Owners confident in home values
Faith in market runs counter to indicators

By Tara Malone, Daily Herald Staff Writer
Posted 9/12/2007

Farmers roll in just after 5 o'clock.

Construction workers and road crews arrive next for a quick bite at Sugar Grove's Sunrise Restaurant, where the coffee is rich, eggs are fresh and people familiar.

John Ashiku hopes the combination will make customers of the area's newest residents. During 2005 and 2006, more than 30,000 people settled into homes that today stand where corn fields once did in his and other Kane County towns

"It'll be huge," said Ashiku, owner and chef of the restaurant.

New census figures released today underscore his hope. Yet mounting signs of a suburban housing slump also urge caution.

Despite a cooling in the national housing market -- aggravated by an increase of homes on the market, flat or falling prices and higher foreclosure rates -- homeowners continued to buy and have faith in their investments across the Chicago region. At least, they did last year.

Such confidence -- a year delayed and by definition, subjective -- counters evidence of a real estate rut that emerged in 2006 and could persist through 2008.

Yet, economists and real estate veterans say the faith may not be misplaced.

The Chicago region is home to one of the country's more stable and steadily growing markets. Kendall and Will counties ranked near the top of the list of the 100 fastest-growing counties nationwide.

Median home values reported in suburban counties inched higher last year, posting anywhere from a 3.8 percent to a 13 percent increase from 2005, according to the Census Bureau's American Community Survey.

With or without a mortgage, homeowners in all but one suburban county -- Lake, where the median value of homes with a mortgage fell 1.2 percent -- believed the value of their property appreciated. And beliefs, not market sales, are reflected in the survey, which asks participants how much they think their property is worth.

Climbing lockstep with home values are housing costs, census figures show. In every county and every home regardless of mortgage status, anywhere from 1 percent to 10 percent more money was devoted to maintenance last year. Property tax bills also climbed.

Appreciation among home values appears to be slowing, a trend too new to register with census research yet too evident to ignore, experts said.

"The state we're in is something most Realtors, myself included, have never experienced," said Mike Boraca, of Re/Max Horizon's Elgin branch and a 20-year market veteran. "The data will be radically different the next time it comes out."

Consider this: Boraca's office listed 217 properties in August. It had 38 showings during the entire month, down dramatically from the two or three showings a single listing typically draws in a month.

Home sales statewide slipped 16.1 percent to 43,080 between April and June from a year ago, the Illinois Association of Realtors reports.

Where home sales lead, home prices may follow.

Nationwide median home prices -- the point at which half are higher and half are lower -- hit $228,900 in July, down just 0.6 percent from July 2005 according to the National Association of Realtors.

Price tags in the Chicago area bucked the national trend. Economists chalk up the disconnect to the stability of the region's housing market compared with that of the East or West coasts.

"Chicago and many other big Midwestern cities are ones that don't often fly too high and as such they don't necessarily fall too low when things slow down, either," economist Paul Bishop of the National Association of Realtors said.

The median home sale in the Chicago region was $256,400 between April and June, up 2.6 percent from a year earlier. In DuPage, median home sales climbed 6.5 percent to $358,320 last spring, the Illinois real estate group reported.

"There are constantly people moving here to work and the region is an immigration hub," said Beth Devers of the Metropolitan Mayors Caucus.

The group is working with municipal leaders to stem the tide of foreclosures locally.

"All those factors play a role in the housing market continuing to chug along," she said.