Buyers, sellers, and realtors alike have kept a close eye on the Chicago real estate market in the last couple of years, waiting for a sign that recovery is on its way. One factor that plays into this is home prices–everyone wants to know when they’ve reached the lowest point so that they’re getting the most “bang for their buck,” so to speak, on a home purchase.
The Wall St. Journal recently reported that home prices reached new lows in January 2012, dropping just 0.8%. That’s an improvement over the steeper declines in the months before. In other words, home prices still fell, but at a slower pace, which could indicate that the market is bottoming out and poised for recovery.
The Journal noted that easing decline in home prices is certainly a sign that the market is on the mend, and that this year is expected to be the last of declining home prices. A stabilization in home prices doesn’t just affect the real estate market, but could lift overall consumer psychology that has been hurting over the last few years.
One thing to be aware of, however, is that the Chicago real estate market changes constantly–from one month to the next. When positive economic data like this comes in (especially considering there is a two-month reporting lag), change in the market can be swift. Mortgage rates can start to go up and pent-up demand for housing could begin in earnest, and that “bottoming out” is quickly a thing of the past.
Economic Factors in Chicago Real Estate
Another factor that plays into real estate is the stock market, which is up almost 10% in 2012 so far. When the stock market starts in go up, it’s another sign that our economy is starting to turn for the better.
And as with home prices, stock market gains also improve consumer sentiment. The Thomson Reuters/University of Michigan’s final index of consumer sentiment for March 2012 just rose to a one-year high, indicating that consumers are more upbeat about the economy in general. The report credits employment growth, income gains and higher stock prices with helping sustain the improvement, which may help boost consumer spending–yet another positive turn for the economy.
Economic activity is so cyclical that it’s important to note what signs we can look to for improvement. This year already seems well-poised for the Chicago real estate market to begin recovery, which makes it a key time for potential buyers to make a move on a home purchase before the “bottoming out” phase is behind us.
To take a closer look at the Chicago market and its role in the overall health of the economy, give me a call at 312-264-5853 or email me at [email protected]
Lake Point Tower, at right, is one of many buildings along Lake Shore Drive that offer incredible views of Lake Michigan. Image via Chris Walker/Chicago Tribune