Chicago-area home sales jump 24% in Sept. over previous year
BY SANDRA GUY Business Reporter firstname.lastname@example.org October 19, 2012 8:32AM
Dean Karouzos outside of his new condo in Chicago, Ill., on Friday, October 19, 2012. | Andrew A. Nelles~Sun-Times Media
Updated: November 21, 2012 6:07AM
Retiree Dean Karouzos bought a one-bedroom condo in West Rogers Park in a delinquent tax sale for $41,000.
It’s just one example of how Chicagoans are scooping up bargain properties with low interest rates to boost home sales to the highest numbers in years.
Karouzos, a 65-year-old retired schoolteacher, got word from his broker that he should act quickly to win the 800-square-foot condo in perfect condition. He paid cash and closed the deal on Aug. 10. Karouzos’ son, Michael, 26, lives there while he goes back to college.
“If you are prepared and you qualify for a mortgage, and you are fortunate enough to have a job or have the cash saved up, there is tremendous opportunity out there,” said the elder Karouzos, who lives in Forest Glen with wife Nadine and their 23-year-old daughter, Diana.
Plenty of Chicago-area home shoppers are thinking the same thing.
In September, the number of home sales skyrocketed 23.2 percent in Chicago and 24 percent in the nine-county Chicago region from a year earlier, even as home prices stayed the same, the National Association of Realtors said Friday.
Chicago condo sales were even stronger, up 32.2 percent from September 2011.
The 7,484 sales of single-family homes and condos in the region marked the highest number of September sales in six years. In Chicago, the total stood at 1,845.
In Illinois, home sales jumped 15.9 percent in September from a year earlier.
Median sale prices in September dipped 0.6 percent to $188,900 in Chicago; stood unchanged at $160,000 in the Chicago area, and increased 2.2 percent to $139,000 in Illinois.
The rate on a 30-year fixed mortgage dipped to 3.37 percent this week from 3.39 percent last week, according to mortgage buyer Freddie Mac.
“We are seeing a perfect storm of the lowest interest rates and the lowest prices ever — the first time I’ve seen both at the same time,” said Zeke Morris, president of the Chicago Association of Realtors and managing broker at Keller Williams Realty in Hyde Park.
That combination, along with soaring rent prices — to the highest levels in four years locally — are pushing renters and deal-seekers, both buyers and sellers, to rush into the market.
They fear the low interest rates and easy deals won’t last long, and they are willing to put up with rival offers, picky appraisers and tight-fisted lenders who must follow strict post-banking-crisis rules, local Realtors said.
“We started seeing a real increase in activity in March and April, and it has exploded from there,” said Deno Jeffries, owner of Remax Exclusive Properties in the Lake View neighborhood. “Our year over year business is up more than 40 percent in volume.”
While the Chicago market is booming, national home sales dropped 1.7 percent in September to 4.75 million units.
That’s because such a large volume of foreclosed and underwater properties is flooding the Chicago market long after other states emptied their inventories, local Realtors say.
Lenders here are playing catchup in trying to get homes off their books. It takes an average of 540 days to complete a foreclosure process in Illinois, ranking the state among the top 10 nationwide, partly because Illinois requires a judge’s approval of foreclosures. Illinois had the highest foreclosure rate nationwide in August, but the local market it quickly spitting out the backlog.
Morris said local bankers got behind this summer in processing and closing on loans, pushing the time to 120 days — more than twice the average 45 to 60 days — and are just now working through the bottleneck.
One broker said this looks like a bottom but it’s not there yet.
“We better start buying, since these low prices and low interest rates are amazing,” said Mabel Guzman, broker at @properties.
Most experts predict a turnaround in two to three years.
Lawrence Yun, chief economist at the National Association of Realtors, said, “The housing market has clearly turned a corner, and this recovery is expected to continue as the economic and employment situations improve.”
Yun said he believes Illinois will be among the last to recover because its percentage of seriously delinquent mortgages has stayed stuck at 10 to 11 percent for the past four years.
“There is so much property just sitting,” he said.
It isn’t sitting in hot neighborhoods, however.
Nayoung Hwang of the Near West Side had looked for more than a year for an investment buy.
“I looked at 30 places,” said the 35-year-old auditor at JPMorgan Chase. “If there was a bargain, lots of people had cash offers so it was hard to compete.”
Hwang, who focused on the Loop, Gold Coast and Lincoln Park, bought a 450-square-foot studio apartment at 1555 N. Dearborn on $142,000 in mid-July. She had 10 people call to rent it on the same day she closed, with some people countering others’ offers. She is renting it for $1,250 a month.
“It has a great view of the lake and Lincoln Park,” Hwang said.
“It’s a great time to buy if you’re an investor or first-time buyer, but there’s a lot of competition and you have to obtain loans from the bank at a higher hurdle,” she said.