[This monthly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their December eNewsletter. I have had the pleasure of knowing them for most of my appraisal career. They are both very active in appraisal industry matters having held a large number of leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisal myths. Chip and Bob also author a series of market reports on the Chicagoland real estate market They tell me they are also working on a big revamp of their web site as well.] -Jonathan Miller
WHAT IS HAPPENING NOW?
For the third consecutive month, the Months Supply of Inventory has decreased. Again, it is premature to assume our market has changed as the less-motivated sellers remove their homes from the market during the holidays.
Although there are nearly 3,000 fewer homes listed from last month, almost 8,500 fewer homes on the market from the previous quarter, it is still nearly 11,600 more homes than the same period one year ago. Furthermore, we have not yet seen an increase in the homes under contract or a reverse in the downward trend in the pending and sales volume.
The year end reports are attached o this e-mail and they remain inconclusive as where we are going in the future. The year over year indication continues to show the market today is weaker than it was one year ago. After what we observed in 2006, this is no surprise. The fact that we are seeing positive indications from the previous quarter is welcome.
To put these statistics in perspective, from the 3rd quarter in 2005 to the 4th quarter in 2005, there was a 8.6% decline in active listings. From the 3rd quarter in 2006 to the 4th quarter in 2006, there was a 17.5% decline in active listings. The recent drop in active listings is nearly double the previous year’s drop. This is the first positive that we have actually been able to measure statistically, that indicates 2007 could be a better year than 2006.
WHATS IN STORE?
The Million Dollar question. Hopefully, in the coming months we will be able to see the decline in the Absorption Rates continue.
Buyers that were sitting on the fence, cautious as to making a move in the real estate market appear to be ready. Media reports on the housing sector are not “all negative” and we are seeing some positive reports coming out. Prospective buyers hoping to wait until the real estate markets bottom out may believe it has bottomed out and it is time to buy.
The economy is strong, unemployment is low and job growth is strong. Indications are that mortgage interest rates will continue to be favorable in 2007.
Early indications are suggesting that 2007 will be better than 2006 was. The market needs to begin eliminating some of the supply, and a better indication would be an increase in pendings which shows buyer activity. We continue to closely monitor the sales activity, and hopefully there will soon be clear indications that the real estate market has reversed its 2006 doldrums.
Until then, our opinion of 2007’s Chicagoland real estate market, like many other professionals is “cautiously optimistic.”
Here are some additional market reports: