You hear this question all the time. It’s a common refrain on Crib Chatter as well. Many people looking to buy a home in Chicago have heard about all the short sales and foreclosures on the market. In fact, right around 50% of all Chicago recent home sales have been distressed – either short sales or foreclosures. So it’s understandable that people are perplexed when they can’t find these bargains themselves.
Intuitively a lot of people understand the answer: the “deals” are in the fringe areas and at the lower price points. The geographic distribution of short sales and foreclosures in Chicago is pretty well understood but I don’t believe I’ve seen any analysis of how the distressed properties are distributed by price point. So I finally came up with the graph below that shows, by price point, what percent of recent Chicago home sales are distressed. For the technically inclined, it’s based upon a moving average of 100 home sales ordered by sales price.
This graph shows, rather dramatically, that below $100,000 right around 90% of all sales in March were distressed. By the time you get to a $300,000 price point that percentage drops to the upper 20s and by the time you get to $400,000 you’re looking at “only” 10%. And if you’re reading this blog or hanging out on Cribchatter chances are you’re shopping above $200,000. If you’ve been asking yourself this question here’s your answer.