To say the least the economic news has not been the best in the last several months but sometimes we forget to notice some of the more encouraging trends that may be underway in the Chicago local market. That does not mean that we should minimize some of the sobering national economic news with consumer confidence down and the psychological worries about rising unemployment. There are some genuinely positive developments with all this news.
Housing affordability has been the best in decades. In many real estate markets around the country as well as the Chicago local market more households are now able to afford a median priced home than any time since 1970. Most of this is due to an increase in household income and the continued decline in prices of homes being sold. Right now most economists agree that the inventory of unsold homes is a huge obstacle, but inventories have been steadily declining over the last several months, which mean we are selling off the excess supply of homes. Selling off the excess inventory will stabilize the market which bodes well for the economy in general. When the economy is good and consumer confidence is high prospective home buyers flood the market starting the next housing boom cycle.
Another recent positive development which hopes to draw even more people to purchase a home or condo is Congress’s new $8000 non-repayable tax credit. This is available to anyone who has not owned a primary residence during the past three years. The credit is equal to 10 per cent of the home’s purchase price up to a maximum of $8000. You need to act now since it is available only for homes purchased on or before January 1, 2009 and before December 1, 2009.
The Chicago local market is poised for a small rebound in 2009 but then start a steady climb toward improvement in the years following. The housing market has long been an indicator of economic boom or bust and today’s market is no different. The housing market has always run in cycles, some short and some longer but there is always a rebound and this cycle is no different than those in the past. There will not be as quick a recovery we have seen in past troubled economic times but the kind of steady growth expected will be what is needed to sustain a long term housing recovery.
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