Home sales spike in Chicago area; big jump in city prices
BY FRANCINE KNOWLES Business Reporteremail@example.com January 22, 2013 9:02AM
Updated: February 24, 2013 6:17AM
Chicago’s housing market stayed on the recovery path last month, with sales spiking and prices growing, especially strongly in the city, an industry report shows. While the figures point to several positive trends, experts warned that government budget uncertainties could derail the trend.
The median home price in the city spiked 19.4 percent, and home sales jumped 14.6 percent from a year earlier, according to a report from the Illinois Association of Realtors. In the Chicago area, the median price rose a more modest 4.5 percent. But sales spiked 19.2 percent, bringing the year-to-date total of homes sold to 90,365, the highest level in five years, the association said. The last time sales were higher was 2007 when 92,635 homes were sold.
A decline in inventory levels and the amount of time homes are staying on the market before closing are among factors driving price and sales increases, market experts said. Job growth especially boosted Chicago sales, but foreclosures will continue to hold back price growth, they said.
“We’re starting to get multiple offers,” said Zeke Morris, president of the Chicago Association of Realtors and operating principal and managing broker at Keller Williams Realty. “I think people are looking at some values that are out here and they’re saying now’s the time, and if they see it and they want it and they’ve been waiting for so long, with all that pent up demand, they’re willing to pay a little bit more.”
Single family home sales are primarily owner-occupants, but “a lot of the condo sales are still investors,” Morris said. “They’re still leading the charge there, especially if you look at the bottom half of the market, anything under $300,000.”
The report showed the median price in the city rose to $185,000, in December, up from $155,000 in the year-ago period. The price has risen year-over-year for nine straight months, but it’s well below the peak of $291,389 reached in 2007. In the Chicago metropolitan area, the median price rose to $151,500.
“December showed positive indicators across the board at the height of the holiday season, which is typically a quiet time for home sales,” Morris said.
Inventory levels in the Chicago area dropped 37 percent in December from a year earlier, and the average time on market of homes up for sale fell from 8.8 months to roughly 4 months, noted Geoffrey Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois.
In the city of Chicago, decisions by several companies to relocate operations from the suburbs to downtown Chicago are also helping to lift sales and prices, he added.
Hewings expects prices will continue to increase this year, “but much more slowly” because foreclosures will continue to depress prices, he said.
“We’ve seen some months where as much a third of the sales have been foreclosed properties” he said, adding he expects foreclosures to prop up sales this year as they did last year.
Foreclosure filings in the Chicago metropolitan area rose 30.2 percent last year as 125,598 homes received filings, according to RealtyTrac.
“Positive signs for the housing market continue,” Hewings said, but the “market is likely to experience some bumpiness in the first quarter of the year until there is resolution of the fiscal challenges in Washington and Springfield.”
Consumers are not likely to explore major purchases, especially of houses when tax rates, mortgage interest deductions and pension obligations remain unresolved, he said.
If mortgage deductions change dramatically during budget talks, that could damage the market’s recovery, he contended.