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Conflicting Messages From the Chicago Real Estate Market

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By : Jameson Real Estate    99 or more times read
Recent statistics tell two different stories about the Chicago real estate market. Some trends spell recovery, while others point to a continued recession and real estate slump. In the past month, information from the National and Illinois Associations of Realtors have continued to portray these conflicting trends.

Signs Pointing to Recovery
Each month, Chicago realtors are treated to statistics that suggest an imminent recovery. While sometimes these trends only amount to 2010 outperforming dismal 2008 and 2009 sales, they are still positive. In May 2010, the Illinois Association of Realtors reported that:

  • Existing home sales were up from May of 2009.
  • Year-over-year sales showed growth for the 11th month in a row.
  • General home sales were up 7.2% from April of 2010.
  • Home prices within the City of Chicago were up 2.2 percent.

Each of these trends point to a slow recovery trend in real estate, especially the fact that year-over-year sales have improved for 11 months. While buyers, sellers and realtors can't expect a double digit jump upward in prices to echo and offset the fall of prices in 2008, increased prices along with a shrinking home inventory point toward a market that is approaching balance.

Signs Pointing to a Continued Slump
With national disasters like the Deepwater Horizon oil spill, some experts are predicting a "double dip" recession, where our recent recovery will be immediately followed by another, deeper economic slump. In early June, the federal government revised its estimate of economic growth in the first quarter of 2010 downward. While some recent statistics on the Chicago real estate market point to recovery, other statistics signal that a sluggish market is sticking around. There are also many factors that explain away the positive statistics listed above. A few trends to take notice of include:

  • Downtown office vacancies in Chicago are higher than they have been since 2005. Vacancy rates rose to 15.2 percent in the 2nd quarter of 2010.

  • Home sales, while up, were not nearly as high as experts predicted. The June deadline for the home buyers' tax incentive did not boost home sales to the levels that many realtors anticipated.

  • The tax credit did create a boost in closings in May, which will continue show increased sales in June and July. However, these positive statistics may create excess optimism, and some experts predict a resulting slump in the fall, when home sales are no longer bolstered by the tax credit.

  • While sales of existing homes increased, many of those properties were distressed or foreclosure properties. A larger percentage of existing home sales made up from distressed properties lowers the price of homes overall, perpetuating an unbalanced market.

At the moment, experts and realtors can certainly predict how the market will respond in the coming months, but as a buyer or seller, it is important to understand their predictions are just that-- predictions. An informed decision for a buyer or seller in this market takes into account many opinions.
From newly constructed Chicago homes for sale to classic vintage properties, Jameson Real Estate has the knowledge and experience to help you buy and sell Chicago real estate. Whether buying or selling a single family home, condo, townhouse, loft, investment or commercial property, you can rely on the knowledgeable agents at Jameson to help you navigate the local real estate market.

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