Housing Bubble
Illinois home sales set new record
February 12, 2003
Existing single-family home sales increased 6.5 percent in Illinois in 2002, easily setting a new annual record, according to the Illinois Association of REALTORS. A total of 113,613 existing single-family homes were sold in 2002 across the state, up 6.5 percent from 106,710 sales in 2001. IAR began tracking home sales in 1990. IAR’s latest report on total existing-home sales showed that statewide, 26,768 homes were sold in the fourth quarter of 2002, up 9.1 percent from the 24,544 level in the fourth quarter of 2001.
“The robust housing market has kept the struggling U. S. economy afloat. There were many individuals who chose to invest in real estate this year, because of the volatility of the stock market,” said Toni Sherman, ABR, CRS, GRI, president of the Illinois Association of REALTORS. “We expect the outlook for 2003 to be favorable as we begin the year with mortgage interest rates at or below 6 percent. Though it will be hard to beat the record-breaking year we just completed, home sales will still be your best investment and should enjoy solid appreciation.”
The statewide existing single-family median home sale price rose 6.7 percent in 2002 to $161,700, compared to $151,500 in 2001. The IAR survey covers non-seasonally adjusted median prices for existing, detached single-family homes and condos sold in 38 local association markets throughout Illinois. In the Chicagoland Primary Metropolitan Statistical Area (PMSA), sales of existing single-family homes rose 6.4 percent to 72,983 in 2002, compared to 68,603 home sales in 2001. Chicagoland PMSA fourth quarter existing sales volume figures increased 11.6 percent to 17,134. The Chicagoland PMSA includes the counties of Cook, DuPage, Lake, McHenry, Kane, Will, Grundy and Kendall and consists of data from the Multiple Listing Service of Northern Illinois, which includes 11 associations of REALTORS.
The median price of homes sold in the Chicagoland PMSA increased 8.7 percent to $206,900 in 2002. The median price of an existing single-family home reached $209,800 in the fourth quarter of 2002, up 12.2 percent from $187,000 in the fourth quarter of 2001.
Statewide home prices for the year ranged from $497,800 in the Barrington area to $49,300 in the Kewanee area (Mid Valley Association of REALTORS). In the Chicagoland metro region, Aurora posted $178,500, an increase of 5.0 percent; Chicago reported a year-to-year increase of 7.7 percent to $174,500; Elgin was up 8.1 percent to $182,100; and Will-Grundy rose 8.1 percent to $173,400.
Elsewhere in the state, the Capital Area (Springfield) was up 4.4 percent to $90,800, Kankakee County increased 8.4 percent to $104,500; Rockford Area was up 5.3 percent to $105,700; the DeKalb Area rose 6.8 percent to $142,200 and Belleville Area was up 3.4 percent to $93,500.
“This has been a phenomenal year for home sales,” said Sherman, who is a broker associate with Coldwell Banker Residential Brokerage, Glen Ellyn. “Low mortgage interest rates certainly played a pivotal role in driving home sales to such a healthy pace throughout the year. Homeowners are finding their homes may be the best, safest investment, as the majority of markets across the state are reporting solid price appreciation. The Federal Reserve Board has maintained its commitment to keeping interest rates at current levels, so this move bodes well for the housing industry in the year ahead.”
Affordability
The 2002 Illinois Housing Affordability Index* stood at 168.25, compared to last year’s annual index of 161.07. For the fourth quarter, the index stood at 179.76, compared to the same quarter last year which stood at 180.11.
The affordability index measures the ability of a typical four-person family to purchase a median-priced existing single-family residence. For example the annual index reveals that a family earning the statewide median income (for a four-person family) of $66,356 had 168.2 percent of the income needed to qualify for conventional financing covering 80 percent of a home priced at the median price of $161,700
IAR’s Housing Affordability Index uses an interest rate based on a composite of closing rates for fixed rate mortgages on existing single-family homes as reported by the Federal Home Loan Mortgage Corporation. The average 2002 effective rate for the North Central region, which includes Illinois, was 6.62 percent (down from 7.01 percent in 2001). The average fourth quarter 2002 effective rate for the North Central region was 6.17 percent (down from 6.84 percent in the fourth quarter of 2001).
Condominiums
The Illinois condominium market enjoyed robust sales during 2002, with 44,469 units sold—a 9.4 percent increase from 40,640 units sold in 2001. The Chicago PMSA saw a 9.7 percent increase in sales in 2002 to 41,823. Fourth quarter 2002 condo sales statewide rose 12.2 percent to 10,439. In the Chicago PMSA, condo sales increased 12.8 percent to 9,774 during the fourth quarter.
The median price of a condominium in Illinois reached $167,100 in 2002—a 10.3 percent increase from $151,500 in 2001. The Chicagoland area annual median condo price rose 10.5 percent to $170,100 in 2002. Fourth quarter 2002 condo prices were $169,500 statewide (up 10.1 percent) and $172,100 in the Chicago area (up 9.9 percent).
IAR’s survey includes non-seasonally adjusted median prices for existing condominiums as reported by those local associations who compile condominium statistics.
*IAR uses the median income for four-person families figure, as determined by the U.S. Census Bureau, in its housing affordability index figures. According to the Census Bureau, the methodology used to compute four-person family income by state utilizes the most recent data available from the Current Population Survey (CPS) and the decennial census of population as well as per capita personal income estimates produced by the Bureau of Economic Analysis. IAR also uses the Chicagoland PMSA as defined by the OMB (Cook County, DuPage County, Grundy County, Kane County, Kendall County, Lake County, McHenry County, and Will County.)
Source: Illinois Association of REALTORS®
