The volume of Chicago area properties for sale declined 50% between December 2010 and the final month of 2012, according to Midwest Real Estate Data (MRED).
The large drop suggests the metro's market is highly active and inventory levels are falling as Realtors face more competing offers from multiple buyers.
"We anticipate the inventory will grow slowly in the coming year," said Russ Bergeron, MRED's CEO. "In some locations, and because current pricing has been established during a high-demand time frame with a lower supply of homes, we can anticipate some price appreciation in 2013. This has been experienced in other parts of the country, but not here."
While some areas of Chicago are still seeing high numbers of distressed sales, that's not the case in every location.
"In these hard-hit areas the distressed market will keep the prices down for another year or more until such time that they can be processed through the system. Overall, the recovery will show a steady improvement – but there will be some neighborhoods that significantly outshine others," Bergeron added.
Although distressed sales remained steady through 2012, traditional sales grew, indicating a healthier market ahead for sellers.
"Due to the Internet, real estate has become one of this country's most popular spectator sports," said Bergeron. "However one feels things might be going, it's definitely worth watching. We're seeing year-around real estate markets and very busy agents and brokerages. While we probably won't return to the craziness of the last decade, the industry appears to be back on solid footing with the 'arrow' pointing up."