North Shore from 10,000 feet

Here’s a top-down look at what buyers (single-family detached) have closed on in the trailing 12 months in five North Shore housing markets.

I started by taking the current offerings (all active listings) and break them into even quartiles sorted by listing price low to high. Then I placed the trailing 12 months of closings into each quartile. I had to lower the quartile range by 10 percent to adjust for actual sales prices naturally being lower than asking list prices.

 

Lake Bluff 12/1/11 listings w/ trailing 12 mo. sales, single family detached

LP (list)

Listings

90% of LP

Closings

Short

Foreclose

up to 369K

27

25%

up to 332K

25

27%

4

4

369K-550K

26

25%

332K-495K

25

27%

1

1

550K-1050K

27

25%

495K-945K

28

30%

1

2

over 1050K

26

25%

over 945K

15

16%

0

0

total

106

100%

93

100%

 

 

Highland Park 12/1/11 listings w/ trailing 12 mo. sales, single family detached

LP (list)

Listings

90% of LP

Closings

Short

Foreclose

up to 409K

66

25%

up to 368K

86

31%

10

12

409K-600K

66

25%

368K-540K

93

33%

9

6

600K-950K

66

25%

540K-855K

78

28%

6

3

over 950K

66

25%

over 855K

23

8%

2

0

total

264

100%

280

100%

 

 

Glencoe 12/1/11 listings w/ trailing 12 mo. sales, single family detached

LP (list)

Listings

90% of LP

Closings

Short

Foreclose

up to 650K

25

25%

up to 585K

37

28%

5

5

650K-1100K

25

25%

585K-990K

44

34%

3

1

1100K-1800K

25

25%

990K-1620K

30

23%

2

1

over 1800K

24

25%

over 1620K

20

15%

0

0

total

99

100%

131

100%

 

 

Lake Forest 12/1/11 listings w/ trailing 12 mo. sales, single family detached

LP (list)

Listings

90% of LP

Closings

Short

Foreclose

up to 680K

69

25%

up to 612K

58

28%

7

4

680K-1200K

69

25%

612K-1080K

70

33%

6

1

1200K-2000K

69

25%

1080K-1800K

47

22%

3

0

over 2000K

68

25%

over 1800K

36

17%

3

1

total

275

100%

211

100%

 

 

Winnetka 12/1/11 listings w/ trailing 12 mo. sales, single family detached

LP (list)

Listings

90% of LP

Closings

Short

Foreclose

up to 950K

34

25%

up to 855K

73

36%

4

4

950K-1600K

34

25%

855K-1440K

72

35%

0

2

1600K-2600K

34

25%

1440K-2340K

41

20%

1

0

over 2600K

33

25%

over 2340K

18

9%

0

0

total

135

100%

204

100%

 

Sales activity in the highest price quartile in all five markets was light, especially in Highland Park and Winnetka. As expected, the second lowest price quartile in all five markets appears to be attracting the most buyers.

In Lake Bluff, Highland Park, and Glencoe about 27 percent of the activity within the lowest price quartile is from buyers of distressed properties. Yet only 14 percent of the lowest price quartile buyers in Lake Forest and Winnetka bought distressed properties. But the rate of short sales and foreclosures were much less frequent within the top half of all five markets, with Highland Park at 11 percent, Lake Bluff and Glencoe and Lake Forest around 7 percent, then Winnetka at less than 2 percent.

Let’s take a look at absorption rates (the ratio of inventory to sales activity, stated in months). In aggregate, Winnetka has 7.9 months of inventory, Glencoe has 9.1, Highland Park 11.3, Lake Bluff 13.7 and Lake Forest 15.6. No surprise that it’s a buyer’s market out there! But take a note of the bottom half of the Winnetka market with a mere 5.6 months, which is not unquestionably a buyer’s market.

The highest priced quartiles of Lake Bluff (>20 months), Lake Forest (>22 months), Winnetka (>22 months), and Highland Park (>30 months) contain the slowest absorption rates.

Remember, as I explained in , the majority of active listings out there are not positioned as compelling "in the market” offerings (attractive price and condition). So absorption rates can be adjusted for the two markets based on what is really taking place.

For simplicity, if the “in the market” listings were to represent one half of all listings and this group was to receive 75 percent of the actual sales activity, then the activity level of the “in the market” group would be 1.5 times the aggregate average sales activity, while the remaining "undesirable" group would get one half the aggregate average sales activity. I find this to be an accurate way to understand the market and operate within it.

So here are some implications for analyzing Winnetka. In aggregate, remember that Winnetka has 7.9 months of inventory. That means “in the market” properties as a group has 4 months of inventory while “undesirable” properties have 15.8 months. Within the bottom half, instead of 5.6 months of inventory this can be split into “in the market” which has only 2.8 months (buyers better hurry and bid high) whereas “undesirable” has 11.2 months (buyers take your time and don’t overbid).  

Drilling further into the Winnetka bottom half data will further illustrate this. Days on market statistics show that 40 percent of these sales involved buyers snatching up homes that were on the market for no more than 2 months, and 70% of these were on the market no more than 6 months.

Clearly the vast majority of these were “in the market”. Among the remaining 30 percent of these sales, 1 in 3 or 11 percent were purchases of homes which spent over 1 year on the market. For the brisk “within 2 months” group, buyers in aggregate paid 95% of list price (that’s 94% of original list price). For the slow “over 1 year” group, buyers paid 90 percent of list price (which was only 85 percent of original list price).   

So if you further arm yourself with statistical information about days on market and selling price to list price and selling price to estimated value of the land plus improvements, as a buyer you'll be dangerous!

This is especially true if you partner with a full service exclusive buyer broker that also rebates 25 percent of seller-paid commissions back to buyers. Hey, that would be Exclusive Buyer Brokers LLC.