CHICAGO IL. “Short Sale Super Man” Big Picture. By Phil Buoscio, Better Living Realty.
It is my job to not be “rosy” and generic and talk generality about the “market” that might or might not improve. I am not your typical rosy scenario Realtor/Broker. You might have caught me doing that in 2004 like many of us–but the Great Recession taught me better. It’s better to be “black sunday” real and stay in reality and not get crystal ball rosy with peoples outlooks when they rely upon you to base big decisions — like whether or not to move or not.
Well here is a report anyone thinking about “holding” a home for a “few more years” until “things get better” should read.
Again… the core issue here is “what is my return to equity date?” Many clients who owe 400k and have a market value of 289k now and have a hardship are thinking should I put food on the table or keep paying my mortgage. I can’t answer that question – all I can do is provide a longer term check. The media is starting to make the “economy narrative’ sound better and lost in that gloss over B.S. is the fact that locally – we are back at prices equal to 2003. In some n’boods – prices have dropped 45% since just 2007. I just ran comps for a client who lives at Irving and California… paid over 475k for a home in 2006 (march) and I pulled median home sale stats and found out that since then the depreciation in the 7 block square pocket of this “gentrified area” has dropped 43%. Yes. That is a Gentrified N’hood of Chicago that dropped 43% FOURTY THREE PERCENT since March of 2006.
So when you hear the media say the housing market is “improving” remember we have to make up a TON of equity to get many people just back to “return to equity date” of what they owe.
Now let’s jump to a study. It’s rather pessimistic… I’m sorry for this. But “Short Sale Super Man” does not B.S. you. A professor at the Rockefeller Institute of Government in New York just published a report (link is here) on the future of cities that paints a dire future for metro areas — this report and sponsored by Mortgage Association Of American a dire picture for the future of struggling neighborhoods and cities.
-The “Great Recession” of 2007 to 2009 has taken a great toll on housing markets in most cities and metropolitan areas in all parts of the country. Though the pace and extent of the overall economic recovery of these markets is still far from certain, many places will likely resume growth and fully recover within the next decade or so. This is almost certainly not to be the case for all metropolitan areas.
-In fact, a number of large metropolitan statistical areas (MSAs) experienced severe recessions during the latter half of the 20th century and prior to the Great Recession and never fully recovered or took many years to do so.
He found that substantial decline in home values occur when a n’hood is hit by population decline (Chicago dropped about 2% a year in 2005-2009) and higher unemployment. Such declines bring about a reduced housing demand, and it often takes many years for supply and demand to become balanced again and for house prices to return to the levels they achieved prior to the negative economic event.