A real estate slump that has driven down home prices nationwide is being felt in Riverside, North Riverside and Brookfield. Despite attractive mortgage rates and a market flooded with home for sale, buyers remain cautious overall.
Home prices and the number of homes being sold is down in all three towns, while the time it takes to sell a home has increased dramatically. Some veterans of the west suburban real estate market predict that the trend won’t end anytime soon.
“I think we’re going to see a flattening of prices through the end of the year,” said Loretta Alonzo of Century 21-Alonzo in LaGrange Park. During her 32 years in the business, Alonzo has had offices in Berwyn, North Riverside and Brookfield.
“Until we get the inventory down, it’s the law of supply and demand. The economy has everyone a little fearful.”
While all three towns have experienced downturns in the market, Riverside in particular appears to be struggling as a market. After two strong years in 2005 and 2006, Riverside saw the number of homes sold fall by almost half from 108 in 2006 to 68 in 2007.
The first quarter of 2008 remained very slow, with just 11 homes closed during that time. In the first half on April, four homes closed.
According to data provided by Midwest Real Estate Data LLC, which is affiliated with the Multiple Listing Service of Northern Illinois, in the first quarter of 2008, home prices in Riverside tumbled 7 percent to $515,364 from 2007’s average price of $552, 835.
In the first half of April, data from the Cook County Recorder of Deeds showed that the average sale price for a single-family home in Riverside fell another 16 percent to $432,500.
“Obviously, the economy is having a major impact on the housing market,” said one veteran Riverside real estate agent who wanted to remain anonymous.
“The problem right now is that we don’t see a large inventory of buyers. Even though prices have come down, we’re still not seeing buyers take advantage of that,” said the agent, who has 20 years of experience selling homes full time in Riverside.
Part of the problem in Riverside is the average price of homes. With prices averaging between $430,000 to $550,000 in the past two years, buyers have been hard to find.
As a result, more and more of the homes on the market in Riverside are vacant. The Riverside agent said that of 17 homes she recently showed to a client looking to relocate to Riverside from another city, just two of the homes were still occupied.
Karen Arndt, a real estate agent with 26 years of experience selling in North Riverside and surrounding suburbs, said that the vacancy rate has led to a record number of people renting their vacant single-family homes.
“I’ve never seen this before,” said Arndt, an agent for Remax Properties in LaGrange.
Between the end of 2006 and the end of the first quarter of 2008, average home prices in North Riverside fell by 12.6 percent from $286,125 to $249,875. And after experiencing a steady number of homes closed between 2005-07, the year 2008 got off to a very slow start in North Riverside. Just four homes closed during the entire first quarter of 2008. Two homes and one condominium sold in the first half of April.
The good news is that of the two detached single-family homes that sold between April 1 and April 15, the average price was up to $264,500.
As far as home prices dropping further, Arndt said that her gut feeling is that things won’t get much worse in places like North Riverside and Brookfield.
Of the three villages, Brookfield’s real estate market in 2007 was the most stable price-wise according to Midwest Real Estate Data LLC. In 2006, the average Brookfield home price was up 8 percent to $285,612.
In 2007, prices fell, but by just 2.6 percent to $278,099. In the first quarter of 2008, with 19 homes closed, Brookfield’s average home price remained virtually unchanged.
However, in the first half of April in Brookfield average home prices fell 4 percent to $266,208.
Still, the dozen sales were over half of the number of closes Brookfield experienced in the entire first quarter of 2008. That kind of activity is good news, said Glenn Failla, co-owner of Failla Realty in Brookfield.
“I’m starting to see a change for the better,” said Failla, who has been in the business since 1980. “We’re getting more listings and more activity on those listings.”
If that activity translates into faster sales, that could help immensely.
Average market time for homes skyrocketed from 2005 to the beginning of 2008, doubling in the case of North Riverside and Brookfield and nearly tripling in Riverside.
In 2005, homes in Riverside were on the market an average of 91 days. For the homes that closed in the first quarter of 2008, the average market time was 256 days-nine months.
In Brookfield and North Riverside the average market times for homes in 2005 were 49 days and 52 days, respectively; for the homes that sold in the first quarter of 2008, they were 118 and 103 days.
The key to making that number drop, real estate agents agree, is realistic pricing by sellers.
“I think sellers have begun to get the realization of the market,” Arndt said. “There was a denial over it.”
Failla agreed with Arndt’s assessment saying the key “is a combination of sellers being more realistic and buyers coming in making reasonable offers.”