SOME CHICAGO REAL ESTATE MARKET PREDICTIONS - THROUGH 2008, AND BEYOND!
CONTINUED PROCRASTINATION, YOUNGER BUYERS, MORE RENTERS EXPECTED!
We would each have one billion dollars if we can accurately predict the near and mid-term future of the Chicago Real Estate Market! As reviewed in an article by Anne Brennan in yesterday's Chicago Tribune, here are a few statistics, possibilities, and predictions - but no guarantees -
1. According to the Illinois Association of Realtors, median Chicago area home prices increased 0.8% in November, 2007, versus November of 2006. The Median Chicago-area price - $247,000 (50% of properties sold above this mark, 50% below it). Statewide, the median price decreased 3.0 percent, to $193,000. Across the country, median home sales prices have, on the main, either stagnated, or, in a few local markets, dropped dramatically. Chicago, however, was "spared the worst of it," according to Diane Swonk, chief economist for Mesirow Financial.
2. Many buyers will wait on the sidelines for the next couple of years, according to Bill Hummer, with Wayne Hummer Investments here in Chicago. "Concerns are going to persist for the next couple of years," says Hummer. "We'll be out of the woods in 2010." Swink adds that qualified borrowers will still have access to credit for mortgages, although the good-old-days of easy credit available in 2005 and early 2006 may be gone for a long while.
3. As the Baby Boomer Generation, those born between 1946 and 1964, begin to prepare for retirement condos and second homes, the bulk of first-time buyers will come from the ranks of Generation X and Generation Y - those born between 1964 and 1989. Highly-paid young professionals can get with unblemished credit can easily tap the mortgage market for their first homes. Those in this age group seeking condos will find high inventory, and low prices, most likely until 2009, according to Swonk.
4. Many are renting, rather than buying! Out-of-state rentals make up 31 percent of the tenant pool, up from 22 percent two years ago. Many European professionals are renting rather than buying right away. Rent levels are increasing - as much as 12 percent in Downtown Chicago and The Loop, and chic neighborhoods like Lincoln Park and The Gold Coast. In this "Landlord's Market," concessions, such as free or discounted rent and reduced security deposits, are rare. Related to this, many frustrated home sellers are offering "Rent to Own" options, with as much as 50% of the paid rent going toward down payment after one or two years.
5. Flipping appears to be out, as investors are no longer confident they will enjoy a quick appreciation on their investment. Many investors today plan on holding purchased properties for several years, rather than completing cosmetic improvements and reselling them immediately.
The next few months will provide an insight as to whether these predictions are on track.
DEAN MOSS & DEAN'S TEAM CHICAGO
