County real estate market shows signs of bottom, except in prices
CRYSTAL LAKE – Despite signs the real estate market is stabilizing, home prices continue to fall in McHenry County.
Even as the pace of foreclosures slowed and the number of houses on the market declined, values have dropped. The county’s median residential sale price in July was $150,000, down 17.4 percent, or $31,500, from the same month in 2010, according to market statistics prepared by Rob Schaid, broker and owner of RE/MAX Plaza in McHenry.
The housing slump keeps pressure on struggling homeowners who owe more than their home is worth, and even when the market begins to recover, it could take years for some owners to get back the value they’ve lost, experts said.
“There is no telling when home prices will reach the level we saw prior to 2006,” said Pam Bartholomew, a real estate agent with Century 21 New Heritage in Marengo. “One thing we can be certain of is that when we do see an increase of home prices ... they will creep up. Not exactly what the current homeowner wants to hear, but realistically that is what should happen.”
Unlike the stock market, the real estate market tends to move slowly.
“If you think the market is going to turn quickly, you’re going to be disappointed,” said Paula Dorion-Gray, president of Dorion-Gray Retirement Planning Inc., a financial adviser with offices in Crystal Lake and Lincolnshire.
Many national real estate experts are optimistic the bottom is at hand.
And although the end of the housing crisis has been heralded before, the trumpets are growing louder. The New York Times and the Wall Street Journal both have reported the turn in recent months.
But homeowners, including seniors, still could face hardships and take losses as the market recovers. The for-sale inventory is down in McHenry County, but a glut of homes on the market is one reason prices haven’t recovered here, Schaid said.
If no additional homes were listed for sale, it would take local real estate agents 5.4 months to sell the homes on the market. That’s down 71.3 percent from the 18.9 months’ supply in July 2010.
“We’re selling more and more,” Schaid said. “Sooner or later prices will have to come up.”
Months’ supply of inventory is considered a key indicator. A balanced market has six months of supply. McHenry County has been close to that level for the past two months by Schaid’s calculations.
But others say the inventory is higher. For example, in June the Heartland Realtor Organization, which serves McHenry County, pegged it at 8.5 months of supply.
Schaid said he expects to see rising prices by the end of the year. Rental prices, he noted, already have started to increase in some areas. Some homes are renting for $100 or $200 a month more than in recent years.
The homes that are selling are priced competitively, often lower than the seller would like.
“If it’s not priced right, you’re going to sit on the market,” said Jan Leider, senior loan officer at American Heartland Bank and Trust in Crystal Lake.
The combination of low prices and record-low interest rates make it a great time to buy for those who can get financing, said Dorion-Gray, who remembered the 20 percent interest rate she got when she bought a home in the 1980s.
However, getting a loan isn’t as easy as it was a few years ago. Banks have ratcheted up lending requirements.
To get around this, some sellers act as the lender when selling their home, said Kim Keefe, president of the Heartland Realtor Organization and a broker with RE/MAX Plaza in McHenry.
Usually, the seller requires the buyer to secure their own financing within a set number of years, Keefe said. This allows buyers with a large down payment to go forward with a purchase.
Another sign of improvement is the slowdown in foreclosures.
McHenry County foreclosures tumbled in July. One of every 220 housing units received a foreclosure filing in July 2012, compared with one of every 164 the previous month, according to RealtyTrac’s Foreclosure Market Report.
Kane County’s foreclosure rate was one in every 254 homes. Lake County’s rate was one in every 217. Statewide, RealtyTrac’s report shows one in every 686 housing units with a foreclosure filing during the month.
Official foreclosure numbers for June and July weren’t available Friday from the McHenry County Circuit Clerk’s Office.