This is the 6th article in a series I am writing about the real estate market on Chicago's North Shore. I have been talking about "shadow inventory" and how this affects home prices. There are homes that are in pre-foreclosure (the owners are 3 months or more behind on their payments) and homes that have already gone through the foreclosure process and are bank-owned. Some of these homes may already be available for sale, but most of them are not. They are called "shadow inventory" because most of them will be for sale in the coming months at discounted prices (as short sales or bank-owned properties) because of their distressed status. When these types of properties are for sale, this causes prices to decline. So the fact that these properties are potentially going to hit the market in the coming months is NOT A GOOD THING. There are many other factors that affect home prices, such as interest rates and unemployment rates - in these articles I have not been discussing these factors directly. To a large extent these factors are already reflected in the shadow inventory numbers.
Northbrook
Northbrook showed a dramatic decline in shadow inventory, which is a positive indicator for this community. There were 286 distressed properties (bank-owned and pre-foreclosures) in January, and now it is down to 218. Over 70% of these are pre-foreclosures.
|
Northbrook - 12 months ending 7.26.2011
|
Bank-owned properties Sold
|
Short Sales
|
Total distressed property sales
|
|
Total
|
56
|
49
|
105
|
|
% single family homes
|
68%
|
73%
|
70%
|
|
% condos/townhomes
|
32%
|
27%
|
30%
|
Another positive sign for Northbrook is that the number of distressed properties that sold in the past 12 months (see chart above) is about 48% of the size of the current shadow inventory (105 divided by 218). This is better than the North Shore average of 38%. Things are headed in the right direction for Northbrook. We’re not at the bottom yet with regard to pricing, but hopefully that is just around the corner.
Please bear in mind that once prices do hit bottom, they aren't going to just pop right back up to where they were before the bubble burst. Experts are saying that we will see small increases in real estate prices over the next several years.
Northfield
This is a small community in the New Trier school district nestled between Winnetka, Wilmette, Glenview, and Northbrook. During the past 12 months there were a total of 5 distressed properties sold, as shown in the chart below:
|
Northfield - 12 months ending 7.26.2011
|
Bank-owned properties Sold
|
Short Sales
|
Total distressed property sales
|
|
Total
|
4
|
1
|
5
|
|
% single family homes
|
75%
|
100%
|
80%
|
|
% condos/townhomes
|
25%
|
0%
|
20%
|
The shadow inventory in Northfield dropped from 32 to 24 over the past 6 months (8 are bank-owned properties). Distressed properties sold in the past 12 months as percentage of shadow inventory is under 21%.
This is well below the 38% average for the North Shore, but like Kenilworth, when the numbers are this small it is difficult to gauge whether or not this is significant. I believe that there will continue to be downward pressure on prices in Northfield until the 8 bank-owned properties are sold and the remaining pre-foreclosure properties are resolved one way or another.
Riverwoods
Part of the Deerfield zip code, Riverwoods is another small community on the North Shore, known for its homes on large wooded lots. Shadow inventory in July was 25, about the same as it was in January (26). On the positive side, Riverwoods had 11 distressed properties sold during the past 12 months. The distressed sales as a percentage of shadow inventory is 44% - this is above the North Shore average.
|
Riverwoods - 12 months ending 7.26.2011
|
Bank-owned properties Sold
|
Short Sales
|
Total distressed property sales
|
|
Total
|
5
|
6
|
11
|
|
% single family homes
|
100%
|
100%
|
100%
|
|
% condos/townhomes
|
0%
|
0%
|
0%
|
This means that even though there were 11 distressed sales, there are still households experiencing financial difficulty because the number of distressed properties in the pipeline stayed the same. Translation – in this wooded community, we’re not yet out of the woods on declining prices.
Thank you so much for reading! The next and last installment in this series will cover Skokie, Winnetka and Wilmette. If you would like the entire analysis all in a single report, please contact me directly and I can send it to you in PFD or WORD format.
To find any property for sale in the Chicago area click here.
To look at recent sales and other sales statistics for your community click here and then click on the map to specify the community you want to see.
nsk
Nancy S. Karp
nancy@nancykarp.com
@properties | Consultant, MBA, ePro, SFR, CREN |
love where you LIVE
