Feb
13

What are Chicago Real Estate Prices Going to Do?

February 13, 2014

Ask A Chicago Real Estate Expert - Best Chicago PropertiesThe one question homeowners always want to ask real estate professionals is “what are home prices in Chicago going to do?” For many people, their home is by far their biggest asset. So their curiosity is understandable. For this “Ask An Expert” piece, we asked Best Chicago Properties’ Associate Broker Doug Boehm and Streeterville resident to help answer this question and here’s what he had to say:

There Are Two Problems In Answering The Question “What Are Chicago Home Prices Going To Do?”

The first with addressing that question is that every piece of real estate is unique. Condos in Streeterville may be going up in price while homes in North Center are going down. Even within the same neighborhood sales of high-end homes could be strong while starter homes languish on the market.

The second problem answering that question is that no one really knows. Like the stock market or the economy nobody, even highly paid professionals, has a winning track record predicting home prices.

Some Factors That Affect Home Prices That You Can Keep An Eye On

That being said, there are many factors that affect home prices that you can keep an eye on to make an informed prediction.

Doug Boehm - Broker Associate At Best Chicago Properties

Currently the job market is a big factor.

While unemployment is improving slowly, the lack of jobs is one of the main reasons prices have been slow to recover. Not having a job makes it virtually impossible to buy a home. Unfortunately while the numbers have improved much of it can be accounted for by people taking part time or low paying jobs. The accountant working at Starbucks because that is all she can find may be no longer unemployed but she probably will not be a home buyer anytime soon. It will probably take a significant improvement in the jobs market, 300,000+ jobs added per month, before the housing market gains steam.

Another important factor is the supply of homes.

In the worst of the housing crises many markets had eight months or more of inventory. That is at the current sales pace it would take 8 months to sell all of the homes that are for sale. That number has been steadily dropping and is closer to 5 months for most of the country. Less inventory means fewer sellers and fewer options and bargaining power for the buyers.

Mortgage rates also play a role.

Rising rates cause monthly mortgage payments to increase. Someone with a set budget for their monthly mortgage will need to buy a less expensive home to maintain that budget as rates increase. Rates have been in a general uptrend and will probably continue to move up if the labor market improves. This should temper any price improvements created by increasing demand if more people are getting high paying jobs.

The ability to obtain a mortgage has also been a big factor in hurting home prices.

Many seemingly qualified buyers have not been able to get a mortgage. For most home buyers an inability to get a mortgage means that they are not being able to buy a home. If the mortgage market continues to loosen up it will increase home demand.

Conclusion About Chicago Real Estate Pricing Going Forward…

Chicago Home Prices 2013So in conclusion, while keeping an eye on prices is a good idea for any home owner or anyone considering buying a home in the future the best option when you become serious about buying or selling is to talk with a local real estate professional. A good local Chicago real estate professional will analyze comparable property values to find a good estimate of the fair market value of your home. Local real estate brokers are in tune with the market and utilizing their expertise can be invaluable. The amount of traffic a new Chicago listing creates can be a good indication of the current market for that neighborhood.

The chart above shows the average home prices for Chicago in 2013. Chicago home prices increased about 15 percent last year according to the Chicago Association of Realtors.

Want to know more? Feel free to touch base with Doug Boehm to get a better idea of what pricing may do in your Chicago neighborhood going forward.

 

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