The market for residential multifamily apartment buildings in Logan Square, Chicago remains very tight in early 2013. Properties of all types from distressed to arm-chair investments are moving quickly. Demand is outstripping supply to such an extent that the Average Sale Price to List Price ratio has been nearly 100% or above since August of 2012. The strategy these days seems to be to purposefully under price an asset by 10-15% to generate extreme buyer frenzy and irrational bidding.
Dating back 12 months, there was nearly 3X the amount of inventory for sale in Dec ’11 compared with Dec ’11. As we push into the spring market, we could see a bounce in the level of inventory especially if asset managers holding off market product decide to test the market more aggressively. That remains to be seen.
As is stands in January 2013, we are presently at a 2 –year low of the number of units actively for sale on the market. Meanwhile, the number of units under contract and recently sold remains steady. There is a price for everything and in a market like this everything gets a second look and in a lot of cases, offers from buyers desperate to pick something up.
A lot of real estate brokers advise their clients to buy/sell based on market values both current and anticipated. Since no one knows with certainty where market values are headed and expert economists have varying opinions for the 2013 market and beyond, my advice it to sell into strength and buy into weakness. Right now, owners with equity who are contemplating a sale would be wise to test the market, assuming the current market value for their property is acceptable.
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