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Are you getting frustrated finding great deals? The key is, knowing what is happening in TODAY’S marketplace. It’s amazing what has happened in the Chicago market place over the last year! In the past it was easy to buy and challenging to sell but NOW it’s tough to buy and easier to sell. Knowing stats such as absorption rates, homeowner rates and vacancy rates are some key tools to evaluate the market.

Knowing what areas are moving better than others will give you a leading edge in the market. Some price ranges within markets are moving very well while others are stagnant, yet the absorption rate has gone down to 7.2 month supply compared to 15.1 month supply approximately 18 months ago. Generally, the average absorption rate for most markets is 6 months. However in the Chicagoland area the average absorption rate is generally a 10 month supply. Are you wondering why the Chicagoland area has a higher absorption rate than the general market? It’s simple: The suburbs in the far outskirts of Chicago tend to take longer to sell.

Here is another interesting point about the Chicagoland market: First take a look at these stats for Single Family (SF) Attached SF and 2-3 unit buildings:

Total Inventory: 69,229

Under Contract or Pending: 25,118

Active: 44,111

Shadow Inventory: 30,111

Pre-Foreclosures: 89,101

If you look closely and diligently the opportunities become brighter and more apparent, and sometimes just glaringly obvious.

Now, for some interesting news about home ownership in the United States: Pay Attention because this affects real estate investors in a tremendous way!

US HOMEOWNERSHIP FELL TO THE LOWEST RATE IN ALMOST 18 YEARS!!

What does this mean to an investor?   A HIGH RISING DEMAND FOR RENTALS AND INVESTOR PURCHASES IN THE HOUSING MARKET

65% of Americans owned their homes in the first quarter which is down from 65.4 the previous year. It’s currently at the lowest levels since 1995!

(Just an FYI- 65% is good, 67.5% is the tipping point, and 68% and above is dump all and time to get out of the market. The last time we got up to 69% (2007) all hell broke loose in the market) These numbers are MY (Andrew Holmes) PERSONAL OPINION ONLY.

Let’s now take a look at what is happening with VACANCY RATES.

Vacancy rates for rented homes dropped to 8.6% from 8.8% a year earlier. Owner-occupied vacancy rates also fell from 2.2% to 2.1%.

BEWARE! The madness of over paying for properties has already begun. Many rehabbers and people who are holding properties for long term are overpaying.   Recently, I had to turn down 2 deals that other investors were over paying by 25K.

If you are a wholesaler it’s time to step up your game NOW! There are new investors that want properties and this can be a gold mining opportunity.

ARE YOU A WHOLESALER?

  • What methods are you using to find your deals?
  • What price range are you targeting?
  • Are you in a position to assign/sell an investor a property?

The demand for homes and investment properties are pushing prices up and now is the time to go back to POCKET INVESTING.

If you are not aware of the POCKET INVESTING TECHNIQUE make sure you read up on the subject. There are pockets that are opening up in the marketplace that are on fire.   Are you finding them? As you are looking for these pockets please keep in mind the intrinsic value of the real estate is key. Pocket investing does not work well with rehabs and flips but it works great with wholesaling and long term holds.

Do you know when the best time to set up searches is? October.   Why? While most investors are hibernating between October-February this is the perfect time to pick up some really good properties. Less competition means more opportunities! By the time the property is purchased and rehabbed spring is just around the corner.

Until next time – keep looking, keep communicating, and keep your lines open!