By Dennis Rodkin
Around 4:30 Sunday afternoon, Re/Max Action agent Josie Morrison put a two-bedroom townhouse in Glendale Heights on the market. By 10:30 Monday morning, she'd already had several calls on it and had scheduled the first showing with a potential buyer.
"It's been a busy Monday morning," Morrison said. That's because the townhouse on Golfview Drive was like chum tossed into a sea of hungry predators: middle-priced buyers shopping in suburbs where there's a severe scarcity of homes for sale.
Tight inventory, which has plagued the Chicago and national real estate markets for a few years now, keeps getting tighter in midpriced suburbs. Tightest among them are Glendale Heights, where the supply of homes on the market at the end of February was enough to fuel just 1.4 months of sales, Elk Grove Village (1.5 months) and Bolingbrook (1.6 months).
They're among 10 Chicago suburbs that ended February with less than two months of inventory on the market, according to a report from Midwest Real Estate Data released last week by the Chicago Association of Realtors. A rule of thumb in real estate is that five to seven months of inventory defines a balanced market, and below five, the advantage shifts to sellers.
The data is reported differently for the city, so it's not possible to include Chicago neighborhoods in this list. The city market overall had four months' inventory on hand at the end of February, according to the Realtors association. Crain's rough estimate found that inventory is below two months for attached homes (condos and townhouses) in North Center, Logan Square, West Town, Lincoln Square and Lakeview.
At this time last year, the suburbs with low inventory were all above two months; now at least 10 have dipped below that line. (Suburbs with fewer than 20 sales in February aren't counted because their numbers are so small.) In all except Waukegan, the median price of a home sold in February was between about $164,000 and $275,000, not far off from the region's median price. The median home sale price in the nine-county metro area was $210,000 in January, the Illinois Association of Realtors reported last month; the February figure will come out this week.
In higher-priced suburbs, the problem is the opposite: too many homes on the market. In Hinsdale, Highland Park, the Barrington area and Lake Forest, at least seven months of inventory is available, topping out at 11.7 months in Lake Forest. Each of these towns had a median sale price in February of $457,000 or more.
The reasons the screws keep tightening, according to agents who work the midpriced suburbs, include owners who hesitate to list their homes because they don't think the proceeds will fund a big enough step up to their next home. On the buy side, young shoppers whose budgets are sensitive to rising interest rates pick each home off the market swiftly after it appears, the agents say.
Most suburban home values have not quite fully recovered from their fall during the recession years. That makes potential sellers worry that because their proceeds in a sale will be slim, "they're going to have to go buy a pup tent for their next home," said John Bates, a Coldwell Banker broker in Naperville who covers Bolingbrook.
Buyers, meanwhile, know they're competing against both other buyers and increasing interest rates that shrink the amount of house they can afford, "so they're acting fast," said Liz Tannehill, a Coldwell Banker agent who listed an Elk Grove Village townhouse March 17. Buyers she represented recently, she said, lost the first two homes they wanted to other bidders before landing one.
Also helping to shrink inventory: the non-winter winter that just ended. "People were out buying homes earlier than they would have in a more difficult winter," said Catherine Terpstra, an agent at Re/Max All Pro in Bloomingdale who is also the president of the Mainstreet Organization of Realtors, which represents most of the suburban area.