Chicago-Area Home Sales Show Slight Improvement
The metro Chicago real estate market closed out 2011 with slightly improved existing home sales numbers, according to the latest report from the Illinois Association of Realtors (IAR). The industry group released figures on Friday that compared last month’s sales with that of a year earlier, revealing a 1.3% gain in December 2011 over December 2010 for the Chicagoland area.
Sales volume increases in various Northern Illinois counties showed plenty of double-digit improvements in December. For example, Cook County went up 12.3%, DuPage County rose 15% and Will Country experienced an uptick of 33%. The total number of condos that sold in the city of Chicago also climbed in December (about 5%), although transactions for single-family homes didn’t do as well, falling 7.8% from the same month a year earlier.
This news comes in the midst of an unusually temperate Chicago winter and very low national average mortgage rates, which have continued to fall to new record levels. Low interest rates have created a strong incentive for home buyers who were waiting on the sidelines to purchase a residential property. Buyers who qualify can get extremely good home loan rates from lenders right now, making homeownership more affordable than renting in many parts of the city and suburbs.
Because affordability is such a determining factor in purchasing a home these days, foreclosures and short sales remain an attractive sector of real estate for many potential buyers in markets throughout country. However, most of these distressed properties are deeply discounted, which brings down the median sale price for all homes in the area. In Chicago, median sale price for single-family homes dipped 1.7% from December 2010, while the median price for a condo fell more than 18%, according to Friday’s IAR report.
Some economic analysts believe the Chicago market will see an influx of foreclosures and bank-owned properties this year, as inventory of such real estate is finally processed and readmitted to the marketplace. Even with the large supply of affordably-priced condos and townhomes, it may be hard for some Chicagoans who want to buy to do so. This is because it is getting tougher to find Chicago condo buildings with the FHA approval needed to secure the Federal Housing Administration’s popular 3.5% down home loan.
According to an article published in the Chicago Tribune on Sunday, nearly one-fourth of Illinois condo buildings that attempted to get FHA approval since the beginning of October were denied by the administration. Current FHA approvals of another 560+ units in Chicago are slated to run out in 2012. For buyers who don’t have the funds to put up the 20% down payment for a conventional mortgage, an FHA loan may be the only way to get financing. That doesn’t mean anyone with limited money for the upfront costs of purchasing a property should give up their dreams of owning a home. Talk to a real estate professional and/or a lender about alternative options and creative solutions to buying a home in today’s ever-changing market.