Chicago Real Estate
Home sales in Chicago made a dramatic jump this spring with a 32.1% increase in May from the same month a year before, according to reports from the Illinois Association of Realtors. Total residential real estate sales in the city reached 2,057 for May (which includes both single-family homes and condo units). That is the 9th straight month of year-over-year growth in Chicago. The Chicago metropolitan area saw similar improvements with a 33.6% leap in home sales that equaled 7,580 units sold during the month of May. There were also significant year-over-year gains in the rest of the state, where transactions for residential property sales went up 27.1%.
The same report revealed a 2.2% rise in median prices within the city of Chicago to $230,000 for May. Median prices dipped slightly for the Chicagoland region to $190,500, which is a 4.8% decrease from a year ago. Statewide, values remained pretty much the same with a median price of $157,000 for the 11,600+ homes sold this past May in Illinois.
The federal home buyer tax credit is considered a major contributor to the number of sales seen in the past year. A sizeable portion of residential real estate transactions are likely attributed to the government incentive, which promises up to $8,000 to qualified buyers who signed a contract of purchase on or before April 30th and close by September 30th. The tax credit program motivated a lot of people to move forward with their plans of owning and spurred a mini buying boom across the nation. As the last of the tax credit claims trickle in over the next two months, sales are expected to subside. Some lenders and builders have introduced their own post-tax credit incentives to keep the momentum going—so be on the lookout for special deals when you’re looking to buy.
Speaking of buying, this is a great time to lock in the lowest mortgage rates on record. July saw two straight weeks of record-setting lows for 30-year fixed-rate mortgages at 4.58% and 4.57%, according to averages from Freddie Mac. Rates have hovered around 5% for quite some time, offering affordable home loans to those with great credit. Unfortunately, tightening mortgage standards have made qualifying for a loan much tougher. And homeowners who want to refinance to reduce monthly payments are having trouble coming up with the capital for closing costs.
Buyers in Chicago benefit from a wide variety of choices when shopping for a condo or single-family abode right now. The housing supply is well above balanced levels and there is a huge selection of properties with marked-down prices, as well as short sales and foreclosures. A recent article in the Daily Herald said 39% of home sales in Cook County were foreclosed units during the first four months of 2010. The suburban publication cited data from RealtyTrac’s U.S. Foreclosure Sales Report, which analyzes first quarter real estate stats. The report also found that Cook County residences were discounted 53% on average.
In view of the saturated inventory, many Chicago developers have curtailed their plans to build more condominiums in downtown. Only a few projects are scheduled for delivery this year and just one is on the books for 2011. Some large-scale developments were put on hold until the stock of unsold condos recedes, while others were canceled altogether. Industry experts predict absorption of the surplus units will begin in the next 2 or 3 years, making this a crucial time for condo buyers to start house hunting while selection is extensive.
One new construction Chicago condo that received high marks is the Aqua, an innovative high-rise in the New Eastside neighborhood. Its wave-like façade and superior functionality earned it Emporis’ coveted “Skyscraper of the Year” award in 2009. The honor was announced earlier this year and has put another notch in the Windy City’s belt for architectural ingenuity. The tower was designed by Jeanne Gang of Studio Gang Architects and is the world’s third tallest building by a female architect. It has several green features, including the deep overhanging balconies which naturally shade windows from excess sunlight to reduce interior heat gain during warmer weather months (cutting down on residents’ AC usage and energy costs).
The Aqua was originally planned as a condominium/hotel. However, a portion of the units have been reallocated for rental apartments as a result of a slowed economy. The economic landscape remains a huge factor in the health of Chicago’s housing market. With heightened unemployment levels, Chicagoans (and people around the country) are hesitant to invest in big ticket items such as a home. Fear of loosing a job and not being able to make the next mortgage payment has deterred many from entering the real estate marketplace and will continue to have a strong bearing on both local and national home sales.