The housing market in Chicago is clearly a buyers market. However, beginning in October of last year we began to feel a turn which is now showing up a tiny, but hopeful, bit in the numbers.
As you can see, it is still a sea of red but, there are some neighborhoods that have ventured into the balanced territory. The areas recovering first (yellow) are in the near northwest: Lincoln Square, North Center, Irving Park, Logan Square, West Town and Near West.
Reasons? It is hard to know for certain. Looking at price drops over the decline and average price now, there are some similarities in these neighborhoods which may tell the story: a combination of affordability and some level of market stability.
The 6 neighborhoods in yellow had average median prices (neither the most nor the least expensive) and they had average declines in value over the recession (neither the most devastated nor the most stable). This snapshot will be published at least once a quarter so we can watch the recovery happen in living color across the close in Chicago neighborhoods.
The “rule of thumb” definition of a buyers’ market is an inventory level of 7 months or more. A sellers’ market would be 0-4 months of inventory. In between (4 to 7 months) would be considered a balanced market.
In a balanced market, home prices would be stable and negotiation between buyers and sellers would not be a one-sided battle.
In a sellers’ market we see price appreciation and short market times. In the most recent sellers market (the run up to 2006), you could put a home on the market on a busy street, next to an empty lot, in less than mint condition and still have a pretty good shot of making the sale.
In a buyers’ market we typically see price depreciation and long market times. This position coupled with historically low interest rates creates a unique opportunity for people to shift out of the rental market into an ownership situation. Or this might be the right moment to trade up – taking a smaller hit on the sale of your lower priced home for the potential value in a buy of a higher priced property.
Today Chicago is still a buyers’ market in general. Even with aggressive pricing, market knowledge, clutter-free staging and a “turn over every stone” approach to marketing, selling might still be a challenge.