What’s ahead for housing in the metropolitan Chicago real estate market in 2012 and specifically in the northwest suburbs?  RE/MAX recently asked a representative sampling of its experienced agents for their assessment of where the market stands today and what the New Year may hold.  A sizable majority of those agents expects that the first half of 2012 is likely to see a slow steadying of home prices and a continuation of the recent trend toward increased home sales.

First-time home buyers and investors should remain key sources of demand for housing in 2012, just as they have been in 2011, the survey revealed.  Because both those groups of buyers tend to focus on lower priced homes, the RE/MAX agents expect to see continued growth in sales activity and possibly shorter sales times for homes in that segment of the market, while upper-bracket properties may take longer to sell and face greater pricing pressure. 

“The strongest segment of the market right now consists of single-family homes priced at $300,000 or less.  That applies to all the suburbs I see, and I cover a lot of ground across Cook and Lake counties,” said Janice Weiner of RE/MAX Suburban in Arlington Heights.  She reported that more homes are selling than was the case a year ago, but prices have retreated to levels not seen for nearly a decade.

“Homes are selling, and if priced correctly they are selling faster, giving us better market times,” said Susan Camiliere of RE/MAX Central in Roselle.

“People are buying because interest rates are low and prices are down,” she said, noting that homes in the $150,000 to $250,000 range are proving particularly attractive to buyers.  “If lenders can do a better job of handling short sales, we could get more of them sold.  Many purchasers are aware that it can take 3 months to a year to close a short sale, and they don’t have that long to wait.”

Across the metro area, sales activity has been on the upswing for both detached homes and attached units.  Home sales in Lake County were 26 percent higher from July through October of 2011 than for the similar period in 2010, while in McHenry County the increase was 31.3 percent.   For the entire metro area, home sales were up 20 percent during the July-October period. 

Paul Wells, broker/owner of RE/MAX of Barrington in Barrington, thinks the key to the 2012 market will be consumer confidence.

“Many families would like to buy a home but are holding back because of the uncertain economy and their own worries about employment,” said Wells.  “A few months of positive economic news could go a long way toward boosting their confidence and triggering a burst of home buying, especially with prices and interest rates at today’s attractive levels.”

The survey revealed that agents expect a greater improvement in the market for single-family homes during 2012 than for attached units, a category that includes townhouses and condominium apartments.

One major reason, according to several agents, is that many attached homes are part of homeowner associations that have not made themselves eligible for Federal Housing Administration (FHA) financing, and other associations refuse to allow any or a significant number of their units to be rented.

Not surprisingly, the tenor of the market varies by area.  The agents surveyed in Chicago, for example, said city sales volumes have risen only modestly in recent months but that prices for single-family homes have shown improved stability, with some neighborhoods seeing small gains.

The suburbs present a more mixed picture.  Paul Wells expects that the most likely result in 2012 will be more of the same, with sales of single-family homes gradually improving, especially at lower price points.  But a brighter result is possible, he theorizes, because as consumers adjust to the new economic realities they may have an increased willingness to buy a home despite the uncertainties they face.

Broadly speaking, the agents expect a gradual stabilization of prices for homes in the middle and lower price brackets as 2012 progresses, while upper-bracket properties may face continued but less substantial price declines than they experienced in 2011.

The survey also asked RE/MAX agents what actions they thought would do the most to help the Chicago-area housing market recover its balance. 

“As a group, our agents pointed to three areas in which they thought actions would be helpful:  25 percent cited the importance of a stronger employment market and an overall improvement in public confidence; 40 percent pointed to a need for slightly more relaxed lending standards for both home purchasers and those seeking to refinance existing loans; and 35 percent stressed the need for banks to handle short sales and foreclosures more efficiently,” said Laura Ortoleva, a spokesperson for the RE/MAX Northern Illinois real estate network.  

 This news release was provided by RE/MAX Northern Illinois network. The northern Illinois network is part of RE/MAX LLC, a global real estate organization with 89,000 sales associates in 85 nations.