March Housing STATS

`


Contact IAR Communications:

• Home sales in Illinois rose for the second consecutive month in March showing some
momentum heading into the spring market, while sales remain lower than last year’s
heightened totals from the tax credit. (IAR)
• March 2011 home sales are up 40.0 percent from the previous month’s totals in February;
sales are down 17.9 percent year-over-year compared to March 2010. (IAR)
• More than one-third of Illinois homes sold in March closed under $100,000 and 69 percent
under $200,000; this combined with the continued impact from distressed property sales
contribute to the lower median price. (IAR)
• It’s worth repeating that market conditions today are optimal for buyers. Interest rates remain
below five percent and home prices are lower making affordability at an all-time high for
investors and buyers with strong credit and the financial wherewithal. (IAR)
• Sellers have an opportunity now to use the spring market when buyer interest is higher and
the weather more cooperative to set the right price to sell. (IAR)
• “In March the Illinois and Chicago housing markets were warming up as expected and as the
sales forecast reveals, the housing sales volume is expected to increase for the next three
months with a monthly growth in the 10-15 percent range for Illinois and 7-23 percent range
for the Chicagoland region. (Regional Economics Applications Laboratory, University of
Illinois, April 2011)
• Comparing the housing market in 2011 with 2010 and 2009, the sales volume is recovering;
however, the housing prices remain well below prior year levels although the trend suggests
some modest price recovery. The removal of foreclosed properties from the inventory will
have long-term positive benefits to the housing market. However, in the near-term the
presence of these properties serves as a significant break on any upward trend in prices.”
(Regional Economics Applications Laboratory, University of Illinois, April 2011)
• The five-year swoon in home prices has done little to shake the confidence of the American
public in the investment value of homeownership. Fully eight-in-ten (81%) adults agree that
buying a home is the best long-term investment a person can make. (Pew Study, 4/12/11)
• Most experts expect rates to continue to increase through the year. Interest rates along with
price determine the overall cost of a home. Even with prices softening, if interest rates rise, it
may be less expensive to buy now rather than wait. (KCM blog, 4/12/11)

IAR Economic Talking Points

Illinois Statewide – March 2011
􀂃 Home sales up +40.0% from February; -17.9% from March 2010
􀂃 7,833 sales in March compared to 5,596 in Feb 2011, 9,538 in March 2010
􀂃 Median price +1.6% from February, down -12.2% from March 2010
􀂃 $130,000 March 2011; $128,000 February 2011; $148,000 March 2010
􀂃 SF/Condo median price trending back to 1999-2000 levels
􀂃 42/98 counties reported median home sale price increases or no change
􀂃 37/98 counties reported sales increases or no change compared to last year

Chicago PMSA (Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will)
􀂃 Home sales +41.3% from February; -15.6% from March 2010
􀂃 5,324 sales in March compared to 3,769 in Feb 2011; 6,309 sales in March 2010
􀂃 Median price +3.6% from February, down -14.1%
􀂃 Will County – median price increase +.6.3% to $170,000 year-over-year
􀂃 Kendall County – sales increase +14.7% year-over-year
􀂃 SF/Condo median price trending back to 2000


• Forecasts for the next three months (April, May and June 2011) for Illinois and Chicago
suggest that while annual sales are expected to be negative (still because of the effect of
the tax credit), the month-to-month sales are expected to be positive for all three months.
• The housing price forecasts for both Illinois and Chicago show month-to-month increases
for the next three months. However, the forecasted prices are still 13-16% lower than last
year during the same period.
• Illinois added 17,600 jobs at a rate of 0.31% in February 2011, compared to a revised
24,200 job gain in January 2011. The three-month moving average of jobs, a more stable
measure of the labor market, was up by 12,200 jobs.
• The February shadow unemployment rates for the Illinois, The Rest of the Midwest and
the Nation were 11.2%, 13.6% and 12.3%, compared to the official unemployment rates
of 8.9%, 9.0% and 8.9%

• Four great financial reasons why you should not wait before taking the plunge into
homeownership. 1) Interest Rates Are Increasing. 2) The 30-Year Mortgage May Disappear
(There are several experts who believe If Fannie Mae and Freddie Mac’s roles are
eliminated, or even limited, it may be the end to the 30-year mortgage. 3) QRM
Requirements Could Be Much More Stringent (Certain mortgage types would be eliminated,
You would need to put a minimum of 20% down, You would need a minimum 690 FICO
score, The ratios of income to both the mortgage payment and overall debt would become
much more conservative (28% and 36%). And 4) Rents Are Expected to Increase. (KCM
blog, 4/12/11)

• "Mortgage rates edged up following a light week of economic data releases. Although rates
on 30-year fixed mortgages have risen four weeks in a row, they have remained below 5
percent for eight straight weeks now, helping to maintain affordability in the housing market.
(Freddie Mac, 4/14/11)

• “We may not see notable gains in existing-home sales in the near term, but they’re expected
to rise 5 to 10 percent this year with the economic recovery, job creation and excellent
affordability conditions providing confidence to buyers who’ve been on the sidelines.”
(Pending Index, 3/28/11)

• The faster pace of incoming distressed inventory into the marketplace does not necessarily
mean a further slump in the housing market. The key is demand. If these distressed
inventories are quickly picked up by buyers, then no worries. But if distressed inventories
linger in the marketplace then we can expect a notable further decline in home values. All
indications point to plenty of ready buyers for foreclosed homes, not uncommonly with
multiple offerings. So housing demand appears to be present at the moment and could grow
as the economy turns for the better. (NAR Real Estate Insights, 4/11)

• Last year the demand arose from the home buyer tax credit. This year the demand will come
from improving job market conditions. (NAR Real Estate Insights, 4/11)

• The job market continues to provide some positive signs. In March, the national
unemployment rate declined for the fourth month in a row to 8.8%, and the national nonfarm
payroll expanded by 216,000 jobs, according to the Bureau of Labor Statistics. The
state of Illinois added 17,600 jobs at a rate of 0.31% in February 2011, compared to a revised
24,200 job gain in January 2011. (U of I REAL Forecast, 4/11)
• The three-month moving average of jobs, a more stable measure of the labor market, was up
by 12,200 jobs. The February unemployment rate in Illinois fell to 8.9 percent; this rate fell
for the 13th consecutive month, and the last time the state rate was below 9.0 percent was
two years ago in February 2009. (U of I REAL Forecast, 4/11)

• “Housing affordability conditions have been at record levels and the economy has been
improving, but home sales are being constrained by the twin problems of unnecessarily tight
credit, and a measurable level of contract cancellations from some appraisals not supporting
prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a
gradual but uneven recovery. (NAR release, 3/21/11)

GSE Reform Talking Points (NAR)

• Owning a home contributes to the strength of the nation’s economy and is still one of the best
ways for individuals to build long-term wealth; therefore, we need public policies that

support home ownership. Making it harder for families to afford safe mortgages does not
further the goal of a housing or economic recovery.”

• Housing creates jobs. Housing accounts for more than 15 percent of the national Gross
Domestic Product, or $2 trillion, a key driver in our national economy. For every additional
1,000 home sales this year over last, about 500 new jobs are added to the economy.

• Without the government’s role in housing finance, mortgage rates would rise unnecessarily
and become unaffordable for many Americans. In addition, an inadequate secondary market
would impede housing and economic recovery and prevent many young middle-class
families from owning a home.

• NAR is actively engaged on behalf of Realtors® and the nation’s home owners to protect the
flow of affordable mortgages to home buyers.

• For a vast number of consumers, access to affordable, simple 30-year fixed rate mortgages
requires government backing.

• Foreclosures: Despite record affordability and buyer incentives, rising foreclosure rates and
concerns about proper foreclosure procedures led some to question whether owning a home
was a good personal decision. Home ownership didn’t create the foreclosure crisis – Wall
Street greed and irresponsible lending practices did. The decision to own a home is a very
personal one, but over the long term, owning a home is one of the best ways to build longterm
wealth, in addition to providing numerous social benefits that include reduced crime
rates, improved childhood education, and increased stability. After all, a fixed-rate mortgage
might last 15 to 30 years; renting is forever. (NAR)

• NAR practitioner survey: First-time buyers purchased 34 percent of homes in February, up
from 29 percent in January; they were 42 percent in February 2010. All-cash sales were a
record 33 percent in February, up from 32 percent in January; they were 27 percent in
February 2010. Investors accounted for 19 percent of sales activity in February, down from
23 percent in January; they were 19 percent in February 2010. The balance of sales were to
repeat buyers. (NAR, 3/28/11)

• Foreclosure impact: Distressed homes – sold at discount – accounted for a 39 percent
market share in February, up from 37 percent in January and 35 percent in February 2010.
“The decline in price corresponds to the record level of all-cash purchases where buyers –
largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be
seeing greater numbers of traditional home buyers if mortgage credit conditions return to
normal.” (NAR 3/28/11)

• Shadow inventory: The continuing concerns center on the size and impact of the “shadow
inventory;” estimates of the impact range from minor to very profound. In large part, the
magnitude of the impact centers on the way in which homeowners react to continuing price
declines and the realization that they may owe more their home than the property’s is current





value. Negative equity becomes a problem when a homeowner attempts to sell the
property—but it can also have an impact on consumption, potentially depressing
consumption or at least delaying purchases of major items (such as automobiles, appliances
and so forth). A further concern centers on the degree to which negative equity in a home
influences the operation of the labor market by limiting job mobility; this concern will
become more important as the job market rebounds and opportunities for advancement in the
labor market present themselves. (U of I REAL, 3/2011)

• MID: Government support of programs and initiatives that encourage home ownership have
also been called into question. The deductibility of mortgage interest is one example, with
critics suggesting that the mortgage interest deduction primarily benefits the wealthy, while
in fact, the MID benefits primarily middle- and lower income families – almost two-thirds of
those who claim the MID are middle-income earners. (NAR)

• MID: Sixty-five percent of families who claim the MID earn less than $100,000 per year,
and 91 percent who claim the benefit earn less than $200,000 annually. The ability to deduct
the interest paid on a mortgage can mean significant savings at tax time. For example, a
family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming
an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next
year. That’s money they could use to pay down other debts, supplement their children’s
college savings account, or put into savings themselves. (NAR)

• The typical homeowner’s net worth ($205,200) was 49 times that of a typical renter ($4,200)
in 2008. (NAR calculations using stats from the Federal Reserve Board).

NAR Homeownership Matters Campaign

http://www.realtor.org/topics/homeownership

• The economic benefits of the housing market and homeownership are immense and well

documented. The housing sector directly accounted for approximately 14 percent of total

economic activity in 2009. Less than half of Americans owned their homes at the beginning

of the 20th century. By 2004, 69 percent of Americans owned their homes – a record high.

The homeownership rate has since declined to 66.9 percent as of the second quarter 2010.

Still, that figure indicates that two thirds of U.S. households own their own home.

-Add 5-

IAR Economic Talking Points

NAR Surround Sound Talking Points

www.realtor.org/press_room/surroundsound

The basics

• Home ownership is an investment in your well-being and future.

• Today’s market offers great opportunities for buyers and sellers.

• The supply and choice of homes for sale is plentiful in most markets.

• Mortgage interest rates are low.

• Home prices are affordable.

• Homeownership offers immediate benefits and long-term value.

• REALTORS® add value to the real estate transaction.

• REALTORS® are the most trusted resource for real estate information.

ECONOMIC DATA

Homeownership Rates (U.S. Census)

4Q10 3Q10 3Q09 2008 2007 2006 2005 2004 1985

U.S. 66.5 66.9 67.6 67.8 68.1 68.8 68.9 69.0 63.8*

Midwest 70.5 71.1 71.6 71.7 71.9 72.7 73.1 73.8 *1986, 1988

Illinois 68.3 68.7 69.3 68.9 69.4 70.4 70.9 72.7 60.1

Interest Rates at a Glance – Average North Central Region (which includes Illinois)

4.86 – March 2011 5.0 – Feb 2011 5.03 – March 2010

16.63 – 1981 (high)

National Unemployment Rate – www.bls.gov

8.8% March 2011

Illinois Unemployment Rate – www.ILWorkingInfo.com

8.9% March 2011

Consumer Confidence - www.conference-board.org

63.4 March

70.4 Feb

60.6 Jan

(1985=100)

“The sharp decline in confidence was prompted by a sharp decline in expectations. Consumers’

inflation expectations rose significantly in March and their income expectations soured, a

combination that will likely impact spending decisions. On the other hand, consumers’

assessment of current conditions improved, indicating that while the short-term future may be

uncertain, the economy continues to expand.” (3/29/11)