I was recently reading an article entitled “Home Sales Show Spark” in Crain’s Chicago Business, April 6, 2009 edition. The subtitle of the article was “Distressed-housing deals pick up the pace; prices still plunging.” This article stated that Chicago-area “home buyers are snapping up foreclosed and marked-down houses.” A chart accompanying the article indicated that the prices associated with short sales and foreclosed properties reflected only a fraction of the prices for traditional sales.
In the Chicago market, traditional sales prices have actually gone up in most cases (detached homes and multi-unit buildings) from January 2009 to March 2009. The foreclosures/short sales prices have gone down in all cases (detached homes, condos and townhomes, and multi-unit buildings) in the same period.
A letter writer to the publication in the next week, Kenneth F. Brinkman, President of Environs Development, Inc. in Chicago wrote, in part:
“Our industry is struggling to cope with foreclosures and short sales. Yes, those prices are going down and are continuing to skew average prices for the entire market. But have you ever been inside a home that sold in foreclosure or a short sale? I am working with a client who bought one. Prior to the sale, all the vendors who had been stiffed by the builder came in and ripped out their materials. Suddenly the “great deal” is not so great, but it affects the median price and causes articles to be written about “plunging” prices.”
Are the home sales prices in your area truly reflective of the traditional sales going on, or of lumping foreclosures and short sales in with traditional sales, thus bringing overall sales prices down? How do the published home sale prices affect your ability to price a home that is not in a distress sale?
Lastly, what are your foreclosure and short sale tales? Have you had a buyer be “surprised” after taking ownership of a distressed property?