Ah! There's the question that everybody is interested to know the answer to at every Christmas party. I've been discussing this with lots of people and now I thought that it would be a great idea to use this topic to start out my blog.
So what's the situation with real estate market right now? Why on one TV channel they tell you the market's great, home values are appreciating and all that good stuff, and on a different channel they see today's real estate market as still declining.
So why is that?
When you see market statistics, most of the time it would be prepared based on a large area, it could be America as a whole, or a particular city. Although looking at real estate market in Chicago is more accurate than reading about the market in the whole country, it still will not give you the true market report in every neighborhood. The market on one street might be really great, and you go 1 mile down, and see a totally different picture. Location, location, LOCATION!
For example, if we take into consideration the market activity during the period of 3 years, some neighborhoods like Arlington Heights, Schaumburg and Park Ridge are well over 5% appreciation rate. Which shows us that the market is doing just great, sellers and buyers are both happy. In other neighborhoods the trend might just plato (stay still) or even have a slight depreciation.
If we want to know what's going on with real estate in Chicago as a whole, the average statistics is enough, but when you are trying to determine the market trends in a specific neighborhood, perhaps when you are thinking of buying or selling real estate in that area, you need to dig a little deeper.
The big price drivers are:
1. The rise in housing affordability is drawing more buyers out into the market who are looking to cash in on low mortgage rates and fallen home prices compared to a few years ago.
2. The rise in household formation is expected to hit 1 million new households this year. That number is up from an average of 570,000 over the last five years, according to data by Bank of America.
3. The rise in rents has prompted more investors to purchase properties to rent out and more renters to second-guess why they are paying so much in rent when they could buy.
4. The decline in distressed sales and foreclosures has fallen significantly this past year. While distressed sales are still high by historical standards, they have fallen from their peaks in most markets, helping to alleviate the downward pressure on home prices in many areas.
5. Inventories of homes for sale are at their lowest levels in nearly 50 years and builders have cut back on construction. Many homeowners are waiting to sell until they can recover some equity on their properties.
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