Despite sales drop, area homes maintain value

Home sales in the Chicago area declined in the fourth quarter of 2007, but the Illinois Association of Realtors is hopeful housing provisions in the federal government's economic stimulus package, coupled with low interest rates, may boost sales in the coming year.

Sales of single-family homes and condominiums in the nine-county Chicago area declined 28 percent in the fourth quarter to 17,364, from 24,120 in the fourth quarter of 2006.

For the year, home sales dropped 20.5 percent to 92,656, from 116,527 in 2006.

The median home sales price in the region rose 1.2 percent in the fourth quarter, to $248,000, from the fourth quarter of 2006. Cook County's median home sale price increased 4 percent to $260,000. Kane County's was up .4 percent to $229,990, and Lake County's rose 1.8 percent to $252,000.

Statewide, home sales were down nearly 23 percent in the fourth quarter compared with the year-earlier period, and down 16.8 percent for the full year. The median sales price statewide was $201,000, down 1.1 percent from $203,500 in 2006.

"The uncertainty in the national housing market has penetrated into the Illinois economy," said Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois, "although the volatility is more muted than for other parts of the country, especially the major metropolitan areas and states like Florida."

The Illinois Association of Realtors sees a silver lining in the federal economic stimulus package, which President Bush signed into law Wednesday. It temporarily increases loan limits for the Federal Housing Administration, Fannie Mae and Freddie Mac, which should stimulate sales in higher-cost markets such as Cook County and the eight surrounding counties.

Mortgage rates are lower now than four weeks ago. The rate on a 30-year, fixed-rate loan has remained under 6 percent for more than a month, according to Bankrate.com.

The housing provisions "will help to bolster housing market activity by infusing much needed funding into these mortgage options and thus making the dream of homeownership more attainable for home buyers," said Kay Wirth, president of the association.

Even with the stimulus plan and low interest rates, national sales are expected to be soft through the first half of 2008.

According to the National Association of Realtors, there are plenty of buyers who have been stranded by the credit crunch.

"Household formation was only half of what it should have been last year, given the demographics of a growing population and sustained job growth," said National Association of Realtors chief economist Lawrence Yun. "So there is clearly a pent-up demand from buyers who are on the sidelines."