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Taking a realistic look at the Chicago housing market

Chicago Realtors® are a realistic bunch when it comes to the housing market. We know when things are going well and when they’re not.

That was reflected in a January economic forecast meeting held in late January by the Chicago Association of REALTORS®. As a Chicago Tribune story reporting on the meeting said, the REALTORS(R) in attendance took an honest look at the Chicago housing market and found that there is plenty of reason for optimism.

But these REALTORS(R) also admitted that the Chicago housing market is lagging behind the rest of the country when it comes to price increases. And they admitted, too, that the local housing market has a long way to go before truly recovering from the negative impact of the Great Recession.

In other words, the REALTORS® were realistic: Things are better in the Chicago housing market, but they’re nowhere near where we’d like them to be.

Where does the optimism come from? The Illinois Association of REALTORS® recently reported that the home sales in the nine-county Chicago area rose by nearly 27 percent in 2012 when compared to 2011, according to the Chicago Tribune story. The Tribune story also reported that housing inventory in the Chicago area fell 37 percent in December when compared to the same month one year earlier. This, of course, has led to a greater number of sellers receiving multiple offers for their homes.

But the Tribune story also pointed out some disappointing numbers. The biggest? Median housing prices actually dropped 1.5 percent from 2011 to 2012. That’s really the biggest number for home sellers. They want to sell their Chicago condominiums and single-family homes for as much as possible. If median housing values continue to fall, many sellers will still be unloading their homes for less than what they originally paid for them, especially if these sellers bought during the real estate boom years of 2004, 2005 or 2006. That doesn’t inspire much confidence in the local housing market.

The takeaway from the REALTORS® economic meeting? There is reason for optimism in the Chicago housing market. But there’s reason for pessimism, too. The key is for sellers and buyers to take a realistic look at the market.

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