The Chicago area housing market is once more a safe place for sellers.
The Illinois Association of Realtors said Wednesday that Chicago-area home sales and median prices rose in July amid a sharp decline in available properties.
In the nine-county Chicago region, sales in July rose 36.1 percent from the same month last year to 11,897, the Realtors said. The total includes single-family homes and condominiums and was the highest monthly figure in seven years, since before the housing crash.
“This is what a housing recovery looks like,” wrote an exultant Brian Wesbury, chief economist of First Trust Portfolios, in a report reacting to data that also showed home sales up throughout the country in July.
Other analysts, however, still express caution. An increase in mortgage interest rates of about 1 percentage point from historic lows over the summer could slow the market, some believe.
It’s also possible that rising prices will bring out the sellers.
“This will bring more homes onto the market but could lengthen the time some of those homes sit, especially if they are not turnkey properties. Investors are still seeking deals,” said Diane Swonk, chief economist at Mesirow Financial Holdings Inc.
The Realtors said the area’s median sales price in July was $201,075, up 18.3 percent from the prior year.
Meanwhile, the inventory of homes for sale was off 34.9 percent over the same period. Experts said the lack of supply supports higher prices, with buyers looking hard for what they want and then finding that desirable properties are getting multiple offers.
Home sales in general are climbing throughout the state, and here in Naperville, folks like Jack Persin, managing broker for Ryan-Hill Realty, say the seller’s market has definitely returned.
“We currently are at about a 3 1/2 month inventory, as compared to 2011 when the time was more like 13 months,” Persin said. “Any time the number goes below six months, we refer to it as a seller’s market. Currently there are 684 single-family homes for sale in Naperville, and we’ve been selling 228 a month.”
Reed Pederson, managing broker for John Greene Realty in Naperville, said the threat of higher interest rates is beginning to urge more buyers to enter the market.
“We still have low rates, but people have been reading about reports that they might begin to go up and while this hasn’t brought people out in full force, there are those who are looking to buy as the inventory is getting low,” Pederson said. “I wouldn’t say the increase in sales has been more dramatic, but it is returning to predictable levels. We’ve seen things grow throughout the spring and summer market and now that we are entering the fall, things are going to continue to level off until the cycle begins all over again.”
Midwest Real Estate Data reports that for the first seven months of 2013, Naperville home prices have risen a total of 7.1 percent so far and that total sales for the same period are up 18.4 percent. Both Persin and Pederson report that most homes are receiving multiple offers, but Pederson warns homes have to be priced correctly.
“People get multiple offers and are trying to sell their homes for the best price they can, but when appraisers come in, they have to look at what homes in that market have been selling for over the past three to six months,” he said. “When it comes to getting financing, some people are finding those values aren’t being supported.”
Teresa Ryan, owner of Ryan-Hill Realty, agrees that the more robust market has produced an outcome she labels as “a two-edge sword.”
“A lot of investors and those involved with hedge funds aren’t financing homes and have the cash to buy these properties,” she said. “Once these get reported ...the markets will adjust. But in the meantime, because of the more robust market, a lot of the appraisers haven’t yet caught up, and people buying homes may have to make up the difference between the selling price and what they were appraised for.”