Aug
24

What We Need Is Another Home Buyer’s Tax Credit

August 24, 2010

Each month this year that Chicago real estate sales have increased, experts have attributed the rise to the Federal Home Buyers Tax Credit.

July was the first month that buyers could not qualify for that tax credit, so analysts were expecting a drop in sales.

They got it.

According to the Illinois Association of Realtors, total home sales in the city of Chicago for July 2010 were down 19.5 percent over July 2009.

In the Chicago area, total home sales were down 25.1 percent last month compared to a year ago.

Statewide, the percentage fell to 29.7 percent over last year’s sales number.

Yuck.

Of course, when you have less sales, you also have lower prices, so median home prices took a hit as well:

*Chicago: The median home price fell from $245,000 a year ago July to $196,500 last month; a 19.8 percent drop.

*Chicago area: The median home price fell from $213,500 in July 2009 to $193,000 in July 2010; a 9.6 percent drop.

*Statewide: The median home price was $167,185 in July 2009 and $160,000 in July 2010; a 4.3 percent decrease.

“The flipside to the success of the tax credit in reducing inventories is that we have an anticipated break in the action,” said REALTOR® Mike Onorato, GRI, president of the Illinois Association of REALTORS® and broker-owner of Onorato Real Estate in Coal City. “The underlying issue for stability in the housing market remains a healthy job market. We need some significant boosts in economic development, employment and consumer confidence to reduce foreclosures and create some equilibrium between supply and demand for housing. Slower sales and rising inventories will force more downward pressure on prices.”

Wait! There is good news: Sales from January through July 2010 are still on positive ground compared to sales from January through July 2009.

*Chicago: Year-to-date sales in 2010 are up 25 percent.

*Chicago area: Year-to-date sales in 2010 remain up 22.8 percent.

*Statewide: Year-to-date sales are up 15 percent compared to the same time last year.

Let’s hope the next few months continue that upward trend.

“The hangover from the expiration of the tax credit in April may extend into fall with forecasts for sales on an annual basis for the next three months indicating a continuation of the July experience,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois. “The anemic growth of private sector jobs is dampening chances for a more robust recovery. The expectation has to be that the slowing of the national economy will affect Illinois’ growth prospects over the remaining months of the year.”

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Tracey

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