The Chicago metro area had the best home sales volume in 59 months according to reports by the Illinois Association of Realtors (IAR). In the last year sales were up 28.5%. There were 9,240 new and existing homes sold in the nine-county Chicago metropolitan area, compared to the 7,188 homes sold the year prior. Notable was the condo market whose sales increased 35.9%.
In the recent past there had been concerns that there would be a backlog of shadow inventory in states like Illinois where the foreclosure process takes longer, due to protections enacted by states to protect home owners from lenders who may unfairly try to repossess a property. However after the latest data, Dr. Geoffrey J.D. Hewings, the director of the Regional Economics Applications Laboratory of the University of Illinois, was quoted as saying, “The latest data, suggests that the Chicago and Illinois housing markets will be able to clear out their distressed housing inventory quicker than originally anticipated”. After this latest report, it is expected that it will take less than three years to clear the active home inventory in the market, which as of April, was expected to take 3.28 years.
Meanwhile, the S&P/Case-Shiller home price index has shown four consecutive monthly gains for the Chicago area as of June, a month in which prices rose 4.6 percent from May but remained below their year-ago level. A study by DePaul University narrowed the macro view of the market to specific building types within Cook County and found that keen interest in renting has enabled residential buildings with at least five rental units to experience the most impressive steps toward recovery coupled by the fact that this sector of the market experience a general lack of new construction, which has been driving up the prices of existing buildings changing hands.
On the contrary two-to-four unit buildings, many of which are owner-occupied and are in lower-income neighborhoods were hit heavily by foreclosures and as a result, many sold were foreclosed properties picked up at a discount by investors. The single family segment only increased modestly and condos, whose values peaked after other segments of the market, have been the slowest to show any signs of recovery in prices. However, it must be pointed out that the number of sales in this sector has increased by 35.9% in the last year as noted the Illinois association of realtors report, this may be as a result of low prices attracting investors.
What this means moving forward is not clear, but there is hope that the positive news in the housing market will lead to positive news in the larger economy.
Michael Hobbs, SRA, LEED GA, PahRoo Appraisal & Consultancy