As the clock ticks toward 2016, home resale prices in the Chicago area and across Illinois continue to dig out from the depths of the Great Recession, which began eight years ago.
Adjusted for inflation, existing home prices in Illinois have recovered to 91 percent of their November, 2008 level, and values in Chicago have rebounded 84 percent, according to economist Geoffrey J.D. Hewings at the University of Illinois.
At the current rate of price growth, “complete recovery will take between 12 months and 18 months,” Hewings predicted.
In Chicago, total of 1,615 existing single-family homes and condominiums were sold in November, down 1.4 percent from the same month last year when 1,638 homes were sold, reported the Illinois Association of Realtors (IAR).
However, the median price of homes and condos in Chicago was $235,000, up 2.2 percent over November of 2014 when the median price was $230,000, the IAR said. The median is a typical market price where half the homes sold for more and half sold for less.
“Median prices in the Chicago market posted a strong showing in November, boosted by a lower inventory of available properties,” said Dan Wagner, president of the Chicago Association of Realtors (CAR). “To see inventories drop more than 16 percent year-over-year in Chicago clearly signals that buyers want to start the new year in a new home.”
In the nine-county Chicago-area, sales of single-family homes and condos totaled 6,836 units in November, a decrease of 3.9 percent from the 7,115 units in November of 2014. However, the median price in the nine-county area in November rose 7.9 percent to $196,000 from $181,690 in November a year ago, reported the IAR survey.
Lawrence Yun, chief economist for the National Association of Realtors (NAR) said a drop off in existing home unit sales nationwide may be attributable to a new federal loan closing process called “Know Before You Owe.”
Yun said the new integrated loan disclosure rules—also known as TRID—has lengthened closing times in up to 47 percent of the home-sale deals from coast-to-coast. TRID was created by the Consumer Protection Bureau to help prevent mortgage abuse.
“Buyers are having to move fast to get the home they want in this market,” advised Mike Drews, president of the IAR. “Houses are selling at a brisk pace, even in the face of continued median-price increases.”
In Illinois, the time it took to sell a home in November averaged 67 days, down from 74 days a year ago, the IAR reported. Available housing inventory remained tight with 63,023 homes listed for sale, an 11.7 percent decline from November of 2014 when there were 71,385 homes on the market.
“Median prices continued to increase even though sales declined on both a monthly and an annual basis,” Hewings noted. Some of the decline in unit sales also can be attributed to the significant drop in the sales of foreclosed properties in Illinois, he said.
In 2016, house hunters also will have to deal with rising mortgage rates, experts warn.
Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed home loans averaged 3.96 percent on December 24th, down slightly from 3.97 percent a week earlier. A year ago at this time, the popular 30-year fixed-loan rate averaged 3.83 percent.
NAR economists expect the Federal Reserve’s recent move to increase interest rates will push 30-year fixed mortgage rate average up to 4.5 percent by the end of 2016.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.