Oak Park feels real estate sales pinch

More homes on the market, for longer periods of time

July 3rd, 2018 11:40 AM

By Lacey Sikora

Contributing Reporter

In Chicago and the suburbs, spring and summer is prime time for real estate, with the first half of the year the busiest season for homes sales. Here in the near west suburbs, inventory is up and sale prices are down, but houses are selling. 

A snapshot of the current market shows us what the professionals say is happening in our market for the first half of 2018.

For John Lawrence, owner and managing broker of Weichert Realtors Nickels Group, the typically hot spring and early summer selling season had a different feel this year. 

"In the spring when $300,000 to $500,000 homes in Oak Park are flying off the shelves with multiple offers, we feel like the market is good. That didn't happen this year," Lawrence said. "The market has a very uneasy feel, and a lot of people were saying the market was way down, but the data doesn't back it up."

Lawrence said that single-family homes are selling and says average market time was the same 79 days for single family homes from Jan. 1 through June 10, 2017 and for the same period in 2018.

But, when Lawrence parses the data, he does see some differences in those averages.

"Last year, there was a combination of homes that flew and those that sat," he said. "This year, more properties are sitting a bit longer."


Longer market time

Michael Nowicki of Ideal Location Oak Park says that homes are taking longer to sell and buyers are interested in a lower price point. 

"Over the years, Oak Park's sweet spot has been $400,000 to $600,000," Nowicki said. "Now it seems to be $350,000 to $525,000. I've seen plenty of houses that would have sold in days in 2016 and 2017 now sitting for 45 days."

Nowicki also sees a change in high-end properties. 

"Our higher-end market has slowed tremendously," he said. "Market time has increased, and the number of buyers in this price range seems to have decreased. Don't get me wrong, buyers are still out there; it just requires more patience to sell higher-end homes."

The numbers back him up. In the first half of 2017, homes in the $900,000 to $999,000 range had an average market time of 93 days, and homes in the $800,000 to $899,000 range averaged 70 days on the market. For 2018, those numbers were 221 days and 95 days, respectively. 

The outlier is average market time for homes between $1 million and $2 million, which fell from 2017 to 2018. In the first half of 2017, two Oak Park homes in that category sold with an average market time of 194 days. In the first half of 2018, five $1 million-plus homes sold in an average market time of 116 days. 

While the market time decreased and the number of highest-end sales increased over this period in 2017, an examination of the five closed sales reveals that three of the five originally had been listed for sale one to three years prior to selling. 

Lawrence said that once a home has been off the Multiple Listing Service for at least 90 days, its market time starts over when the sellers relist. He also pointed out most of the sellers of those homes came down in price from their original list prices saying, "Most of them sold for just over one million." 

For Lawrence, one of the bigger differences this year is the number of properties on the market. In 2017 at this time, there were 162 single family homes on the market in Oak Park. This year, there are 209. He states, 

"That's why the market feels like it does," Lawrence said. "Buyers have more choices." 

Tax 'tipping point'

Lawrence pointed to a few reasons why there might be more homes for sale this year, including a highly publicized violent crime wave that swept through all of the western suburbs just before the spring market. 

He also says that property taxes are a big part of the equation in Oak Park today. 

"Anecdotally, there is the tax situation," Lawrence said. "We've always said, 'What is the tipping point?' I think we've reached it."

Steve Scheuring of Baird and Warner agrees. 

"We used to have buyers who would come and look at a $500,000 house with $8,000 to $10,000 in taxes," Scheuring said. "The taxes were high, but considering Chicago Public Schools and private school tuition, they were cool with that. Now, with that same house having taxes of $15,000-$16,000, the buyer is no longer cool with that. We've reached a saturation point."

Nowicki says his clients are definitely influenced by taxes. 

"Seeing affordable houses with unaffordable taxes has been a hard pill to swallow," Nowicki said. "The realization that property taxes affect how much house you can afford has been frustrating for them. Prices are down, and taxes seem to be why."

For Lawrence, these concerns might be playing out in the difference between median list price and median sales price, which has dropped roughly 2 percent. 

"Basically, the extra competition is causing sellers to make larger price reductions this year compared to last year when a home doesn't sell right away, and then the buyers are able to negotiate harder, knocking an additional 1 percent off the asking price," Lawrence said. "The sky is not falling, but if tax bills go up any further, I think the sky will fall."

From Jan. 1 to June 10, 2017, the median single-family home sales price in Oak Park was $470,000. In 2018, that number has dropped to $460,000. Lawrence thinks that the number of homes on the market give buyers the incentive to negotiate prices more and notes that taxes play a role here as well. 

Stating that buyers tend to consider monthly expenses as a combination of mortgage payments and taxes, Lawrence says that tax bills contribute a lot to a buyer's purchase power.

"Higher tax bills change the affordability at every price point," he said. "If it's not in line with what you expect at that price, people will push back on price." 

Lawrence notes that overall, River Forest and Forest Park have much smaller housing inventories than Oak Park, so sales numbers in those villages can swing widely with the opening of a new development or the sale of a handful of expensive properties. 

"Their numbers for this year are on pace with last year," Lawrence said. "The numbers sold are relatively low, but they are holding steady."

Condo crunch

Attached housing sales in River Forest and Forest Park have remained on pace from 2017, but Oak Park has seen a large drop in condominium sales. Lawrence says closed sales for condos are down 20 percent from this time last year, and the median closed sale price has dropped from $176,000 to $165,000. He points to taxes and assessments figuring into those numbers.

"The issue may be who buys condos? Millennials, people coming out of school," Lawrence said. "We hear about high student-loan debt and household formation lagging, so that might play into it as well." 

The local market may not be going gangbusters, but homes are selling at all price points.

"Oak Park is still a desirable community at the end of the day," Lawrence said.

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  • Amanda Poppenk Massie from Oak park (Facebook Verified)

    Posted: July 11th, 2018 1:32 PM

    Finally a real estate professional saying "taxes are an issue " to home buyers. Its about time. Now D200 wants to raise taxes with another Referendum. Some people can no longer afford to live here with the taxes going out of control. And that also affects home buyers the same way.

  • Kevin Peppard (Facebook Verified)

    Posted: July 7th, 2018 12:02 PM

    Jason: It's actually MORE than twice that. Visit this link from the High School's similar plan from awhile back, expressed in 2016 dollars, where the architects estimated construction costs would inflate at 3.5% per year (see page 35):

  • Jason Cohen (Facebook Verified)

    Posted: July 7th, 2018 11:42 AM

    Here's an interesting reference point on the whole imagine project. Chicago is looking at building a brand new high school and the project costs $70 million. We want to modify 1/3 of ours for twice this.

  • Kline Maureen (Facebook Verified)

    Posted: July 6th, 2018 5:50 PM

    LOL, very good Alice Caputo! To finish: You may say I'm a dreamer - - But I'm not the only one - - I hope some day you'll join us - - And tax increases will be done.

  • Alice Caputo (Facebook Verified)

    Posted: July 6th, 2018 10:05 AM

    Sung to John Lennon's Imagine: Imagine no high taxes. It's easy if you try. No pool referendums, D97 scraping by. Imagine all the people, retaining home value?

  • Bruce Kline (Facebook Verified)

    Posted: July 5th, 2018 10:37 PM

    Neal: Good one! Maybe Tom should be chair of the alternative IMAGINE group.

  • Neal Buer (Facebook Verified)

    Posted: July 5th, 2018 7:56 PM

    Tom, are you imagining things?

  • Tom MacMillan from Oak Park (Facebook Verified)

    Posted: July 5th, 2018 7:43 PM

    Yeah, a lot of us are not "cool" with the taxes anymore. Maybe its time to not do a $100 million dollar olympic pool project at OPRF for 100 kids on the swim team. Maybe its time to stop giving the unused Housing Center $500k every year just because twenty years ago that was relevant. Maybe we don't need a building full of Township employees on the payroll and pension band wagon anymore. Maybe the Trustees could start cutting things instead of dreaming up new spending.

  • Bruce Kline (Facebook Verified)

    Posted: July 5th, 2018 4:15 PM

    Mike: I wouldn't rely on our government or someone there -in to "finally listen." Hey it was our government - duly elected by us - who facilitated this mess - of course with our blessing. And what we are seeing now has been "brewing" for some time and obvious to many as well. Hey, one governmental taxing body, D200, sits mute while a so called community organization proposes a palatial swimming pool - and tear down of 1/3 of the high school - that will likely break the bank. So no, don't get your heart set on government "listening" and bailing us out of this quicksand. I'm afraid that job falls to us: the folks who have to listen to us are us. And we (us) have to take back our village and our government from these spendthrifts. Like right now.

  • Mike Hanline (Facebook Verified)

    Posted: July 5th, 2018 2:56 PM

    Case in point: I own a two-flat near DTOP--I live in one unit and rent out the other. My former tenants (with two kids under the age of 6) broke their lease early (with my blessing) when they bought a house in Brookfield two years ago. They missed Oak Park so much that they recently started house hunting back here again. She makes a six-figure salary, and I'm assuming her husband is close to or in the same range. But after a few months of looking at houses, they've given up for good solely because of Oak Park's insane property taxes (which have gone up again in the two years since they moved out).

  • Paul Clark (Facebook Verified)

    Posted: July 5th, 2018 1:56 PM

    Since the village just got reassessed, aren't the higher property taxes sort of baked into individual houses for the next three years? I know that individual taxing bodies influence what each property owner ultimately pays each year, but a high assessment coupled with downward pressure on sales price .... that's going to be tough for sellers.

  • Richard Lane from Oak Park, IL (Facebook Verified)

    Posted: July 5th, 2018 12:45 PM

    Amen to that, Mike.

  • Mike Hanline (Facebook Verified)

    Posted: July 5th, 2018 10:59 AM

    Now that we have definitive proof that increasingly high property taxes are having a detrimental effect on the local housing markets and attracting new residents, perhaps someone in government will finally listen.

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