According to Crain’s Chicago Business an index of Chicago-area single family home prices will decline 8.1% in 2008 and another 2.2% in 2009.  Prices for homes in Plainfield and Naperville area, in general, have held up well against the current rates of depreciation, but the price declines are a necessary evil for bringing some long term stabilization to the real estate market. 

Plainfield home values have returned to their 2005 values which was pretty much the peak of the area’s appreciation during the real estate gold rush that swept across the nation.  I personally think that one of the reasons that appreciation was so high and depreciation has been relatively low in areas like Plainfield and Naperville has to do with the new development that took place during the years of 1998-2004. 

The lure of lower home prices on new construction became a concession to the distance that buyers were willing to travel for a newly constructed home in under developed suburban areas.  Buyers were able to buy low for a longer period of time until the development of the area caught up with the amenities of older and more established neighborhoods north and east of Plainfield and Naperville. 

After the area became developed, the prices in the area caught up with the national rate of appreciation, in addition to the quickly captured equity of “moving so far away” from where residents were originally from.  I think that those two factors softened the blow for the immediate rate of depreciation, BUT… that may not be the end of the story.

Plainfield home owners may have a tougher storm to weather in the long run.

Why? Because there is a large demographic of first time home-buyers in Plainfield. This demographic continued to rise every time a new developer built a subdivision on vacant land.  First time home buyers who bought a home from 2003-2005 were easy prey for unscrupulous mortgage lending schemes.  It was also an opportunity for new homeowners to be tempted by the market to strip their newly acquired homes of any and all available equity. 

First time buyers that find themselves in the wrong hands can often be misguided and misled to make bad decisions.  The best piece of advice I could ever give someone looking to buy a home it this:

Don’t let someone else tell you how much house you can afford. 

Now, I’m not saying that you shouldn’t seek the advice of a mortgage professional when it comes to buying a home, because that’s the first thing I’m going to tell you to do, BUT… I hope you already have an idea of what kind of a payment you can comfortably make before you start shopping for a loan.  Commit to that payment before you start shopping for a house because it’s really easy to inch up past that mark as you take in the excitement of buying a house.

Another reason things may get worse for Plainfield and Naperville sellers is that tighter lending restrictions have made it more difficult to reduce the inventory of homes available for sale from owners who want, or need, to sell their homes, and we all know from high school economics class that when there is a surplus of anything it drives prices down. 

Foreclosures in the Will County area are still on the rise and as long as there are bank owned properties, neighborhoods with a high volume or REO homes for sale will continue bring down the area values.

Home prices are still relatively high in comparison to area income levels and in order for home prices to stabilize, prices need to decline. 

Naperville and Plainfield sellers who are serious about selling their homes in this market will need to be serious about their homes value based on market time, active comparisons, and closed comps within the last 3-6 months.  Sellers who are not willing to price their homes according to the current market conditions will find themselves holding on to a property that is never going to sell. 

To find out what your house is worth right now, or to learn about the market conditions in your Plainfield or Naperville neighborhood, call me at 630-673-6233 contact me at the tab at the top of this screen for your custom market analysis or market report.