It?s That Time of the Month Again: October?s Housing Numbers
The Illinois Association of Realtors® released its sales numbers for October 2009. Winners include the increasing quantity of units sold over the same period last year, but sellers continue to be the losers as the median price of a home has significantly declined in the year over year analysis.
Home Buyer Tax Credit Has Helped With Sales
As seen in previous months, home buyers have pushed the market by taking advantage of historically low interest rates, 2004 pricing and the first time home buyer tax credit. Yet home prices continue to be soft because of distressed properties and competition with other properties in this higher inventory market. The following figures demonstrate the effects of these two factors. According to IAR, 2,012 single family homes and condominiums in Chicago sold at a median sales price of $215,000 last month. In comparison, 1,566 units sold at a median price of $262,500 in October 2008. While the number of homes sold grew by 28.5% over this period, the median price nevertheless decreased by 18%.
Second Time Home Buyer Tax Credit Expected to Move Inventory
Current home owners, who wish to purchase a new residences, and the market as a whole will benefit from the extension and expansion of the tax credit to second-time home buyers. As the number of units sold each month continues to increase, inventory is starting to be absorbed and pricing appears to be stabilizing. The variables for this market equation, however, rests upon unemployment figures and bank-owned real estate. Other variables that have affected pricing include new Federal Housing Authority guidelines and regulations. A FHA spot check and other FHA modifications should work in the favor of first time home buyers. In the Chicago real estate market, The $417,000 limit on conforming loans will continue to negatively affect property sales in the $500,000 to $1,000,000 range. Limited and more costly financing options will hinder buyers in this price range. In many parts of the country the conforming loan limit is $729,000.