Springfield, IL – December 15, 2009 – (RealEstateRama) — More optimism in terms of year-over-year home sales increases is projected in 2010 while the declines in median prices continue but at a lower rate of decline, according to the 2010 Illinois Housing Market Forecast released by the Illinois Association of REALTORS® and prepared by economists from the University of Illinois Regional Economics Applications Laboratory (REAL).
“The momentum gained by the homebuyer tax credit stimulus and plans for more streamlined at-risk loan modifications as well as recent positive reports related to jobs and the economy should carry forward into the 2010 housing market,” said Michael Onorato, GRI, president of the Illinois Association of REALTORS®.
For Illinois as a whole, total home sales (single family and condominiums) in 2010 in all but June and July are forecast to be in the positive side of the ledger and in those two months the range also embraces positive values. However, bear in mind that in 2009, sales volumes declined dramatically. The picture for Chicago is less attractive. January and February look to have modest, positive gains but the rest of the year will see the sales move negative.
“Overall compared to the sort of forecasts we were producing this time last year the outlook is much better for 2010 and we will begin to see the starts of some sustained pick-ups month after month in the positive range,” said economist Geoff Hewings, director of REAL. “The downward trends that we’ve been watching over the last year and a half are beginning to bottom out.”
Adds Hewings: “While we are more optimistic about 2010, we are clearly still suffering the effects of the recession and they are likely to continue well into 2010 and 2011.”
Jobs and foreclosures remain significant factors for the housing market recovery. According to REAL, since 1945 Illinois has never taken longer than 8 years to recover a prior peak employment level; in 2010 we enter the 10th year. Given the state’s history and the consensus expectation among economists that we are likely to witness a jobless recovery for the next 12 to 18 months, it is unlikely that Illinois will recover its prior peak employment (November 2000) much before 2016. Since the beginning of the recession in December 2007, Illinois has posted negative job changes 22 times, and the state has lost 359,000 jobs in this recession.
“The most critical factor for housing in 2010 is what happens to employment,” said Hewings. “People who have jobs are becoming much more risk-averse to buying a more expensive house; for one they worry will they keep their job and two, can they sell the existing home.”
“As consumer confidence in the economy is restored, then it is likely that a more robust rebound in sales will occur; in the interim, a high percentage of the housing transactions will be from households relocating as a result of job changes and, with the continuing aging of the Illinois and U.S. populations, there will be housing sales as a result of retirements,” said Hewings.
Median prices will continue to decline although the rates of decline will moderate mid-year (compared to 2009) in Illinois and the Chicago region. Using data through October and forecasts for November and December 2009, the median price for Illinois in 2010 is expected to be $145,900 compared to the forecast 2009 median of $153,500 (-5.0%). For the Chicagoland PMSA, the 2010 median is expected to be $184,900 compared to the forecast 2009 median of $193,500 (-4.4%).
“Until those foreclosed properties work their way through the system we won’t have a price recovery that will match the sales recovery,” says Hewings. “Most people are seeing the foreclosure peak occurring in 2010. Particularly in Chicago we are seeing the influence of many more foreclosed properties on the market but compared to a lot of other metropolitan areas it’s still nowhere as bad as it might have been if we look at markets in Miami and California for example.”
The Illinois Association of REALTORS® (IAR) is a voluntary trade association whose 50,000 members are engaged in all facets of the real estate industry. IAR releases monthly, quarterly Illinois home sales and median price data as well as monthly forecasts prepared by University of Illinois economists. Sales and price information is generated from a survey of Multiple Listing Service sales reported by 37 participating Illinois REALTOR® local boards and associations.
Find the full forecast and video commentary by economist Geoff Hewings at www.illinoisrealtor.org, click on Market Stats. November 2009 Illinois housing market data will be released Tuesday, December 22.
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Illinois Total Home Sales (Single-Family and Condos) |
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Contact:
Mary Schaefer
217-529-2600
