As the economy sputters along and unemployment rates remain steady at more than nine percent, there isn’t call for celebration. Whereas the real estate market was also lumped in with these aforementioned Great Recession causalities, in certain regions, sales of homes and condominiums are showing positive signs—giving hope to an industry that has been treading water for over three years.
“We are seeing a reduction in inventory and a higher demand from buyers,” says Matt Farrell, managing partner for Chicago-based Urban Real Estate. “There has been a bottoming out in the Chicago market and we are not seeing the same type of worries. There are still short sales and foreclosures but they are not necessarily driving down the prices as much.”
In September, the National Association of Realtors (NAR) released its monthly report and the news was somewhat encouraging. From August 2010 to August 2011, sales of existing single-family, townhomes, condominiums and co-ops spiked by18.6 percent. The report also found that sales on a monthly basis increased by 7.7 percent with unsold inventory dropping by three percent.
While these are aggregated national statistics show promise, these real estate tea leaves should be read with caution. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” noted Lawrence Yun, NAR’s chief economist. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”
Rosie O’Donnell’s recent purchase of a home in Chicago’s prestigious Lakeview area for $2.5 million isn’t an indication that the market is showing signs of high-end growth as not every buyer in Chicagoland is starting a television show this fall on Oprah Winfrey’s OWN network. Conversely, former Chicago Bulls star Charles Oakley placed his 10th floor condominium unit in Chicago’s prestigious Museum Park at 233 East 13th Street for $979,900. Barkley paid $1,087,500 for the home the year it was built in 2005. For a buyer, this is tantamount to sending a white flag up the pole.