“Until we start to address the pension funds and spending issues, we’re going to continue to see weakness in the housing market,” said Jennifer Ames, a longtime top-selling broker in the city who heads the Chicago office of Engel & Volkers. “It’s not a new story.”
When flat is fine: A forecast for the Chicago housing market
A prediction for 100 metro areas puts Chicago in a group of 17 where both prices and sales will go down, but the dips here are so small as to be essentially flat. Local experts say not much will change until the city and state are on better financial footing.
The state’s $133.5 billion unfunded pension obligation hangs in the air, and with it the threat of big tax increases designed to plug the gap. That creates uncertainty about households’ future cost of homeownership.
Chicago is one of 17 metro areas where the forecast is for both attributes to dip. Realtor.com doesn’t rank the 100 metros anymore (when it did, Chicago was No. 100 twice), but 14 of the 17 are forecast to slip more deeply than Chicago.
Nationwide, realtor.com forecasts a sales decline of 1.8 percent and prices rising by 0.8 percent, all in all a meager year. Even the highest-flying market out of 100 isn’t looking at a frothy market. That’s Tucson, Ariz., where realtor.com forecasts sales increasing by 3.4 percent and prices by 3.3 percent.
In its report, realtor.com attributes next year’s lackluster real estate market to uncertainty about the U.S. economy putting a damper on both buyers’ and sellers’ outlooks and on shortages in the supply of both new and existing homes.
The other report, which looks at home price growth over the past four quarters, shows that Chicago ranks 95th of 100 metro areas. According to the late-November report from the Federal Housing Finance Agency, Chicago-area home prices grew by 1.6 percent over the course of the past year.
At the opposite end of the list, the metro areas with the biggest price growth were Boise City, Idaho, at 11.1 percent, and Tucson, at 10.3 percent.
Slim price growth is good news for buyers, who don’t see homes becoming less affordable too fast, but not as good for existing homeowners and sellers who may be hoping to maximize their investment and perhaps finally come up from underwater so they can afford to sell.
Both reports deal in broad strokes across entire metro areas, and in doing so they obscure the differences in submarkets within the Chicago area.
“Look at the West Loop,” said veteran agent Janet Owen, with Berkshire Hathaway HomeServices KoenigRubloff Realty Group. “They have so much sales activity and they’re having bidding wars.”