It could be coincidence; it could be the sum of several factors. Maybe it is just my imagination… I was at the office tracking weekly market trends and activity on listings. It started with Memorial Day, and considering the gloomy news, warm weather it’d be hard not to find people enjoying themselves on Oak St. beach, having a drink in River North or shopping in the Magnificent Mile.
But the trend continued the week after. The jobs report came out, and for many segments although there have been increases in jobs; the growth was nominal enough to make many worry.
Granted there is less inventory starting to come to market in the year over year data. Sellers have less motivation to sell now and many have opted to rent and wait. So why isn’t the traffic picking up in several areas? Where did all the home buyers go?
Traffic for several segments seemed to have dropped considerably, whereas the rental segment has been extremely active in multiple areas. Some homes are being rented a matter of days, if not sooner.
The added increase in rental activity is no surprise. Back in February, I wrote about this segment (Evolving Trends: Rental Outlook – subscriber only content), and the pace is picking up. Granted it is summer, and the summer season performs fairly well, but if Sept 2010 was the busiest month of the year last year what will the next few months look like?
With the increased demand in the segment, attractive and properly priced properties are going under contract. If the return on investment is strong, and with the additional potential upswing in rates, investors are not waiting to purchase.
With distressed properties starting to come to market at much more even pace, investors and homebuyers alike are bidding for desirable properties.
For Chicago’s Loop, Near North (River North, Streeterville, Gold Coast) and Lincoln Park, May 28 to June 14 of this year has resulted in 173 closed residential properties (including single family homes, condominiums, townhomes and multi-units); Whereas in 2010 during the same period 204 properties has closed. If we extend the period by a few days, the number jumps by another fifty+ properties in 2010.
Of course, last year was a different market, different conditions and incentives. So what trend should we be looking for when many people can’t agree on what the baseline is?
Unless you are an investor, developer or economist or something of the sort, the numbers alone shouldn’t justify your residential or commercial purchase. On the contrary, if you are purchasing your home as a primary residence or live-in investment it shouldn’t be purchased on pure emotion either.
It’s all about the balance. Some markets may make it smarter to purchase, others won’t. Some may place a premium on being in school districts others on transportation. Prioritize what matters to you.
Related posts: Beginning Investors Looking at Commercial Properties, Analyzing the Data