Hints of more activity in U.S. housing sales
'More stable' Chicago area off 25% from a year earlier

By Mary Ellen Podmolik, Chicago Tribune reporter
August 26, 2008


Home buyers took advantage of sharply falling prices to snap up bargains last month in some parts of the country, though not necessarily in the Chicago region.

Sales of existing single-family homes and condos in the nine-county metropolitan Chicago area dropped 25.2 percent in July from a year earlier, the Illinois Association of Realtors said Monday. Sales were off just 5.76 percent from June.

The national figures, however, were rosier. July home sales rose 3.1 percent from June, to their highest level in five months, with most of the gains coming from the hard-hit California and Florida markets, where prices have plunged. But sales were down 13.2 percent from a year earlier. Existing-home sales in the Midwest increased 0.9 percent from June but dropped 17 percent from July 2007, the National Association of Realtors said.

Some industry observers don't put much stock into one month's figures, but the year to date offers little solace. In Grundy County, for example, home sales from January through July dropped 25.4 percent from a year earlier and were off 36.7 percent in DeKalb County, according to the Illinois Association of Realtors. Seven-month sales in Cook County were down 27.9 percent, to 23,980, in the first six months.

July new-home sales data will be released Tuesday, and the numbers aren't expected to be any better.

Add the presidential election to the continuing woes of tighter lending standards, higher mortgage rates and job insecurity. Those make buyers few and far between, which is contributing to an inventory of homes that is three times greater than what is considered healthy.

Just ask Forrest and Melinda Artz, who have been trying to sell their two-bedroom, two-bath West Loop loft for three months because Forrest Artz has moved to Memphis to take job there.

On Sunday, Melinda Artz held an open house for 2 1/2 hours but spent much of the time watching TV with her parents. Two groups came through. One had just started looking at condos and was not ready to commit, and the other liked the unit but said she had a house to sell in Flossmoor before she could consider a purchase.

"We haven't had any objections to the price" of $399,900, Melinda Artz said. "Realtors say it shows great, that we shouldn't have a problem selling it. We're just going to keep trying it on our own."

Most economists aren't providing Artz or other sellers with hope for a turnaround anytime soon.

"Existing sales have made a bottom, and they are just bouncing along on that bottom," said David Oser, chief economist at ShoreBank, who predicts 5 million existing homes will be sold this year nationally, down from just over 7 million in 2005. "The people in the market are people who have to be or who have made the decision that we are at or near the bottom and this is the time to bottom fish."

Sellers are hearing the same refrain, and surprisingly, it's not just price. Either the home doesn't measure up to so many others like it in the same price range and community, or people are browsing with no real plans to jump into the market until at least next year.

"Wrap up all of that stuff and it says you wouldn't be surprised to see even lower housing sales numbers in Chicago for August," said James Shilling, real estate professor at DePaul University.

Sitting at an open house Sunday for an Elmhurst home first listed in February for $857,000 and now priced at $759,000, real estate agent Sheila Barbre saw six groups of people, including two who stumbled upon the house after seeing a sign Barbre had posted nearby at the Illinois Prairie Path. "Everybody had the same comment," she said. "They wanted to stay away from the market because of the way this year is. They are looking into next spring to do something."

Economists worry that the growing number of homeowners who want to list their house–but haven't because of market conditions and price declines—will slow any recovery next year by keeping inventory levels high.

"It was clear six months ago, nine months ago that the housing market was having a dramatic impact on the economy," said Geoffrey J.D. Hewings, director of University of Illinois' regional economics applications laboratory. "Now the economy is dampening the housing market. People, I think, are very nervous.

"What will happen [next year] is you'll have this massive increase in listings," he added. "If there's any good news at all, it's that our prices haven't gone down nearly as much as the top 25 metropolitan areas."

Median prices in metropolitan Chicago fell 2.9 percent, to $254,900, from July 2007, faring better than the median-price drops of 4.8 percent for Illinois and 7.1 percent for the nation, the Realtors said. The median price means half the homes sold for more and half for less.