Will Home Prices Go Even Lower?

Chicago RE-blog 5.11.11.jpgWhile we are all
waiting for the price of our residential property to go higher, is there a
chance that it will go even lower?  I
have a broker friend in residential real estate that has always made money on
her residential properties, both in
Chicago and Sarasota. She manages to always buy and sell at the
right time.  Four years ago, she bought a
condo on
Michigan
Avenue
.  She put it on the market last December.

Her doing this makes
me nervous.  Why would she sell now when
the real estate market is so depressed? 
She couldn't possibility have made money on her condo, so why sell
now?  Perhaps, she believes the
Chicago residential real estate market is going
down even further and she wanted to cash out, pronto!

I have seen a sneak
preview of data on the
Chicago market collected by east coast analyst Keith Jurow, who writes
for the investment site Minyanville and has a subscription-based report which explains
what is really going on in residential real estate throughout the
U.S.  He
has local contacts with banks, mortgage companies and prominent individuals
that he taps into for concise and accurate data to evaluate the real
value of residential real estate in specific markets.

Here are some
disturbing facts in his report on the Chicagoland area.  Evidence is growing that distressed property
sales (foreclosures and short sales) have already been climbing steadily as a
percentage of all purchases.  In the
first three months of 2011, more than 50% of all sales in
Chicago were either REOs or short sales.

In the 7-county Chicago metro market, nearly 52% of all sales in
February were distressed properties! 
This number indicates that the number of normal residential
property sales is decreasing at an astounding rate, lowering the value of
properties.

As prices continue
to decline, fewer homeowners have any equity left in their property.  Homeowners with negative equity that need to
sell are forced to ask the lender to allow a "short sale". A growing number
others who are "underwater" will simply walk away from the mortgage and
eventually the property, as well.

For more
information on the current state and value of
Chicago residential property, check out Keith
Jurow's report at http://www.minyanville.com/housing-market-report/.  It will be available on 5/16.  Whether you are a home owner trying to sell
or an investor, the subscription is worth every penny.  If you prefer, you can buy just an individual
issue.  

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