Signs of a Stabilizing Real-Estate Market

In the past month, signs of vitality in the Chicago real-estate market have proliferated…

In the past month, signs of vitality in the Chicago real-estate market have proliferated:

• At the end of July, Chicago posted the best price increase—4.4. percent—among the 20 top U.S. cities covered by the highly regarded Case-Shiller index. By one writer’s measure, it was the largest increase the city has notched since 1988. We’ll see if that holds next Tuesday (August 28), when the latest round of Case-Shiller data is due.

• In early August, the Regional Economics Applications Laboratory at the University of Illinois said in its 3rd Quarter 2012 forecast that prices in both Chicago and Illinois should remain about the same as they were in the same period a year ago. That’s good news after the successive declines of the past few years. The forecast also said that the number of homes sold should be significantly higher than in the third quarter of 2011.

• Last week, Appraisal Research Counselors delivered its 2nd Quarter 2012 report on downtown residential neighborhoods. Among the findings: For a representative sample of 65 downtown condo buildings, the average sale price per square foot was essentially the same in the first half of 2012 as it was in 2011. “It now appears that pricing may be stabilizing,” the report said.

• The same report noted that the inventory of unsold downtown condos, which peaked at 8,222 in the first quarter of 2008, is now down to 1,229, lower than it’s ever been in the 15 years Appraisal Research has been counting.

• Also last week, Re/Max reported that across the seven-county metro area, the average time a home took to sell was shorter in July than it had been in nearly five years.

• Yesterday, the suburban Main Street Organization of Realtors reported that sales of single-family homes in July were up 27 percent from July 2011. Towns where the number of sales was more than twice what it had been a year before included Brookfield, Homewood, Inverness, Mount Prospect, and Wauconda.

This is all looking good enough to convince skeptics and foot-draggers that the Chicago area may finally be turning the corner toward a “a normal [real-estate] market, where things aren’t going gangbusters but they’re slow and steady,” says Linda Levin, senior vice president at Jameson | Sotheby’s International.

Levin and Appraisal Research’s Gail Lissner both say that the pace of sales impresses them most. Both attribute it to realistic pricing by sellers—whether they are individual homeowners or commercial sellers, such as developers or banks that have taken over projects.

“It’s a great time to be a buyer,” Lissner says. That’s not only because prices are low, but also because they finally appear unlikely to dip much lower. Though buyers may no longer get those rock-bottom prices—that opportunity may have passed, though we can’t be certain yet—they will get a price that, while slightly above the bottom, is at least not headed downward (fingers crossed!).

Sellers, Lissner says, have gotten the message that “it’s all about price. If they want to sell out, they adjust the pricing.” She mentions 200 North Dearborn, where a year ago prices were cut by as much as 50 percent, and a flurry of sales resulted. “They’ve been the volume leader,” Lissner says.

Levin says that the perception of stability has brought out what she calls “better buyers. They’re not the bottom-feeders who are looking for a [steal]. They’re educated, and they see that it’s time to buy confidently.”

On the other hand, Levin warns against over-confidence among sellers. “They see the market is picking up, and they tend to react prematurely,” she says. “They can stop the market with high asking prices. [Selling] prices haven’t increased.” (The price increase seen in Case-Shiller reflects the uptick from recent months of super-lows; prices are still down from a year ago.)

Almost a third of sellers in 20 cities, including Chicago, who were recently surveyed by Redfin said that they plan to price their homes higher than the amounts garnered by comparable nearby sales. Kudos to the two-thirds who didn’t say that.

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2 years ago
Posted by Dennis Rodkin

And here's another good sign. Today's release of July sales data by the Illinois Association of Realtors shows sales volume is up for Illinois, for the metro area, and for Chicago alone. But prices are still down everywhere but DuPage County.

http://www.illinoisrealtor.org/node/3025

July home sales in Illinois up 25.5 percent from a year ago;
Statewide median price at $148,000

SPRINGFIELD, Ill. — Home sales in the state surged 25.5 percent over previous year levels, with data released today by the Illinois Association of REALTORS® showing signs that the state’s housing market is strengthening.

Statewide home sales (including single-family homes and condominiums) in July 2012 totaled 12,355 homes sold, up 25.5 percent from 9,846 home sales in July 2011. This was the best July performance since 2007 when 14,735 homes were sold in Illinois.

The statewide median price in July was $148,000, down 1.7 percent from July 2011 when the median price was $150,575. Median prices in July 2012 were $25,650 higher than they were in January 2012. The median is a typical market price where half the homes sold for more and half sold for less.

“The sales momentum we saw building in the first six months of 2012 is continuing into the latter half of the year,” said Loretta Alonzo, CRB, GRI, president of the Illinois Association of REALTORS® and Broker-Owner of Century 21 Alonzo & Associates in La Grange Park, Ill. “Low interest rates and home prices will give the market a foundation for continued strengthening.”

The monthly average commitment rate for a 30-year, fixed-rate mortgage for the North Central region was 3.54 percent in July 2012, down from 3.67 percent during the previous month, according to the Federal Home Loan Mortgage Corp. Last year in July it averaged 4.59 percent.

In the nine-county Chicago Primary Metropolitan Statistical Area (PMSA), home sales (single family and condominiums) in July 2012 totaled 8,551 homes sold, up 29.1 percent from July 2011 sales of 6,624 homes. The median price in July 2012 was $172,000 in the Chicago PMSA, down -5.9 percent compared to July 2011 when it was $182,700.

"Despite the unclear signals for the future pace of economic recovery, the Illinois and Chicago-area housing sales and price forecasts suggest that the housing market will maintain the positive momentum into the fall,” said Dr. Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois.

More than half of Illinois counties reporting (62 of 101) showed year-over-year home sales increases in July 2012. Fifty (50) counties showed year-over-year median price increases including DuPage, up 1.1 percent to $220,000; Grundy, up 15.8 percent to $139,000; Kankakee, up 4.2 percent to $123,449; LaSalle, up 13.6 percent to $100,250; McLean, up 3.8 percent to $165,000; Rock Island, up 5.6 percent to $99,750; and Winnebago, up 3.9 percent to $93,500.

In the city of Chicago, July 2012 home sales (single family and condominiums) totaled 2,088, up 26.2 percent from 1,655 homes sold in July 2011. The city of Chicago median home sale price for July 2012 was $205,000, down 2.4 percent compared to July 2011 when it was $210,000.

The city of Chicago saw a continued incline in the number of all units sold through July 2012 over the same period in 2011, including 23.2 percent more condos sold in Chicago.

“Condos remain a cornerstone of the Chicago marketplace and an affordable option for first-time homebuyers and investors looking for both value and the experience of city living,” said REALTOR® Zeke Morris, president of the Chicago Association of REALTORS® and Operating Principal and Managing Broker, Keller Williams Realty, CCG. “Condo sales remain a strong indicator of a market recovery. Competitive pricing and low interest rates create investment opportunities some may have not otherwise been able to achieve.”

Sales and price information is generated by Multiple Listing Service closed sales reported by 31 participating Illinois REALTOR® local boards and associations including Midwest Real Estate Data LLC data as of August 7, 2012 for the period July 1 through July 31, 2012. The Chicago PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

The Illinois Association of REALTORS® is a voluntary trade association whose 41,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, the Illinois Association of REALTORS® works to protect the rights of private property owners in the state by recommending and promoting legislation that safeguards and advances the interest of real property ownership.

Find Illinois housing stats, data and the University of Illinois REAL forecast at www.illinoisrealtor.org/marketstats.

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