An increase in Macomb's housing inventory?

Is Macomb's housing inventory finally beginning to improve? Maybe so.

Back when I first joined our office in late 2004, I didn't have many clients, so I spent most of my days poking around online, looking at real estate sites. I quickly realized the power of realtor.com (at the time, no one else was offering all listings by all real estate offices) and often browsed around on that site, as if I were someone looking for a house in Macomb. I wanted to see realtor.com as a typical consumer did.

On realtor.com's welcome screen, you can start your search by entering either the city/state or ZIP code. I always would opt for the latter -- much fewer keystrokes that way -- and leave all the search criteria (price range and bedroom/bathroom count) blank, so I'd be pulling up absolutely everything for sale. (We're a small town, so even if you pull up everything, you're still going to be looking at a relatively short list.)

Then I'd arrive at a second screen: the barometer of our market.

This second screen is pretty simple; it just tells how many properties match your search criteria. Because I'd keep my parameters open to include everything in Macomb, that number would give me a quick answer to the number of Macomb properties listed through real estate agents.

I'll admit that most people probably wouldn't care about this sort of statistic. But I had the geeky interest to be curious (I was an unofficial economics minor in college, with a desire to understand this stuff) and I certainly had the time (i.e., few clients). So I started keeping track of things.

In late 2004, there were around 135 to 145 Macomb listings showing up for sale on realtor.com. The total stayed around that level until the end of the year.

In early 2005, the number of listings began dropping -- and was soon under 100. The drought continued for over two years, with the low point coming in late 2006, when there were only about 70 listings for sale.

Things improved in early 2007, with the number trending upward a little bit, into the 80s and low 90s.

Then this month, we reached another signpost: The number broke 100. Two weeks ago, we were up to 105 listings.

I don't consider this recent increase in housing inventory an absolute turnaround. Call it a mini-bump. We're still not back to late-2004 levels.

And obviously, these figures only include properties listed through agents, and there have been many things listed "for sale by owner" (FSBO) during this time frame. But what matters, I think, is that we keep the comparisons over time consistent, and the discussion here is doing that -- this number is a true comparison of agent listings in 2004 to agent listings right now (and during all the time that passed in the interim).

Moreover -- and this is crucial -- while the number of agent listings has increased, it's done so in spite of a possible increase in FSBO properties.

Or, to phrase this idea in a different way: If the number of agent listings goes down, we could surmise that this could (maybe) have been caused by an increase in FSBOs. That is, more people are selling houses on their own, without agents involved, so the agents have fewer listings. But because the number of agent listings went up, the FSBO factor could only be (1) getting outpaced by the number of agent listings or (2) in a state of decline. (My vote's for the former.)

I'm not celebrating all this as some sort of triumphant Return of the Realtor. Instead, I'm more interested in figuring out what's happening and why. One thing I learned about economics a few years ago, from some great University of Illinois professors, is that macro-economics -- the study of entire markets or systems, not just individual companies or incidents -- can be complex and difficult to keep in focus. But if you have some actual data of what's occurring . . . well, that's at least a start.

Without my realtor.com statistics, I'd just be on my soapbox in the park talking about all this. With it, I'm confident I'm observing a real trend.

We now own macombland.com

Our office website just got an easier-to-remember name. How's macombland.com sound? (Kind of like an amusement park, I suppose, but maybe Macomb could use one.)

A few weeks ago, I learned (via RE/MAX's corporate office) that our RE/MAX-approved domain name of remax-unified-macomb-il.com is allowed to have a secondary domain we can use to drive traffic over to our main site. We can name this secondary domain anything we want, provided that (1) we don't use the word "RE/MAX" and (2) the domain name is actually available.

We did some checking and found that macombrealestate.com, macombproperties.com, macombhomes.com, and macombhouses.com all have already been taken, some by people who don't even seem to be doing much with them. But macombland.com, surprisingly, was available. We quickly bought the rights.

Our old domain name of remax-unified-macomb-il.com is staying right where it is. But we'll start using macombland.com in all our print advertising from now on. And anytime we're telling someone -- either in person or over the phone -- our website address, we'll just say macombland.com. We won't even have to spell it out for them.

Good real estate websites, part 2

In an earlier post, I mentioned some of the best real estate sites to visit if you're looking to find a house. What about the "for sale by owner" sites? Aren't they good, too?

Sure, and I encourage you to visit them.

But right now, the for sale by owner (FSBO) market is fragmented. There isn't one site where you can view all FSBO listings in a given city or ZIP code. (Not a surprise, really. Each FSBO website is run by a different company, and each one wants to make money off folks looking to sell their homes.)

I recommend starting with realtor.com if you're the sort of person who wants to visit one site and view as much real estate as possible. But if you're an inquisitive and thorough sort, you'll want to get a complete picture of everything by also visiting some FSBO sites.

There are some cities where FSBOs have a huge market share -- sometimes as much as 30% of all the houses for sale. That's not the case in west-central Illinois, and on most of the sites listed below, you'll be lucky to find one or two houses for sale in a given town.

One final note: I ran my estimates (included below) on what it would cost to run ads in west-central Illinois. These numbers may not hold true for bigger markets in more metropolitan areas of the U.S.

To the list!

Good FSBO sites:
forsalebyowner.com -- Definitely seems to be the most popular of the FSBO sites, and my Alexa toolbar ranks it 9,113 -- meaning that, at this moment in time, Alexa considers it the 9,113th most popular site on the Internet. (Alexa ranks yahoo.com #1, msn.com #2, and google.com #3.) Rankings aren't a flawless science, but I do think they matter; if you're going to sell your house on your own, you want it to be posted on a website people actually visit.

If you want to sell your house, paying $199 at forsalebyowner.com lets you post it on their site indefinitely; if you pay $249, they'll also give you a yard sign. They also offer an intriguing feature: For $349, they'll include the aforementioned stuff, plus allow you unlimited access to their toll-free real estate consultation line. (I'm not sure how great the advice on their consultation line actually is, but then again, I imagine some people would tell you that they've received rotten advice from real estate agents hired for a lot more than $349.) For $599, forsalebyowner.com will post your house on yahoo.com and some other websites, too.

owners.com -- Ranked 30,701 by Alexa. $49.95 lets you post your house on their site until it sells. $79.95 does the same thing, plus a yard sign. $179.95 is everything plus a virtual tour. They also offer a separate package: $377 lets you post your house in the local multiple listing service (MLS) -- the database of properties overseen by real estate agents in that area. (I like this idea of MLS a la carte, but it's been highly controversial in some parts of the U.S., and lawsuits have been filed because of it. I plan to write more about all this in a future post.)

homesbyowner.com -- Ranked 49,529 by Alexa. This site will give you a free (!) listing and one photo. $79.99 will give you a yard sign and allow you to post up to five photos. $129.99 allows you up to 20 photos and a virtual tour.

fsbo.com -- Ranked 58,620 by Alexa. $69.95 posts your house on their site for nine months, and for $10 more, they'll throw in a yard sign. Or, for $499, they'll post your house in the local MLS.

byowner.com -- Ranked 141,414 by Alexa. $249 to list your house (with six photos) until it sells. $49 extra for yard signs.

And then there are the folks who go the FSBO route and never do anything more than stick a sign in the front yard. Obviously, you won't find those houses on any websites, and often the only way to stumble onto them is by driving up and down streets in a given town. But maybe Google's team of experts can come up with a infrared-like map that can detect all yard signs (both the FSBO and real estate agent kind) from low-earth orbit, then post the results on an easy-to-navigate Google site. Why not?

New chief of Macomb zoning

Earlier this year, Macomb hired a new community development coordinator -- the public official who's consulted on all things zoning -- named Ed Basch. He comes to Macomb from Burlington, Iowa.

The Macomb Eagle ran a good story about Basch and his approach to the job. How will he handle the multi-family zoning imbroglio? The Eagle story gives some clues:

Basch is aware of the ongoing conflicts between single-family and multi-family residential areas. Having once worked as an administrator for the Village of Savoy, on the edge of Champaign, he said he has experience with student housing issues.

"One of the challenges is, 'How do we best blend and layer different land uses?" he said. "Part of that will be addressed in the comprehensive plan.

"Slowly, over time, I'd like to see less and less situations where an R-1 or R-2 area - single family homes - are directly up against multi-family," he said, cautioning, "That will take time."

I'm curious about Basch's specific proposals on all this. We'll see.

The rentals list

At our office, I spend most of my time helping people who want to buy or sell real estate. But every week or so, I get a call about something else -- and the question I'm asked is always the same:

"Do you guys have any rentals?"

That's when I mention our list.

Our office doesn't actually own any rentals or perform property management for landlords. Nonetheless, we realize that many people, especially those new to the area, need places to rent and don't know the names of some of the local landlords to call. That's why we maintain and distribute a list of every currently available rental we know about. We give out the list free to anyone who wants it.

The list isn't exhaustive -- though we'd like it to be -- and doesn't rival the Chicago version of Craigslist. But for many people, the list provides a helpful start to the housing search. (Other good sources of rentals include the classified sections of the Macomb Eagle and Macomb Journal, our local newspapers.)

Because Macomb is by far the largest city in the area, most of the rentals on our list are located there. Occasionally we also get some rentals in the smaller towns nearby; Good Hope has frequently claimed a spot on the list with a rental or two. But you'd be surprised how often people call asking for rentals in specific towns (like Bushnell, Colchester, Table Grove, etc.), and we rarely have anything that specific. We hope to improve in that regard.

If you're a local landlord and looking for a tenant, call and tell us to put your name, phone number, and available rental address on the list. We'll do it for free. And we'll leave the information on the list indefinitely -- until you tell us otherwise.

Lately I've started getting more creative with the list. One client just bought a house and told me that he's looking for a roommate. No problem, I said. We added his info to the list. No word yet if he's had any leads, though I'm optimistic he'll get at least a few inquiries.

I can't claim credit for coming up with the original idea for the list; other agents started it long before I joined the office in 2004. But I'm happy to carry on the good work. After all, if we're not helping people, we're not doing our jobs.

A Macomb zoning primer

You can't escape the zoning battles in Macomb, and that's true even if you don't practice real estate for a living.

Up until a few years ago, you could take any house in Macomb and rent it out to up to four unrelated college students. Didn't matter what the zoning was -- single-family, multi-family, whatever -- you could pretty much do whatever you wanted with your house, and there was little the city could do about it. (Loud underage parties at 2 a.m. were an exception, at least if such a house sat across the street from sleep-respecting locals.)

Then a few years ago (around 2002, I think), everything changed. A group called Project HANDS (Homeowners and Neighborhood Development Strategies) lobbied Macomb's city council to come up with new rules regarding how many college kids you could pack into a rental house.

The new zoning categories set the following standards:

R1 (single-family): No more than two unrelated tenants, no matter how many bedrooms the house may have.

R2 (single-family): Same as R1.

R3 (multi-family): Possibly up to six unrelated tenants, but only if the building's configured as some sort of duplex and has two kitchens.

R4 (multi-family): Up to six unrelated tenants, depending on the number of bedrooms. (Think of your typical college party house.)

Note: The City of Macomb considers "related" students to be students who are married, siblings, or first cousins. Second cousins or relations that stretch beyond that aren't allowed.

When this zoning change took effect, there were some R1 and R2 houses that were "grandfathered in" and allowed to continue being rented out to four college students. But these properties have to continue to be used as rentals in an ongoing fashion in order to retain their grandfathered-in status. If they go at least 12 months without doing so, they lose their grandfathered-in status forever and can't get it back. (I compare this to the extinction of the dinosaurs; grandfathered-in properties aren't being created, but they can be destroyed.)

How does the new zoning classification system work?

Let's say you have a four-bedroom house in the northwest quadrant of town, right across the street from Western Illinois University. The house is zoned single-family; it wasn't grandfathered in. How many college students can live there?

Only two, if they're unrelated.

There are exceptions, but they're rare. You might have two brothers who want to live together, and then they'd be allowed to have an unrelated friend as a third tenant. Or you could have a family of triplets who want to live together, and they'd be allowed to have an unrelated friend as a fourth tenant. But only in such exceptions could you hope to fill out and actually use all four bedrooms of a single-family house. That means most single-family houses (which constitute the majority of housing in Macomb) are off-limits to what college students want to do with them. This can be good or bad, depending on whether you're (1) a college student looking for a place to live or (2) a local who doesn't want college students trashing up the neighborhood.

As a result, anything with R3 or R4 zoning has had a premium placed on it. And there aren't many R3 or R4 properties in Macomb, as you can see on the city's zoning map:

http://www.cityofmacomb.com/pdf/zoning_A.pdf

(The file's pretty big, so give it a few seconds to load after you click the link.)

What's especially noteworthy are the colors in the northwest quadrant, near WIU. The dark brown color signifies R4 properties. A good percentage of this is land owned by the university and used for residence halls, but there are some privately owned R4 lots off to the south and east, such as a solid stretch along West Murray and West Pierce.

And then there's the island -- a pinkish R2 zone that encompasses mostly Chandler Boulevard, Orchard Street, and Stadium Drive. It's all zoned single-family. And it's completely surrounded by R4 properties.

If there are zoning battles in Macomb, that island's on the front lines.

Good real estate websites, part 1

What's the best website to use when trying to find a house? I'm asked that quite a bit, and my answer's simple: realtor.com.

What makes realtor.com so great is that it's an all-in-one site, meaning that it has all houses for sale by all agents in a given market -- and every house has at least one photo. Right now there's nobody else doing this (though many companies are trying to join the game).

Real estate agents don't have to pay to post their listings to realtor.com -- it's completely free. That means you can go to realtor.com and search an entire town and see literally everything for sale through agents there. When you do, you'll find that some houses have special headlines and multiple photos; these are listed by agents who've paid realtor.com advertising fees to dress up things a bit.

Other good real estate sites:

homes.com -- Like realtor.com, they list everything on the market. The catch: Apparently, only agents who've paid to advertise with homes.com get photos on their listings. (All other listings have boxes with the words "photo not available."

Yahoo real estate -- Uses the same data as homes.com.

zillow.com -- Started allowing agents to post their listings, but only a few have done so at this point.

macomb.com/realestate -- This is actually a directory of real estate offices based in Macomb, Illinois, and operated by Infobahn Outfitters, a local Internet service company. Infobahn created and services our own office's website, so I'm a little biased, but what I like is how Infobahn doesn't discriminate. They list nearly every real estate office in the area -- as long as that office has an email address. This page also ranks highly in any Google search of "real estate Macomb IL." Many clients have told me how much they appreciate this page, especially if they're from outside the area and want a quick overview of the offices that serve the Macomb market.

historicproperties.com -- A specialty site for really old houses. I've been surprised to learn recently that there are many buyers out there looking for highly specific types of structures (e.g., 1890 Victorians), and that they're willing to move a considerable distance -- sometimes hundreds of miles -- to buy and live in them. The folks who run this site really seem to know what they're doing.