Blame it on Distressed Properties: September?s Housing Numbers
This morning the Illinois Association of Realtors reported that in September 2009 the number of residential sales were up 3.3 % but that the median sales price fell to $160,000 statewide, a 9.3% decrease compared to September 2008. Following this trend, units sold in the City of Chicago were up 5.8% – 1,918 sales this year compared to 1,813 homes sold in September 2008. Chicago?s median home price this September was $225,000, down 16.2 percent compared to $268,600 in September 2008. Outside of Chicago, in those areas that include the rest of Cook County as well as DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will county, the average sales price was only $199,00.
Why the Increase in the Number of Sales but the Decrease in Pricing?
For the traditional homebuyer, pricing is back to 2004 levels. Short sales and foreclosures have impacted property values for sellers but they have also given buyers the opportunity for finding a good value for a home. The first time home buyer tax credit has been an incentive for some and steady interest rates that have hovered around 5% for the past year have also helped. As savings rates have increased over this past year, home buyers have repositioned themselves to meet new lending guidelines. It is not unusual to now see buyers putting 20% down.
What the Next Months Will Bring
Market watchers believe the next few months will be a mixed bag for buyers and sellers. If unemployment does not abate, distressed properties will continue to impact market pricing for months and even years in the future. Bank inventories of REO properties continue to grow. On top of this, the median sale price may only rise if financing larger projects and homes become increasingly available. For example, Chicago?s $500,000 – $1,000,000 market is crippled by having a conforming loan number of $417,000 – much lower than those numbers found in other areas of the country. Qualified buyers are expected to enter the market at higher rats because of relocation and also because they have financially readied themselves to move forward with a home purchase. On the flip side, many homeowners are opting to stay in their current home for longer periods of time, often to see if the market rebounds. Just as buyers need to be qualified to buy, sellers need to be qualified and willing to sell.