Housing Affordability at Its Lowest Ever A lack of affordable…
Illinois and Greater Metro Chicago Real Estate
The months of January and February revealed the Illinois housing market and especially Metro Chicago housing market performed much better.
2020 was starting in a promising rising direction with upward projections for the next 3 months. Now with the Covid 19 work shutdown, is Metro Chicago and Illinois one of the most likely markets to crash? We’re waiting for clearer projections of the duration of the disease and accompanying economic slowdown.
“At a time when a deep recession and broad unemployment may be on the horizon thanks to shutdowns aiming at slowing the spread of COVID-19, Chicago could be more vulnerable to a new wave of foreclosures than other major cities, because of homeowners’ slim equity stake in their homes.” from Chicagobusiness.com report.
There are a lot of dire economic reports, but if the shutdown only last for 6 more weeks, with aid money, it may be okay. Illinois is a laggard, trying desperately to catch up with the rest of the country. The state has lost a lot in the last 10 years and keeps bleeding talent and investment.
Off to a Better Start in 2020
2020’s good start for the housing market was an important signal, as Illinois housing markets have been the 2nd lowest of all US state housing markets for the past 10 years. Globalism has not been good to Chicago among other midwestern or heartland cities. The recent improvement in the real estate market here shows that Illinois economy might be on the mend.
The states woes stem from its lagging economy, high taxes, huge pension debt, perhaps its politics, and the migration of workers to other more prosperous states. That drain of skilled workers has hurt the state badly. However, all states in this circumstance can turn it around, and Illinois looked to be doing that. More is needed.
Fewer jobs being created means fewer buyers want to buy a home and stay in Illinois.
With the Corona Virus shutdown, most states will see their housing markets crash or at least go into a 3 month hibernation. Chicago, Springfield, Rockford, or Peoria are no different from Dallas, New York, Boston, Atlanta, Los Angeles, San Diego or Tampa. The real estate sector is about to be hit hard. President Trump’s 2.2 trillion dollar aid package might be enough to get through the rough patch.
2019 Housing Market Recap
Looking back at 2019, it was a year which created fewer sales, where housing stocks was depleted by 8%, and with a small rise in median home values.
The state’s lagging home building situation means more sales can’t happen and there is one more thing missing to provide an economic boost. It takes some critical mass force of some kind to get the Illinois real estate market moving again, and a severe housing shortage can be that stimulating event.
Home building in Illinois is one of the lowest in the nation.
Home ownership by young people is one of the lowest in the country.
Illinois Real Estate Market February Stats
The states housing market couldn’t keep up with the hot sales in January where sales rose 12% YoY with prices up only 2%.
Home Sales and Prices in Illinois
Total residential mls home sales in February rose 5% to 8,725 homes sold, up from 8,307 in February 2019. The median home prices rose 7% YoY, to $199,000, from February 2019’s median price of $186,000. Days on market, stayed at 68 days which is very high. Housing inventory in Illinois amounts to 45,653 homes for sale, which was down 8.5% from the 49,916 homes in February 2019.
The Illinois housing market continued to make solid gains in February with increases in home sales and median prices,” said Ed Neaves, president of Illinois REALTORS®
However, sales and home building in Illinois are much less than the national average.
In Metro Chicago, in February, home sales rose 6.6% to 6,057 homes from February 2019 sales of 5,680 homes. The median price climbed 4.3% to $240,000 from $230,000 in February 2019.
In February, for the Chicago PMSA, the percentage of foreclosed sales of total home sales was 9.5%. 619 foreclosed properties were sold, which was down 12.9% from last year. The Illinois pending home sales index is 164.2 which is up 27.8% from a year ago. In the Chicago PMSA, the index rose strongly 30.65 to 194.4 (2008 was the base year = 100).
Market Predictions for Illinois
Illinois Realtors forecast a more positive situation for the Illinois and Chicago housing market. They believed the median price for March, April, and would rise by 5.3% in March, 5.5% in April and 5.0% in May. They forecasted the REAL HPI (Jan 2008=1) would grow by 2.6% in March 1.8% in April and 3.5% in May.
Thanks to the Illinois Realtors Association for forecasting sales, prices for the current 3 month period. It was helpful info until this Corona Virus pandemic hit the US hard. The fallout for the Chicago housing market and Illinois real estate market is scary.
With higher than normal foreclosure rates already, high state debt, high taxes and now high unemployment, Chicago which has had lower sales numbers, is at risk. Will there be a Chicago housing market crash?
6 Month Forecast for Illinois?
If the recession is minimized by stimulus and the virus passes by May, we should see the housing market rebound to where it was in January, by October. I don’t believe the Chicago housing market will crash, but it’s very likely there will be a lot of foreclosure opportunities as many people lose their current jobs.
For more insight, learn more about the potential for a US housing market crash.
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Housing Market Forecast – copyright Gord Collins
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