Real-Estate Data Offer Some Comfort, But Mashed Potatoes Are Better
Real-estate data has been getting dished up in the past few weeks as heartily as mashed potatoes get passed around the Thanksgiving table. And this year, for the first time in a while, the information provides some solace—though not nearly as much as the comfort food will.
Some of the most reassuring news came from the Illinois Association of Realtors, which reported on Monday that home prices and the number of sales were both up yet again for Chicago, the nine-county Chicago area, and Illinois.
In Chicago, October’s median home-sale price was 8 percent higher than in October 2011; for the metropolitan area, it was up 2.1 percent, and statewide, it was up 3 percent. The larger increase in Chicago in part reflects the fact that sale prices on foreclosures have been rising as distressed properties become more attractive to buyers (both investors and would-be homeowners).
For the nine-county area, the October median price was $153,000, which is up 13 percent since February 2012. That’s a lot of ground regained in eight months. And for all three areas, the number of sales is way up: Chicago, up by 53 percent; metro area, 44 percent; Illinois, 37.3 percent.
But even with those improvements, the general consensus that rises from recent reports is that Chicago’s housing recovery is lagging far behind what’s happening in many other cities. Looking at price growth from September 2011 to September 2012, the FNC Residential Price Index had Chicago at the very bottom of the list of 30 major metropolitan areas. On that list, home values in 23 cities went up—several by 5 percent or more—and seven went done. Chicago lost the most value of all, 3.1 percent. (The difference between the Illinois Association of Realtors numbers and the FNC numbers can be explained by the fact that, in making its calculations, FNC uses a hedonic index, which is based in part on the estimated value of homes not on the market.)
Prices have been going up here for several months running, just not as fast as elsewhere. From January through September, the FNC Index says, Chicago prices did go up by 0.6 percent. That’s the 29th smallest increase among the cities—and a trifle compared to the national average of 5.2 percent—but it is something.
The starkest indication of the gap between Chicago’s performance and that of the nation at large is RealtyTrac’s foreclosure activity report for October, out last Thursday. Nationally, foreclosure filings were down 19 percent from October 2011; for the Chicago area, it reported an increase of 18.6 percent. That’s a gap of 37 percentage points.
Even more foreclosures may be on the way. On Thursday, the Mortgage Bankers Association reported that 9.98 percent of Illinois residential mortgages were 90 days past due or foreclosed. Illinois was the fourth-worst state for mortgage delinquency. The national figure was 7.03 percent. (The MBA doesn’t make year-to-year comparisons readily available.)
But I’m not here to ruin everyone’s holiday. There are a few reasons—on top of the Illinois Association of Realtors’ data—to believe the recovery in the Chicago market could speed up on a region-wide basis. (Individual neighborhoods around the area are doing better than the broad-brush regional figures that these reports offer.) A big one is that unemployment has finally started to decline in Illinois—in September, it hit 8 percent its lowest point in four years—and well below the 10.1 percent rate of a year before.
And fewer people are underwater. Zillow reported Thursday that the proportion of Chicago-area homeowners who owe more on the mortgage than their home is worth dropped from 39.2 percent in the second quarter of the year to 36.6 percent in the third. That means that about 45,000 Chicago-area homeowners may be feeling more confident about being able to hold onto their homes.
Posted in Housing Bulletin