Brighter News From Residential Market: Pace Of Sales Decline Eased In Chicago Real Estate Area During Third Quarter

The outlook for residential Chicago real estate brightened somewhat during the third quarter of 2008 even as the number of homes changing hands continued to decline. Sales of all attached and detached homes, meaning single-family homes, townhouses and condominium apartments, were 23.5 percent lower for the third quarter than during the same quarter in 2007. However, that represented an improvement from the results for the first half of this year when home sales fell 29.2 percent compared to the first half of 2007.

The slowing of the sales decline can be attributed primarily to stronger activity in the Chicago real estate market for detached homes. Sales in that segment fell 16.5 percent in the third quarter compared to the same period in 2007, but that contrasts favorably with a 26.8 percent decline during the first half of 2008. For the entire January-September period, the decline from prior year sales was 23.1 percent.

The improved activity level among detached homes was most pronounced in Chicago, where third-quarter sales declined only 8.3 percent from the 2007 level. For the first six months of this year, sales of detached homes in Chicago fell 25.2 percent.

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.

The average sales price for all homes sold during the third quarter was $309,429, which was 5.3 percent less than the average price in the third quarter of last year. The average sales price of an attached home rose 1 percent to $288,408 when compared to the third quarter of 2007. In contrast, the average price of a detached home fell 10 percent to $322,526.

For the nine-month period, 54,180 homes changed hands, versus 74,595 during the January-September period last year. In all but one of the seven counties, the pace of sales improved during the third quarter when compared to the first half of 2008. The most significant improvements were in Will County (3.8 percent), Lake County (2.9 percent) and DuPage County (2 percent). Only in Kane County was the pace of sales for the July-September period slower than during the first six months of the year.

“It seems the Chicago-area residential market was beginning to firm up during the third quarter. However, given what happened on Wall Street in October, it is difficult to say if that trend will continue in the fourth quarter,” said Jim Merrion, regional director of the RE/MAX network in northern Illinois. “It wouldn’t surprise me if market activity slowed until the end of the year as people digest the situation. But assuming that we work through the financial crisis and banks start lending more normally again, we anticipate that the market rebound will resume during the first half of 2009.

“The lower prices now evident, especially for single-family homes, seem to be drawing buyers back into the market, and a good number of those buyers are investors who see opportunity in foreclosure properties.”

Elsewhere in the metropolitan area, sales of single-family homes during the first nine months of the year were down 17.7 percent in Kendall County, 21 percent in DuPage County, 22 percent in Cook County, 24.3 percent in Lake and Will counties, 25.6 percent in McHenry County and 27 percent in Kane County. Sales of townhouses and condominiums were off 37.1 percent in the suburbs and 31.1 percent in Chicago.

Only a few individual communities showed strong sales increases over 2007 levels at the end of the nine months. In the city, the Near South Side saw sales rise 32.5 percent to 971 units, and West Englewood has seen 156 units change hands, an 18 percent gain. The strongest suburban performances through the first nine months of the year were turned in by Merrionette Park (up 66 percent) and Western Springs (up 16 percent).

“We are moving into a period in which homebuyers will find outstanding opportunities awaiting them,” said Merrion. “The selection of homes available this winter will be exceptional, and the owners of many of these properties are anxious to consummate a sale. November and December are the months when most folks don’t go out looking for a home, but this year might be the right time to take a different tack if your economic situation permits because there are good values to be found.”