.


BTW I think the deerfield house is ALREADY gone. So much for a "declining market". I kind of "bang the drum" that weather and external factors have a HUGE influence and when the Chicago market is "hot" and I really cannot emphasize enough that with ALL THE BLEAK NEWS, high gas prices, bad weather, tightened mortgage standards and even the never ending Democratic primary MOST of the "normal spring market" was SHUT DOWN. There are some people that REALLY need to get some houses and I suspect some attractively priced homes, in top notch communities are going to offer made RIGHT NOW...

[cohdane]

Originally Posted by jaynetarzana

How much further do you think prices can go? It is hard with kids, but we also need to be smart about not paying too much in a declining market.

This is impossible to answer, which is why it makes me so crazy.

However, when we got here in January, everyone said this area wasn't really subject to the same forces as the rest of the housing market. To me, it looked like it just hadn't corrected yet. Sure enough, the price drops have been fast and furious.

Disclaimer: I'm not a realtor or financial guru.

If I had to bet, I'd say prices could soften at least another 5-7% on the low end in the next year. On the high end, I'd guess 10-12% in the next year. On the everything hits the fan end, 30% over the next four years.

Here are my reasons for thinking that:

The average sales price for a home in Highland Park was $700,045 as of June 30, 2005, an increase of 103.88% since 1994. (Chicago Magazine, October 2005) Charts - Suburbs (Evanston to Libertyville) - Chicago

Now, keep in mind, prices out here didn't peak till around September of 2006.

I also recently saw that traders of housing futures at the Chicago Merc are putting their money on -11% over the next year for Chicago. Ten Housing Markets: The Outlook Worsens - BusinessWeek

Lastly, it looks like Highland Park has slightly more than its share of Alt A loans, which are predicted to be part of the next pile of brown matter to hit the fan. So inventory will continue to have at least some small portion of foreclosures effecting it. Dynamic Maps of Nonprime Mortgage Conditions in the United States

Existing inventory is moving very slowly. New listings keep coming on. And the Chicago Tribune reported May sales down 29% over last year: Area home sales plunge; prices steady -- chicagotribune.com

Factor in that (IMO) mid-century modern homes aren't a hot ticket out here (I think a lot of people don't "get" them-- to quote one looker I overheard at an open house, "It's a nice house...for someone who likes TILTING AT WINDMILLS!") and I think it's not an UNsafe bet to hold off a bit if you can.

Yes, interest rates are definitely going up. But with prices coming down, it could be a wash, or you could still come out ahead. (And yes, there is a possibility that interest rates will go up and prices hold steady-- but I really really doubt that combination.)

We're playing it this way, until we see a substantial change in either the downturn on prices or the upturn on interest rates, we've got nothing to LOSE by waiting for the "dream house." Especially since we intend to stay in it for quite a while. The wait could be worth it. Just to be clear, we're not waiting for the bottom, we're waiting for the house.

Again, I'm not an expert. Read the facts, find some more and decide for yourself.

GOOD LUCK!

[chet everett]

I do not think not think that the map you are looking at breaks out data they way you may think... Anyhow I would wager that more than few folks that do have ARMs in that neck of the woods are exactly the kind of people that Dr. Greenspan was talking about when he said "they've saved consumers a great deal of interest"... I mean the number of folks with poor FICO scores who just stumbled their way into Highland Park and are going get locked out of refinancing is vanishingly small...

Look, Jay's agent hopefully did NOT just reach into their butt to say the houses that have sold did so for 94% of list, I am gong to trust the data supports this. That is NOT a declining market. The VOLUME of sales is way off, but NOT the price. For reasons that MANY people have mentioned there are plenty of communities in the region that, while not completely immune, and much better insulated.

I have no crystal ball but I really do not understand what forces will push mortgage rates up significantly -- basically the past few weeks have been a chorus of voices saying "inflation is not the same as rising energy costs, household spending is flat". When put in context of the people charged with controlling the money supply the strong implication is that there will be no need to throw cold water on an economy that is clearly NOT overheated... If rates do not change significantly what good comes from sitting on your hands?

At this very moment I as sure there are many people giving some serious thought to the TIMELINE they need to move into a house in time for the start of school. Grab a calendar, realize MANY schools will be opening their doors August twenty-something. If you have to compete for a house and financing and closing there could very well be a bit of a rush...

Now Jay could sit on the sidelines, but as she has seen what rentals are like and how that would be ANOTHER stress on top of her husband's new job, packing up, settling in -- it does not take much to see that finding a solid home at a price that will not bust their budget is a wise decision.


BTW-- In another thread I pointed out that Case-Schiller for Chicago is a particularly large physical area. By including the HUGE region that stretches out to Grundy Co they do increase their odds of getting their "sale pairs" inside of their desired interval, but the result is that is then subject to a much different kind of market force than would be the case if the more stable suburban market was exclusively tracked...

[cohdane]

Originally Posted by chet everett

Look, Jay's agent hopefully did NOT just reach into their butt to say the houses that have sold did so for 94% of list, I am gong to trust the data supports this.
I have no crystal ball but I really do not understand what forces will push mortgage rates up significantly.

BTW-- In another thread I pointed out that Case-Schiller for Chicago is a particularly large physical area. By including the HUGE region that stretches out to Grundy Co they do increase their odds of getting their "sale pairs" inside of their desired interval, but the result is that is then subject to a much different kind of market force than would be the case if the more stable suburban market was exclusively tracked...

My answer to selling for 94% of list would be-- in many, if not most cases, after MULTIPLE price drops. If the list prices are dropping, prices are dropping. Like rocks. And if they're not dropping, the majority are not selling. The question isn't how much off list-- the question is, how much off ORIGINAL list?

As for mortgage rates, I will make no claim to understanding how it works, but everything authoritative that I've read has said they are tied more to inflation and treasury bonds than to anything the Fed can control. Hence, with gas prices doing what they're doing, mortgage rates will likely go up (and if they don't, that's even better and even more of a reason not to rush to buy.)

As for the large market area of the Case Shiller index, that may be true. Or, it may just be yet another "not us, our market is DIFFERENT" excuse.

Jay asked for info, I gave my reasons. You have yours. Jay and family have theirs. I think any facts can only help them make their own informed decision based on their owns needs and preferences.

[cohdane]

Just came across some numbers published today, July 3, on NorthShoreInsider.com:

North Shore Chicago Real Estate - Information & Resources

Highland Park Illinois home for sale: October 1, 2007: $659,000 May 16, 2008: $539,903

It's an interesting article overall, some suburbs listing prices are actually increasing. However, Highland Park is not one of them. In fact, it appears to have the biggest decrease in prices going.

Overall North Shore: April sales down 14% Y-O-Y, April prices down 5% Y-O-Y

[chet everett]

Not too derail things too much, but tying together / better explaining my problems with Case-Schiller and the true Chicago suburban market one also has to realize that the Case-Schiller model specifically throws out sales that happen too close in time AND ones where the selling price is such a big jump or one party was a builder that it was a rebuild/teardown. Uh, HELLOOOO that basically 'circular files' ALL the activity in MOST suburbs! While I understand WHY they do this, and agree that it probably DOES make sense for what the index is trying to track it means that since the Chicago region WAS THE CAPITAL of teardowns the Case-Schiller index was biased against our region. Tie this together with our already MUCH longer than average holding time for houses and you begin to see why I go out of my way to say that for people buying in the pricey in-demand areas of Chicago's suburbs it is unrealistic to thing a giant drop in prices in just around the corner...

I have better faith that the numbers cited in the Northshore Insider are reflective of the sales. That said the sales do not track "cost per sq. ft." or anything else that would at least give SOME indication of the KIND of houses that did sell this year compared to last. My gut tells me that a disproportionate number of the houses that did sell this year are EXACTLY the type Jay could afford -- less than 4 bedrooms, 2 or fewer baths. As people no doubt realize these are far less in demand than the larger houses and also ties in with one of the semi-sane things that Nysee said: people like newer houses. You do get more livable space in MANY newer homes, and the market reality is that those homes DO cost more.

I do not think I am doing any excessive hand waving / rationalizing. No one is going to argue that VERY different market forces are at play in the fringe of Joilet in Grundy Co. than in Highland Park or Glencoe. If so many people are willing to accept statement like "the rich get richer while the poor get poorer" and the "two Americas" thing then I would suggest that the pulling apart of house prices should also show this...

If one wants to live in an area of homes that cost more than half a million dollars one ought to be aware that your neighbors are effected by things in different ways than those whose homes are way down market.

[Anthera]

Originally Posted by Paige65

My DH would die if they ripped down the Clement Stone mansion. He loves that place! I'm glad your friends are rehabbing it, I'll bet it's going to be spectactular.

They love it. They are keeping it as intact as possible, while bringing it into the 21st century.

[Anthera]

Originally Posted by Paige65

I don't know about the accuracy of Zillow in Lake Bluff, but I just looked up my own home, and Zillow's estimate is about $175,000 - $200,000 (hard to know exactly) below what I think is its FMV. The estimates for most of my neighbor's homes were pretty far off as well.

Good luck today.

As well as zillow, cyberhomes.com, housefront.com, and yahoorealestate are good tools. Try all four and see what you get.

[Anthera]

Originally Posted by Nysee53

A new house always beats an older home in this market, even if the older home is in a better location and offers more space. If someone is dieing for an old home, then they will buy an old home. Anthera, you have named a few cases, there is an article from Crains featuring Sharon Friedman of Coldwell Banker Winnetka South. She tells how old homes have become increasingly hard to sell even if the old home is in a great location. I will try to find the article for everyone here. You should also read the posts by MiddleAgedMom, she can tell you that this is absolutely true. That $450,000 house can be had for $300,000, which then means it makes sense for a developer in Ravinia. Architects have become more creative, because it is increasingly difficult to find affordable lots with a 50' or more width. An article about Greenwich, CT is very irrelevant to Chicago. In Fairfield County and NYC Metro, people are more appreciative of older homes, there are far more new homes being built here and demand is much higher. Construction costs there are also considerably higher than our already high midwest construction costs.

I completely disagree. If this were true new homes would always sell before old homes, which means in this market there would be no sales of older homes and no inventory of new homes.