housing supply

More Chicago-Area Homes Underwater Last Quarter

Back when I was running “The Most Hated Blog On Wall Street” I used to talk with increasing regularity about the “underwater people”- Americans who owed more on their mortgages than their homes were worth. According to online home and real estate marketplace Zillow, their ranks are now thinning out. At least in certain parts of the country. Cory Hopkins reported on the Zillow Blog yesterday:

Almost 2 million American homeowners were freed from negative equity in 2012, and the overall percentage of all homeowners with a mortgage in negative equity fell to 27.5 percent at the end of the fourth quarter, according to Zillow’s fourth quarter Negative Equity Report.

The falling negative equity rate is good news for struggling homeowners and is largely attributable to a 5.9 percent bump in home values nationwide last year to a median Zillow Home Value Index of $157,400 (when home values rise, negative equity falls). At the end of 2011, 31.1 percent of homeowners with a mortgage were underwater, or more than 15.7 million people…

Still, despite more than 1.9 million homeowners nationwide finding their way back above water last year, 13.8 million American homeowners are still struggling with negative equity.

Here in the Chicagoland region, there’s still plenty of “underwater people” around. Francine Knowles reported on the Chicago Sun-Times website early this morning:

Nearly 37 percent of homeowners with mortgages in the Chicago area had negative equity in the fourth quarter of 2012, edging up from the third quarter, according to a new report that forecasts conditions will be worse by the end of the year… That was up from 36.6 percent in the third quarter, but down from 39.2 percent in the fourth quarter of 2011.

The Seattle, Washington-based company predicts falling home prices for the “Windy City.” Knowles added:

Zillow expects the percent of homes with negative equity will rise to 37.3 by the end of this year.

“Our forecast shows that Chicago’s negative equity rate is expected to rise because home values are expected to decrease by 0.6 percent” in the metropolitan area in December 2013, Zillow senior economist Svenja Gudell said in an email.

(Editor’s note: Italics added for emphasis)

I’ve been reading/hearing about a Chicago-area housing market recovery in the local media outlets with more frequency these days. Sure, sales are up. But prices have been going down. Plus there’s a whole bunch of foreclosures in the pipeline.

A recovery? I’ll believe it when I see it. And let you know when that happens.

UPDATE: This afternoon the Chicago media is running stories about a February 21 Illinois Association of REALTORS press release which might be interpreted as showing the Chicago-area housing market is experiencing a solid recovery. The problem is, January 2013 home sales and median prices are being compared to just one month (“year-over-year”)- January 2012. Instead, consider what the REALTORS wrote on January 22 about the nine-county Chicago Primary Metropolitan Statistical Area (PMSA) over 12 months (January through December 2012):

Year-end 2012 home sales totaled 90,365, up 26.7 percent from 71,315 homes sold in the region in 2011… The year-end 2012 median price reached $160,000, down -1.5 percent from $162,500 in 2011.

(Editor’s note: Italics added for emphasis)

Like I said before: Sales up. Prices down.

Analyze year-end totals for home sales and median prices, and a clearer picture emerges of how healthy the Chicago-area housing market really is.

Or isn’t.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Hopkins, Cory. “2 Million Homeowners Freed From Negative Equity in 2012; 1 Million More to Come in 2013.” Zillow Blog. 20 Feb. 2013. (http://www.zillowblog.com/2013-02-20/2-million-homeowners-freed-from-negative-equity-in-2012-1-million-more-to-come-in-2013/). 21 Feb 2013.

Knowles, Francine. “More Chicago homes underwater in last 3 months of 2012.” Chicago Sun-Times. 21 Feb. 2013. (http://www.suntimes.com/business/18361768-420/more-chicago-homes-underwater-in-last-3-months-of-2012.html). 21 Feb. 2013.

“Home sales, median prices increase in January; housing gains extend into new year.” Illinois Association of REALTORS. 21 Feb. 2013. (http://www.illinoisrealtor.org/node/3203). 21 Feb. 2013.

“Illinois sees home sales increase in December; 2012 notches 22.9 percent sales gain over 2011.” Illinois Association of REALTORS. 22 Jan. 2013. (http://www.illinoisrealtor.org/node/3182). 21 Feb. 2013.

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Thursday, February 21st, 2013 Housing, Main Street, Mainstream Media, Recovery No Comments

Crain’s On Chicago-Area Housing Market

Last night I read a good opinion piece about the Chicago-area housing market on the Crain’s Chicago Business website. Three “experts” shared their outlooks on residential real estate for the year ahead:

• Geoff Smith, Executive Director, Institute for Housing Studies at DePaul University in Chicago.
• Jennifer Alter Warden, President, Baird & Warner Residential Sales in Chicago
• Joseph L. Pagliari, Clinical Professor of Real Estate at the University of Chicago’s Booth School of Business

I wonder if any of these “experts” spotted the recent U.S. housing crash? As an early observer of that event, it’s been my experience that most people didn’t.

So, what made this Crain’s piece so “good?”

Unlike other Chicagoland real estate articles I’ve read recently, this one actually discussed the “large foreclosure pipeline” (Smith) and the “declining financial health of the city, county, and state” (Pagliari) as it relates to the local housing market and home prices.

No mention of the impact of incompetent political leadership, but one could make the case that it’s related to that bit about “declining financial health.”

A worthy read, which is located on the Crain’s website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Wednesday, February 20th, 2013 Debt Crisis, Government, Housing No Comments

S&P/Case-Shiller: Chicago-Area Home Prices Fall For Third Straight Month

There’s good and bad news with the latest S&P/Case-Shiller home price data for the Chicago-area housing market.

The good news? In November 2012, Chicago-area home prices were up 0.8 percent year-over-year.

And the bad? Prices fell for the third straight month. From ChicagoRealEstateDaily.com (a Crain’s Chicago Business enterprise) this morning:

A closely watched index of Chicago-area home prices fell again in November, its third straight drop and the biggest decline among a 20-city index.

The S&P/Case-Shiller index of Chicago-area single-family home prices fell 1.3 percent from October to November after dropping 1.6 percent from September to October and 0.6 percent from August to September, according to a report released this morning.

For the second straight month, Chicago posted the biggest decline in a 20-city index where prices fell.

(Editor’s note: Italics added for emphasis)

A week ago, the Illinois Association of Realtors released housing data for all of 2012. Mary Ellen Podmolik reported in Sunday’s Chicago Tribune:

On Tuesday, the Illinois Association of Realtors reported that home sales in the nine-county Chicago area rose almost 27 percent in 2012 from 2011. The inventory of available area homes in December plunged 37 percent from its year-ago comparison, which has led to multiple-offer scenarios and quicker marketing times. Still, the annualized median price slipped 1.5 percent from 2011.

Those pesky home prices…

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

“Chicago-area home prices fall for third straight month.” ChicagoRealEstateDaily.com. 29 Jan. 2013. (http://www.chicagorealestatedaily.com/article/20130129/CRED0701/130129771/chicago-area-home-prices-fall-for-third-straight-month). 29 Jan. 2013.

Podmolik, Mary Ellen. “Realtors’ dose of optimism tinged with reality.” Chicago Tribune. 25 Jan. 2013. (http://articles.chicagotribune.com/2013-01-25/classified/ct-mre-0127-podmolik-homefront-20130125_1_mabel-guzman-median-price-realtors). 29 Jan. 2013.

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Tuesday, January 29th, 2013 Housing, Main Street No Comments

S&P/Case-Shiller: Chicago-Area Home Prices Decline Again

Data through October 2012 from the Standard & Poor’s/Case-Shiller home price indices paints a not-too-pretty picture for Chicago-area residential real estate. Sandra Guy wrote on the Chicago Sun-Times website yesterday:

The Chicago-area housing market continued to lag national numbers, posting the largest non-seasonally adjusted single-home price decline — 1.5 percent from September to October and 1.3 percent year-over-year — of 20 major cities in the Standard & Poor’s/Case-Shiller national home price index released Wednesday.

Of the 20 cities, 12 saw housing prices drop.

(Editor’s note: Italics added for emphasis)

Recent rising prices have led to claims the U.S. housing market is in recovery-mode.

However, doubts remain. AnnaMaria Andriotis reported on the MarketWatch website on December 20:

But experts say that spike is largely due to the limited number of homes on the market. There were about two million existing homes available for sale at the end of November, which equates to the lowest housing supply since September 2005, according to the NAR. With fewer homes to choose from, buyers intent on purchasing a property are more inclined to offer a higher price or engage in bidding wars, housing analysts say, which ultimately drives prices up.

The problem is this limited inventory underscores a weakness in the housing market: Many sellers have resisted putting their home up for sale, out of concern that it will sell for far less than they paid for it, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla. That’s set off a domino effect. Because they’ve held off, supply has remained limited, in turn pushing prices up. “Prices have gone up in the last year because of this temporary, artificial market,” he says…

Separately, in some neighborhoods, median or average sales prices are rising because the mix of homes selling has been shifting toward higher-end, more expensive properties — not necessarily because the value of the typical home is rising, says Jed Kolko, chief economist at Trulia.com, a real-estate listing site. Sales of existing single-family homes priced at $1 million or more increased 52% in November from a year ago, a trend that’s been in play for most of the year, according to the NAR.

(Editor’s note: Italics added for emphasis)

More later on these doubts…

By Christopher E. Hill, Editor
Survival And Prosperity (http://www.survivalandprosperity.com)

Sources:

Guy, Sandra. “Chicago-area home prices see steepest drop nationwide: report.” Chicago Sun-Times. 26 Dec. 2012. (http://www.suntimes.com/business/17230482-420/chicago-area-home-prices-see-steepest-drop-nationwide-report.html). 27 Dec. 2012.

Andriotis, AnnaMaria. “The real meaning of rising home prices.” MarketWatch. 20 Dec. 2012. (http://www.marketwatch.com/story/the-real-meaning-of-rising-home-prices-2012-12-20). 27 Dec. 2012.

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Thursday, December 27th, 2012 Housing, Recovery No Comments

Illinois Foreclosures Up 9 Percent Year-Over-Year

“Real estate is going UP!” That’s what one of my family members recently roared at me when I suggested that the Chicago-area housing market was still a mess.

Did I happen to mention this individual also serves as one of my “reverse indicators?”

Anyway, not only are Chicagoland home prices down year-over-year (which I talked about here), but foreclosures too- more so around the state than around the Windy City. From the November 2012 U.S. Foreclosure Market Report from real estate information company and Survival And Prosperity advertising partner RealtyTrac Tuesday:

Florida posted the nation’s highest state foreclosure rate for the third month in a row, with one in every 304 housing units with a foreclosure filing in November, followed by Nevada, Illinois, California and South Carolina…

One in every 392 Illinois housing units had a foreclosure filing in November, the nation’s third highest state foreclosure rate. A total of 13,520 Illinois properties had a foreclosure filing during the month, down 9 percent from the previous month to a seven-month low, but still up 9 percent from November 2011 — the 11th straight month where Illinois foreclosure activity has increased on a year-over-year basis.

(Editor’s note: Italics added for emphasis)


RealtyTrac

As for the Chicago metropolitan area, the Irvine, California-based company said on its website:

Florida and California metro areas accounted for 16 of the top 20 highest metro foreclosure rates. Other cities with foreclosure rates in the top 20 were Rockford, Ill., at No. 11 (one in 290 housing units with a foreclosure filing); Chicago at No. 13 (one in 306 housing units); Las Vegas at No. 16 (one in 336 housing units); and Dayton, Ohio, at No. 18 (one in 338 housing units).

(Editor’s note: Italics added for emphasis)

Chicago Tribune real estate reporter Mart Ellen Podmolik chimed in this morning on the Chicago newspaper’s website:

In the Chicago-area counties of Cook, DuPage, Kane, Kendall, Lake and Will, almost 11,000 homes received a foreclosure notice in November, a decrease of 10.5 percent from October’s level of activity but up 1.6 percent from November 2011.

Most of that activity was in Cook County, where about 2,299 homes received initial notices of default, another 2,651 homes were scheduled for court-ordered sales and 2,086 homes were repossessed by lenders.

(Editor’s note: Italics added for emphasis)

I’ll have to see if I can’t find data on the local housing supply. Lots of for sale signs up on front lawns around the area…

You can read the Realty Trac report on their website here.

Source:

Podmolik, Mary Ellen. “Illinois foreclosures rise for 11th month.” Chicago Tribune. 13 Dec. 2012. (http://www.chicagotribune.com/business/breaking/chi-illinois-foreclosures-rise-for-11th-month-20121213,0,6683119.story). 13 Dec. 2012.

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Thursday, December 13th, 2012 Housing No Comments

Report: Chicago-Area Foreclosures Jump 34 Percent From A Year Ago

The housing Pollyannas are out in full force these days in the Chicago metropolitan area. The thing is, there no shortage of bad news still out there for my local residential real estate market. From the home foreclosure tracking firm (and advertising partner of Survival And Prosperity) Realty Trac this morning:

RealtyTrac (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Q3 2012 Metropolitan Foreclosure Market Report, which shows third quarter foreclosure activity decreased from a year ago in 131 out of the nation’s 212 (62 percent) metropolitan areas with a population of 200,000 or more. Third quarter foreclosure activity decreased from the previous quarter in 134 of the metro areas tracked in the report (63 percent).

Foreclosure activity decreased annually in 12 out of the nation’s 20 largest metro areas, led by San Francisco (36 percent), Detroit (31 percent), Los Angeles (29 percent), Phoenix (27 percent) and San Diego (26 percent).

The biggest annual increases in foreclosure activity among the nation’s 20 largest metro areas were in New York (69 percent), Tampa (43 percent), Philadelphia (34 percent), Chicago (34 percent), and Seattle (20 percent).

(Editor’s note: Italics added for emphasis)

Chicago-area foreclosures last quarter increased 34 percent when compared to the same time in 2011.

And according to the Irvine, California-based company, the Chicago metro-area foreclosure rate is 1 in 98 housing units.

Only the Riverside-San Bernardino metro area in Southern California registered a higher foreclosure rate (1 in 73 units) among the nation’s 20 largest metropolitan areas in the third quarter.

Considering the likely effect of all these foreclosures being added to the local housing supply, I think it’s safe to say it will be a while before the Chicagoland housing market really gets back on its feet.

You can read the entire report on the Realty Trac website here.

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Thursday, October 25th, 2012 Housing No Comments

Seen On The Streets, Part 1

Real Estate “For Sale” Signs Going Up. Lots Of Them.

There’s more talk recently of a housing recovery being “right around the corner” due to shrinking inventory. A number of media outlets have discussed the decreasing number of existing homes on the market lately. For example, Nick Timiraos wrote in the Wall Street Journal’s Developments blog back on January 19:

“Housing Inventory Ends Year Down 22%”

There were fewer homes listed for sale at the end of 2011 than in any of the previous four years, a positive sign for the housing sector…

The 1.89 million homes on the market at the end of December represented a 6% decline from November and a 22.3% decline from one year ago, according to data compiled by Realtor.com.

I can’t speak for the rest of the country, but based on what I’ve seen around the Chicagoland area the past several days, inventory levels might be rising shortly. Driving back and forth between Chicago and the western suburbs I’ve noticed an awful lot of “for sale” signs going up in front lawns- more so than what you’d typically expect for the spring selling season. Stately homes, shacks, condos, you name it, and quite a few signs are out. On the opposite end of the spectrum, I’ve seen only two “for rent” signs, both in my neighborhood, which has a lot of multi-family buildings. While Craigslist usually returns a good number of properties for rent around where I live, a quick search revealed only seven available going back to the oldest entry on February 24. Plenty of condominium units up and down my street for sale though. Hmm. I wonder if unwilling landlords aren’t thinking this is the year for finally unloading that ill-timed attempt at a “flip?”

Those who point to improving inventory data as evidence a housing recovery is near might be underestimating what I may be witnessing, which is, quite a few sellers who pulled their properties off the market some time ago to wait for better conditions could be charging back in, emboldened by each bit of good housing news they’ve heard lately. However, more properties placed on the market leads to increased supply, which could keep depressing home prices.

Source:

Timiraos, Nick. “Housing Inventory Ends Year Down 22%.” Wall Street Journal. 19 Jan. 2012. (http://blogs.wsj.com/developments/2012/01/19/housing-inventory-ends-year-down-22/). 2 Mar. 2012.

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Friday, March 2nd, 2012 Housing, Seen On The Streets No Comments
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