Chicago-area home values are growing, but not as fast as other metropolitan areas, according to reports in Crain’s Chicago Business and the Chicago Business Journal. Here’s what first-time Chicagoland home buyers should know as we head into the 2017 home buying season!
First, let’s recognize that the glass is half-full. Home values in Chicago and the suburbs have been steadily climbing over the past few years. As of October 2016, single-family home values were up by 3.9% in a year-over-year comparison to October 2015. During the previous months of September and August 2016, home values had year-over-year gains of 4.0%. Considering that October typically brings slower sales activity, the price trends have been stable.
Yet Chicago lags behind the home value gains that have taken place elsewhere in the country. Nationally, home prices were up an average of 5.6% in October 2016, well above Chicago’s gain of 3.9%. Out of 20 major metropolitan areas compared by the S&P CoreLogic Case-Shiller Indices, only New York City and Washington D.C. had lower growth in home values. Cleveland tied Chicago with price growth of 3.9%.
Cities enjoying the most gain in home values include Seattle, Portland, San Francisco and Boston.
Let’s not be too unhappy with 3.9%! As of October 2015, Chicago home values had only increased by 1.3%. A year-over-year improvement to 3.9% is nothing to sneeze at.
Here’s where the concern comes in. Chicago-area home prices have been slow to recover after the Great Recession. Between Septempber 2006 and September 2016, the value of a typical home in the greater Chicago area dropped 14.7%. Out of 124 housing markets, Chicago’s price recovery ranks near the bottom at 101.
One of the things we must remember is that prior to the housing bust, the Chicago area had a spectacular, and unsustainable, rise in home prices. New homes were spreading across suburban fields like wildfire. Home sellers were cashing in on equity, and home buyers who were breathing were qualified for no-down payment mortgages. It was a party that could not last.
When the housing crash and Great Recession hit, the Chicago area was awash in distressed homes, and home prices tanked. It takes time to cure a hangover of this magnitude, and Chicago home prices have gradually and steadily improved during the past several years. We have every reason to believe that home values will continue to make progress, so long as overall economic conditions are favorable.
StartingPoint Realty – serving first-time Chicago home buyers!
StartingPoint Realty specializes in serving first-time home buyers throughout Chicago and the Northwest suburbs. We provide complete education and guidance during the entire home buying process!
Be sure to attend a free home buying seminar to learn about Chicago home buying! Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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