Homebuyers feel the heat with real estate minibooms
By Stefano Esposito Staff Reporter July 13, 2013 11:46AM
Jason and Megan Komenda are expecting their first child in late August and will be moving into this home on the Northwest Side in the Wildwood neighborhood. The couple twice lost out on homes to other bidders before they got the home they wanted- and only because an earlier deal on the home fell through. June 05, 2013 | Alex Wroblewski~Sun-Times
Updated: August 15, 2013 6:02AM
With their first child due in August, Jason and Megan Komenda knew last fall that they wanted out of their one-bedroom Lincoln Square condo with shared laundry three floors below their unit.
The couple weren’t novices in the real estate market — between them, they’d bought three condos before they began house hunting last fall.
“At the time, I thought that it was a buyers’ market,” said Jason Komenda, a 38-year-old accountant. “I didn’t feel like I had to be so aggressive.”
But the Komendas found themselves in “extreme panic” last month, with their condo all but sold and no house lined up. The couple twice lost out on homes to other bidders in what’s become a suddenly hot sellers’ market in parts of the city and suburbs.
North Side realtor Joan Brennock, who has been in the business for 27 years, now offers this advice to clients in hotter neighborhoods: “If they see a property they like, they should bid on it that day. I don’t think we’ve had that kind of market in a long time.”
What’s behind the miniboom? A low housing stock, near-record low mortgage rates — but rates are climbing — and potential buyers who’ve stood on the sidelines are emboldened by an improving economy, real estate experts say.
A look at the most recent figures from the Chicago Association of Realtors illustrates the supply-and-demand problem for buyers — or the boon, if you’re a seller. For condos — about 70 percent of the city’s home market — new property listings increased about 3 percent for the first five months of 2013, compared with the same period last year. But sales of existing condos jumped a little more than 28 percent during that time. The situation is more lopsided for stand-alone homes. Inventory for single-family homes dropped almost 1 percent for the first five months of 2012, and sales jumped about 22 percent. On average, the amount of time a condo remains on the market has shrunk 36 percent, according to the data.
And these trends appear to be here to stay, at least for the next two years or so, because of the lack of new development in the Chicago area, says Erik Doersching, executive vice president of Tracy Cross and Associates, a Schaumburg-based firm that tracks real estate trends locally and nationally.
“It’s going to take some time before you get enough new construction supply in the marketplace to take the pressure off the resale market,” Doersching said.
In some of the city’s in-demand neighborhoods — Logan Square and Bucktown, for example — properties that might have taken months to sells a year ago are now selling just weeks after they’re put on the market.
“It’s consumer confidence,” Brennock says. “Last year, people were afraid of layoffs. They were just afraid to put their toes in the water.”
Zeke Morris, president of the Chicago Association of Realtors, has noticed a similar confidence among buyers and sellers.
“People should understand the marketplace,” Morris said. “If you’re interested in the hotter neighborhoods, understand that your ability to negotiate is going to be limited. If you’re in a neighborhood that’s not experiencing multiple offers (on a home), then you can afford to be picky.”
Though homes are generally still selling at 12 to 20 percent below prebubble peaks, prices are climbing — about 8 percent over the last two years, Morris said.
The story is similar, although not quite as pronounced, in some suburbs.
Jim Kubal, a Naperville-area realtor since 1979, said the market began to heat up in January.
“If it’s well-priced, within 5 percent of the market value, it’s going to go within the first couple of weeks,” Kubal said.
It took Kubal’s client John Beery five tries to get the winning bid on a home in the western suburbs. Beery and his wife were looking for a ranch-style house in the $250,000 range.
Beery, who runs his own air conditioning business, described the competition for homes as a “rat race.”
“You’re down this maze, and if you find something you like, you better put an offer on it — otherwise it’s gone,” Beery said.
Beery and his wife, Jacci, finally found a home to their liking in Oswego, paying $230,000, which was $9,000 less than the asking price. They plan to move in at the end of August.
Jason Komenda and his very pregnant wife are set to close on a Northwest Side four-bedroom house they saw in mid-June. They passed on the home at the time even though it had almost everything they wanted.
“Of course they told me someone else was prepared to make an offer,” Komenda said. “I said, ‘Forget it. I’m not going to get into another bidding situation.’ ”
Fortunately for the Komendas, the deal fell through for the other interested buyers. The Komendas, who paid in the “lower 500s” for their home, are set to close on the new property seven days after they close on the sale of their Lincoln Square condo.
After his experience, Komenda cautions against panic buying.
“Don’t feed the frenzy,” he said. “Be sensible on your purchase. Don’t overextend yourself. Don’t get caught up in bidding wars.”