Illinois REALTOR® Magazine | January 2013
By Geoffrey J.D. Hewings, Ph.D. | Director, Regional Economics Applications Laboratory (REAL), University of Illinois
Jobs are linked to the housing market and at press time the data showed the nation’s unemployment rate fell to 7.9 percent in October 2012 from 8.9 percent in October 2011. The Illinois unemployment rate decreased from 10 percent in October 2011 to 8.8 percent in October 2012.
Along with the encouraging situation in the job market, consumers presented much higher confidence about the short-term outlook than in 2011. In October the Conference Board Consumer Confidence Index® and the University of Michigan Consumer Sentiment Survey indicated consumers’ positive outlook of the economy for the next six months.
From October 2011 to October 2012, median prices showed mixed performances, varying between -11.7 percent and 3.6 percent year-over-year statewide; between -14.3 percent and 1.7 percent in the Chicago PMSA. Illinois experienced a solid annual sales gain, between 14.3 percent to 37.2 percent, and the Chicago PMSA gained from 17.0 percent to 44.2 percent. Distressed properties were still dragging down housing prices, while the continuing recovery of the labor market and high consumer confidence together with the Fed’s third round of quantitative easing ensured solid home sales gains.
In addition, pending sales trended up and decreasing listings drove a continuous decrease in the months of housing supply for Illinois from 11 months in October 2011 to seven months in October 2012. If housing starts cannot catch up, lack of housing supply will become a problem.
By October 2013, the median price of a house is forecast to be $136,286 in Illinois and $157,841 in the Chicago PMSA. Through October 2013, annual sales percentage changes are forecast to fall in a range between 16.5 percent and 116 percent from November 2012 to April 2013, followed by a mixed performance and narrow range between -11.6 percent and 14.1 percent.