Real estate: Chicago-area home sales take off
By Christine Dugas, USA TODAY

Chicago-area home sales are surging — up more than 45% from a year ago.

The Windy City housing market didn't suffer as badly as Florida and Nevada, for example, "But we were not unscathed by any means," says Genie Birch, president of the Chicago Association of Realtors.

Low prices, low mortgage rates and the federal first-time home buyer tax credit have changed the market.

•Sales status. Regional sales steadily increased the past six months, spurred by lower home prices and the tax credit. In March, home sales were 45.4% higher than in March 2009.

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Many first-time home buyers took advantage of the $8,000 tax credit. "But it was also significant when the government added the $6,500 tax credit for the move-up buyers," Birch says. "Homeowners who were sitting on the fence needed this to push them."

The tax credit helped stimulate the housing market, but it is unclear what will happen after it expires this week, when buyers need to have a binding contract. "The future will depend a lot on employment, the stability of the economy and interest rates," Birch says.

•Price points. In March, the median sale price was 4.6% lower than a year earlier. In previous months, distressed properties caused home prices to plummet.

Foreclosures hit Chicago hard because of subprime loans and rising unemployment. The Chicago metro area's foreclosure rate ranked 38 out of 202 metro areas at the end of last year, according to RealtyTrac. It's unclear if the foreclosure rate has hit bottom.

"They come in waves," Birch says. "There could be another just waiting around the corner."

•Local economy. The Chicago economy suffered greatly during the recession, and problems continue. The metro area unemployment rate was 11.2% in March, higher than the national rate of 9.7%.

"I hate to be a pessimist," says Edward Stuart, economics professor at Northeastern Illinois University. "But I don't think that things will be improving soon anywhere, and Chicago will be lagging."

The Chicago metro area has two main weak spots, Stuart says: It is a large manufacturing region, and many of those businesses are tied to the auto industry. And the suffering-of-late construction industry also employs many people. Two other prominent industries — finance and real estate — also struggled during the downturn.

•Hot 'hoods. The Kenwood/Hyde Park neighborhood, home to President Obama's residence, is a historic mansion district with turn-of-the-century ornate homes on oversized lots. It has long been home to Chicago's business, political and intellectual elite, and has been more resilient than other neighborhoods, says Matt Garrison, a real estate agent. He recently sold a house next to the president's house for $1.4 million.

During the housing bubble, some houses at the outskirts of the Kenwood/Hyde Park area commanded a premium. But those prices dropped. One bank-owned row house that needs to be gutted is priced at $74,900, Garrison says. Nice homes that don't need work are for sale at $300,000 to $500,000.

The most expensive

Realtor.com


Michael and Margaret Friedman are selling a contemporary, three-story home with a greenhouse on a double lot in Lincoln Park.

Price: $8.5 million
Bedrooms: 6
Bathrooms: 5 full, 2 half
Size: 11,000 square feet
Features: Billiards room, great room, gymnasium, indoor sports court, theater, family room, elevator, basement, patio, roof deck, four-car garage.

Median-price home
The two-story home seen at the top of the page, built in 1952, is on the market.

Price: $185,000.
Bedrooms: 4
Bathrooms: 2 full, 1 half
Size: 1,012 square feet
Features: Basement with woodburning fireplace, family room, eat-in kitchen, fenced yard, two-car garage.

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