Slower Chicago Housing Market Sees Some Bright Spots
Suburban housing growth continued in various markets in the southwest and northwest as overall soft market conditions in the Chicago housing market persisted through the fourth quarter of 2006.
One of the hottest areas in this sector of the Illinois housing market was what is known as infill housing on scattered sites in many places across the suburbs, according to Tracy Cross & Associates, Inc.
The southwest region easily dominates new growth, with Joliet, Plainfield, Yorkville, Oswego, Aurora, Plano and Shorewood producing seven of the top ten spots in new home orders. The remaining three municipalities included Elgin and Huntley to the northwest and Mundelein in Lake County.
There could be problems, however, in some places in the southwest market. Some home builders, who were not named, are holding back on some projects about to come on line in places like Yorkville and Oswego.
One consultant also noted that demand for affordable housing is pushing growth southwest into Kendall and Grundy counties.
“Kendall County is growing, morphing from farmland into suburbs. Grundy has ample land available for affordable housing. Will County is a popular suburban market with a large supply of affordable housing,” said Steve Hovany, a principal in Strategy Planning Associates.
During the fourth quarter of 2006, the seasonally adjusted annualized rate (SAAR) of new production homes sales totaled 21,783 units. That figure produced a 9.4 percent decline from the 24,051 annualized pace recorded between July and September.
Those numbers reflect a decline in Illinois mortgage demand and included a drop of sales in the suburbs from 17,985 to a yearly pace of 16,588 or a drop of 7.8 percent. That compared to a figure of 14.4 percent for the city of Chicago where the numbers went from 6,066 to 5,195.
The regional SAAR in the single-family sector during the fourth quarter of 2006 equaled 9,088 units, the lowest volume of activity since the first quarter of 1995. In the multi-family home category, the annualized rate dropped to 12,715 units.
In 2006, a total of 25,702 new production single family and town home/condo units - offering more affordable home loan options to buyers - were sold in the ten-county Chicago metro area. Volume was down by 22.8 percent overall with the city dropping by 17 percent and the suburbs by 24.5 percent.
During 2006, with home mortgage costs relatively stable, the median sales price of a new single family home reached $303,957. That figure was an increase of 5.6 percent from the previous 12 months.
Across Illinois, housing starts continued to grow at a modest pace and median sales prices rose at an annual rate of 3.1 percent from $286,764 in 2005 to $295,535 in 2006.
SOURCE: The Business Ledger