ELGIN, IL – December 15, 2011 – (RealEstateRama) — What’s ahead for the housing segment of the metropolitan Chicago real estate market in 2012? RE/MAX recently asked a representative sampling of its experienced agents for their assessment of where the market stands today and what the New Year may hold. A sizable majority of those agents expects that the first half of 2012 is likely to see a slow steadying of home prices and a continuation of the recent trend toward increased home sales.
First-time home buyers and investors should again be key sources of demand for housing in 2012, just as they have been in 2011, the survey revealed. Because both those groups of buyers tend to focus on lower priced homes, the RE/MAX agents expect to see continued growth in sales activity and possibly shorter sales times for homes in that segment of the market, while upper-bracket properties may take longer to sell and face greater pricing pressure.
“We’ve seen a definite improvement in recent months,” said Mark Zipperer, broker/owner of RE/MAX Edge in the Lake View neighborhood of Chicago. “The public has a clearer understanding of how much more affordable homes have become, and at the same time, there is less concern about a further downward correction.”
The improved affordability of homes has been a key factor in bringing first-time buyers into the market, reported Julie Anderson of RE/MAX 10 on Chicago’s Southwest Side. Another plus she sees for the market moving into 2012, is that “local banks have become more aggressive about mortgage lending after sitting on the sidelines much of the time over the prior two or three years.”
Across the metro area, sales activity has been on the upswing for both detached homes and attached units since the middle of 2011, and the agents expect more of the same in 2012. Home sales in Cook County were 13.9 percent higher from July through October of 2011 than for the similar period in 2010. In Chicago, the increase was a more modest 9 percent, while in the seven-county metro area outside Chicago, sales increased a robust 24.5 percent.
As those figures suggest, the tenor of the housing market varied considerably by area. RE/MAX agents in Chicago, for example, said that sales volumes have risen only modestly in recent months but that prices for single-family homes have shown improved stability, with some neighborhoods seeing small gains.
Matt Boemmel of RE/MAX Exclusive Properties in Chicago said prices of detached homes in areas such as Graceland West and St. Ben’s on the Mid-North Side have made gains recently thanks to a limited inventory of available properties. If the inventory doesn’t expand substantially, that trend should continue in 2012, he believes.
“There’s a better understanding now of what opportunities the housing market offers,” said Boemmel. “One thing I’m seeing more of is people trading neighborhoods. The home they sell and the one they buy are priced similarly, but they are getting more of what they want, which might be greater square footage or a better location.”
The survey also revealed that agents expect a greater improvement in the market for single-family homes during 2012 than for attached units, a category that includes townhouses and condominium apartments.
One major reason, according to several agents, is that many attached homes are part of homeowner associations that have not made themselves eligible for Federal Housing Administration (FHA) financing, and other associations refuse to allow any or a significant number of their units to be rented.
That is not so much the case along Chicago’s lakefront, according to Zipperer. The many large, professionally managed condo buildings found there typically are FHA approved and are more flexible about rentals. As a result, they have been attracting both investors and those who plan to live in the unit they purchase.
“Even for those who want to occupy the unit, the fact that it would be easy to rent gives them extra confidence,” said Zipperer. In the current economic environment where losing a job can mean many months of searching for the next position, having the option of renting your condo is a nice safety net.
The suburbs present a mixed picture when looking ahead to 2012. For example, Kathy Brothers of RE/MAX Town and Country in Aurora, Ill., sees continued price declines a likely scenario in the Fox Valley because the inventory of homes for sale during the spring season should be quite large.
In contrast, Paul Wells, broker/owner of RE/MAX of Barrington in Barrington, Ill., expects home prices to gradually stabilize for homes in the middle and lower price brackets in the markets he serves, which include the Barrington area and surrounding communities in Lake, Cook and McHenry counties. But for upper-bracket properties, he anticipates further price declines.
In central Will County, David Cobb of RE/MAX All Properties in New Lenox, Ill., said he believes home prices are about as low as they will go, but “I don’t expect a bounce back in the year ahead.”
Along the North Shore, Allyson Hoffman of RE/MAX Villager in Glenview, Ill., said she is hopeful that sales prices of single-family homes will rebound more rapidly this year than last after softening during the slower winter months.
The survey also asked RE/MAX agents what actions they thought would do the most to help the Chicago-area housing market recover its balance.
“As a group, our agents pointed to three areas in which they thought actions would be helpful: 25 percent cited the importance of a stronger employment market and an overall improvement in public confidence; 40 percent pointed to a need for slightly more relaxed lending standards for both home purchasers and those seeking to refinance existing loans; and 35 percent stressed the need for banks to handle short sales and foreclosures more efficiently,” said Laura Ortoleva, a spokesperson for the RE/MAX Northern Illinois real estate network.
RE/MAX has been the leader in the northern Illinois real estate market since 1989. The RE/MAX Northern Illinois network consists of 2,200 sales associates and 105 individually owned and operated RE/MAX offices that provide a full range of brokerage services throughout the northern one-third of Illinois. Its www.illinoisproperty.com and www.remax.com websites are leaders in consumer visits among real estate franchise brands. Its mobile search, m.illinoisproperty.com, allows users to conduct real estate searches on any mobile device with Internet access. The northern Illinois network is part of RE/MAX LLC, a global real estate organization with 89,000 sales associates in 85 nations.