It could be just a case of a spring market up-tick, but a number of neighborhoods have seen the inventory of available homes drop sharply last month.
In mid-March there were six neighborhoods with 4-6 months inventory (the accepted definition of a balanced market). Today, 17 neighborhoods are in that balanced category and two neighborhoods have fewer than four months inventory: West Town and Albany Park.
Prices, however, will not increase any time soon. Despite the lower inventory levels, the pressure from distressed sales, which account for more than a third of overall sales, will keep price increases at bay. This is especially true of Albany Park.
The Albany Park neighborhood has been especially hard hit with foreclosed properties and short sales. Distressed sales, because there are so many of them, depress the price of so called “regular” sales.
Appraisers cannot ignore the foreclosures and short sales when assessing the value of a regular sale in markets with many distressed properties. In neighborhoods where distressed properties are less common (e.g. Lincoln Park, Lake View), we may begin to see some price increases once the inventory drops below 4 months. In some very specific instances of particularly high demand locations and properties that show very well (updated features and high quality finishes) we are beginning to see multiple offer situations and instances of higher priced sales.
My advice to sellers is still the same – make sure you have a compelling price. My advice for buyers is shifting. When you see something you like, don’t hesitate. If the home you found is well priced and in a high demand location, it might not be around when you finally decide.
Jody Wise is affiliated with Prudential Rubloff. Visit her profile or her website for more information.