Fears keeping people out of a buyers market

Now is the best possible time to buy a house because there is lots of inventory and interest rates are low, said Hank Fatoorehchi, broker/owner of Century 21 First Class in Schaumburg.

"But people are afraid of long-term commitment so they aren't buying," Fatoorehchi said.

"Once people realize that the market isn't going to drop anymore, I think that prices will go up more than people expect. I think that people are just waiting for that to happen so they can jump back in," he said.

How is the real estate market in the Chicago area faring?

"Sales have slowed down quite a bit in the Northwest suburbs where I sell, but prices are not down as much as you might expect, except in the case of foreclosures."

The average time for a home to be on the market used to be 67 days, Fatoorehchi said. Now it is up to 90 days.

"Some people are hanging in there and eventually selling. Others are getting frustrated and taking their homes off the market to wait for a better time."

How does the Chicago area market compare to the national market?

"Prices in the Chicago area market have dropped an average of ten percent compared to a drop of 30 percent in places like California, Florida and Las Vegas."

Fatoorehchi said housing values in those states boomed when things were good and now they are experiencing more of a drop when the market is difficult.

"The Midwest has always been a steadier market than the coasts. We never get huge appreciations here or huge drops."

Do you see more movement in any specific sector of the Chicago area market?

"Even when the market was strong, houses costing over $1 million sit on the market longer than more inexpensive homes. Even in good times they took five or six months to sell, on average. Today they are sitting on the market even longer."

Has the rise in gas prices affected how far people are willing to commute to work and where they are shopping for homes?

"Lately I have had lots of people tell me they are considering moving closer to where they work or at least closer to public transportation."

Are first-time buyers who have no home to sell taking advantage of the low prices?

"Not yet, but hopefully we will start to see first-time buyers getting into the market because of the government's $7,500 tax credit.

"I feel that the government needs to be more proactive and give people incentives that they get immediately. That $7,500 should have been given to first-time buyers at closing, not next year on their taxes."

What steps need to be taken to help strengthen the Chicago area real estate market?

"The government needs to institute a program for investors who want to buy up these foreclosures. The stock market has become so volatile that many investors want to get out of it and back into real estate, but there is no good program to help them do that.

"Fannie Mae and Freddie Mac are lending banks money at 2.1 percent so that they can turn around and lend it out to homebuyers at 6.5 to 7 percent. If the government hadn't rescued Fannie Mae and Freddie Mac, interest rates would have continued to rise. So if the government would just come out a say that interest rates will remain at 5.5 percent for awhile, that would certainly help."