Flat sales of condos hint thrill is leaving
Flat sales of condos hint thrill is leaving
Home prices higher as volume stagnatesBy Mary Umberger
Tribune staff reporter
Published January 26, 2006
Condo sales, the driving force behind Chicago's housing market throughout the fall, went flat in December, the latest sign that the torrid housing market has eased to tepid.
The Illinois Association of Realtors reported Wednesday that existing-condo sales in the Chicago area rose just one-tenth of 1 percent last month from December 2004, though year-over-year sales last fall had spiked 7 to 15 percent a month.
Meanwhile, The National Association of Realtors reported Wednesday that sales of existing homes climbed to 7.072 million units in 2005, setting a new record.
However, sales fell by 5.7 percent last month, the third straight monthly decline.
Analysts say the national trends are worrisome.
A report Wednesday from Goldman Sachs said the December existing-home sales report suggests that "U.S. housing market conditions are deteriorating rapidly," because inventories of both single-family homes and condos "appear to be surging."
If the market doesn't bounce back sharply in early 2006, "we may need to revisit our view that U.S. house prices are set for stagnation rather than outright declines," the report stated.
In Chicago, single-family home sales continued their gradual decline, falling 2.7 percent in December, though their median sales price climbed 11.2 percent, to $264,561, the Realtors said.
Statewide, it was a similar story: Single-family sales, though posting an annual record, were down 1.1 percent for the month, with their median sales price up 8.6 percent, to $203,000.
Chicago-area agents have mixed views of the market.
"It just feels completely flat," said Pamela Ball, a North Side agent for Baird & Warner. "There's no sense of urgency from buyers.
"In Edgewater, for instance, just eight condos over $300,000 were sold in all of December. The year before, there were about 15. That doesn't seem so good."
Others said they don't see a pronounced slowdown but rather a building-by-building variance.
"There are buildings that are very flat," said Thaddeus Wong, a principal with the @Properties brokerage in Chicago. "But in the good buildings in the solid locations, there's strong appreciation. We're still seeing good, solid pieces of real estate that, if in a good location without inherent defects, have a market time of less than 30 days."
Wong said one reason condos are lingering is because many lack distinctiveness from one another, a byproduct of the housing boom that has created a bumper crop of units in similar buildings with similar amenities.
He also cited overpricing by "overzealous sellers" whose perceptions are colored by memories of a hotter market.
This performance--fewer homes sold, but at higher prices--mirrored the U.S. housing picture, according to the National Association of Realtors.
While existing-home sales were down 5.7 percent in December, prices climed 10.5 percent from the year before.
"This is part of the market adjustment we've been discussing, with a soft landing in sight for the housing sector," said David Lereah, chief economist for the trade association.
Population growth
He said he expects sales to pick up in the coming months because of population and jobs growth and because mortgage interest rates are receding toward last summer's levels. On Wednesday Freddie Mac reported that 30-year loan rates averaged 6.1 percent, the lowest since Oct. 20, when it also was 6.1 percent.
But NAR President Thomas M. Stevens of Vienna, Va., cautioned Wednesday that sellers should expect prices to come down to "more normal levels" because of inventory.
Buyer's advantage
"I wouldn't call it a glut," said Arlington Heights Re/Max agent Bill Brucks. "But there's plenty available. In the past five years we've had several new high-rises built here, and they're putting more in as we speak. It does take longer to sell them."
Bob Gary of Arlington Heights said the ample condo inventory there worked to his advantage when he and other family members signed a contract to buy a unit for his mother-in-law just before Christmas.
"We were waiting for the market to downshift a little," said Gary. "We were able to begin the search from a better position than if we had bought earlier in the year."
Gary says he is not worried about appreciation.
"Everything is cyclical, so I wasn't too concerned about it. This isn't something we're looking to turn and make a profit."
One of the few places locally that showed an uptick in condo activity in December was McHenry County, where sales rose 15.2 percent and prices gained about 19 percent.
"It's still a seller's market," said Crystal Lake Re/Max agent Kristi Hoiberg, who said that within certain price ranges the relatively newer condos there sell faster than single-family homes because they tend to be in better condition.
"I'm pricing them aggressively, sometimes at what seems to be a very high price," she said. "The houses sell OK, but the condos get contracts within a few weeks."
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mumberger@tribune.com
The Illinois Association of Realtors reported Wednesday that existing-condo sales in the Chicago area rose just one-tenth of 1 percent last month from December 2004, though year-over-year sales last fall had spiked 7 to 15 percent a month.
Meanwhile, The National Association of Realtors reported Wednesday that sales of existing homes climbed to 7.072 million units in 2005, setting a new record.
However, sales fell by 5.7 percent last month, the third straight monthly decline.
Analysts say the national trends are worrisome.
A report Wednesday from Goldman Sachs said the December existing-home sales report suggests that "U.S. housing market conditions are deteriorating rapidly," because inventories of both single-family homes and condos "appear to be surging."
If the market doesn't bounce back sharply in early 2006, "we may need to revisit our view that U.S. house prices are set for stagnation rather than outright declines," the report stated.
In Chicago, single-family home sales continued their gradual decline, falling 2.7 percent in December, though their median sales price climbed 11.2 percent, to $264,561, the Realtors said.
Statewide, it was a similar story: Single-family sales, though posting an annual record, were down 1.1 percent for the month, with their median sales price up 8.6 percent, to $203,000.
Chicago-area agents have mixed views of the market.
"It just feels completely flat," said Pamela Ball, a North Side agent for Baird & Warner. "There's no sense of urgency from buyers.
"In Edgewater, for instance, just eight condos over $300,000 were sold in all of December. The year before, there were about 15. That doesn't seem so good."
Others said they don't see a pronounced slowdown but rather a building-by-building variance.
"There are buildings that are very flat," said Thaddeus Wong, a principal with the @Properties brokerage in Chicago. "But in the good buildings in the solid locations, there's strong appreciation. We're still seeing good, solid pieces of real estate that, if in a good location without inherent defects, have a market time of less than 30 days."
Wong said one reason condos are lingering is because many lack distinctiveness from one another, a byproduct of the housing boom that has created a bumper crop of units in similar buildings with similar amenities.
He also cited overpricing by "overzealous sellers" whose perceptions are colored by memories of a hotter market.
This performance--fewer homes sold, but at higher prices--mirrored the U.S. housing picture, according to the National Association of Realtors.
While existing-home sales were down 5.7 percent in December, prices climed 10.5 percent from the year before.
"This is part of the market adjustment we've been discussing, with a soft landing in sight for the housing sector," said David Lereah, chief economist for the trade association.
Population growth
He said he expects sales to pick up in the coming months because of population and jobs growth and because mortgage interest rates are receding toward last summer's levels. On Wednesday Freddie Mac reported that 30-year loan rates averaged 6.1 percent, the lowest since Oct. 20, when it also was 6.1 percent.
But NAR President Thomas M. Stevens of Vienna, Va., cautioned Wednesday that sellers should expect prices to come down to "more normal levels" because of inventory.
Buyer's advantage
"I wouldn't call it a glut," said Arlington Heights Re/Max agent Bill Brucks. "But there's plenty available. In the past five years we've had several new high-rises built here, and they're putting more in as we speak. It does take longer to sell them."
Bob Gary of Arlington Heights said the ample condo inventory there worked to his advantage when he and other family members signed a contract to buy a unit for his mother-in-law just before Christmas.
"We were waiting for the market to downshift a little," said Gary. "We were able to begin the search from a better position than if we had bought earlier in the year."
Gary says he is not worried about appreciation.
"Everything is cyclical, so I wasn't too concerned about it. This isn't something we're looking to turn and make a profit."
One of the few places locally that showed an uptick in condo activity in December was McHenry County, where sales rose 15.2 percent and prices gained about 19 percent.
"It's still a seller's market," said Crystal Lake Re/Max agent Kristi Hoiberg, who said that within certain price ranges the relatively newer condos there sell faster than single-family homes because they tend to be in better condition.
"I'm pricing them aggressively, sometimes at what seems to be a very high price," she said. "The houses sell OK, but the condos get contracts within a few weeks."
----------
mumberger@tribune.com
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