With the rental apartment market booming, homeownership in the Chicago area in 2014 skidded to its lowest level since 1995, according to a gloomy report from Uncle Sam.
The homeownership rate fell a hefty 6 percentage points last year to 64.1 percent from 68.2 percent in 2013, the U.S. Census Bureau reported.
What’s making the American Dream of homeownership evaporate? Millennials—those young, busy people born between 1981 and 1998— mostly are renting apartments, moving in with friends, or returning to the family nest.
Plus, some former homeowners didn’t make it through the Great Recession. They lost their homes to foreclosure or short sales and now are collecting rent receipts.
Meanwhile, the number of housing units on the market is shrinking because fewer people are listing homes for sale, Realtors say.
The Illinois Association of Realtors reported that only 5,611 single-family homes and condos were sold in the nine-county Chicago metropolitan area in February of 2015. That’s a decrease of 1.3 percent from the 5,683 units sold in February of 2014.
The numbers were better in the city of Chicago, where 1,448 homes and condos were in February 2015, up 3.9 percent from the same month last year.
“Chicago’s spring-buying season is starting strong,” noted Hugh Rider, president of the Chicago Association of Realtors (CAR). “In a sign of buyer confidence, year-over-year city sales increased for the first time since last summer despite the low inventory.”
“Spring has come earlier than the weather to the housing market with solid gains in prices even with slight declines in monthly and year-over-year sales,” said Geoffrey J.D. Hewings, an economist at the University of Illinois.
“Sellers should definitely be motivated by this market,” said Jim Kinney, president of the IAR and vice president for luxury sales at Baird & Warner in Chicago. “The lower inventories and relatively short time it takes to sell a home are indicators that the housing market is quite robust entering into the busy spring season.”
Lower housing inventory remains a factor in the market with 59,042 homes available for sale, a 4.8 percent decline compared to February of 2014. The time it took to sell a home in February of 2015 was slightly higher at 91 days compared to 88 a year ago.
With fewer resale homes and condos on the market, prices are on the rise, the IAR reported. The median price of a home in Chicago was $212,000, up 21.1 percent compared with February of 2014. The median price of a home in the Chicago metropolitan area $175,000, up 12.5 percent from $155,600 in February of 2014.
Despite higher prices, low mortgage rates continue to be a plus for buyers.
The monthly average commitment rate for benchmark 30-year, fixed-rate mortgages for the North Central Region was 3.68 percent in February of 2015, up slightly from 3.66 percent in January, according to the Federal Home Loan Mortgage Corp. A year ago in February of 2014, benchmark 30-year fixed loans averaged 4.32 percent.
Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit www.escapingcondojail.com.