Chicago Homebuyers Face Competition, Sellers Gain Leverage
CHICAGO — Homebuyers, prepare for battle. At least for a little while.
The number of properties with multiple people offering to buy has jumped in the last three months compared to last year, area real estate agents said.
Buyers, whether they’re buying to own or they’re buying to invest, are starting to compete for good property.
“We’re getting outbid by places,” said Joe Siciliano, a Coldwell Banker Lakeview branch manager. “It’s like how it was in '06 and '07.”
Stephen Johnson, managing broker at BE Realty, for example, used to competed for a property about three to four times a year during the economic downturn. He’s had that same amount of competition in just the last few months.
The time that properties have been on the market has been cut in half—from 120 to 180 days to a couple months, he said.
Sellers are still selling at prices far below boom levels, but they’re finally gaining a little more leverage, Johnson said.
A client of Mark Zipperer of Re/Max Edge, for example, wanted a two-bedroom condo at Lake Shore Drive and Addison Street in Lakeview with garage parking, a balcony and a “drop-dead million-dollar view of the city.”
The property's listing price was far lower than during the boom — $249,900 instead of $434,000 — but multiple people offered to buy. So Zipperer's client, an accountant, had to sweeten the deal: He paid listing price, used all cash, and offered to pay $10,000 worth of past condo fees.
Homeowners and banks have been able to sell to more qualified buyers because fewer good properties are on the market, Zipperer said.
“If you’re the only girl in the bar — what do you do?” he said. “You hold out for a better guy. That’s exactly what’s going on.”
The shortage of properties can be attributed to the lull in the number of foreclosures in 2011, said Daren Blomquist, vice president of real estate trend tracker RealtyTrac.
Foreclosures in the Chicago area, including suburbs, decreased about 30 percent in 2011 from 2010, RealtyTrac numbers show.
Less housing on the market plus more confident buyers equals more competition for buyers. But Chicago's multiple-bid environment may not last for long, Blomquist said.
According to the most recent numbers available, foreclosures went up 23 percent from 2011 to 2012.
That means more properties will enter the market later in 2013, and the multiple bids for hot Chicago properties may die down a bit, Blomquist said.
"There is still plenty of latent distress," he said.
But popular neighborhoods such as Lincoln Park, Lakeview and the Gold Coast may see multiple bids for a while if homeowners are still holding out on selling. Foreclosed properties rose very little in many popular ZIP codes from 2011 to 2012, according to RealtyTrac numbers.
In Lincoln Park, for example, a 4 percent rise in foreclosures means just 13 more properties may enter the market in 2013. Old Town foreclosures rose 4 percent, or nine properties. And South Loop foreclosures rose 5 percent, or 13 properties.
So, unless more homeowners feel confident enough to sell, buyers may continue to compete for hot housing this year.
"We're running out of bank-owned property," said Zipperer. "I suspect that we’ll flesh out on the North side of Chicago, and prices will start to rise."