Housing Market Starts Reeling From Massive Slump

The help wanted sign for real estate agents in Morton Grove's front window would logically indicate at least semi-brisk business for the local housing market - and some are hoping it's a sign of things to come.

“I have confidence in the market that it’s coming back – and it is coming back,” said Nick Marino, who set up shop with his agency on the corner of Dempster Street and Menard Avenue in 1972. “We’re always in a recruiting mode because it’s a kind of business (where) you need agents, you always need people.”

Marino added that there’s plenty of business out there, but it’s just a matter of finding it.

“Real estate agents are independent contractors, they’re entrepreneurs,” he said. “They have to turn over rocks to find business.”

But while Marino reports a modest, low single-digit “uptick” in the local residential home sales market over the last six months, it’s questionable whether those gains have any traction. 

Foreclosures, short sales going swimmingly

A different view is offered by Anthony Spillo, a manager at ReMax, located at 7174 W. Dempster St. He notices a boom indeed – in foreclosure and short sale transactions – at the expense of conventional home sales.

“Comparable to last year, the office is up about 20 percent,” Spillo said. “A lot of people are not so nervous about buying a foreclosure or short sale (property sold for less than the mortgage price).”

He added that properties once listed at $500,000 are now at $250,000 due to foreclosures. While it may sound like a great deal to buyers, it’s not helping the seller.

“Unless we get rid of these foreclosures, we’re not getting conventional sales. The savings you’re getting on the houses is huge. That’s definitely hurting the average person selling a house,” Spillo said. “No way can they compete. They’re getting hurt.  Another wave (of foreclosures and short sales) is coming through the market.”

Regardless of their form, home sales are enough to keep longtime local agents in business. Whether it’s 45-year veteran Marino or 49-year Morton Grove resident Rosalyn Grossman, who began in the business the same year Marino did. Grossman now runs the independent R & R Real Estate agency. She said one thing is certain: buyers are attracted to low prices and low interest rates.

“The whole thing’s been crazy since 2008,” Grossman said. “It’s been a downward spiral. This year, I finally have people interested in buying. They want the low prices. As far as interest rates, they’re good. That’s bringing them in.”

Great time to be mortgage-qualified

As far as the market hitting bottom and finally reversing, Grossman said she is taking it with a grain of salt.

“I would hope it’s true, but not what I’ve heard,” Grossman said. “I have had an increase in sales at this point. But prices are still declining. People have to have good credit, and 20 percent down (to qualify for a mortgage). People got fooled in the 2000s. I never sold a house with no money down, they’d never afford the payments.”

On the other hand, Marino is a little more optimistic.

“If you’re qualified for a mortgage instead of just breathing, it’s a wonderful time to buy,” Marino said. “Prices are down, interest rates are at the lowest ever and if you can buy now, you’ve got to be nuts not to.”

Location, location, location or jobs, jobs, jobs?

Veterans like Grossman and Marino have handled real estate crises before. The most outstanding was the early 1980s, when interest rates between 15 and 20 percent threatened to kill the market.

“You’ll laugh at this,” he said, pulling out a well-worn mortgage-rate book. “This one came out in 1980 and it goes up to 24 percent. The only ones I had went up to 10, 12 percent.”

But Marino recalled finding a way around such a barrier when buyers were still plentiful.

"We still had demand, we had the remnants of the secure, stable, Midwest market," he said. "People were still employed, and were not affected by financial markets. Prices came down, leveled off and we could make deals."

This time, however, the housing revival is directly tied to jobs, not lower interest rates.

“Employment is the key at this point,” Marino said. “In order to get more buyers back into the market, we’re going to have to see people getting back to work.”