Northwest Suburbs Housing Market for January 2010

What's going on in the Illinois Housing Market in January 2010?

First-time buyers - A survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors. In the Illinois 2009 Profile of Home Buyers and Sellers: 51% of recent home buyers were first-time buyers, compared to 47% nationwide.

Distressed homes - which accounted for 32 percent of sales in December, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area. For all of 2009, distressed homes accounted for 36 percent of total sales last year.

Although multi-family (townhouses, condos, quads) housing activity should stabilize and improve by the end of 2010, it will be slower than in 2009, with starts declining from an estimated 112,000 last year to an even lower 87,000. Difficulty in obtaining financing for condos and apartments remains a major stumbling block to new projects, followed closely by historically high vacancy rates that are expected to ease up by the second half of the year, though not by much. (NAHB, 1/8/10)

Lyn's Thoughts - This conflicts with the sales numbers that we've seen in the City of Chicago.

“A consumer survey conducted by Thomas Reuters and the University of Michigan indicates that it is sellers who are holding the housing market at low levels. Approximately 75 percent of homeowners who participated in the survey viewed current home buying conditions as favorable because of attractive home prices and low interest rates. However, nine out of ten of those homeowners viewed the conditions for the sale of their own home as unfavorable, not because of lack of buyers, but because of price declines." (REAL Trends, 2/9/10)

Lyn's Thoughts - I think that sellers are frustrated that they cannot move up or move down to a new home because their current home just will not sell.  OR ... to get it to sell they must compete with foreclosures that are currently at a pricing discount.

The FHA loan program is alive and well. As specialty mortgages have faded away, FHA is stepping in. In fact, the FHA market share is up to more than 30 percent, from just 6 percent in 2007.

Lyn's Thoughts - Why bang your head against the wall with conventional financing?  Unless you have more than 20% down, this is probably the best way to go.

Distressed sales – foreclosures and short sales – account for almost half of transactions nationwide. This varies widely from market to market.

Many markets have two levels of pricing – distressed sales and traditional sales. Foreclosures and short-sales tend to carry prices as much as of 20 percent below traditional homes in the same area.

Lyn's Thoughts - This is true and I'm glad to see somebody step up and put it in print for once. Spineless b@st@rds!

Illinois posted the nation’s fourth highest foreclosure filing total with 18,120 – a 2 percent increase over December and a 25 percent increase from January 2009.

Lyn's Thoughts - RealtyTrac is highly inaccurate but the only game in town that collects these numbers. I would take it with a grain of salt.  In the attached graphic we are 8th in the nation.  

Sources: National Assn of Realtors
Illinois Assn of Realtors
National Assn of Home Builders