Improving housing data suggests to some that the economy has bottomed. Yet, for homeowners, values are a far cry from their 2007 highs. Even as values stabilize, other factors may be pressing downward on homeowners, especially for those who are looking to sell their houses in the near future.
If sub-par economic conditions persist and unemployment continues to climb, some experts predict that an increasing number – almost half by some estimates – of homeowners may be under water by 2010, or have mortgages that exceed the value of their homes.
The housing crisis that began with sub-prime borrowers has now spread to more affluent neighborhoods. One sign of this is the large inventory of high-end homes on the market, as owners try to sell houses that have proven too big or too expensive for them.
“There is a glut at the upper end,” said Louis Cain, a professor of economics at Chicago’s Loyola University. “You are going to have far more people moving down and nobody moving up.”
Home inventory, meaning how long it will take the existing inventory to sell at the current rate, is sky high in some Chicago neighborhoods. In Hyde Park, for example, home inventory is 56 months compared with Chicago’s overall average of 16 months.
But Hyde Park’s home values have only fallen 6.8 percent year-over-year, compared with Chicago’s overall decline of 13.5 percent. In Winnetka, an affluent North Shore suburb, however, home values have dived 20 percent.
While economists are looking at home values closely, homebuyers and sellers may find it useful to look at a broader set of data, including home values, home inventory and property taxes. Take a look at a breakdown of your neighborhood and how it stacks up to other Chicago-area real estate markets.