Bargain hunters boosts Chicago-area home sales

Sales of existing homes rose in the Chicago area and across the country in December, apparently because of drops in both interest rates and home prices.

National purchases rose 6.5 percent to an annual rate of 4.74 million to 4.45 million from November sales, according to the National Association of Realtors.

The 15 percent annual drop in median prices in 2008 was the biggest decline since records began in 1968 and probably the biggest in seven decades, according to the association.

"The net trend is still negative," said David Sloan, a senior economist at 4 Cast Inc. in New York. "It does seem that some cheap prices are attracting buyers."

In the nine-county Chicago area 4,232 sales in December was an increase of about 8 percent over November, said the Illinois Association of Realtors. Statewide 6,590 homes were sold in December, up more than 7 percent from a month earlier.

Home sales and prices in the Chicago area dropped dramatically in December and for 2008, when compared with the previous year, said the association.

The median price for 2008 in the nine-county area reached $240,000, down 5.5 percent from 2007. December, however, saw Chicago area prices drop to $204,950, down 17 percent from the same month in 2007. Sales were down 16 percent from the same month in 2007. The year's total was worse with area home sales dropping 26 percent to 68,676 when 2008 was compared with 2007.

Home prices, supply of homes for sale and financing with interest rates around 5 percent are all good in the Chicago suburbs, said Pat Callan, president of the Illinois Association of Realtors.

The big problem for buyers is fear of losing their jobs, he said.

He also said that the number of foreclosures are depressing prices.

Inman News, which reports on real estate, said nationally a huge number of bank-foreclosed homes will hit the market soon. They quote the Federal Deposit Insurance Corporation as saying insured banks reported $23 billion in property on their books at the end of the third quarter of 2008, 134 percent increase from the previous year.