It's been two years since the Chicago Association of Realtors conducted an economic briefing for its members because, frankly, any forecast revolved around rising foreclosures and falling home values.
But this month, real estate agents gathered in Chicago to digest a message for 2013 that they're likely to happily bring to their buyers and sellers. The message? There are still clouds out there, and we're behind other cities, but the local housing market is showing some promise. The key now is to keep that optimism grounded in reality.
Some of that positive outlook is borne out in the numbers. On Tuesday, the Illinois Association of Realtors reported that home sales in the nine-county Chicago area rose almost 27 percent in 2012 from 2011. The inventory of available area homes in December plunged 37 percent from its year-ago comparison, which has led to multiple-offer scenarios and quicker marketing times. Still, the annualized median price slipped 1.5 percent from 2011.
When it gets right down to it, what matters to potential sellers is what price their property will sell for, so the current stats are encouraging in that they're simply less discouraging than before.
"It depends on when they bought," said Mabel Guzman, an @properties real estate agent. "If they bought at the peak of the market, they're still down 15 to 20 percent. If they have money in the bank and think, 'I can get a little more bang for my buck,' they'll (sell)."
For potential buyers this year, the key question will remain whether they can qualify for a mortgage, and new rules announced earlier by the Consumer Financial Protection Bureau will provide more clarity. For months, lenders have fretted about the extent of the pending regulations and the associated compliance costs.
With those rules now published, there are expectations that over time, as the rules are implemented, both high-wage earners who are interested in jumbo mortgages and low-income borrowers may have a harder time meeting requirements.
This year, though, the lending experience should be similar to how it was last year, and while the Chicago area still has a glut of foreclosures to work through, there are reasons for optimism, according to David Hrobon, president and CEO of Wintrust Mortgage Corp.
"We see, hear, feel pent-up demand among buyers and sellers in almost every segment — the first-time homebuyers, move-up, jumbos, investors and folks looking to buy that second home in the city," Hrobon said.
Nationally, last year set a record in terms of home affordability. As of November, a median-income family had 198.2 percent of the income necessary to buy a median-priced, single-family home, according to the National Association of Realtors. While mortgage interest rates are expected to move up slightly during the second half of the year, that higher level of affordability is continuing to help drive home sales, particularly at a time of rising rents.
During the Realtors' event, Michael Miller, an associate professor of economics at DePaul University, told agents that for the last 31/2 years, the nation has been in the slowest and weakest recovery on record since the Great Depression.
The economy is growing, but not fast enough. There are new jobs, but not enough of them.
The one economic bright spot, Miller believes, is housing.
"It appears the turnaround is here," he said. "People are going to buy homes if, for no other reason, we have so few homes relative to how many households we have to create and we have the largest percentage of 20-somethings living at home on record. They want to get out."
Zeke Morris, president of the Chicago Association of Realtors, likes the message but says it's one that real estate agents need to temper for their clients.
"We have to be cautiously optimistic in terms of what we do," Morris said. "We don't want folks to go out and create wild expectations. It depends on where people are in their lives."
mepodmolik@tribune.com
Twitter @mepodmolik
