Chicago, IL, December 23, 2012 --(PR.com
)-- The residential segment of the metro Chicago real estate market has been picking up speed these days, and move-up buyers (who own a home but are looking for something larger or in a more desirable location) are returning to the market but with a much different mindset than they had during the housing boom, according to RE/MAX.
“The move-up buyers of the boom had a different logic than those purchasing during the current recovery. Today’s move-up buyers are purchasing bigger and better homes because it is often less expensive to do that than remodel their current home, which may have lost some of its value,” said Laura Ortoleva, media spokesperson for the RE/MAX Northern Illinois real estate network.
Move-up buyers are active at nearly every price point in the real estate market, but the heart of the move-up market in the Chicago area is in the $250,000 to $550,000 range, according to an analysis by RE/MAX. During the third quarter of this year, activity in that market segment accounted for 25 percent of all sales, up from 23 percent over the prior 18 months. It marked the first time in several years that sales in that segment captured an expanded share of the market.
RE/MAX agents say they can see the difference in the marketplace.
The opportunity to make a move that is a financial plus clearly is the dominant theme in the move-up market served by Jim Humbard of RE/MAX Plaza in McHenry, Ill.
“Value is what draws many move-up buyers into the market right now,” Humbard said. “Their view is that they can buy a house that meets their needs for $60 or $80 per square foot rather than spend $120 per square foot to build an addition to their current home.”
It’s also a matter of convenience for the buyers because remodeling is a challenging process even if the owners don’t do the actual construction work. As a result, move-up listings in turn-key condition currently command something of a price premium, according to Humbard.
“I’m seeing offers in higher price ranges that I haven’t seen in a long time,” said Jennifer Bennett of RE/MAX Excels in Geneva, Ill. “I recently had two offers from different move-up buyers on a home in the $400,000 range that had been on the market for just 10 days. All the agents in our office are talking about the fact that there has been a huge clearing of inventory, especially in the more desirable executive neighborhoods in the Fox Valley. Listings are in short supply in those areas, and sellers can get, relatively speaking, top dollar.”
Steven Paige of RE/MAX Vision 212 in Chicago reported that he is seeing more move-up buyers testing the waters, attracted by a combination of appealing prices and low interest rates.
“People are more optimistic right now than they have been for several years, and that has increased activity at all levels of the market,” said Paige. “A recent buyer sold his home for $400,000 and moved up to a home that cost $850,000 but had sold for more than $1 million a few years ago. He understood that the values available in the current market won’t last forever.”
Activity in the move-up segment is picking up even beyond the confines of the metro Chicago area. According to Dawn Nielsen of RE/MAX Homes Unlimited in Rock Falls, Ill., the number of move-up buyers active in her market area is on the rise. Most often, these buyers are either those who have recently advanced in their careers or who have improved their personal balance sheets.
“They realize that if they have the financial resources, this is a good time to buy. They can purchase more house now than they will be able to in a few years when mortgage interest rates are likely to be higher and home prices will have rebounded at least to some degree,” Nielsen said.
She observed that along with the financial incentives, a major motivator for move-up buyers these days is a desire to avoid remodeling their current home.
“A common theme is that the buyers’ current home needs work, and they think it makes sense to buy a home with everything done rather than remodeling what they have now. In many instances, the amount needed to buy a new home can be less than the cost of remodeling,” she said. “These move-up buyers have also come to realize that whatever they lose on the sale of their current home, will be made up for by the savings they achieve in buying a more expensive home.”