Chicago housing market experiences drastic turnaround
Home sales up nearly 32% from last year
July home sales in Illinois surged 28.5% year-over-year, while median prices jumped 14.2%, providing further proof that a once distraught market is on its way to a healthy recovery.
July total home sales in Illinois reached a volume of 16,012 sales, up from 12,461 sales year-over-year, making this the highest level reached since August 2006, the Illinois Association of Realtors said.
Statewide, the median price held at $169,000 in July, a 14.2% increase from July 2012 when the median price hit $148,000.
"Slight increases in interest rates over the past few months have done little to slow interest in homeownership,” said IAR President Michael Oldenettel. “Buyers are clearly comfortable enough with the way the economy is progressing to make a big purchase, and sellers are getting off the sidelines as they see prices begin to erase losses sustained during the recession.”
July’s inventory of Illinois homes for sale hit 67,466 units, down 24.7% from last year’s total of 89,548 properties. Increased demand has homes flying off the market, with the average time spent on market at 73 days, a 23.2% drop from 95 days in July 2012.
But let’s take a look at Chicago, one of the hardest hit metros during the housing crisis.
The city of Chicago reported a 31.1% annual increase in home sales with 2,838 sales last month, up from 2,164 sales in July 2012. Chicago’s median sales price was $250,000, a significant 25% increase from July 2012, when the median price was $200,000.
Homes in The Windy City spent much less time on the market in July than one-year prior, down 30.4% from 69 days to 48 days year-over-year.
"While both prices and sales continue to point to a sustained housing market recovery," noted Geoffrey Hewings, director of the regional economics applications laboratory of the University of Illinois, "the inventory of homes for sale remains at low levels."
He added, "The number of foreclosed properties may have deterred many potential sellers from listing their homes. Recent analysis suggests that the level of foreclosed properties may return to pre-recession levels by the end of the year and thus providing some incentive for additional listings.”
While it will take some time, a resurgence is definitely underway, added Realtor Zeke Morris with the Chicago Association of Realtors.
“The market is starting to come together, especially in the condo arena that was hard-hit across most areas of the city. That condos are moving at a strong pace now and prices are also increasing means that both buyers and sellers are feeling confident,” said Morris. "As the availability of inventory continues to decrease, we hope to see buyers look into some of the areas that aren’t performing as well, as an alternative."
Last week, the Woodstock Institute reported that Chicago’s foreclosures are improving and filings dropped more than a third from the first half of 2012 to the first half of 2013.
New foreclosure filings in the area fell to their lowest level since the second half of 2007. In the Chicago region, filings fell by 36.1% from 34,978 filings in the first half of 2012 to 22,342 filings in the first half of 2013.
"While the decline in new foreclosure filings could indicate good news for the Chicago housing market, it’s too soon to know for sure,” said Spencer Cowan, vice president of research at Woodstock Institute.
“Improvements in the Chicago real estate market, such as increases in home prices, may have encouraged servicers to pursue short sales or other alternatives to foreclosure,” he added.
Chicago-based Realtor Matt Laricy has experienced the city’s housing turnaround first hand. According to Laricy, 2010 was one of the best years for homebuyers in Chicago. By 2011, he said, you could tell that the market was coming back, and by 2012, you could almost sense in the air that the market was going to morph into a seller’s market soon. In 2013, the turnaround has started to take hold.
“People who couldn’t really afford to buy in the first place, who were putting down 3.5%, have dropped out of buying,” said Laricy. “The people who were serious consumers are trying to buy quickly before the rates rise too much.”
“Now that they’re starting to rise up, people who were sitting on the fence are jumping in,” he added.