Despite the continued weakness in the U.S. housing market as indicated by March numbers from indicators such as NAR’s existing homes sales, Census’s new housing starts and new home sales, signs of a housing pick-up in the Chicago metro area are emerging earlier this year.
Rising Inventory and Owners’ Asking Prices: First, as early as February, Chicago’s single-family home listings were up 8.0% from the previous month, accompanied by a 1.5% increase in median listing prices to reach $175,000, according to data from FNC’s National Collateral Database™ (NCD). Then in March, listings jumped by another 13%; likewise, the median listing price rose 2.4% from February to $179,200.
Rising Sales Volume and Prices: Second, March home sales were up significantly, rising more than 23% since February, or 11% from March 2011, according to FNC’s NCD. Among them, sales of non-distressed properties were up 26% from February to March and foreclosure and REO sales were up 18.5%. On a year-over-year basis, March non-distressed sales rose more than 18% from a year ago, but foreclosure and REO sales rose by less than 2.0%.
The Chicago metro area is seeing a higher average sales price in both distressed and non-distressed sales. In March, the median sales price on non-distressed properties was $175,000, up 6.0% from February. In foreclosure and REO sales, the median sales price was $84,000, compared to February’s $80,000.
Shrinking Asking-Price Markdown: Another important indicator of a stronger Chicago market can be seen in smaller price markdowns being negotiated between sellers and buyers. Not surprisingly, rising demand for housing is expected to strengthen a seller’s bargaining power. And sellers in markets characterized by relatively low housing inventory will be able to secure better prices resulting from competitive bidding wars among potential buyers. (See a recent Wall Street Journal article by Nick Timiraos, “Stunned Home Buyers Finding the Bidding Wars Are Back.”)
FNC Data & Analytics indicate that March has already seen a 1.3% drop in sellers’ asking price discount, down from an average of 20.2% in February to 18.9% in March. In the past spring seasons, improving discounts have typically not occurred until April. But this year, the turning point arrived a month earlier, along with other stronger numbers to indicate a spring strengthening. The average seller asking price discount is 9.6% nationwide.
Distressed Sales Drop Significantly from a Year Ago: The area’s distressed sales continue to account for a significant portion of the sales volume. Nearly 38% of the homes sold in March were foreclosure, REO, and short sales, significantly higher than the national average of 28.7%. However, compared to spring 2011 – which marks the peak activity of distressed sales for the area — this February and March have seen distressed sales drop more than 8.0% in each month, according to FNC data.
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