Eek! Did you see the headline of the Chicago Tribune’s Sunday paper, “Trapped in Troubled Real Estate Market” (1/13/07)? The accompanying picture of a glum-faced homeowner staring blankly out the window poignantly illustrated the Trib’s message of doom. It would seem that the market is in dire, dire straits.
The headline, the article, and the picture were emotion-laden expressions of what we would assume to be facts about our local real estate market. The actual data, however, –that is, the actual statistics for Illinois and more specifically the Northwest Suburbs, does not correspond with the forlorn images and headlines in the Chicago Tribune or the national news for that matter.
Here is a glimpse of the facts. According to the Illinois Association of Realtor’s 2007 Real Estate Year in Review, the median sales price in Illinois rose from $184,900 in 2004 to $203,000 in 2007. Now the median sale price did drop in 2007 to $203,000 from $203,900 in 2006, but that is hardly a market melt-down. What we are seeing is a correction from overheating. In Chicago the news is even more encouraging: median sale prices went from $223,000 in 2004 to $254,500 in 2007. From 2006-2007, the median sales price went up $6,500. How does this correspond to the collapse of the condo market in Miami? That’s just it; it doesn’t. In fact, condo prices in Chicagoland hit an all-time high in August of 2007 (ibid.) But, aren’t home prices dropping 15-20% across the nation? Well, actually, in Illinois median home sale prices also hit an all-time high in August of 2007 (ibid.). Prices are currently softening a little, but that is typical of the winter selling season.
When I look at these statistics, I see a strong, stable market that is in a period of transition. We are used to stronger appreciation, and we may not see that for a few years, but I don’t think we’ll see depreciation. If I were downsizing, I would wait for market appreciation to return to a more robust state. But, a move-up buyer will do very well in this market. The lack of recent price appreciation they see in the sale of their home co-exists with a nice discount on the buy-side in a higher price point yielding them a greater dividend. Moreover, and this is the point of this article, if a move-up buyer or first-time home buyer stays in the Northwest Suburbs, they are investing in a solid, stable market. Despite national headlines, the sky is not falling in Palatine, Barrington, Inverness, Arlington Heights, Rolling Meadows, Lake Zurich, et cetera.
As NAR economist Lawrence Yun has pointed out in regard to the Midwest, “There is absolutely no bubble in that region . . .It is perhaps underpriced.” In other words, this is a buyer’s market and a time of great opportunity for move-up buyers and first-time buyers in particular.
On a more personal note, my husband Jeff and I feel great about our home-purchase of this past fall. We got a great deal! Our home was originally listed about $70,000 higher than what we paid for it. The home needs some work, but after our sweat equity builds up and the market eases back into normalcy, we will sell and make money. Homes in our neighborhood continue to sell at a slow pace, but they do eventually sell, and the prices are remaining steady. Naturally, we look forward to greater appreciation, but we feel secure in our investment in our community.
