Monday, February 25, 2008

DEATH OF HOUSING MARKET MAY BE EXAGGERATED—RESALE VALUES UP IN 2007

The death of Chicago’s housing market as reported recently by some news media pundits may be a bit exaggerated, veteran Realtors say.

“Although the news media would have you believe he sky is falling, an examination of two segments of the upper end of the housing market—properties listed for more than $1 million—dispel that notion,” said Gold Coast sales agent Louise Study, a 14-year veteran at Rubloff Residential Properties.

Study, who compiles an annual MLS resale home study of about a dozen Chicago neighborhoods, noted the following price stability in the luxury home and condominium marketplace:

• 388 upper-bracket single-family homes sold in 2007 for an average price of $1,716,713 with an average market time of 179 days. That compares with 434 luxury homes sold in 2006 for an average price of $1,673,223 with an average market time of 149 days.

• 393 luxury condominiums sold in 2007 for an average price of $1,636,726 with an average market time of 208 days. That compares with 393 upper-bracket condos sold in 2006 for an average price of $1,757,204 with an average market time of 210 days.

“These statistics covering luxury resales in such neighborhoods as the Gold Coast, Lincoln Park, Lakeview, Bucktown, Roscoe Village, Wicker Park, Hyde Park, Ravenswood, Andersonville, the South Loop and West Loop demonstrate that Chicago’s high-end market did not suffer a bubble that occurred in other markets across the country,” Study noted.

And, an analysis of 2007 MLS of Northern Illinois sales activity by RE/MAX Northern Illinois, showed existing condominiums—especially those in Chicago—were the top performers in the housing market last year.

In Chicago, the number sales for attached homes, mainly condominiums, rose in 27 neighborhoods, with the most striking gains coming in such emerging hot areas as North Center (11 percent), Lincoln Square (18 percent) and Avondale (24 percent).

“The city condo market showed particular resilience in 2007 across almost all parts of the city and all price categories,” said Jim Merrion, regional director of RE/MAX Northern Illinois.

“Overall, the current housing market offers and outstanding opportunity for buyers to take advantage of affordable interest rates for mortgages and an extensive inventory of homes for sale in almost every price category,” Merrion said.

Four city neighborhoods—Lincoln Square, Forest Glen, Bridgeport and Mount Greenwood—saw sales increase in both the detached and attached categories. In Lincoln Square total residential sales rose 19 percent to 678 units. In McKinley Park, total residential sales rose 55 percent, with 73 homes changing hands.

Bridgeport saw total sales rise 22 percent to 159 units. More good news recently was reported by the Illinois Association of Realtors. In 2007, the median resale home price in the Chicago metropolitan area was $254,000, up 2.4 percent from $248,000 in 2006. The 2007 Chicago metropolitan condominium median price was $228,000, up 4.2 percent from $218,893 in 2006.

So what about the forecast of a collapse in home prices? “Even if housing prices declined 20 percent from peak levels, they would return to the levels first reached in the summer of 2004 and would still be almost 55 percent above their level at the start of the decade,” noted Jim Paulsen, chief investment strategist for Wells Fargo Capital Management.