Tuesday, July 1, 2008

Breaking News: Dollar Volume Down 15% YTD

Year to date, through June 30, dollar volume of Chicago condos is down 15% and units closed are down 26%. But median sales price is up 10% and average days on market is up only 4%.

That's the picture from figures generated on the Multiple Listing Service, operated by Midwest Real Estate Data.

By comparison, at the end of May, year-to-date volume was down 12%, transactions down 25% and median price up 11%.

For the raw numbers on which the above percentages are based, see the Condo Market widget on this blog. For more details, go to Market Overview on ChicagoCondosOnline.com. Receive these monthly reports by e-mail.

EXPERT ANALYSES: Has City's Condo Market Bottomed?

Asked to comment on the above report, Jim Merrion, Regional Director of RE/MAX Northern Illinois, offered this analysis:

"My personal opinion is that we have not hit bottom yet, and the news is continuing to worsen every day in the financial mar- kets. (Note stock market plunge, unemployment increases, pension cuts, layoffs, 600 Starbucks closing, anticipated impact of obscene Cook County tax increases, SB 1167’s forthcoming effect, Merrill Lynch situation, the Spire as a rental building, etc.)

"Prices are still too high! They should not be increasing at this time, and by doing so, the backlog and average days on market continue to increase, which will force buyer price disintermediation and an ever-looming inventory buildup, which, combined with the new projects that were too late to stop, are destined to cause a severe market correction in average sales price, and until that happens, slipping sales numbers.

"Indeterminable at this point is the long-term effect of a Federal bailout of sorts, which I believe would be beneficial short-term (two years maximum) but detrimental to the market in the long-run, because it is unsustainable.

"The key to agents being successful, at this point," adds Jim, "is for them to do their market research thoroughly, and to fully educate their sellers about how to properly price, stage and market their property to effect a sale.

"We have found that our access to the foreclosure, short-sale, and REO data on our illinoisproperty.com Web site has helped us to do that. Remember, there has never been a property that has failed to sell if the price is low enough, and every market has opportunity available."

Rubloff's President Jim Kinney agrees about the bottom:

"We have not hit bottom yet. You need some blood in the street to see bottom. The city resale market has been a lot stronger than many other markets and indeed some buildings are still commanding record and near-record prices. New construction is close to dead and at a standstill in many projects. I think we will have to see a failure of an already started project (out of the ground) to see a fishing of the bottom.

"Hints of inflation are actually good for real estate except that it will be alongside increasing interest rates--2009."

Rubloff's Mario Greco, one of Chicago's Top Ten condo agents, adds his perspective:

"Based on what I'm seeing in the market, I'm not sure there is a true bottom. I am continuing to see well-priced (not firesale, but fairly priced) and well-located properties marketed correctly are selling for 96 to 98% of list price and are doing so in 60 days or less.

"The 'bottom' that people are fishing for seems to be codespeak for 'When are the majority of sellers going to actually price their properties fairly and not shoot for the moon?' My sales volume is up almost 30% from last year and my number of units sold has increased by 22%."

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