Chicago real estate has a long way to go to catch up with the rest of the country when it comes to real estate market values, but it is starting to feel like one.
A record number of people are looking to buy homes, which is why the market is showing signs of a bubble, according to data from Trulia.
And when you add up the total value of all homes sold in Chicago since the start of the year, the total was a whopping $4.2 billion.
“It’s almost as if Chicago is a bubble in a very strange sense,” said Mike Tuchscherer, an analyst with Trulia and author of The Price of Real Estate.
“There is such a tremendous demand for homes in Chicago, that if they were to break even it would mean a huge bubble, especially when you factor in the cost of the properties.”
That’s a good sign for the city, which has been battered by the economic downturn and a slow recovery.
Trulia’s numbers show that the city is now worth $4,800 higher than it was in April, and the median price is $5,900 higher than the median in May.
“You can see that the market has a lot more activity than you would expect,” Tuchswer said.
“But there is still a lot of slack in the market, which makes sense since we are in the midst of a recession and we need a boost in demand to get the economy back on track.”
Chicago home prices are in a bit of a pickle.
Chicago realtor Robert Schreiber said it’s hard to get a handle on the number of homes sold because it doesn’t always include sales made outside of the city.
He said it will be interesting to see if the number continues to increase.
“We’ll know more when we see the inventory numbers and the total number of sales,” Schreib said.
He added that many people have been looking to sell in Chicago for the last several months.
“That’s really not surprising, because a lot people are thinking about moving to Chicago.
I think they have been a bit over-optimistic,” he said.
Tuch, of Trulia, said that many are thinking of selling in Chicago because of a “huge” demand.
“They think it will get a lot cheaper,” he added.
“A lot of people in the neighborhood want to buy and they want to be near a school, or they want a place to live close to a grocery store.
They want to own a home that’s close to where they work and they can get away from it all day.”
But he cautioned that many homes aren’t sold yet, meaning they’re “on the fence” and aren’t ready for prime time.
“I think that’s why people are having this pause in selling in the city,” Tucher said.
Chicago home sales are now the second-highest in the country after New York, according a report from the real estate research firm Zillow.
The average price of a home sold in the Chicago area is now $6.6 million, up $400,000 from April, according the report.
“This year, Chicago realtors are seeing a spike in demand, as well as a surge in inventory,” Zillows report states.
“For the second consecutive year, sales have surpassed pre-recession levels in many of the key areas.”
And if you think that is an anomaly, you are not alone.
“When the market was booming, there were still many houses that were under water,” said Jim Miller, chief economist with Real Capital Analytics.
“Now there is a lot less underwater.”
In May, Miller said Chicago was selling at a rate of 3,200 homes a month.
“If you were to do a price estimate and look at that, you would be looking at 4,000 homes sold each month for the next 12 months,” Miller said.
Miller said that is likely to drop as the recovery continues and Chicago home values pick up, but there is also a good chance that many of those homes will not sell at all.
“Many people are worried about selling their homes,” Miller added.
And as they get older, they may need to take their home equity into account when deciding whether to sell.
“Those older people are going to want to maintain the home they own for longer,” Miller noted.
Miller also said that when it came to selling, he believes it will take a “really strong push” from Chicago to make real estate more affordable.
“These are people who are living paycheck to paycheck, but they don’t want to live paycheck to pocket,” Miller told Business Insider.
“So, I think if Chicago can maintain affordability and maintain their home values, it would be very good for the overall economy.”
As for whether it is possible to buy a home for less than its market value, Miller and other analysts say that’s a tricky proposition.
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