Chicago Area Home Sales Plunge

The recent news on homes sales was not very good, but is was hardly a surprise. If you’ve been a reader of this blog you already know I was not in favor of the tax credit. All the tax credit did was move up the time table for buyers who were already thinking about purchasing a home. So basically, the summer housing market moved up their time table and purchased in the spring instead. Rather than spreading out the home purchases and letting the market play out, the government wanted to prop up the housing numbers to help ease the american public. Well, I don’t think that plan worked.

Anyway, here are the numbers. These numbers are for the nine-county Chicago region (Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will).

The total number of homes (single family and condos) sold in July (2010) was 5,561, compared to 9,085 in June (2010) which represents almost a 40% drop. In comparison the difference last year was actually an increase of 287 homes sold, 7427 in July (2009) vs. 7140 in June (2009).

In the city of Chicago the total number of homes sold in July (2010) was 1,589 compared to 2,526 in June (2010), again about a 40% drop. However, comparing last years numbers July (2009) had 1,975 homes sold vs. 1,981 in June (2009) it was basically flat.

What about prices? The median home price (half the homes sell for more and half sell for less) in the Chicago area was $193,000 down from $207,500 in June (2010) which represents about a 7% decrease.  In the city of Chicago the median price fell to $196,500 from $234,250 (June 2010) which represents about a 16% drop.

While we all know the pressure there’s been on prices for quite some time, I think we need to take it with a grain of salt. The majority of purchasers have been first time home buyers or people purchasing homes under $250-300k mainly because the higher end homes are either too far “under water” or can not sell their home due to the limited number of potential buyers.

The question I always get asked is, “When is the housing market going to turn around?”. The answer is, I don’t know and it will likely get worse before it gets better. One of the main problems is still the large amount of foreclosures and short sales and there is no sign of this slowing down any time soon. I do think that in 2011 the banks will make a better effort to get short sales approved and take in less foreclosures which will definitely help. I also saw someone suggest that rather than the government continue to give cash incentives they should assist the banks in refinancing all existing mortgages so homeowners could take advantage of these extremely low rates which would put some extra money into the pockets of consumers and it would also most likely raise housing prices.

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