REO property listings continue to pull down the sales prices of single-family houses, condo units and townhomes in Chicago, based on a report on residential sales in August from the Illinois Association of Realtors.
In August, the median sales price for detached single-family houses dropped by 30 percent to $154,000 and the median sales price for condo units and townhouses fell by 15.3 percent to $271,000. According to the realtor organization, short sales and foreclosure sales caused the big drops in sales prices.
Sales of brick Georgian houses, bungalows and other single-family detached homes increased by 22.6 percent compared to sales in August last year, but sales of townhouses and condo units dropped sharply. With the decrease in townhome and condo sales, the overall sales of existing homes in Chicago in August dropped by 7.2 percent compared to August last year.
According to David Hanna, head of the Chicago Association of Realtors, condo units in the past years were the best selling residential properties across the city. But when REO property listings included a lot of low-priced single-family detached houses, buyers gravitated towards single-family homes.
Other factors affected condo sales, according to Hanna. Among them are restrictions on condo purchases by government agencies providing guaranteed loans, income guidelines preventing first-time home buyers from taking advantage of the federal tax credit and the refusal of some condo sellers to price their units realistically.
Hanna also mentioned the difficulties of potential move-up buyers from obtaining jumbo loans and from coming up with the required percentage of down payment. Besides, move-up buyers could not sell their units at a price that would enable them to move up. Hanna said that foreclosure sales and short sales have been pushing down the prices of condos in the lower price bracket.
A two-bedroom condo unit in the DePaul neighborhood which was initially offered for sale at $449,000 is now being sold at $435,000, but still there are no takers. Prospective buyers looking at the condo unit have been making low-ball offers, indicating that there are so many other units available for sale.
Chicago real estate professionals said they expect the Chicago market to soar this fall as first-time home buyers try to beat the deadline for the federal tax credit.
In the Chicago metro area, sales of existing homes increased compared to sales in August 2008 but the median sales price dropped by 18.7 percent to $205,000, again due to the price reduction effects of REO property listings.
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