By Jim Merrion
Home sales activity in August suggests that the metro Chicago real estate market is healing after the sharp decline in sales recorded a month earlier and triggered largely by the expiration of the federal homebuyer tax credit. That was the conclusion of an analysis by RE/MAX of home sales information collected from Midwest Real Estate Data, LLC.
Though the picture was considerably brighter than in July, sales activity in the seven-county Chicago metro area during August was 19 percent lower than in August 2009, with 5,609 homes changing hands this August compared to 6,943 a year ago. In contrast, July sales totaled 5,581 and were 25 percent lower than the same month in 2009.
The improvement in total sales activity was not enormous, but when you look past that number, there were quite a few encouraging signs. For instance, sales of detached homes were down just 15 percent in August compared to 23 percent in July, and the average price for all homes sold this August was $274,442, compared to $265,542 a year earlier. The average time that homes sold in August spent on the market was 154 days compared to 164 days a year ago.
An important aspect of the August sales results was that closings on homes eligible for the federal tax credit fell to less than 10 percent of all transactions from about 20 percent in July. Homes that may have been eligible for the tax credit were those that were under contract by April 30 of this year and closed by Aug. 30.
The fact that more than 90 percent of August home sales were not related to the tax credit is definitely encouraging. It shows the market can survive without that stimulus. In my view, the housing market looks as if it is stabilizing, and best of all, prices of detached homes in the metro Chicago area could be poised to hold steady as we move ahead. I don’t expect prices to rise noticeably this fall, but the outlook for the spring 2011 market is getting brighter.
Jim Merrion is the regional director of RE/MAX Northern Illinois.