Chicago Real Estate

The Chicago real estate market has shown positive growth in recent reports. Home prices inched up 1.1% in June from the previous month, according to the Standard & Poor’s Case-Shiller home price index. It may be a small increase from May, but it is a sign that the housing market in Chicago is leveling off. The Illinois Association of Realtors (IAR) published new data in August, which showed a 1.7% climb in median home prices from June to July. In the Chicago area, median sales price rose to $213,500 from $210,000 the month before, and number of sales posted gains for the sixth month in a row.

According to statistics released by Midwest Real Estate Data in late August, existing home sales in the Chicago region went up in July from the previous year, demonstrating a slight improvement from 2008. The numbers are pulled from northern Illinois, parts of southern Wisconsin, and northwest Indiana, totaling 7,828 homes sold in the month of July. It is the first sign of a year-over-year sales increase in two years. The upturn was minimal (only 76 more homes sold in July ’09 than July ’08), but the significance is great in a financial landscape that is striving for long-term revitalization.

Many economists and real estate professionals believe this could be an indication that home prices in Chicago have hit bottom. However, even with good news from various industry monitors, experts hesitate to predict a recovery at this point in the game. Still, the minor uptick is promising and it has stirred up a lot of excitement in the local media.

The documented boost in buyer activity is partly attributed to the $8,000 first-time home buyer tax credit. The federal tax break is available to both first-time buyers and those who have not owned a principal residence in the three years prior to purchase. Eligible buyers have until November 30th to close on a home and qualify for the refundable tax credit, which is equal to 10% of the purchase price up to $8,000. The looming deadline is expected to motivate even more buyers to come down off the fence in the next couple months.

Also contributing to the jump in sales are investors buying up distressed properties at reduced prices. Foreclosures, shorts sales and REOs make up a sizeable portion of the current Chicago real estate market. By some accounts, more than 30% of sales in the local market are from distressed properties. They are typically listed at prices lower than they would be sold in a traditional sale and many buyers are attracted to the deals.

As a whole the Chicago real estate market has a diverse selection of homes, condos, lofts, townhouses and other residential properties for sale. The downtown Loop is dominated by condominiums, while the outer regions of the city offer a large inventory of single-family detached homes. Lofts have also become popular residential real estate purchases in recent decades, especially in neighborhoods that used to be industrial. Most sections of Chicago offer a mix of residential dwellings that can vary greatly in size, style, amenities and price. Online property search engines can help house hunters narrow the scope to find homes that suite their particular needs, tastes and budgets.

A couple of challenges that still face the Chicago real estate market are stricter lending qualifications and surplus inventory. Mortgages are harder to secure these days because lenders require higher credit scores and larger down payments. On top of that, there is an issue with appraisal values coming in lower than the agreed purchase price, in which case banks will not approve a loan for more than the property is worth. The oversupply of Chicago homes for sale is diminishing slowly — more so for single-family houses than condos — but the excess number of listings on the market means stabilization is still in the distance. Home prices in some areas of the city have remained more stable than others. However, as the data shows, Chicago’s housing market is changing every day.