In Chicago home prices are down, home sales are up but foreclosures continue to flood onto the market even as the inventory of unsold homes is clearing. What does this housing market trend and the Chicago real estate news mean for those looking to buy or sell their home this year?
In Chicago home sales were up more than 71.6 percent in November 2009 over the same period last year, says the Illinois Association of Realtors. Median Chicago home prices, however, have fallen 10.1 percent in the past year, according to the Standard & Poor’s/Case-Shiller home price index. This paints a very mixed picture of the health and recovery of the residential Chicago housing market.
The first thing to remember about the Chicago real estate market is that all of these figures are year-over-year, meaning they are compared to the same period of the previous year, which is when the recession hit hardest. The current housing market trend in Chicago show sales of existing homes were at record lows and sellers were holding out for prices comparable to the height of the housing bubble. In Chicago, specifically, many condo developments were still pouring into the market with new properties. Thousands of homes went into foreclosure or were listed as short sales at greatly reduced prices to avoid foreclosure. This all contributed to driving home prices down.
However, the double digit rise in Chicago area home sales in November marked the fifth consecutive month of rising home sales. This end of the year push was in part due to the original November deadline for the Federal Housing Tax Credit. As a result, rising sales have cleared out most of the inventory of distressed properties, which was the driving force behind falling home prices.
“Until those foreclosed properties work their way through the system we won’t have a price recovery that will match the sales recovery. Most people are seeing the foreclosure peak occurring in 2010,” states economist Geoff Hewings, director of the University of Illinois Regional Economics Applications Laboratory (REAL). This, combined with the annual rise in home sales in the spring, should pave the way for a rise in Chicago house prices in the first half of 2010.
Other influences on housing market trends are the continued low interest rates and the extension of the Federal Housing Tax Credit until April 30, 2010. The tax credit has expanded to include current homeowners and those with a higher income than in the original First-time Homebuyer Tax Credit. Many expect interest rates to rise as soon as signs of recovery are evident in the housing markets, but probably not until the second half of 2010.
The real Chicago real estate news is that, if these indicators are correct, both home prices and sales volume will rise in the early part of this year. However, most analysts agree and the national housing market trend indicates that improvements in the residential Chicago housing market will taper off over the summer and probably fall again in the third and fourth quarters of 2010.
Bottom line: Sellers can expect the best Chicago house prices and most buyer interest in their homes in the first half of 2010, before April 30. Though it is still a buyer’s market, if you plan to sell anytime in 2010, the spring is the best opportunity. For home buyers, based on Chicago housing market trends, expect to see a wealth of new properties enter the market earlier than usual this spring. This will increase the selection on the market as well as the competition.