By Daniel I. Dorfman
For people looking to purchase a home after the worst of the recession is behind us – and there appear many of them in Highland Park and Deerfield – this just might be the right time to buy.
Home sales and prices are accelerating in both North Shore communities. According to information provided by the North Shore Barrington Association of Realtors, total sales of single family homes have increased in Deerfield almost 41 percent in the same 12 month period concluding in July 2013 as opposed to that same period in 2012. Highland Park has seen a 22 percent increase.
Moreover, the average sale price of a single home is up nearly 2 percent in Deerfield and 3.5 percent in Highland Park over that same 12 month period.
“This whole year has been awesome,” raves Lynn Cosner, the managing broker of Baird & Warner in Highland Park.
Most experts are tying the spike in sales to the perception of a recovering economy as well as the incredibly low interest rates that were put in place to invigorate the housing market. Rates today are still between 4.5 and 5 percent.
“Many people want to take advantage of today’s lower interest rate and even though there is discussion of them increasing a bit, we are still at historic lows,” Cosner added.
Sellers in a better position
Another positive factor is that fewer purchases are due to the previous owner’s unfortunate situation.
In July, Realty Trac, a California-based firm that tracks the real estate market, reported the numbers of homes Highland Park and Deerfield at some point in the foreclosure process were in the single digits. That reflects the overall trend of falling numbers of distressed properties in the area.
“Nationally speaking, we are in the 9th inning of the foreclosure crisis” Realty Trac’s Daren Blomquist said. We’re at levels with 6.5-year lows in terms of foreclosure activity,”
That trend echoes what the people on the ground are seeing locally.
“Distressed sales including foreclosures are a fraction of what they were in 2012. Some people were able to renegotiate their terms with their lenders and others restructured their debt service besides their mortgage,” said Michael Maize, a senior vice president of Koenig & Strey, who oversees Deerfield, Northbrook and Glenview.
That doesn’t necessarily mean the effects of the mortgage crisis are completely gone. While most of the distressed properties have been cleared out, the foreclosure process in Illinois is slow and there are some residual problems, specifically because of the properties that were on the market in the first place and the damage they do to all home values.
“Houses are selling for a good amount of money but appraisers are having a hard time finding enough comparables without using short sales or foreclosures,” cautioned Carol Strauss, the Deerfield branch manager of Coldwell Banker.
Interest rates good, but poised to rise
But interest rates are beginning to head north. In fact they are up a full point from May. The overall rate of 4.5 to 5 percent is still considered very good, so that might drive people towards for sale signs.
“There is a pent up demand from buyers and with interest rates picking up people want to buy something before they go here,” Strauss said.
Maize believes the time is right for prospective buyers who have been hesitant to jump in because of previous uncertainty.
“Now is the perfect time to buy because the housing values are going up and the interest rates are still favorable,” he said. “If there continues to be a shortage in inventory there is still going to be a demand that will drive prices up.”
Still, one expert advocates that if the right property is not available today, there is no need to worry that you are missing out on a great opportunity.
“I don’t think buyers need to be in a rush,” Blomquist said. “You don’t want to make a rash decision. It can be a good time to buy, but you don’t want to be too concerned about buying at the bottom of the market. You are making a huge commitment.”
While sales are going well in Highland Park and Deerfield, nationally things have slowed down over the last couple of months as interest rates rise.
Even in the North Shore, realtors have noticed a slight decrease in action the last few weeks. But most tie that to the summer and people concentrating on their vacations, not on the purchase of a home. The line of thought is things will begin to pick up once again now that children are back in school.
There are other factors that can be in play, specifically if the tenuous economy receives another jolt such as government budget crisis or tensions in the Mideast.
A good time for optimism
All that being said, the local real estate agents believe the positive signs they have been seeing will continue into the future.
Strauss predicts a strong market for the rest of the year.
“I think there is some optimism from buyers and sellers that we haven’t seen in a long time,” she said. “I truly believe that if a home is priced right it will sell. If it is languishing on the market, it is not priced right.”