Does anyone think we're entering another real estate bubble? (Chicago: purchasing, good schools)

[Lookout Kid]

Originally Posted by My Kind Of Town

However, if you had the same home listed at the same price 4 blocks from downtown Hinsdale vs 4 blocks from downtown GE, which would sell faster? Wouldn't that be the apples to apples comparison of demand?

Priced well, that house sells almost immediately in Glen Ellyn. We got in a bidding war for our house. Was listed on a Wednesday, multiple offers immediately, under contract by Saturday--and the only reason it took that long is the sellers negotiated the offers upwards and played the top two bidders against each other.

Like I said, demand is coming from a different set of buyers. You can't get much in Hinsdale for $540,000 (believe me, I looked), but in Glen Ellyn that is an average house. Or it was in 2012.

[Lookout Kid]

Originally Posted by 3Series

Demand is the price of homes. I need data to make a determination, if the price gap is narrowing, however the gap is still very wide. It's a lot easier to go from 250k to 500k then $1M to 1.5M.

That's not an accurate way to look at demand. Say you are comparing a brand new re-designed model Toyota Prius to a Jaguar. Orders for the Prius will go through the roof and the car will be hard to get at dealerships at the $30,000 price point, and demand will be very high with a larger pool of buyers. The Jaguar at $90K may not sell as quickly. Fewer people can afford it. However, set the price at $30k and you might see sales and demand skyrocket.

Demand does help to set price, but demand does tail off after prices are too high. Having a higher price doesn't not necessarily make for higher demand, though my understanding is that demand in Hinsdale is quite healthy at this time. And I'm sure that Hinsdale would vastly outsell Glen Ellyn if the prices were the same. But they're not. Hinsdale is more upscale, has better schools, shorter commutes to the Loop, and is surrounded by nicer towns. It's a more premium product and nearly double the cost.

[ToriaT]

Home prices will hold their value in a desirable community like Glen Ellyn or Wheaton. (Hinsdale too). There are so many good attributes of those communities. Provided you keep your house up and you did not buy towards the height of the market and try to sell a year or two later you should be okay. Home prices are rebounding and inventory of desirable homes are low. A friend of mine put his house on the market in Naperville and the first buyer made an offer and he sold it the first day. This was a week ago.

[3Series]

Originally Posted by Lookout Kid

That's not an accurate way to look at demand. Say you are comparing a brand new re-designed model Toyota Prius to a Jaguar. Orders for the Prius will go through the roof and the car will be hard to get at dealerships at the $30,000 price point, and demand will be very high with a larger pool of buyers. The Jaguar at $90K may not sell as quickly. Fewer people can afford it. However, set the price at $30k and you might see sales and demand skyrocket.

Demand does help to set price, but demand does tail off after prices are too high. Having a higher price doesn't not necessarily make for higher demand, though my understanding is that demand in Hinsdale is quite healthy at this time. And I'm sure that Hinsdale would vastly outsell Glen Ellyn if the prices were the same. But they're not. Hinsdale is more upscale, has better schools, shorter commutes to the Loop, and is surrounded by nicer towns. It's a more premium product and nearly double the cost.

Demand refers to how much (quantity) of a product is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship

Hinsdale is more "in demand" and the higher prices reflect that. The reason why it is 'in demand" is because there are constraints on supply. The reasons for the supply restraint is myriad but I'm sure you can conjecture on why.

[Lookout Kid]

Originally Posted by 3Series

Hinsdale is more "in demand" and the higher prices reflect that. The reason why it is 'in demand" is because there are constraints on supply. The reasons for the supply restraint is myriad but I'm sure you can conjecture on why.

No, it's not. At the price it's at, it is not more "in demand". The Law of Demand states that demand falls as prices rise. It is an INVERSE relationship. Holl1ngsworth already showed that houses have actually been in greater demand in Glen Ellyn over the past year (prices rising faster). This does not make Glen Ellyn more desirable or nicer, it just means that houses at that price point have been more in demand over the past year. Glen Ellyn could easily top out, or if Hinsdale prices are flat comparable to other towns, it could cause a spike in demand there since it offers certain advantages.

I understand what you are trying to say, but using the word "demand" is just not correct in this case. Hinsdale is more desirable than Glen Ellyn, but it is not in more demand at this time. This could easily change.

[3Series]

I hear you on the law of demand, but that only works if other factors are the same so you can't really use that. It needs to be a like for like good or service.

[3Series]

Another item is that according to Redfin the number of homes sold as a percentage of population was higher than in Glen Ellyn for the last 3 months.

But we don't know the supply contraints etc...

[Lookout Kid]

Originally Posted by 3Series

I read that someone looked in Hinsdale but bought in Wheaton or Glen Ellyn because it was cheaper. So the demand for housing is greater in Hinsdale but was substituted for a house in another town because the price was lower and the price is lower because of greater supply and various factors of desirability.

Okay.

Yeah, that was me. We actually preferred La Grange to both Hinsdale and Glen Ellyn, but it just didn't work out.

[holl1ngsworth]

Originally Posted by 3Series

Another item is that according to Redfin the number of homes sold as a percentage of population was higher than in Glen Ellyn for the last 3 months.

But we don't know the supply contraints etc...

And that includes large sections of unincorporated GE. Upwards of half the addresses are unincorporated and fall into a separate school system that is largely less desirable.

[holl1ngsworth]

Originally Posted by Lookout Kid

Okay.

Yeah, that was me. We actually preferred La Grange to both Hinsdale and Glen Ellyn, but it just didn't work out.

I did as well, before buying in Wheaton. Not La Grange, but Hinsdale and Clarendon Hills. We actually were under contract for a home in Clarendon but balked after the home inspection.