The Chicago real estate market is facing mixed signals during the first quarter of the 2010 fiscal year. According to a March 16, 2010 article in Business Week, “A new report says the number of Chicago homes in foreclosure was up 16 percent in 2009 compared to 2008. The National People’s Action’s 2009 Chicago Foreclosure Report says more than 23,000 homes in the area were in foreclosure last year.” The piece, originally composed by the Associated Press, continued to say that “Senator Dick Durbin says the report suggest foreclosures are no longer being driven primarily by the years of what he calls predatory lending. The Illinois Democrats says they’re now driven more by unemployment and homeowners who owe more than homes are worth. In a statement about the new report, Durbin’s office cited figures showing 11 million homeowners nationwide owe more than their homes are worth.”
One positive bit of news for Chicago homes for sale and Midwest real estate was reported by a March 23, 2010 article by the New York Times. This article reported that “Midwest home sales improved nearly 10 percent over last year as tax credits and low interest rates continued to motivate buyers. The National Association of Realtors released figures Tuesday showing 68,000 sales in the 11-state region in February, and the median sales price fell 2 percent to $128,000.” The piece, also originally released by the Associated Press, continued to say that “In February, Midwest sales improved more than the nation as a whole. Non-seasonally adjusted figures showed total February homes sales increased 8 percent over last year.”
This same general outlook for Chicago real estate for sale was reported by a March 31, 2010 article in the Chicagoist. This piece found that “The Associated Press is reporting that Chicago-area single-family home prices saw the biggest drop among 20 cities in January, according to The Standard & Poor’s/Case-Shiller home price index. Chicago-area prices dropped just over four percent compared to last year, and is a bigger dip than the 0.7 percent year-over-year drop for the 20 cities combined…Analysts fear that bigger home prices may be in store as the first-time home-buyer credit expires.”
Chicago real estate prices are on the rise, according to Eleanor Goldberg who wrote an article based on Northwestern reports on September 29, 2009. Goldberg claimed that “Chicago home prices rose in July for the third consecutive month, up 2.7 percent, but prices are still down 14.2 percent from a year prior.” Even the pricier Chicago homes for sale are improving in terms of price. The article states that “in terms of a million-dollar house, there has been roughly a $40,000 to $50,000 increase in median sale price in larger, newer homes.”
A recent Chicago Tribune article written by staff reporter Mary Ellen Podmolik brought attention to the issue of short selling. The author explained “the practice, which involves selling a property for less than the amount owed on the mortgage, has grown in popularity as an exit strategy for financially strapped homeowners because it doesn’t ding a credit report as deeply as a foreclosure. But because the transactions have to be approved by first and second lien holders, they are languishing. Some real estate agents try to steer clear of them entirely and even specify in their listings that a property is not a short sale.” According to Podmolik’s research, “During the second quarter, 14 percent of all home sales were short sales and they were made primarily to first-time buyers who may have more flexibility to deal with the long wait times.”
CNNMoney.com and Money Magazine’s 2009 Real Estate Forecast, valid through the end of March 2010, claims that real estate in Chicago will lose value 2.7 percent during the period and will fall on a median home price of $280,000. This is a decline of about 14.5 percent from the housing market’s peak and a 10 percent change from the same quarter last year. Analysts estimate the bottom is not even close – perhaps the second quarter of 2010 if they are lucky. At rock bottom, the analysts hope the damage won’t be too bad. They are predicting prices similar to those of the first quarter in 2004 when the local housing market was not in great shape either.