This is the strongest Buyers Market to hit the Chicagoland area in at least 20 years, yet many buyers are waiting for the market to turn around before acting. You are missing your best opportunity to buy a home in at least 20 years! First we should back up for a second and explain what happens in a Buyers Market like the one we are currently seeing and how buyers felt during the latest hot “Sellers Market”.
When real estate experts and economists talk about a “Buyers Market” they are referring to the fact that there are more sellers then buyers. When this happens the buyer gains control of the negotiation process and can find some amazing deals. They also will have an excess of inventory to choose from allowing them to find the perfect home. Sellers become willing to work out deals to sell their home, things like paying discount points to lower your monthly payments, or paying closing costs, or drastically reducing their price if they must sell fast. Any of these items allow you to buy the perfect home today for an amazing deal!
Almost every buyer we worked with during the hot “Sellers Market” said they wished there where more homes to choose from. They also complained that sellers expected full price (or higher) for their homes and many times buyers ended up in a multiple offer situation. Lastly we couldn’t convince sellers to give assistance to buyers making it even harder for first time buyers to afford to purchase. If you didn’t purchase a home during 2002-2005 feel free to ask anyone who did if they ran into these types of issues. These items all happened because during a Sellers Market the seller is in control of the negotiation process.
The very distinct difference between the two types of markets shows why buyers should be buying today. The sad reality is that the average person always buy high and sell low. They buy and sell based on emotions that are steered by media hype. Don’t follow the masses, this is the time for smart move up buyers to save tens of thousands of dollars and it’s the perfect market for first time buyers to get the best pricing and incentives possible.
If you wait on the sidelines please don’t cry about how you could have bought that house for less in 2007 or early 2008 after the market turns around. You have been warned that housing prices will go up and that interest rates will go up. You have been informed that this is the best buying opportunity in at least two decades.
So the real questions are:
- Why aren’t you buying a home today?
- Why not take advantage of the best “Buyers Market” in recent history?
- Why not get the best price possible for the home of your dreams?
- Why not take advantage of the glut of inventory and shop for a home when you have more options?
- Do you want to risk that interest rates increase before you purchase your next home?
To view foreclosures, by owner listings, and all currently listed properties by all real estate companies make sure to visit our free Chicagoland Home Search. If you have questions about the buying or selling process including our guaranteed services please fill out our contact form or call today at 847-749-3533, we will be happy to discuss your options.
15 responses so far ↓
Brian Nygard || Nov 29, 2007 at 1:51 pm
Hi Ken,
Nice post… I think some buyers think things are going even lower. It’s hard to pick bottoms people.
Brian
Ken Smith || Nov 29, 2007 at 3:13 pm
Brian it is impossible to pick the bottom and any smart person realizes that. Smart investors are already back in the market buying as much real estate as they can while the masses are in panic mood selling at a loss.
Olivia Davis || Dec 16, 2007 at 8:51 am
I am looking to buy In Schaumburg, Illinois In the fall of 2008, do you think the market will still be the same? I am currently renting and my lease Is not up until Oct. 08
Ken Smith || Dec 16, 2007 at 11:32 pm
Olivia it will take some time before the market turns back into a sellers market. While there is no way to predict when things will completely turn around I would say that Fall of ‘08 will still have some good buying opportunities. What i would watch closely is the interest rates, they very likely will start to go up next year and this can greatly effect your buying power.
Ryan Ward || Jan 18, 2008 at 11:12 pm
Ken,
If it was a buyers market when you wrote this, what would you say it is now? I wrote something similar about the same time you wrote this explaining basically the same things and they apply more here in Atlanta now than they did then - especially with interest rates under 5.5%. Anyone who can and wants to buy should get off the sidelines and jump in. You can only see the absolute bottom in the rear view mirror and when you hear on the news it’s time to buy, the truth is, you already missed the best time.
Ken Smith || Jan 19, 2008 at 3:44 pm
Ryan it was and still is a buyers market. With the current low interest rates and amazing selection of homes it is a great time to purchase. More important it really looks like the market is about to pick up.
Our list price to sales price ratio has narrowed meaning that homes are properly priced and buyers agree. When it’s a strong buyers market there is always a large gap between the sales price and list price…this gap has reduced by over 60% in the last 4 months.
There are so many other stats (that most agents don’t even know to follow) that are starting to really show signs of an improving market. While it isn’t going to be the crazy market we had 3 years ago it looks like we will be back to our steady and stable market that Chicagoland normally has.
Our team is already having a better start to 2008 then we had for the start of 2007. Time will tell if these trends will continue or if it’s just being driven by the low interest rates.
C Richey || Jan 28, 2008 at 3:06 pm
Same for us in Las Vegas. It didn’t hurt that the Fed lower interest rates again either. I think regular people are starting take the media with a large grain of salt. Trump has been on a few shows saying the time to buy is a down market.
Phil Scwartz || Feb 15, 2008 at 5:09 pm
It would be a rather dumb move to buy a house now. Most economists project a 30% fall in the price of homes by 2009/2010. If you purchased a house now for $500,000 the house would be worth $350,000 by 2010. Realtors need to sell homes in order to make money so they will always skew the facts in their favor.
Ryan Ward || Feb 15, 2008 at 5:41 pm
Phil,
This is why you hire a real estate professional and not listen to an economist about real estate. Before you go around spinning out numbers, you should site your source. In my opinion that ‘economist’ is competely irresponsible. My market has continued to see prices increase and will continue to do so.
Real estate is local. Period.
Ken Smith || Feb 15, 2008 at 5:53 pm
Ryan I couldn’t have said it better myself. There are so many people that love to buy into the doom and gloom media. The reality is that for every economist that claims what Phil says I can find 5 that say something else.
If there was a remote chance of our market falling 30% (which we have only had about a total of a 2-4% correction based on location over a 2 year period) I would have sold my home and investments and just rented for a couple of years. I would have also had my family sell their homes and investments.
Our market is actually picking up an amazing pace and this looks to be a very good year for real estate in the Chicago area. Would put money on the fact that home prices increase this year with the activity that we are seeing.
Ken Smith || Feb 15, 2008 at 5:58 pm
BTW, Phil feel free to site your sources. As someone who loves economics I would enjoy reviewing their work. It should naturally be multiple sources as you say “most” economists.
Scott || Feb 18, 2008 at 4:28 pm
I’ve seen some of the posts on here recently and decided to chime in. First, I think we would all agree that the housing market has been in a recession for at least a year. Second, just b/c the country as a whole MIGHT enter into a recession doesn’t mean housing prices will continue to tumble. Phil do you even know the definition of a recession? For Phil and everyone else that may not know, it’s 2 consecutive quarters in real GDP.
Just as with the housing boom, every area is affected differently, the economy in Chicago and the surrounding suburbs is solid.
We’ve also seen an increase in buyers and contracts written lately. Most are either first time homebuyers, investors, or relocations.
I do believe that we still have too much inventory on the market, but I expect the market to stabilize in the next 12-15 months. You’ll never predict a bottom and I don’t think we’ve hit it yet, but I think we’re pretty close.
Ken Smith || Feb 18, 2008 at 4:45 pm
Scott the bottom will be very different based on the area. Some suburbs have done much better then the City, and even parts of the City have done much better then others. That alone will make it impossible to say the exact time for “the bottom”, but in some areas I feel it is very close.
We have seen a huge increase in first time buyers over last year. This means a lot of move up buyers are finally getting their home sold The first time buyers start a huge chain of events as buyers are able to move up.
Relocation buyers are also calling us on a daily basis. They have the same effect as a first time buyer on the market.
Karen Geselle || Mar 1, 2008 at 11:14 am
Interesting viewpoints being presented here. Thought I’d add my 2 cents worth. I’m a Realtor in Boise, Idaho. We’ve seen home prices fall pretty dramatically over the past year or so. But let me back up a couple of years. Prior to 2005, we saw appreciation of 4-6% annually year after year. In 2005 - 2006, we were inundated with investors (mostly out of state) that were buying up everything they could get their hand on - single family, vacant land, commercial, income properties. Due to the high “demand” for real estate, prices went through the ceiling. Then the “crunch” hit and the investors backed away. Because our local economy (and by the way, it’s in pretty good shape) and wage structures couldn’t and wouldn’t support the “inflated” prices, prices began to fall - first slowly and then gaining momentum. But, it appears that we’ve seen the worst and I believe that, at least in our area, we’ll see a turnaround by the end of the year if not sooner.
I feel bad for homeowners that purchased during the “frenzy” and now their homes are valued at less than they owe on their mortgage. But these reductions were necessary, at least in our area, to bring the price of housing back into line with our local economy and wage structure. And history has shown, that real estate, HELD OVER TIME, is a good investment. In my humble opinion, we shouldn’t be “day-trading” real estate.
Homes are still selling here if - and here’s the Realtor mantra - they’re in a good location, in good condition, and PRICED APPROPRIATELY. Another agent in my office had multiple offers on one of her listings the day the listing hit our MLS.
AND for those who don’t believe it’s a good time to buy, tell that to all of the investors who’ve returned and are making offers on short sales, pre-foreclosures and REO’s.
Ken Smith || Mar 1, 2008 at 11:25 am
Karen you seem to have a very good handle on your market. It is sad for the homeowners that overpaid while the investors drove up prices, but they made the decision to purchase.
Luckily we never had the huge run up in prices like so many areas. Sure our appreciation was higher then normal, but we now have had 2 straight years of zero appreciation and even some small reductions in price. This has rebalanced our market very nicely and will allow for a much easier transition into a more normal market.
As for investors, we are seeing true professional investors coming back into the market. These are the same investors that had been sitting on the sidelines not buying, sometimes even selling during 2004-2005, our hottest market time.
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