Sometimes the market is one big gray area, and other times it is totally black and white. Right now, I see the market as totally black and white when it comes to the mentality of Chicago’s buyers right now.
Chicago’s current population of buyers do not want to do work on their new home. They don’t want DIY projects, or to replace mechanicals. They want to add some personalized touches here and there--think a new light fixture or two--and that’s IT! And there’s very, very little exception to this rule. Nearly all of my buyer clients feel this way.
So today I am offering advice to the sellers of Chicagoland on how best to appeal to this type of buyer, and also to buyers around how to strategically find the right property.
Advice to sellers:
Your goal in this marketplace should be to sell as fast as possible. Chicago hasn’t seen appreciation in the past 10 years, excluding West Loop and Logan Square--this is why I say your goal is to sell, versus make a huge profit because chances are it won’t happen that way, unfortunately. The numbers don’t lie: the amount of available homes for sale continues to outpace demand, which puts downward pressure on price. Additionally, more choices for buyers causes more indecision. Buying a home is a process of elimination, not a process of selection when it is successful. So, speed really is the name of the game. Houses that are priced competitively out of the gate sell for more in stiff markets like this. So how do we make sure your home sells quickly?
First, the old adage has never been truer: you have to spend money to make money. If your home is generally out-of-date, or a big ticket item is not functioning properly, it is time to address. Buyers in this market don’t want a home warranty, they want you to install the new furnace upfront. So this is where you have to pick your battles since you can’t do everything. Over the years I have found that one skill I have really refined is figuring out where sellers can get the most bang for their buck when it comes to remodeling. Sometimes it’s the master bath that will make all the difference, other times it’s the kitchen cabinets.
One last tip if you are thinking of remodeling and selling is to make your updates over the winter. Labor tends to be cheaper in the winter, and popular vendor’s calendars are usually a bit more flexible.
Advice to buyers:
When you are buying in a market that is fluctuating, always look for location, strength of floor plan and light. Those are items that will trump when a market is down.
Also, if you are serious about buying, get serious now! With less buyers, you have more buying power in the winter. And also generally, sellers on the market in the winter are serious sellers. Some of the easiest and most successful deals happen in the winter months.
A note regarding the discussion of a recession and the real estate market as a whole: my 30 second answer is that I don’t believe we are headed for a major recession. And even if we are headed toward a recession, I don’t believe it will be nearly as bad as the last one. Jeff Tucker, a Zillow Economist said it well: “ The housing crash during the Great Recession left a lasting impression...But as we look ahead to the next recession, it’s important to recognize how unusual the conditions were that caused the last one, and what’s different about the housing market today. Rather than abundant homes, we have a shortage of new home supply. Rather than risky borrowers taking on adjustable rate mortgages, we have buyers with sterling credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago.”