While not yet as healthy as in other states, the real estate market in the Chicago area "definitely shows signs of having bottomed out and early signals of an upturn," said Jeff Matheson of Century 21 Kreuser and Seiler in Libertyville.
Houses are sitting on the market fewer days and sellers are getting better selling prices, primarily because of the lowest inventory levels the area has seen in six or seven years, he said.
"It used to be common for a traditionally-listed home to spend seven to 12 months on the market," Matheson said. "Over the past few months that has fallen to 90 days or less. And with high-quality homes in core areas, most are on the market now fewer than 30 days."
Two other factors that have changed the market is foreclosed homes now make up a dropping percentage of that inventory, while both real estate agents and prospective buyers are shying away from short sales.
"Unless they are preapproved short sales, people are staying away. They are tired of the long wait for approval with no guarantee (an offer) will ever be approved," Matheson said.
"In Lake County, there are actually shortages of good homes in specific markets. I have personally sold three homes recently that never hit the market," he said. "But the outlying areas are still suffering. It is all about location, location, location. In the mid-2000s people developed a disregard for location. That has become a priority again."
Buyers are also flocking to single-family houses over townhouses and condominiums, Matheson said. Single-family homes are very attractively priced. In addition, FHA financing of townhouses and condominiums can be difficult to obtain and some associations refuse to allow renters, which also makes the units difficult to sell.
Matheson has also noticed marked changes in the types of homes that people are seeking.
"There has been a philosophical change. They don't want McMansions. People are opting for smaller homes and they want homes that are closer to town where they can patronize restaurants and public transportation," he said. "The 'bigger is better' attitude is gone."
But no matter what size the home is, prospective buyers are all looking for granite countertops, stainless steel appliances and hardwood floors.
"Each home is the buyer's biggest purchase. So they want all the amenities," Matheson said.
First-time buyers now make up 30 percent of the market with investors making up another 20 percent, he said. Both groups are motivated by low interest rates, low prices, high rents and the lack of available inventory.
Buyers know that it is less expensive now to buy a home than to rent one based on monthly payments.
Investors know that they can buy a home at a low price and then earn high rents from it. They also know that there are many high-quality, long-term tenants currently in the rental marketplace, Matheson said. These are people who have been forced to rent because they got upside down on their mortgages and can no longer qualify to buy, but they make great, responsible tenants.
"The path we are currently on is going to be one of long, steady growth," Matheson said. "Most of those in the marketplace now are people who are relocating, investors and first-time buyers. There is a very large group of people right now who are sidelined because they are upside down on their mortgages and can't afford to move until prices rise. They are stuck in their current home until that happens.
"Unless the government finds a way to provide relief to that very large group of homeowners, the market will only improve very slowly," he said.
Matheson has been selling real estate in Lake County for nine years, three of those with Century 21 Kreuser and Seiler. To reach him, call (847) 367-1171 or visit www.kreuserandseiler.com.