The error in the Illinois Association of Realtor’s (IAR) May 2011 data, and potentially years previous, has likely left many industry professionals wondering what data they can trust.
While the to-be released corrections may come months after the fact, the backwards comparisons are necessary to understand the progressive nature of the housing market. The overestimation of prices for Chicago condos and single-family homes impacted local perceptions, and while IAR believes the erred data stemmed from a technical glitch, both agents and buyers might now be more likely to put less weight on the group’s numbers as they gauge the market with the inaccurate numbers pushed to the back of their minds.
“This isn’t unique to MLS-based price data; there are myriad local, regional, and national data sources that typically provide an incomplete view of the market in one way or another, and finding all the information in a single source has always been near impossible,” said Housing Intelligence of the recent IAR’s technical blunder.
The reality of the Chicago condo market is that we have seen an increase of REO/distressed condominium closing transactions, up 30 percent in January of this year from January 2008 when the REO’s made up only 5 percent of condominium transactions-which Housing Intelligence admits has dragged down regular resale prices and strained the new home market. As 2011 progressed, overall condo transactions declined, as well as the ratio of distressed properties in the market.
“Between 2005 and August of 2010, the rate of foreclosure on condominiums in the city of Chicago has outpaced the rate at which they have been sold back into the marketplace as REO/Distressed closings in every month except for five,” said the article.
Many condominiums owners and residents faced lawsuits, with varying terms of negotiation. Some condominiums stalled construction, causing residents to stray from closing, while others have been forced to evacuate.
“Circling back to pricing, while more REO/Distressed means additional downward pressure on overall condo prices, in the long run it is good that the peak of foreclosure overhang appears to be in the past, and the Chicago condo market can now move forward with absorbing the remaining foreclosed inventory so that the market and prices can stabilize in the coming months and years,” said Housing Intelligence.