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Q2 Market Overview

Q2 Market Real Estate Market Review- Oh That Supply!

Positive Market Activity

Real Estate market activity in the first 6 months of the year remained strong and continued to exceed the market activity for the same period of 2016 and 2015.  In the first 6 months for 2017 the number of homes sold in the MRED (Midwest Real Estate Data) service area, which covers most of Northern Illinois, grew by 4.44% in comparison to the same period in 2016.  Additionally, the average sales price of the homes increased to nearly $285,000, representing an increase of 4.23%.  While these numbers represent strong market activity, it is important to note that the growth in number of transactions as well as of average price, in comparison to the growth in the first six months of 2015/2016, has slowed down.

Overlooking bargains on bigger homes

If you are looking to buy a home in the Chicagoland area, particularly a smaller home with less than 3,000sf, you are in for one frustrating endeavor.  Poor selection, high demand and high prices are just some of the issues our clients have been facing this year.  On the flipside of that, sellers of homes smaller than 3,000sf are very much enjoying the situation, but not enough of them decide to cash in.

The main reason for the low supply of the smaller and more affordable homes (less than 3,000sf and $400,000) is the fact that there is little to no new construction taking place in this segment.  The supply is coming from resale only.  In the graph above you will notice that the supply of homes smaller than 3000sf is less than 5 months (meaning that if no homes are added to the inventory the current inventory would sell out in 5 months).  The inventor of homes smaller than 2000sf is even lower.  Experts say that the healthy balance in the real estate market is between 6-7 months supply of inventory.  Many homeowners who currently own smaller homes or condos are hesitant to move onto a bigger property despite the fact that they can get premium for their home and possibly a bargain on a larger home (specifically homes $600,000+).  High taxes and investments necessary to improve or maintain larger homes are the main causes of buyers holding off on purchasing larger, more expensive homes.  Current supply of inventory in this segment is over nearly 9 months for Cook and Dupage County and over 11 months in Lake County.  Due to this reason, the $600,000+ market is very much buyer’s market, despite low interest rates and arguably, good economy.  A large majority of our seller clients this year have been people who are moving out of state or selling their investment property, not those who are moving to a bigger place. 

Market Outlook

In regards to the market outlook we don’t foresee a major shift in the real estate trends.  There are talks about the interest rates possibly being increased one more time before the end of the year or in the early 2018.  However, the last two increases have not produced a significant impact on the real estate rates.  On the other hand it is important to note that the global economy has not suffered from a major correction for some time now.  Economists predict a major correction at least once in 10 years, which means that sometime in the next 2-3 years we can expect a major slowdown in the economic growth or even recession.  As that is usually followed by the increase in the unemployment rates we can expect to see a slowdown in real estate market activity as well.  While owner occupants may put up a fight and resist the price drop, investment properties, particularly residential rental units may see a drop in value as renters may not be able to continue to afford the current sky-high rents. 

In summary, real estate market is strong and prices, on average, continue to grow.  Anyone looking for a bargain will only be able to find it in the segment of large and expensive homes.  Owning real estate is still much better than paying rent, but depending on how the economy performs, that may not hold true for long. 

Dan Cuckovic

Managing Broker/Owner

Enterprise Realty Brokers Inc.

708-955-7950

[email protected]

 

 

 

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Chicago-Based Realtor, Enterprise Realty Brokers, Introduces Lower Listing Fees

Enterprise Realty Brokers believes that people pay too much to list and sell their homes. With the housing market in full recovery, this agency is setting new trends and helping homeowners put more money back in their pockets.

Chicago, IL – March 6, 2017 – With the real estate market continuing to improve, real estate agents are finding it more and more profitable to get back into this sector working full time. Though people do choose to sell by owner, the majority go through a well-established agency so they can take advantage of the MLS listings.

One of the big reasons people cite for not wanting to list with an agency is the commission that can be as high as 6% of the sale price. On homes worth a lot of money, this amount can be significant. For instance, a homeowner selling at $500k will pay about $30,000 simply for the listing and buyer’s agent’s fees.

Dan Cuckovic, the managing broker and owner of Enterprise Realty Brokers, a Chicago-based real estate company, recently stated that, “Considering the real estate market today, sellers should never agree to pay more than 4.5% commission.”

Cuckovic goes over the top three reasons for this statement:

  1. The Chicagoland market in 2017 is going to be a seller’s market. According to Midwest Real Estate Data service, the supply of real estate is at its 10-year low with only 4.2 months of supply available.  Month’s supply chart indicates the number of months it would take to sell off the entire real estate inventory currently on the market without any new properties being added.  Knowing this empowers sellers and gives them confidence that there will be a good to excellent demand for their property.
  2. Smaller agencies can provide excellent services without large corporate fees. Large corporate and office fees that big brand real estate firms charge their agents drive the commission percentages upwards.  Smaller, more specialized firms do not have these fees and their agents are at liberty to reduce their commission in order to obtain the listing, without sacrificing the quality of the services offered.
  3. Everyone is online. This goes for sellers, buyers and real estate agents.  The most important search tool for the homebuyer is the internet (according to the National Association of Realtors).  100% of buyers have at some point used the internet and it’s free to use.

Cuckovic also points out that websites like Zillow.com and Realtor.com offer free access and reliable information on all homes for sale in the Chicagoland area.  Any buyer searching for a new home will use these or similar sites.  Listing with any licensed real estate agent does put a home on the local Multiple Listing Service (MLS) network and it should show up on these and other websites. This service is expected to be offered by all agents, regardless of whether they are charging 6% or 3.5% commission.  While there are other means to reach buyers (open houses, social media and email campaigns), online presence is crucial.

For homeowners, these reduced real estate fees are very good news; it’s money they can put back in their pockets. The question that remains is how to find those agents that are willing to offer full services at a discounted rate.

Cuckovic offers this advice: “Do your research online and use services like Upnest.com or Hungryagent.com.  These websites have agents bid for your business, allowing you to interview and select the best agent at the most affordable price. In addition, approach your local family owned real estate firm and talk to them about discounting their fees.  If you are also buying your next property after the sale and you are open to using the same agent to find your next home, it is highly unlikely that any agent will say no.”

For more information, please visit: http://enterpriserb.com/

About Us

Enterprise Realty Brokers was founded in 2005 by Dan Cuckovic.  The company’s goal is to offer the best services possible to clients at the best possible prices.  They strive to go the extra mile to help clients achieve their real estate objectives.  They focus on helping clients sell and buy residential real estate in the areas of Cook, Lake and DuPage County. Enterprise has changed the playing field in real estate by focusing on technology and data to deliver the best services and results to clients.

Media Contact:

Enterprise Realty Brokers

2900 W. Irving Park Suite C2

Chicago, IL 60618 United States

[email protected]

773-999-9679