Monday, August 24, 2009

THE HOME AND CONDO MARKET IS SLOWLY RECOVERING IN THE CHICAGO AREA

It may take months for home values to swim out of the sea of red ink, but the housing recovery in the Chicago area apparently is underway, experts say.

Home-loan interest rates in the low 5-percent range and Uncle Sam’s $8,000 tax-credit incentive for first-time buyers are credited with rekindling a flame under the once ice cold resale-home market, reports the Illinois Association of Realtors (IAR).

Median existing home prices in the city of Chicago rose a solid 7 percent in the second quarter of 2009 to $230,000 compared to $215,000 in the first quarter of 2009, reported the IAR. However, resale values still have a long way to go. In the second quarter of 2008, the media home resale value was $310,000.

Single-family home and condominium sales skyrocketed 65.2 percent to 4,947 homes sold in the second quarter of 2009 compared with 2,995 home sales in the first quarter. However, sales still are lagging 21.3 percent behind the 6,287 homes and condos sold in the second quarter of 2008.

Total home and condominium sales in the Chicago area increased 67.7 percent in the second quarter to 17,622 homes sold compared with 10,507 home sales in the first quarter of 2009, the IAR reported. The survey covered Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties.

The median home sale price in the Chicago area increased 7.2 percent to $201,050 in the second quarter from $187,500 in the first quarter of 2009. The median price was $250,000 in the second quarter of 2008.

“We are moving through [existing home] inventories and that’s a good sign for the Illinois housing market,” said Pat Callan, president of the IAR.

“Year-over-year sales are still lower, but one promising trend is the rate of decline has slowed in recent months and is now at a pace last seen in the third quarter of 2007.”

Callan noted than more first-time buyers are taking advantage of the $8,000 federal-tax credit while distressed properties are prolonging the downward pressure on prices.

There also are more positive numbers in the new housing market. Builder price cuts and the first-time buyer tax credit help boost new home sales in the Chicago area to an annual rate of 4,164 units, reported Tracey Cross & Associates, Schaumburg-based housing analysts. It was the second straight quarter that new-home sales rose.

The housing market also should be boosted in the near future from financing incentives, the IAR said.

“In July the Illinois Housing Development Authority announced its new Home Start program that offers qualified first-time home purchasers for a zero-interest, short-term advance loan on their anticipated federal first-time home buyer tax credit,” Callan noted.

Also, the Federal Housing Administration-insured loan modification option now offered by Uncle Sam through the Making Home Affordable program. “This is another step forward to help struggling families stay in their homes,” Callan said.

“Realtors are calling for additional housing stimulus including an extension and expansion of the home buyer tax credit program to continue moving housing in the direction of recovery,” Callan said.

“The current program ends on December 1 and qualifying first-time home buyers realistically should be under contract before October to close in time and get the added benefit from the Illinois Home Start advance loan program, which also ends December 1.”