Good News for Chicagoland

A message sent over from the President of Coldwell Banker Residential Brokerage, Fran Broude.

From Crain's:
Chicago-area home prices show first signs of recovery after three-year slide
By Alby Gallun
April 26, 2010
Home prices are rising again in some Chicago-area neighborhoods, in a sign that the local housing market is nearing the end of a devastating three-year slide.
Single-family home prices rose in 56 of 253 Chicago-area ZIP codes last year, according to Fiserv Inc., which calculates the widely followed Case-Shiller Home Price Index. It's the first gain since 2006 in any of the local ZIP codes Fiserv tracks.
Declines slowed sharply across the region, suggesting the worst erosion of home values is over. Prices in the area fell 2.8% last year, compared with 16.3% in 2008.
The data, provided exclusively to Crain's, offer the most detailed and accurate survey of single-family home prices. Fiserv tracks price changes at the ZIP-code level and compares repeat sales of the same properties.
The numbers reveal an uneven recovery, with gains concentrated in neighborhoods hit early by the foreclosure crisis. Double-digit declines continue in outlying suburbs.
It's "very good news" that the market "is beginning to show signs of stability in selected areas," Schaumburg-based housing consultant Tracy Cross says. "On the negative side, you still have areas that are saturated with a high number of foreclosures."
As prices approach a bottom, it's possible to start assessing the damage. Parts of metropolitan Chicago have seen a decade or more of home price appreciation erased in three years. At the end of 2009, the local price index had plunged 25.8% from its peak in the first quarter of 2007 to its level in first-quarter 2003.
ANOTHER SLIP
Home values aren't expected to regain much ground soon. Fiserv predicts Chicago-area prices will slip another 2.6% this year and rise just 0.2% in 2011.
Falling prices, low interest rates and the federal housing tax credit have helped boost demand, but generally not enough to offset high foreclosure rates and the miserable job market.
"Until we start creating jobs on a regular basis, I don't think (the market) is going to turn around," says Prudential Rubloff agent James Horwath of Chicago. "I think it's going to be another tough year still."
Over the past three years, prices fell in every ZIP code Fiserv tracks, but some areas weathered the slump better than others. The picture is bleak in suburbs like Cicero and South Side neighborhoods like South Shore, which have suffered drops exceeding 40% since 2006. Homeowners from the Gold Coast north to Uptown fared the best, with declines ranging from 11% to 15.3%.
But buyers are "finally getting off the fence," says Jennifer Ames, a Coldwell Banker agent who works in affluent North Side neighborhoods like Lincoln Park and Lakeview.
Ms. Ames brought a four-bedroom brick Victorian at 852 W. Webster Ave. to the market on Feb. 22 with an asking price of $1.4 million. A buyer signed a contract on the house three weeks later.
"We're definitely seeing the spring market we didn't see last year," Ms. Ames says, declining to disclose the sale price.
While prices fell slightly on her turf last year — the 60614 ZIP code sustained a 2.5% drop — they surged in the least likely of places: economically depressed Chicago neighborhoods like Austin, which saw a 20.2% gain, and south suburban Harvey, which led the market with a 28.4% increase.
It's unclear, bordering on inexplicable, why prices bounced back last year in communities with soaring unemployment and foreclosure rates, but one pattern is obvious: The ZIP codes that gained the most last year suffered some of the biggest price drops in 2008.
The same trend has emerged in other cities, Fiserv Vice-president David Stiff says. Though he hasn't studied the Chicago market, Mr. Stiff posits that foreclosure sales in prior years may have depressed values in some ZIP codes so much that prices are surging as distressed sales taper off and the market starts returning to normal.
HOLDING OFF
James Shilling, director of DePaul University's Institute for Housing Studies, says lenders that foreclosed on homes in the most distressed areas are holding off on selling those properties so as not to flood the market and depress prices.
Whatever the reason, it will be several years before homeowners in many ZIP codes get back to boom-era prices. Home values in some south suburbs are down to 1998 to 2000 levels, according to Wisconsin-based Fiserv. Crete was the biggest long-term loser, notching price declines of 5.3% over the past decade, while Lincoln Square led the Chicago market with a 10-year gain of 72.2%.
Last year, single-family home values rose 1.2% in Lincoln Square's 60625, one of 56 local ZIP codes to notch a gain, according to Fiserv. Other winners included Oak Park's 60302, with a 4.2% increase; 60618, covering Irving Park and Avondale, 4.1%, and 60640 in Edgewater and Uptown, 2.1%.
Though some areas may be close to turning a corner, they don't include distant suburbs like Waukegan, Round Lake and Zion, which suffered double-digit declines last year. Prices fell 10.2% in west suburban Yorkville, where foreclosures and overdevelopment have depressed prices.
The Yorkville market, says Century 21 Pro-Team agent Kathy Grabow of Aurora, "just got caught with overbuilding."