Pricing Give and Take
Housing prices in the Chicago area fluctuated in 2015, according to the Standard & Poor’s Case-Shiller Chicago Home Price Index. The index’s most recent data shows that prices in Chicago fell 0.39 percent from August to September but increased 4.5 percent for the year. Year-over-year, prices rose only 1.1 percent from Sept. 2014. Prices also grew slowly in other parts of the country, but Case-Shiller’s data shows Chicago home prices growing at a slower pace than any of the 20 major metropolitan areas measured by the index. Nationally, the index rose 4.9 percent year-over-year.
As supply fell, median prices in the Chicago area rose 8.1 percent year-over-year in 2015. The Regional Economics Applications Laboratory at the Institute of Government and Public Affairs at the University of Illinois’ (REAL) expectation for 2016 median price gains in the Chicago Primary Metropolitan Statistical Area (PMSA) comprising Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will counties falls in the 3.5-percent-to-9.5-percent range, with the median price of homes in the area clocking in at $212,304 by December 2016. REAL forecasts a median price increase of 3.1 percent to 7.4 percent for Illinois, rising to $173,546 by December 2016.
“Our inventory is down more than 13 percent over last year,” Alonzo said. “We just don’t have enough homes to sell. I could see that continuing into 2016. We don’t have enough inventory for the buyers coming into the market. They turn into renters when they can’t find something to buy, so the rental market is tight as well.”
Unemployment held at 5.0 percent nationally in November (unchanged from the previous month), according to the U.S. Department of Labor Bureau of Labor Statistics, though it rose slightly to 5.4 percent in the Chicago-Naperville-Elgin Metropolitan Statistical Area. The numbers reflect a general downward trend in the region, where unemployment was at 6.1 percent during the same period last year. The high for 2015 was 6.8 percent, a number the area hit in January.
The state’s unemployment rate rose to an estimated 5.7 percent in November, but still reflects a year-over-year improvement compared to Nov. 2014’s 6.2 percent. Twelve-month-ahead job recovery forecasts have future recovery rates climbing in every sector in Illinois except manufacturing, trade, transportation and utilities, and information in 2016, according to REAL’s Nov. 2015 Illinois Economic Review. The same report forecasts the total non-farm jobs growth rate for Illinois in 2016 falling somewhere between 0.44 percent and 0.84 percent.