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With the slumping housing market, sales of Chicago homes have declined along with most other areas across the country. Buyers and developers alike are facing tougher loan requirements and an over saturation of the market. But even though overall sales numbers are down as well as the median price, Chicago homes have fared better than in many other areas of the country and there has been some improvement recently.

While it can't be considered a market recovery, the Illinois Association of Realtors reported that as of May, sales of existing Chicago homes rose slightly for the fourth month in a row. Chicago home sales from April to May of this year rose 18.7% for a total of 5,634 units sold. For condos and single-family homes in Chicago, sales increased 11.5% for a total of 1,537 units sold. But comparative sales of condos and single-family homes in Chicago from May 2008 to May 2009 showed a 27.5% drop.

Of those Chicago home sales, 50% were made by first-time buyers. And The National Association Of Realtors reported that sales of homes priced below $100,000 are up 25% from last year. Sales of homes at or below $50,000 are up 48% from last year.

Chicago homes sales are still down in every other price tier, including luxury condos and homes. The increase in lower-priced sales by first-time buyers is due in large part to the abundance of foreclosures and short sales, which make up about half of those first-time buyer purchases. And while those sales plus with developer closeouts and auctions may be driving prices lower, there was an increase in the median price of Chicago condos.

The median price of Chicago area condos and single-family homes in May '09 was $200,000 which is up 4.2% from April '09. The median price in May of 2008 was $251,000. In town the monthly median price increase was lower, with a 2.3% rise to $225,000. For last May 2008 the median in town price for Chicago condos and homes was $319,000.

For developers of Chicago real estate, sales continue to be slow to non-existent. Over 50% of the new construction condo projects in downtown Chicago experienced contract cancellations or zero sales in the first quarter of 2009. Appraisal Research Counselors reported that just 55 units sold in the first quarter of this year, with 1,590 condos and townhomes unsold and another 2,250 yet to hit the market this year. ARC estimates that in a normal year, there are around 1,000 units sold in the quarter, which is certainly far more than the 55 this year.

The overload of new construction Chicago homes and foreclosures has forced many developers to lower prices up to 20% on some units. Rents have also taken a hit as more apartment projects are completed. For Chicago area luxury apartments, rents have fallen 7.42% from last year, while suburban rents are down 5.8% from last year. Also, just over 63% of suburban apartment towers are offering one to two months of free rent.

Attached homes, namely condos and townhomes, account for 53% of all home sales in Chicago and 25% in the suburbs this so far year (2009) according to Midwest Real Estate Data. The neighborhoods with the largest inventory of attached homes include the Near North Side, Near South Side, Lincoln Park and Lake View. In those four neighborhoods, condo sales dropped 50% from last year.

Tougher guidelines from lenders, especially Fannie Mae and Freddie Mac, have made it more difficult for buyers to get financing for a condo purchase. Statistically, condo buyers are predominantly single and that in part makes it harder to secure a mortgage. The single income, less credit history and bigger down payment sometimes required can force some potential condo buyers out of the picture.

Most experts predict that Chicago home sales will continue to be slow, but a recovery will occur within the next couple of years. With no major new downtown developments in the pipeline, the surplus inventory will be absorbed quicker. These sales on the lower end should start to free up those home sellers to purchase a larger, more expensive house or condo. Increased sales in other tiers will allow prices to gradually rebound. Until then, buyers should be able to find some good bargains on Chicago home sales.

 
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