Now that Realtors have crunched the numbers for last year, Forest Park home sale price trends in 2011 are emerging – and the village’s smallest condos have taken the biggest hit. The sellers-market for one-bedroom condos in Forest Park remained significantly toxic in 2011. One-bedrooms dropped by 35 percent in average price in 2011, compared to a five percent drop in two-bedroom townhouses and a 1.4 percent drop in single family homes.
For some buyers, a drop in prices was a chance to move up. “Many buyers could formerly afford only a one-bedroom condo, but now they can afford a two-bedroom,” said Realtor Kyra Pych, who’s been selling in Forest Park for 25 years. “Also there are a lot of foreclosures [of 1-bedroom units] and when banks have to dump their inventory that makes it harder for a typical homeowner who wants to sell to compete.”
At the height of the boom, in 2007, single-bedroom condo sales averaged $179,391. In 2011, the lowest priced one bedroom condo that sold in Forest Park went for $13,500. The average price for a one-bedroom condo was $45,617. At those prices, landlords can actually make a profit on rent.
“I work with investors who are buying condos right and left,” said Pych. She said one investment strategy is to buy condos and rent them for 10 years, hoping the market will return. “The rental market is just phenomenal, either from [buyers’] fear of the housing market or because people were forced out by foreclosures. They’re all renting now.”
Meanwhile, a large percentage of renters in a condominium association creates a vicious circle by making the sale of neighboring condos more difficult to finance. In November, owners at Residences at the Grove, asked the Forest Park village council to allow a higher percentage of rented units to protect owners from the freefall of property values when neighboring units foreclosed. But by raising their complex’s percentage of renters to 25 percent, owners create a development where the future sale of units cannot be financed without special mortgages or cash sales.
Meanwhile, the sale prices of single family homes seem to have stopped falling. Boom prices averaged $326,132 in 2007 and had dropped by 39 percent in 2010 to $212,236. But the drop between 2010 and 2011 was minimal, with homes averaging $209,273.
Realtor Dorothy Gillian says over the past six months she’s noticed an increase in single family sales of homes priced under $220,000.
“The spring market usually starts in March. But after the first of the year I started to get a lot more activity on my under-$220,000 houses. People who are looking and buying right now are in that lower price range,” she said.
“In the past six months only four houses over $260,000 sold, but 27 sold under $220,000,” she said.
National robo-signing class-action lawsuits were settled last month against the top five mortgage banks: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial (formerly GMAC). While foreclosed homeowners got an average $2,000 settlement, banks got the green light to resume backlogged foreclosure proceedings.
“A lot of homeowners are delinquent and in pre-foreclosure which means 90 days late [on mortgage payments],” said Pych. “[Market watchers] are predicting that there is going to be another wave of foreclosures flooding the market in the next year or so.”
For Realtor Jerry Jacknow, Sr., the real estate business is the toughest he’s seen it since 1967 when he started. “It’s tough now. I don’t remember offices closing before and people bailing out of the business as they have in the last couple years. Those of us who are left are hanging in there, trying their best to make a deal.”
But Pych says she’s not worried, “I started in this business in 1987 – so I learned how to sell in a recession.” Pych said short sales and foreclosures require lots of paperwork, but she’s excited about the market.
“It’s a fantastic time full of opportunities now for buyers due to low prices and interest rates. On many properties, the payments will be less than what the rent would be on the same properties,” she said. Ê
Gillian is also optimistic: she had her best year to date in 2011.
“Sellers are starting to be more realistic'” she said. “Those were unrealistic highs in 2007. It’s hard to look at basic numbers. It’s hard to come to terms with lopping off $100,000 from your price. But your house is only worth what the market will pay.”
“Forest Park is still a bargain,” she said.