Chicago Real Estate Sales Showed Vitality In Some Areas During First Half Of 2008

Chicago real estate sales finished the first half of 2008 much as they ended the year’s first quarter. Sales in both periods declined 29.2 percent from the level of transactions recorded during the same periods in 2007. Slightly more than 34,000 homes changed hands during the period, compared to roughly 48,000 during the first six months of last year.

Transaction data is supplied by Midwest Real Estate Data, LLC, (MRED) and analyzed by RE/MAX Northern Illinois. The Chicago-area data includes Cook, DuPage, Kane, Kendall, Lake, McHenry and Will counties.

In Chicago, the Loop and Near South Side areas outperformed 2007 in terms of homes sold. Both saw a considerable increase in units changing hands. In the Loop, 567 units closed during the first half of the year, a 52 percent gain from the comparable period last year. On the same basis, the Near South Side recorded a 58 percent rise in sales, with 680 transactions completed.

Farther south, a number of other Chicago real estate neighborhoods also registered gains either for the six-month period or the second quarter. The best examples were the Douglas neighborhood along the south lakefront, where first-half sales of 73 units translated into a 14 percent gain, and West Englewood, which experienced a 13 percent increase on 108 sales.

Other South Side neighborhoods that saw sales increase on a year-over-year basis during the second quarter were Roseland, West Pullman, Riverdale, and Auburn Gresham. Only one other city neighborhood, West Garfield Park on the West Side, saw sales increase during the April-June period.

Overall, 11,044 homes were sold in Chicago during the first six months of year, while a year earlier, 14,685 transactions were closed, a decline of 25 percent.
“The city is still outperforming the suburbs in terms of maintaining its transaction volume during the current housing market contraction,” said Jim Merrion, regional director of RE/MAX Northern Illinois.

Detached homes, which are primarily single-family homes, and attached homes, which include townhouses and condominiums, performed about equally in the city for the first half of 2008, with both segments seeing sales fall 25 percent from the same period a year earlier.

In the suburbs, only a dozen market areas enjoyed stronger sales in the first half of 2008 than in the first half of 2007.

The best performers were Western Springs where sales jumped 33 percent, with 77 homes changing hands, and Merrionette Park, where 19 homes were sold, representing a 111 percent gain. Other areas where transaction numbers rose were Burnham, Ford Heights, Fox River Grove, Kaneville, Mettawa, Orland Hills, Palos Heights, Robbins, Solon Mills and Union.

Looking at the suburbs more broadly, sales fell least in McHenry County, down 26.4 percent from the same six-month period last year. Kendall County sales were off 27.2 percent, a slightly better result than DuPage County (down 28.5 percent) and Will County (down 30.7 percent). Cook County experienced a decline of 28.7 percent, while sales in Lake County dropped 30.2 percent. The largest fall off in sales was 34.3 percent in Kane County.

“The pace of sales seems to have slowed a bit more in the second quarter if you look closely at the numbers, but we were also seeing some improvements,” said Merrion. “In Will and DuPage counties, sales were off less in the second quarter than in the first quarter, and Kendall County held steady, but the four other counties saw a steeper decline in the recent quarter. Right now, the problems being experienced by mortgage lenders are generating a pretty stiff headwind for buyers unless they have a strong credit rating. If we can get beyond that problem, the housing market should begin recovering.”

Merrion also noted that a good deal of the current activity in housing sales is focused on properties in foreclosure.

“With foreclosures, many of the buyers are investors, and a majority of them are buying with the idea that, if they get the home at a great price, they can fix it up and resell it for a profit. As a result, the homes they purchase don’t stay off the market for long because the investors attempt to resell them as soon as the repairs are complete.

“That is one reason that inventories of homes for sale are so high in some areas. The same phenomenon also may be putting downward pressure on home prices, and it is almost certainly slowing a housing recovery,” he said. “At the same time, the quick resale of such properties may be the only realistic way to deal with the backlog of homes in foreclosure.”