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Home sales up, but market still struggles

Published: Wednesday, Feb. 27, 2013 5:30 a.m. CDT • Updated: Thursday, Feb. 28, 2013 12:19 a.m. CDT
(Kyle Bursaw – kbursaw@shawmedia.com)
Century 21 Elsner Realty Broker Maria Peña-Graham makes a phone call to get answers to questions her clients had about their new Cortland home during a final walk-through on Mond

DeKALB – When it comes to judging the local housing market, Cheryl Landeck said quantity does not always mean quality.

The most recent report from the Illinois Association of Realtors showed home purchases and values increased in January. Statewide, home sales increased 31 percent from 6,484 in January 2012 compared to 8,502 in January 2013. In DeKalb County, January home sales doubled from 39 in 2012 to 78 this year, and the median sale price grew from $104,900 to $121,000 during that time. The median price is one at which half the sales were for more, and half for less.

Homes also came off the market faster this year, with average days until sale falling from 126 to 105.

But Landeck, a mortgage adviser with Sycamore-based National Bank & Trust Company, said those numbers include a large amount of foreclosures and short sales that have prevented the market from truly recovering.

DeKalb County saw a record number of foreclosures last year, surpassing 400 in 2012 and easily topping the previous record of 253.

“There is still a long way to go before we get back to a healthy housing environment,” Landeck said. “But there have been some improvements.”

Short sales have been the major obstacle in restoring the housing market, said Arch Richoz, managing broker for Castle View Real Estate in DeKalb. A short sale occurs when the property owner sells the house for less than what is owed to the lender.

Although short sales help homeowners avoid foreclosure, Richoz said they unfairly hurt property owners who improve their homes and have a strong mortgage standing. He said appraisers will compare the distressed properties sold in short sales with homes in the regular market, which artificially depresses home values.

“Until [short sales] are done, the market has not bottomed out,” Richoz said. “It’s not fair to a lot of homeowners.”

Jerry Wahlstrom, a real estate agent with McCabe Realtors in DeKalb, said the turnaround would have to start with banks demanding a higher sale price. Wahlstrom said many banks try to avoid foreclosures at all costs because they do not want to take ownership of a property and watch it lose value.

By doing so, banks will settle for short sales to cut losses, he said.

“The lender is the final decision-maker,” Wahlstrom said. “If foreclosures and short sales keep coming in the magnitude we have seen, lenders might start demanding higher prices before approving sales.”

The January numbers still are reason for optimism, Landeck said.

Over the past year or so, Landeck said she has seen a shift in her client base. The majority had been people seeking refinancing options; now she sees more people inquiring about pre-approval for a loan or a contract to purchase. The increase in interest in purchasing homes is a good sign, even if many people fail to qualify for a loan, Landeck said.

Richoz said stricter mortgage lending requirements are reason for optimism because they will help prevent another housing market crash when it does finally rebound.

“The market will never be back to where it was, nor should it be,” Richoz said. “We knew the bubble was going to burst, we just didn’t know when. We don’t want that situation again.”

Richoz and Landeck said it is still a great time for people to enter the housing market, with 30-year mortgages carrying a low 3.5 percent interest rate. Conversely, Richoz said homeowners should hold on to their properties unless they absolutely must sell because values are still well below true market value.

By the numbers

Jan. 2012 

                Home Sales       Median Sales Price  Days on Market

Illinois              6,484         $123,500        114

DeKalb County    39          $104,900        126

Jan. 2013

Illinois               8,502       $125,000         96

DeKalb County    78        $121,000        105

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