Suburban home prices experience strong gains in 2014

The suburban Chicago housing market ended 2014 on a positive note: the number of homes that went under contract in December 2014 increased 19.4 percent over the same period last year, the largest year-over-year increase to date. Home prices also continued to grow, with the median sales price of detached homes up 8.8 percent compared with 2013, according to statistics released today by the Mainstreet Organization of Realtors (MORe).

Despite the strong price gains, MORe's region - which includes about 200 communities in DuPage, Lake and suburban Cook counties - experienced a decline in sales volume in 2014. The number of homes sold last year was 8.9 percent lower than 2013, as reflected in information provided by Midwest Real Estate Data, LLC.

"When looking at these statistics, we must remember what they represent," said Pradeep Shukla, president of MORe and managing broker of RE/MAX Renaissance in Des Plaines. "These numbers are year-over-year comparisons, and while it is true that sales volume was down 4.4 percent in 2014, we still had a reasonable year. The market has stabilized since the rapid recovery in 2013, and buyers and sellers are confident in the economy."

In December 2014, median area home prices edged up only 2.1 percent. However, more than one-third of communities in MORe's jurisdiction experienced double-digit average sales price growth in December. In luxury markets, such as Oak Brook and Hinsdale, average sales prices topped $1.2 million.

"The number of houses under contract is a good sign and will likely boost January sales figures," said Shukla. "Average sales prices are up but sales are down, which indicates to me that more regular-priced properties are selling and the inventory of distressed homes has been depleted."

In looking ahead to 2015, Shukla predicted a number of positive trends:

• Housing demand will grow over the next 12 months

"Four years after the end of the recession, it looks as if the U.S. economy might finally be poised for breakout growth. Home prices have grown steadily over the last two years. And most important, the confidence level of homebuyers is improving. Consumer confidence is essential to the steady growth of housing demand in the U.S."

• Strong job markets, high consumer confidence will positively affect housing

"The job market has improved a great deal since we hit an unemployment rate of nearly 10 percent in late 2011. Now with unemployment dipping below 6 percent, the job market is strong. Economists predict about 2.5 million new jobs will be created in 2015. This means a greater demand for residential and commercial space."

• Together, homebuyers and investor will keep the market strong

"Investment in the housing market comes mainly from two different categories: homebuyers and investors. With the increase in employment levels, steady growth in the GDP, easy accessibility for international buyers and first time homebuyers, we expect more demand in the housing sector. For investors, stabilization or correction of the stock market, modest increases in home prices and increases in commercial activities are likely to help keep the market strong."

MORe is dedicated to anticipating and serving the needs of more than 14,000 Realtors, affiliates and licensed appraisers in South, West and Northwest Suburban Chicago area. MORe is the largest local Realtor member organization in Illinois and the fourth largest in the nation. To learn what a Realtor can do for you, visit www.succeedwithmore.com.