During his more than 30 years in real estate, George Seaverns of RE/MAX Experts in Buffalo Grove has seen many different types of markets. And right now he is pleased and excited by what he sees.
"Real estate runs in 15- to 20-year cycles and we are currently at the beginning of one of those cycles," he said. "This is probably the best opportunity to buy that most people will have in their lifetime. It is cheaper right now to buy a home and pay a mortgage than it is to rent and people need to understand that reality."
Interest rates play a big part in that equation.
"Over the past 20 years, the average interest rate has been 8.5 percent. Right now, however, the average rate you will find is about 4.25 percent -- and it is not going to stay that way forever," Seaverns said.
"To illustrate what that means, 20 to 25 years ago when interest rates were 8 percent, a mortgage payment might have been $2,300 per month. Today, for that same size mortgage, the monthly payment (including principal, interest, tax and insurance) would be $1,650 per month. That is a huge difference," he said.
The fact that people can save so much on their payments is helping to drive the market which, in turn, is starting to drive prices up to levels that are more palatable to sellers. The fact that short sales and foreclosures are being purged from the market by real estate investors is also helping, Seaverns said.
Seaverns predicts that by this time next year, those "distressed" properties will have all but disappeared from the scene.
"There have always been foreclosures, but they haven't been an issue because there were so few of them. That will soon become the case again," he said. "2012 was a huge year for local real estate. Many of those foreclosures and short sales were purchased and we had a nice jump in prices that has fueled the current market."
What are you currently seeing in the local real estate market?
"We are very busy. Prices have risen 6 percent from this time last year and while more houses have been coming on the market, we still have a relatively low inventory because they are selling so well.
"This is a fun time because things are selling and prices are going up. But sellers still can't afford to overprice their homes. If they do, they will not sell.
"The average time on the market for a home today is 55 days, but many have been selling the first week they are on the market as people rush to buy and get in before school starts. But in the current market, if you have an average house that is clean and ready to go and not priced too high, it shouldn't last more than a few weeks."
However, lower-priced homes are still selling much more readily than more expensive homes, Seaverns said.
"The market has to work its way up the ladder. We have to start by selling the lower-priced homes so that buyers who are ready to move up can do so. Real estate progressively moves up like that.
"For instance, in Buffalo Grove we are now just about sold out of homes in the $200,000 range but we have plenty in the mid-$300,000s and up. We are moving up the ladder."
How does the local market compare to what you are hearing about the national market?
Markets are very local and they have their own individual characteristics, Seaverns said. Some are like wild roller coasters. Others are gently sloping roads. Chicago's is somewhere in the middle, he believes.
Las Vegas, Arizona and Florida have been taking roller coaster rides. They crashed hard and fast -- and now they are rising fast, Seaverns said. "They are about a year ahead of us in the recovery process."
The Carolinas, on the other hand, felt little or no crash so that region isn't experiencing a steep recovery. That area is conservative and steady.
"There are still many distressed areas in the country, but Chicago really isn't one of them. We are experiencing a good recovery."
Do you see more movement in any specific sector of the market?
"Single-family homes always sell well but townhouses and condominiums are also selling well now. Young people who understand that it is cheaper to buy than rent are in the market and many of them don't want to deal with the maintenance of a yard. So they are willing to pay the assessments so that they can enjoy their free time."
Seaverns said both the city and suburban markets are popular -- with different people. Young people who work in the city often want to live there so they don't have a long commute, and they enjoy the active social life there.
"But it is expensive to live in the city. They can save money, in many cases, by not having a car, but it is still expensive. They also tend to move to the suburbs once their children are ready to go to school."
What is the biggest change you have seen in the local market over the past year?
"The lack of short sales and foreclosures in the market has helped property values to rise. They are no longer a drag on the market. But Realtors still have to work very closely with appraisers in order for the rising prices to be funded by the lenders. They have to go further afield to get appropriate comparables."
What still needs to happen for the market to totally recover?
"Interest rates need to remain low. That is primary. They need to stay low until the recovery is complete because if the government starts to raise them, it will certainly slow the housing recovery."
Seaverns can be reached at (847) 353-7606, (847) 962-5659 or online at www.georgeseaverns.com.