CRYSTAL LAKE – Those looking to buy a home for less than $200,000 in McHenry County right now are advised to be on top of their game.
Not enough homes are available in that price range to meet current demand, local real estate professionals said.
Within the county, there is only a 1.5-month supply of homes available for less than $200,000, according to data from the Heartland Realtor Organization. That’s far below the desired supply for a balanced local housing market.
“It’s considered a balanced market when there is between six and eight months’ supply of homes,” Heartland Realtor Organization CEO Jim Haisler said.
Local experts said the market is moving extremely fast for homes priced at less than $200,000.
Although young professionals may be ready to buy a starter home while some older homeowners want to downsize, the owners of homes for less than $200,000 don’t seem ready to upgrade.
“A lot of potential sellers of homes in that price range are not ready to sell,” Coldwell Banker managing broker Jesus Macias said. “And a lot of buyers are competing with investors who are trying to buy under $200,000 [and flip those houses].”
As recently as July, there was a two-month supply of homes available for less than $200,000, and a 4.8-month supply of homes between $200,000 and $499,999.
The exorbitant property taxes on homes priced more than $200,000 likely is a big reason why people aren’t upgrading, experts have said, and it’s creating a situation where there isn’t much movement, as prospective buyers are left without many options.
“What we are seeing is the high property taxes are holding people back from moving up to bigger and larger homes,” Haisler said. “They’d rather stay at their current house, where they might be able to pay $6,000 to $8,000 in property taxes rather than the $10,000 or $11,000 that comes with a bigger house.”
Coldwell Banker broker Marge Ruhnke recently took prospective buyer Zach Wagner on a tour of a Bull Valley home priced at more than $265,000. The bank won’t budge on the current price, although it dipped as low as $220,000 at one point. It’s been on the market for months.
Wagner is looking for a home that he can make improvements to while living there, as he did with his previous home, and then sell it for a profit.
But at the price of the home he and Ruhnke toured, Wagner appeared hesitant to jump into a new mortgage on the split-level house because it has major window problems. The pair estimated that new windows throughout the home could cost from $15,000 to $30,000 and blow his profit margin in today’s housing climate.
“To me, this house is priced at what it should sell for if nothing needed to be done,” Ruhnke said of the house, which already had been toured by countless buyers and agents.
By contrast, Ruhnke knew of a house at less than $200,000 in Crystal Lake that had more than five offers on it at once. All were looking to buy the 2-plus-acre property with its extensively gutted home and flip it for a profit.
If buyers are hoping for a foreclosure to save some money, they might be out of luck.
“There are no spectacular deals anymore with the foreclosures,” Ruhnke said, pointing to several foreclosures priced at more than $275,000. “That’s what they’re coming in at now.”
Macias said properties priced at less than $200,000 consistently are selling at or above their appraised value, with multiple offers on the table.
“One property I had was priced very well – we had almost 30 showings in two days,” Macias said. “That gives you an idea there’s a lot of buyers out there, but we need more houses.”
For those thinking they might want to hop the state line into Wisconsin to take advantage of potentially lower property tax bills, they also might be out of luck.
“One thing I figured out, just by looking at the inventory across the state line, is that there’s not much inventory there, either,” Macias said.
Technically, the spring market started four weeks ago, Haisler said. But looking ahead to the rest of the year, he said he thinks the market will remain tight.
HOUSING MARKET TIPS FROM THE PROS
For buyers: Contact a real estate agent, call a lender and get pre-approved before starting your search. Houses are going fast, and if you aren’t fully ready to buy, you’ll get passed up by someone who is.
For sellers: Get your home ready and on the market now. The spring market started four weeks ago.