Chicago-area home buyers, sellers in tug o' war
In rocky local real estate market, neither side appears to be willing to face reality

By Mary Ellen Podmolik, Chicago Tribune reporter
August 26, 2008


Home buyers and sellers in the Chicago area just can't agree on the price of a house.

Potential buyers, well aware of the national housing crisis, are willing to wait for rock-bottom prices. Stubborn sellers, meanwhile, know the market here isn't as bad as in California and Florida, so they are still listing their houses at the high end of what they think they're worth, agents say.

The result is a real estate standoff.

While there are inklings of a recovery elsewhere in the country because prices have dropped dramatically, the local market so far appears to be missing out. Sales of existing homes continue to be down, Chicago-area home prices are flat, and real estate agents who want to close deals are pleading with players on both sides to be realistic.

"You've got sellers in denial," said Ken Reeder, a broker associate at Baird & Warner. "They're reducing, but they're being slow."

And buyers now look at a property and immediately want to know what the original asking price was, and how much the seller has come down. "It used to be the first question was: 'How long has it been on the market?' " Now, Reeder said, it's: "Where were they priced before?"

The tug of war between buyers and sellers is a reflection of Chicago having avoided the excesses of the housing boom. Prices here never skyrocketed the way they did in other parts of the country, so they didn't crash after the credit crunch hit and the economy turned sour.

But escaping the worst of it seems to have made it more difficult for players here to adjust to reality, and the sales activity in other markets today magnifies the Chicago area's stagnancy.

The latest indication came in a report Tuesday showing that home prices nationally dropped a record 15.4 percent during the second quarter from a year earlier, while home sales have shown a bump in activity.

Locally, however, the logjam appears to be continuing. Midwest Real Estate Data LLC reports that the number of deals in the nine-county Chicago area has dropped almost 30 percent in the January-to-July period this year compared with 2007, and average market time has increased by more than a month. Prices have barely budged: The median sale price slipped from $250,000 to $247,500.

"Recently, there hasn't been as much of an urgency for buyers to do something," said Aaron Wittenstein, a real estate agent at Century 21 AAA Homes in Schaumburg. "A lot of people are saying we want to wait until winter when we can get the best deal."

Holding out
Denise Dominici put her Romeoville tri-level house on the market in April 2007 for $275,000. It hasn't sold and reducing the price has been painful for her, even though she's moved into a new $425,000 custom-built Shorewood ranch in September. She's turned down offers from renters, reduced the price to $235,900 and offered to throw in the furnishings. To her, the house at its current price is a steal, not a reflection of a bad market.

"I don't know what these people want," she said. "To me, I feel like I'm handing them everything."

Meanwhile, Liz Meyer and her boyfriend, Will Aquino, find themselves stymied in their quest to become first-time homeowners.

In the past eight months, the couple has looked at 25 condominiums. They'd like to make an offer for their favorite, a two-bedroom unit in Humboldt Park, but they think it's worth $30,000 less than it's listed. And their real estate agent heard that higher offers have been rejected and the sellers may pull it from the market.

"I'm really shocked to see prices where they are," Meyer said. "I thought everything would be adjusted by this point.

"We're seeing a lot of people that bought within the last two years when money was cheap. So to break even, they're maintaining a high listing [price]. It's only worth what I'm going to pay for it."

Ready to sell
Aggressive pricing from the get-go, though, can yield results.

Looking to move this spring, Anna Colavitti priced her Schaumburg townhouse at $168,000—10 percent less than similar units sold for a year ago. Within days, she had two offers to choose from and accepted a $165,000 cash bid.

Colavitti then started looking for a single-family house and found herself drawn to ones with price reductions.

"If a house had already been reduced several times, my thought before I would walk in was can I get the house for less than it's listed right now."

In May, she beat another bidder to buy a three-bedroom, two-bathroom tri-level in Schaumburg for the non-reduced list price of $300,000. She walked away happy, particularly after finding out the home appraised for $7,000 more than she paid.

Within the past month, real estate agents say they've seen some sellers come to grips with the market's realities and start chipping away at inflated list prices. Unfortunately, this comes at a time when the ranks of buyers are thin, a result of economic and job worries, higher interest rates and ever-tightening credit standards that are causing some deals to fall apart late in the process, even at closing.

"You see far more price reductions than you ever saw before," said David Hanna, managing partner of Prudential SourceOne Realty. "Every individual seller has to make the decision: 'How long do I want to have my home on the market.' "

Freelance reporter Robert Channick contributed to this report.