BERWYN — Spring is a time when crocuses, daffodils and For Sale signs sprout in front of homes to signal a change of seasons. As for the real estate market, this year is expected to bring in a decent crop of sales.
Area real estate agents are generally optimistic for the coming sales season. As for home values, both for the buyer and the seller, there are many factors at play in the equation.
“Optimistic is a good word for spring,” said Eduardo "Eddie" Garcia, a broker at Realty of Chicago, Berwyn. “We had one of our best months in January. Typically, it's slower in Chicago in the winter. But because of two mild winters in a row, it didn't stop. Usually (buyers) don't come out until the spring.”
James Stillo of Skydan Real Estate Sales said without a doubt, sales are up in Berwyn.
“But the foreclosures are still putting a damper on the prices,” Stillo said. “Values according to the MLS in Berwyn, from March 2012 to February 2013 were down 9.1 percent. It looks like the figures have picked up a little bit, but not a lot. We are seeing more sales. The supply of homes, which should bode well for values, is down 35 percent. It's supply and demand. If their is less supply we should see an uptick in values.”
And there's the rub. Foreclosures have put a lot of homes on the market at reduced prices that have impacted values, Garcia said.
Foreclosures have driven down home prices in the area, Garcia said. “If the bank has 10 houses under foreclosure, they'll undercut the prices to sell them because they are not in the real estate business. They'll just take a loss for that year.”
For those who bought houses in the 1990s for $60,000, the value wold later shoot up to $200,000, Garcia said. Now the value is back down to $60,00 range.
In Berwyn, 58 percent of properties sold within the past 12 months were short sales, foreclosure, or some sort of distressed sale, according to Stillo
"I have to think it's going to be about the same for this year," Stillo said.
In Berwyn and Cicero, there are 98 foreclosed single family homes and condos on the market, and another 30 apartment buildings with 2 to 4 units, Stillo said.
Loretta Alonzo of Century 21 Alonzo & Associates said she's seeing is a very active market in Berwyn and the western suburbs. “We're seeing inventories going down, but we still have quite a few foreclosures or short sales going on. The good thing is we're seeing a lot of multiple offers on these properties.”
The process time on the short sales takes a little longer than other properties, she added, but because of the low inventory, she's still seeing interest in those properties. The good thing, she said, in the Berwyn-Cicero market place, is the Illinois Department of Housing Authority Building Blocks Program, set up to get rid of foreclosed properties. Qualified buyers are given a $10,000 credit on those homes.
“There are some financial conditions that have to be met, but we've sold a lot of properties because of the program,” Alonzo said.
Garcia said buyers today are younger couples in their mid to late 20s, many with families.
You don't really see older customers anymore,” he said.
And there are a lot of investors as well, coming in to buy houses as an investment. They buy cheap, provide their own labor to remodel, then turn around and sell the property.
“The majority of buyers in Berwyn and Cicero buy FHA because it requires a minimum down payment,” Garcia said. “All those homes have to be in move-in condition. When they purchase a home from investors they essentially get a new home for an affordable rate.”
And many of those purchasing homes as an investment are paying cash, Garcia added.
Stillo said he has noticed the trend to purchase and flip the home too, but it's not only single buyers looking to make a profit on an investment purchase. Two homes were recently purchased for cash for rental purposes from the Blackstone group, a huge hedge fund from New York, he said. But most houses sold are purchased as homes, not investment property.
As for price, Alonzo said values have been slow to increase.
“What we've seen in Berwyn is that prices have not increased, but it's tight at the cusp,” she said. “The prices are starting to go up again. All our economists are saying there will be a moderate increase of 3 to 5 percent over the next year. But that's pretty typical. When you bought a home 20 years ago, that's what your appreciation was.”
Alonzo said commuter lines remain a big factor in the popularity of some areas in Berwyn for home sales.
“Absolutely, those who work in the City, having the transportation to the City has always been a big attraction to the Berwyn marketplace.”
Garcia said he thinks quick access to the Eizenhower Expressway is a big draw for those looking for a community to live in.
“Usually people like the south Berwyn area—anything south of Ogden. But I-290 is now drawing people for the convenience to go to work. Houses are more affordable in north Berwyn also. People who would normally buy in Cicero can now afford a home in North Berwyn,” Garcia said.
Stillo said Berwyn neighborhoods close to the commuter train lines are a big draw, and that could impact the price of a home for buyers and sellers.
"There are certain sections in Berwyn that will get a higher price, but it's always been that way,” he said. “People like to be near the train or the Proksa Park area.”