The most popular search I run for my prospective buyers is for 2bed/2bath units in the Lincoln Park and Lake View neighborhoods. The graph below depicts the Supply & Demand of 2/2's in these neighborhoods in Number of Units Sold per month. Over the course of two years, the #units sold has decreased approximately 50%. Obvious dips in #units appear in the winter months, which is pertinent information for sellers who are thinking about listing their properties in the snowy season.
According to data from the MLS (Multiple Listing Service) within the following parameters:
-Attached Single Units (ie, condos, 2-4 Flats)
-2bedroom/2bathroom units
-Within the Lincoln Park and Lake View neighborhoods
-In the price range $200,000 - $500,000
-All ages (new construction and resales)
-Time over the past two years (May 2007 - May 2009)
Here, the same graph from above is overlayed with "For Sale" data for the same area, time period, and price range. Clearly, there is an excess in inventory, or supply. Demand cannot keep up with the steady supply, which drives prices down.
The question we should be asking is 'Why is there such a large excess in inventory on the market?' In my experience, sellers haven't faced the harsh reality of our declining market and proceed to list their homes for sale at their own perceived value. The glitch in the system? The real estate agents who agree to list these homes at unreasonable prices. My thoughts? Agents got desperate in the past couple of years - - with good reason - - their business was failing! So they agreed to take any listing they could get their hands on, and allowed the seller to dictate the sale price. The problem is - - sellers don't have the training and market knowledge that the realtor is supposed to have. They place an emotional value on their properties. Just because they bought it 3 years ago for $500,000 and put $100,000 into a new kitchen does not make the new value of the home $600,000. Realtors should know better. But they failed to cease this progression, and so overpriced homes went on the market... and stayed on the market... and stayed on the market longer. If realtors could make a collective effort to price homes appropriately - and even go so far as to walk away from a seller who wants to list a home at an unrealistic price - we would see inventory begin to drop because a) they will finally sell, or b) the seller will effectively choose not to list it for sale at all. Supply should stabilize. Demand should normalize. Now obviously, I'm not saying the housing crisis is strictly due to inept realtors, but agents that don't do their job properly fail to serve their clients and the rest of the market!
