Illinois REALTOR® Magazine | July 2013
Geoffrey J.D. Hewings, Ph.D. | Director, Regional Economics Applications Laboratory (REAL), University of Illinois
Lower inventories, shorter times on market and increased sales will all be factors in the ongoing stable recovery of the housing market. The market has been on an upward trend and that is expected to continue into early summer. Pending sales are higher than a year ago and drops in the unemployment rate and the creation of new jobs have boosted consumer confidence.
According to the Consumer Sentiment Index, households, particularly upper income households, have favorable attitudes toward vehicle and home buying. The April 2013 survey also found the highest number of homeowners since late 2007 reporting rising home values, but the expectation of rising values is uneven, with upper income households expecting greater gains than lower income households.
Other trends? In April 2012, the lowest priced houses (less than $100,000) on average took the shortest time to sell. However, in April 2013, houses priced at the higher end (above $300,000) sold faster on average than houses in the lower price ranges (below $300,000). The most dramatic change is from houses between $500,000 and $700,000: on average, it took less than two months to sell compared with 3-4 months on the market last April.
In April, at the latest average annual pending sales rate, Illinois had enough housing inventory for 5.0 months (down from 9.3 months a year ago). In the Chicago PMSA, the comparable figure was 3.5 months (down from 8.5 months a year ago). This is due to both higher pending sales in the past twelve months and decreased listings.
The price forecast indicates annual increases in median prices for May, June and July. In Illinois, the median price is forecast to rise by 4.8 percent in May, 3.8 percent in June and 7.7 percent in July. For the Chicago PMSA, the comparable figures are 5.5 percent in May, followed by 6.3 percent in June and 10.4 percent in July.
The sales forecast for May, June and July 2013 suggests continuing gains for Illinois and the Chicago PMSA. On a year-over-year basis, the three month average forecasts point to increases of 23.1 percent to 31.2 percent for Illinois and 26.9 percent to 36.4 percent for Chicago PMSA.
“The housing market is exhibiting signs of a more stable recovery with an anticipated strong early summer led by strong sales gains and more modest but still positive gains in median prices,” noted Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois. “Average time on the market, the growth in the pending sales index and an increase in the share of total sales captured by more expensive properties point to a return to greater stability in the market.”