Housing market depends on where you live, what you’re willing to pay
By Jenette Sturges firstname.lastname@example.org December 8, 2012 6:16PM
For Sale signs hang outside a home in Millbrook on Thursday, November 29, 2012. | Brian Powers~Sun-Times Media
HOME VALUE BY ZIP CODE
Median Percent Average
Home Change Days on Percent Delinquency
ZIP City Value YoY Market Underwater Rate
60119 Elburn 229100 1.2 na 35.2 10
60134 Geneva 278600 2.1 na 22.4 6.5
60502 Aurora 222500 -0.4 127 31.6 9.1
60503 Aurora 183400 0.2 324 53.2 9
60504 Aurora 140500 -2 128 50.3 12.3
60505 Aurora 78000 -2 na 60.2 24
60506 Aurora 118700 -2.3 na 50.6 16.2
60510 Batavia 232600 2.9 na 25 7.2
60511 Big Rock 185500 -6.3 na 33.8 8.1
60512 Yorkville 175000 -0.37 288 27.9 13.8
60519 Eola na na na 33.3 50
60520 Hinckley 150700 -10.9 na 38.5 8.2
60536 Millbrook 360000 -9.1 na 31.8 0
60538 Montgomery 120500 -7 161 62.6 12.7
60541 Newark 183700 4.3 na 21 7.4
60542 North Aurora 186700 -3.8 na 40.9 8.9
60543 Oswego 182300 -5.9 161 45.9 9
60548 Sandwich 141000 -6.4 143 36.6 10.1
60552 Somonauk 130800 -12 na 40.2 8.9
60554 Sugar Grove 217800 0 na 36.7 6.3
60560 Yorkville 179600 -2.2 299 47.2 12.2
Sources: Zillow, FNC; Note: na - indicates unavailable data
Updated: January 10, 2013 6:08AM
The first step in selling a $600,000 home of 3,500 square feet on eight acres in rural Millbrook?
Turning on all the lights.
“I’ve been a Realtor for 27 years,” said Cindy Heckelsberg, as she flitted about flipping light switches, fluffing pillows and hiding power cords out of site in the spacious but cozy home that stands at the far western edge of what could be called Chicagoland. “My mother was a real estate agent when I was growing up in Terre Haute, all but one of my children are in real estate.”
Her 3-year-old granddaughter, she said, knows how to show off a home’s foyer and front-loading washer-dryer set.
Last week, Heckelsberg was handling what she called “one of the less glamorous parts” of her job — marketing. She and a photographer primped and took photos and 360-degree views of homes in Millbrook about to hit the market.
Heckelsberg is optimistic about selling this house, which was custom-built five years ago in the small community along the Fox River west of Yorkville.
“This house has land,” said Heckelsberg, looking out the picture windows onto the eight acres and pond. “You never can find a house with enough land. Someone will buy this looking for a resort home. It’s a lifestyle.”
For something a little more modest, however, selling is a bit trickier.
In another part of Millbrook, an empty home on Wilcox Court is one of six on the street with a real estate agent’s sign in the yard. Another on the cul-de-sac was recently purchased in a distress sale — an agent’s general term for homes sold through short sales or lost through foreclosure.
“A lot of my job has been counseling people through short sales,” said Heckelsberg. “It’s like we’ve had to relearn how everything works. It’s all different.”
The housing market, economists insist, is starting to turn around across the country. But that return has been unsteady and uneven, not just between states and major markets — Illinois had the third-highest foreclosure rate in the country behind Florida and Nevada, according to RealtyTrac — but within major markets, too. The ZIP code next door often has a much different story to tell about distress and recovery.
Home values in Oswego, for instance, remain some of the most depressed post-recession in the Fox Valley, with prices, average $182,300, or about 5.9 percent lower than in October 2011. In Aurora’s near East Side 60505 ZIP, the average home price is just $78,000, but home prices have fallen less over the past year, by 3.9 percent.
By comparison, in southeast Naperville’s 60565 ZIP code, home prices are up 4.8 percent over last year, averaging $323,400.
Kendall County was hit harder than most in the housing bubble and subsequent free fall in housing prices. One in just 135 homes faced foreclosure filings in September, bestowing Kendall County with the unenviable title of highest foreclosure rate in the country. Things improved in October — to one in 170 homes — but prices remain low, and homeowners remain stuck.
In Kane County, homeowners have fared only slightly better. In October, one in 216 homes faced foreclosure, with the highest rates recorded in the Elgin area.
Fast growth, quick fall
But, some experts say, this winter and the following spring home-buying season are looking bright for the Fox Valley.
“It seems like, at this point, there are a lot of good signs locally,” said Dave Richert, president-elect of the Realtor Association of the Fox Valley. “People are starting to realize where the market really is. It’s kind of like a reset of everything.”
As in many U.S. cities, home prices in Oswego hit an all-time high in 2006 — in September of that year the average Oswego home cost $276,000. In October of this year, the average home price had fallen 34 percent, to $183,000, leaving many of the village’s newer, younger residents completely underwater in their mortgages.
Housing expert Geoff Smith, of the Institute for Housing Studies at DePaul University, said it was not surprising that the fastest growers had the most to lose when the markets tumbled.
“From my sense of the Chicago area and foreclosure patterns in the ex-urban parts of the Chicago region, there are higher levels of foreclosure activity because of new developments built right before the housing crash,” Smith said. “Higher foreclosure rates are largely tied to new developments that didn’t quite take.”
Those homeowners who purchased when prices were at their highest were hit hardest when the recession resulted in a job loss. They were hit doubly hard when an unfinished development, with empty homes and unfinished streets and infrastructure, further lowered their home values, leaving them stuck.
Further compounding their problems, Smith said, is the slow pace at which foreclosures are processed in Illinois, which has a judicial foreclosure process, that can drag out the time between when a homeowner starts faltering on payments to when the house is ultimately foreclosed upon and ends up back on the market.
“In Illinois, that inventory of distressed properties is more ambiguous,” Smith said. “That creates uncertainty in the market and keeps prices lower, because if you’re a buyer, you still don’t know if we’ve hit the bottom.”
The big homes, the lifestyle homes are selling, Heckelsberg said. But so are starter homes. Investors are flipping again, and young people are venturing into homeownership again.
“A lot of young people, they’re not stuck,” she said. “Maybe they’ve been renting, or living at home with their parents, and they have a little saved.”
Smaller homes are also being snatched up by investors and turned into rentals, which are in high demand as credit tightens up at banks and many former homeowners are afraid of getting burned again.
“The competition is high for rentals,” said Richert, who said that rental prices are going up in comparison to monthly mortgage payments. “You can buy a house for $100,000 in really good condition in Aurora, and have a mortgage under $1,000. That same house to rent is going to be $1,000 or maybe much higher.”
It’s those homes in the middle, say experts, that face the biggest challenges for sellers.
“In this market, there has to be some kind of draw to the home, there has to be something different,” said Richert. “Subdivisions built all the same without a lot of differences in character all in a row, that things built in 2002 to 2007, those places still struggle because there’s five homes for sale in the subdivision and they all look the same. At that point, the only pull is price, and it forces everyone to compete and low-ball each other.”
Once flat, now rising
But for those “stuck” new homeowners with a view of an unbuilt, weed-covered lot next door, there’s hope on the horizon, insist the experts.
“We did have a lot of price reductions in our two Oswego communities in 2006 to about a year ago,” said Ray Blankenship, Chicago area vice president of K. Hovnanian Homes, which owns Churchill Club and Hunt Club in Oswego. “About a year ago, things started to flatten out, and now in the last year we’ve even seen a little bit of price increases. They have been selling very well.”
In the first week of October, K. Hovnanian pulled about two-dozen permits to build in Oswego, only a couple of which are being built on speculation. Forty-eight permits, almost all for single family homes in half-finished developments, were pulled that week alone in the village.
“I think it’s gotten a little better in the last year in general,” said Blankenship.
Kendall County may still be experiencing a distressed housing market, but it still has a lot to offer, he said.
“It’s still relatively close to popular western suburbs, especially Naperville, just a few miles down the road. Oswego has had a lot of its own development, with shopping and restaurants opening in the last few years, which I think makes the area a really nice little development on the river.”
Smith also said that he expects 2013 to bring some relief, but he believes a full recovery for the Chicago region will take another three to five years.
“In parts of Chicago and the suburbs that are really hard hit, it may take much longer to recover, but hopefully, in aggregate, things will stabilize and recover in the next few years,” Smith said.
Heckelsburg, as she straightened bed covers and flipped light switches, carried a real estate agent’s characteristic optimism.
“We’re beginning to see competition for homes and multiple offers again. There’s a buyer at every price point,” she said. “Train loads of lumber are moving again, and that lumber is going somewhere.”