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Winter Is Coming And Price Cuts Are A Rite Of Autumn

A report from Crain’s Chicago Business in Illinois. “Widespread price-cutting has been going on since early July in the Chicago area, a sign that sellers are responding to ‘unmotivated’ buyers, a Chicago broker said. Of the nine Chicago homes real estate agent Niko Apostal is representing right now, seven have taken price cuts in the past two weeks. ”

“Winter is coming and price cuts are a rite of autumn. But on top of that, for the past several months ‘there’s been a distinct lack of motivation on the buyers’ side,’ said Apostal, a Keller Williams Chicago-Lincoln Park broker.”

“Sellers have noticed and responded with price cuts. That’s clear from new data compiled for Crain’s by Redfin, a Seattle-based online real estate marketplace. In the 12 weeks from July 2 through Sept. 23, roughly 1 in 4 Chicago-area homes on the market took a price cut, the data show.”

“In 2017, the busiest price-cutting season lasted five weeks, from early September to early October. The last time there was a stretch as long as 2018’s with a lot of price cuts was summer and fall 2014.”

“‘Even factoring in seasonality, we’re seeing a noticeable increase in price cuts in the Chicago market,’ said Taylor Marr, Redfin’s senior economist. Chicago’s not alone. Nationwide, price cuts hit a six-year high in mid-September, when 26.6 percent of homes on the market had a price cut, Redfin reported.”

‘Marr said that some West Coast cities where the real estate market has been overheated, a raft of price cuts reflects buyers balking at their shrinking affordability. But in Chicago, ‘while prices aren’t going up as fast, the total cost of owning a home, including property taxes, is.’ Marr is a former Chicago resident.”

“Also contributing: Home sellers may have started out with optimistic asking prices ‘that didn’t match the reality of what the market is doing,’ said Mike Stangel, a Coldwell Banker agent on the Northwest Side. Whether they’re looking at hotter markets in other cities or just down the street at gleaming new construction, some sellers overestimate what they can get.”

“Edison Park, one of the neighborhoods Stangel focuses on, has had a new-construction boom, with three new houses selling this year for more than $900,000 each. ‘That doesn’t mean your older house is going to go that high,’ Stangel said, ‘but people see it and think they should ask high.'”

“Stangel is the agent for a house on Nettleton Avenue in Norwood Park that came on the market in early August at $825,000 and took its second price cut Sept. 12, to $775,000. At the current price, the sellers are asking nearly 9 percent less than the $850,000 they paid for the house 13 years ago.”

“Price cuts have been proliferating recently. Last week, entertainment industry figures and former spouses Richard Marx and Cynthia Rhodes made the sixth price cut on their Lake Bluff estate and are now asking less than half the $18 million they started at in November 2014. And a lavish co-op unit on Lake Shore Drive that hit the market in February 2016 at $13.5 million took its fifth price cut Sept. 17 and is now priced just under $7 million.”

“This week the price on a condo on Goethe Street in the Gold Coast that first listed in January 2016 at more than $9 million was cut to about $5.55 million. It was one of 169 properties in Cook, DuPage and Lake counties that took a price cut Sept. 26, according to Midwest Real Estate Data.”

From Joliet Patch. “For the third time since May, there has been a major price drop on a remarkable piece of property on Joliet’s west side. This home was listed in May at $499,900. This week, the price fell to $464,900. That means, the property has come down by $35,000. Will the third time be the charm?”

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This Post Has 21 Comments

  1. ‘Stangel is the agent for a house on Nettleton Avenue in Norwood Park that came on the market in early August at $825,000 and took its second price cut Sept. 12, to $775,000. At the current price, the sellers are asking nearly 9 percent less than the $850,000 they paid for the house 13 years ago’

    Where’s that troll who says “you guys aren’t going to see prices fall!”

    1. Probably cleaning the toilets of all his rental trying to get them on the market before the bubble burst…Oops, too late.

  3. OFF TOPIC: I have a job offer in the north-east Phoenix area near the Scottsdale Airport. Anyone have an opinion of this area, e.g., cost of living, standard of living, etc.? My former experience around Phoenix was many years ago out southwest in Ahwatukee and Casa Grande. Thanks!

      1. I would certainly be a renter for the first year, probably a room in someone’s home. Prices are way out of line throughout Phoenix, IMHO. Thanks for the follow-up!

  4. “Nationwide, price cuts hit a six-year high in mid-September, when 26.6 percent of homes on the market had a price cut, Redfin reported.”

    Used house salespeople who don’t make money unless/until their listings sell are going to be increasingly resistant to marketing shacks at greedhead wish prices in the current environment, which probably means we’ll see a spike in FSBO, about 7/8s of which will sit unsold due to being overpriced.

  5. “Price cuts have been proliferating recently. Last week, entertainment industry figures and former spouses Richard Marx and Cynthia Rhodes made the sixth price cut on their Lake Bluff estate and are now asking less than half the $18 million they started at in November 2014.”

    Richard Marx hasn’t had a hit since the ’80s. More to the point, who in their right mind is going to pay millions for real estate in the insolvent state of Illinois, knowing the tax man is going to be coming after you to make up the gapping holes in the state’s massively underfunded public employee pension plans?

    1. Taxes are already higher in Illinois than full boat PITI For a comparable in many states. My PITI IN NC for a newer slightly larger house was less than my Dad’s RE taxes in a Chicago suburb.
      I just don’t get it.

    2. In defense of 80s musicians in general, I think Richard writes a lot of songs for other people IIRC, which would explain why his income is much better than average all these years later.

    1. “Sales have been hampered all year by a very lean supply of affordable listings. Inventories did rise slightly in August, but there is still precious little supply at the entry level, where most of the demand is.”

      But wasnt there an article saying that builders were building a Zillions luxury units because there was a demand for it? Somebody might be “lion”? So you’re telling me that they build luxury units that no one can afford? Whats the supply number of these luxury units?

      “The greatest decline occurred in the West region where prices have shot up significantly, which clearly indicates that affordability is hindering buyers and those affordability issues come from lack of inventory, particularly in moderate price points,” said Lawrence Yun, chief economist at the NAR.

      So whos gonna buy those luxury overpriced houses?

      “With prices having risen so quickly, many consumers were deciding to wait to list their homes hoping to see additional price and equity gains,” Yun said. “However, with indications that buyers are beginning to pull out, price gains are going to decelerate and potential sellers are considering that now is a good time to list and bring more properties to the market.”

      So people were just speculating and trying to time the markets! This must be the shadow inventory. I bet the banks were doing the same time. Now that the bubble has burst, everyone is trying to unload before it crash and burn.

    1. “Maria Landi, a 75-year-old retired insurance specialist, and her husband John, had been making payments on their East Brunswick, New Jersey home for 40 years when Wells Fargo foreclosed on it in 2010.”

      Hehe… sounds like HELOC hell happened.

  10. when I watch BAHstin condos w 4 to 6 units total in a converted triple decker from the late 1800s I’m thinking it’s TOO much sharing.
    Who’s buying that roof?
    Any condo board I’ve been on seemed to overpay for everything.

  11. peoria -85% of tax revenue goes to pensions
    ? how much do you have to raise re taxes if the stock market flattens out
    ?

  13. Re Illannoy taxes….. My handle says it all …. vacated and never looked back. Even with the pot heads here in Colorado it is far better than losing out on a shack in Illannoy where taxes are more than the mortgage on an annual basis

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