Wheaton and Glen Ellyn Still Overpriced?

[seattlehawksea]

[quote=fairmarketvalue;]

OK, then if I am understanding correctly, you keep quoting what a "fair" appreciation rate would be- correct? and I believe you said and annual of 3-4 % is not unreasonable- fair.

Yes, I think this is fair.

But you suggested in the quote above that "home sellers are reluctant to sell for what they paid"- this is a different story, big time, if you bought in 1999. Are you suggesting that homes do not appreciate and that selling in 2008, we should sell for what or near what we paid? Let alone, the amount of money put into updating to the "standard" of a buyers market, putting in all or nearly all that's expected in the price range example I gave? Give me a break. It is not a matter of sellers reluctant and taking them off the market, it's downright CRAZY to think that anyone would sell at "foreclosure prices" which is what it would come to if a seller was expected to "sell for what they paid".

Rather than what you said, my comments were thus: "In fact there have been some studies that conclude that in the short run where house prices are in decline (this has happened regionally before), home sellers are very reluctant to cut prices relative to the price at which they paid for the home. And they end up keeping the home on the market longer or just pull the home off the market."

You don't have the time, patience or insight to even understand what I am saying here. Spend some time thinking about what this means rather than skewing my comments.

I also would like your thoughts on my comments about the home values in all of those other suburbs I listed in my previous post ( and I forgot the most important one of all- Lake Forest), and the fact that "numbers" are only a part of what "makes" a market value of a home. Location, schools, commute to job/city, proximity to conveniences, etc..... I'd honestly like to know what your thoughts are and why you think Wheaton/GE is so "overpriced". In a lot of ways, with home values being down 10% or so from peak, I think communities like this are at a "good price" and attractive to the "fair 3-4% appreciation" you keep saying is fair. Again, if bought in 2003-2005, not the case and we all understand that. That's why "market value" is in line and if you paid more than current "market value" as it stands, now, you also know why you are not going to make much if any, appreciation. But a home bought for 390,000 in 1999 that sells for 540,000, then that's fair appreciation- right? But if that same home was turned over for the $620,000 once offered in 2005, then for sale again, in 2008, of course your not going to see ANY appreciation and will actually see a loss- right? So tell me what I'm missing here? I will say it again, while homes were worth more in our area, a few years ago, they were not hugely inflated like places in CA. And our market has listened to the "realities" of market prices and expectations and have come down to "fair prices" for the area. Home purchase is more than just about the Structure. This is when certain communities start to stand out among others and the reasons for it. Not "Gods gift", just clear differences. If my home in Wheaton ever becomes the same value of a comprable home in Lake Forest? Then I'll agree with you! Until then, it's all relative.

Lake Forest prices (along with most of the entire Chicago area) are still too high as well (relative to Lake Forest fundamentals of course). Maybe I should have titled the post "Chicago Area Prices Still Overpriced?" I sincerely apologize for isolating Wheaton and Glen Ellyn. The only reason I did is that is where I am actively looking.

Look, fairmarketvalue, I think that if you realized a 3.5% yearly appreciation on the home you just sold, that you're home was priced correctly and you're right that the buyers were wrong to think that prices would decline further. Congratulations. However, I am finding many home sellers that are being much more unrealistic about prices than in your personal situation. Ok? Can we bury the hatchet please? Can you you agree that house prices are too high at 5-6% yearly appreciation and those will correct downwards given some reasonable and thought-out assumptions?

[fairmarketvalue]

[quote=cubsfan1492;5997809]

Originally Posted by fairmarketvalue;

Yes, I think this is fair.

Rather than what you said, my comments were thus: "In fact there have been some studies that conclude that in the short run where house prices are in decline (this has happened regionally before), home sellers are very reluctant to cut prices relative to the price at which they paid for the home. And they end up keeping the home on the market longer or just pull the home off the market."

You don't have the time, patience or insight to even understand what I am saying here. Spend some time thinking about what this means rather than skewing my comments.

Lake Forest prices (along with most of the entire Chicago area) are still too high as well (relative to Lake Forest fundamentals of course). Maybe I should have titled the post "Chicago Area Prices Still Overpriced?" I sincerely apologize for isolating Wheaton and Glen Ellyn. The only reason I did is that is where I am actively looking.

Look, fairmarketvalue, I think that if you realized a 3.5% yearly appreciation on the home you just sold, that you're home was priced correctly and you're right that the buyers were wrong to think that prices would decline further. Congratulations. However, I am finding many home sellers that are being much more unrealistic about prices than in your personal situation. Ok? Can we bury the hatchet please? Can you you agree that house prices are too high at 5-6% yearly appreciation and those will correct downwards given some reasonable and thought-out assumptions?

Agreed! hatchet burried. Have a great day.

[bungalowdweller]

I'm also waiting to move to Wheaton. My credit is outstanding and my current home has no mortgage but the market has tanked in my town so badly that it doesn't make sense to put the house up for sale because no one is buying.

I've also noticed that many of the houses I was looking at have been taken off the market so it appears that sellers in Wheaton/Glen Ellyn are also waiting things out.

I'd love to get out there asap as Wheaton has an outstanding homeschool community. My girl is in her second year of homeschooling highschool and we'd like to try some of the activities offered there that just don't exist close in to the city, ex. debate teams.

If only the market would just calm down, even if we enter a recession. A recession can be an excellent time to buy a home.

[seattlehawksea]

bungalowdweller,

A couple of the homes I have been keeping an eye on have been taken off the market in Wheaton/Glen Ellyn in the past week. It could be the winter season or the fact that buyers have the constraint of selling their home too. Here is an article summing up some of the problems in the housing market by one of Barack Obama's economic advisors.

Cheers.

September 23, 2007 Economic View NYTIMES A Reality Check for Home Sellers By
AUSTAN GOOLSBEE

mod cut: text removed

http://faculty.chicagobooth.edu/aust...07.9.homes.pdf

[irish setter girl]

“If you want to sell your house then you list it at the market price and
you sell it,” he said. “If you don’t really want to sell then don’t put
it on the market. But don’t say you want to sell and then set the price
so high that you spend the year cleaning up every morning, having people
walk through your living room and look in your medicine cabinets and
reject you. That’s just painful — and expensive.”
Quoted from previous post

I completely agree. The homes that are selling now are priced ahead of the curve, are in excellent condition and have a desirable location. These sellers will win out come spring. Most the sellers who are pulling their homes off the market now to avoid the holidays will put their homes back up for sale in the spring. There will be a huge bubble of homes entering the markeplace in February. Sellers who are price ahead of the curve now will have the best pick of a home since they will be non contingent in the spring and will have an inventory of homes begging them to come their way.

[boyet]

I have a nice house in Wheaton and is for sale. Due to another job assignment, my family relocated in Sept and selling the house a significant amount less than I bought it in June 2006. The market took a huge downturn, and with it the price. Wheaton is great-- good schools, close to the freeways, tucked in the suburbs, Danada Square, Morton Arboretum. Like any buyers then we considered all of those and more, when we decided to buy in Wheaton. My house is in the Scottdale Subdvision by Butterfied, backs to the Morton Arboretum, great neighbors and would have loved to stay. If you are interested, let me know. Thanks.

[chet everett]

While I don't have any major argument with the study cited above, it is important to remember that home are NOT the fungible commodities upon which pure economic theories are built. Even if one considers condominiums, which are far less different than any sort of free-stranding house, there can be some important characteristics of consumer behavior that influence who sells and what price they might be satisfied with.

I know from experience that there are distinct periods in the life-cycle of larger condo buildings that tend to be reflected with some consistency. The buyers most enamored of a building tend to buy during pre-construction. A large number of these buyers will hold on for a looooong time. Depending on the broad economic conditions prices may rise or fall from pre-sales, but a lot more of those buyers are much more "comparision shoppers" and if they can get a unit in a newer building, or a higher floor, better floor plan, or more upgrades they tend to be less "committed" to the building If they do decide to sell they tend to be more pragmatic and less emotional then people that hold out for the last dime becuase they have unrealistic views about how "perfect" one building may have been.

Beyond these broad sorts of behaviors there are also periods of buying and selling driven by "life changes" of the residents. People that get married are often much motivated to "dump" an older condo than singles, ditto for new parents, and those settling estates. You'd need to do a lot more than just look at the sales data to discern those trends.

Not saying that prices are static, or ever increasing, just that there is very complex behavior dictating "who will sell and who will wait"...

[US-Traveller]

From what I have seen the western suburbs, especially Wheaton and Glen Ellyn have dropped considerably.

[cityofwheaton.info]

I must say everything real estate related in this market holds little meaning any more.

Keep it simple, buy where you like to live and hope you get appreciation over time.

Cheers!

[trickygal]

SeattleHawkSea:

I just joined and found your post.Tremendously interesting. (Your thought process and analysis resembles the excel spreadsheet I have for houses in Glen Ellyn.) Just wondering, I know it is a year later, what happened? What were the results?

Thanks,
TG

PS: If I can figure out how to private message you I will do so. I assume that you won't view this thread.

Originally Posted by seattlehawksea

If you think so, you may be right. Here is what I did:

I compiled a list of homes that are currently on the market that I am interested in and recorded current listing and past sale prices. All of the homes are very, very comparable in that they are: roughly 2000 sq. ft., 4BR, 2.1 Baths, 2 car garage, have a fireplace, are South of Geneva Rd. and North of Roosevelt Rd. Each is also within 0.7 - 1.5 miles of a Metra stop. They are also the same style of home and the lot sizes are surprisingly very close in each town, both of which will be left out of the discussion not to single anyone out. Each home was built between 1969 and 1980 and was last sold between 1997 and 2000, which was before the housing bubble began. All in all, very, very comparable.

I calculated what the selling price should be if each realized a 3% or 4% constant yearly return on the home since the last sale. I use 3% and 4% since these numbers are in line with house price inflation historically, although they are higher than consumer price inflation in the past decade, which was low (see a previous post of mine with respect to house prices and inflation). Therefore, with that assumption, I am stacking the deck against my belief that homes on the market are still overpriced.

In the following, I show how much homes are overpriced relative to listing assuming a 3% and 4% yearly return. I also round to the nearest thousand to make things easier to read.

Here are the results for Glen Ellyn and Wheaton:

GLEN ELLYN

Home #1
Last sold in 2000
Difference between listing and selling price in 2000 if 3% appreciation: 86k
if 4% appreciation: 57k

Home #2
Last sold in 1998
Difference between listing and selling price in 1998 if 3% appreciation: 133k
if 4% appreciation: 96k

WHEATON

Home #1
Last sold in 2000
3%: 94k 4%: 64k

Home #2
Last sold in 1997
3%: 122k 4%: 92k

Home #3
Last sold in 1997
3%: 106k 4%: 70k

Home #4
3%: 30k 4%: -3k

So, with the exception of the 4th home in Wheaton (in the case of a 4% yearly appreciation), all of the homes are overpriced according to these assumptions. Of course, every single home may have added 1000 sq. ft since 2000 (which is highly unlikely given the style of the home). In addition, I make the assumption of a 3 or 4% yearly return. If credit conditions remain strict and/or we experience a recession worse than expected, those assumptions may be even too generous.

To buyers: these areas are still overpriced. This holds at least for the homes I am interested in. I don't know what the market looks like for $1M+ homes for example, but I suspect the same holds.

To sellers: some but not most of you may find a sucker to pay your listing prices. "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."