Home market ‘slogging along’

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Updated: February 27, 2012 8:26AM

North Shore homes aren’t commanding the stratospheric prices seen during the housing bubble.

But median selling prices for single-family detached homes were down only a tad from a year ago in many North Shore communities.

So is a rebound around the corner? Don’t count on it, say area Realtors, who will be grateful if 2011 prices become the new normal and prospective sellers can come to grips with what their homes are now worth.

“Let’s hope this is the bottom,” said Jane Pickus, a Realtor with Coldwell Banker. “What I would like to see is for the market to stabilize, so people have confidence in the market. People are uncertain now and when they are uncertain they are afraid. They don’t want to miss a rebound.

“Some people expect that their house price is going to go up drastically; others are worried it is going to go down.”

Among the 261 Wilmette homes that sold last year, the median price was about $650,000, down only a smidge from the midpoint price in 2010, but 20 percent off the high mark of $812,500 in 2007, according to new figures from the North Shore-Barrington Association of Realtors.

In Highland Park, the mid-mark selling price dipped slightly to $441,700, about one-third less than the median selling price five years ago.

“It is really hard on the seller to hear what their home is worth,” said Lynne Heidt, a Realtor with @Properties. “That is true at any price, whether it is a modest bungalow or a $1 million-dollar house in Kenilworth.

“My feeling is we are just kind of bumping along here,” said Ann Boyle, a Realtor with Koenig & Strey. “The North Shore has held its value better than a lot of other communities.”

In Winnetka, the median selling price of the 210 homes that sold in 2011 was about $1 million, down 26 percent from five years ago.

The median price in Glencoe, at $850,000, was unchanged from the prior year, but 34 percent down from the $1.3 million median seen near the height of the market.

On the upside, a homeowner looking for a larger place or a pricier neighborhood will benefit from lower market prices.

Low interest rates

“If they are moving up, the ratio is to their advantage,” said Heidt. “I have never seen interest rates this low. I have never seen prices drop like this before, even around 1980 when interest rates were 18 percent.”

Some would-be sellers who were waiting to see what would happen in the market aren’t waiting any longer.

“They have finally decided, ‘We need to get on with our lives. Or we need the extra bedrooms for new children. We are making more money and we are going to take a hit. You are starting to see that,” said Boyle. “With interest rates this low, buyers would be foolish not to consider making some of these jumps.”

Despite the buyers’ market, the pace of home sales remains sluggish because many sellers are reluctant or financially unable to sacrifice on price. Some wishful buyers who currently own homes or condominiums can’t sell their places. Some renters are waiting for their credit to improve before seeking approval for a mortgage.

Heidt said she’s spoken with one Wilmette couple interested in selling their home three times. “The news hasn’t gotten any better. It’s no fun,” she said. “Probably if I go there a fourth time, it will be worth even less. It is not a reflection on them or their house,” she said, noting it is a lovely place.

More foreclosures

One factor that could suppress home prices for some time is a wave of bank-owned foreclosures and “short sales”. In a short sale, the bank holding the mortgage agrees to a sale price that is less than what the current owner owed on the mortgage.

Some mortgage companies halted the foreclosure process in 2010 to correct errors and oversights in processing cases after it was revealed that some firms, overwhelmed by high volume, were taking shortcuts that in some cases violated the law. Many of those properties soon will come on the market.

Of roughly 5,000 residential units that sold across 21 North Shore communities in 2011, about 1,000 were foreclosures or short sales, according to the Realtors association.

Ironically, if and when conditions improve, home sellers will face a glut of competition from like-minded sellers.

“We are not going to be in the same place we are now,” she said.

Heidt believes homeowners need to rethink the reasons for homeownership.

“We need to view real estate the way our parents and grandparents did -- not as an investment, but as a place to live,” she said. “People aren’t ready to accept that yet,” said Heidt, offering up a prediction. “You won’t be buying homes or condominiums to flip them for a long time.”