Home Sales Down, but Prices Up?

 Chicago area market statistics were released a few days ago.  They showed that home sales were down 19% in the second quarter of 2007 as compared to the same quarter last year.  While this news appears quite disconserting, it is not indicative of a market crash or falling home prices.  In reality, while the number of home sales has decreased, the value of homes have not as the average sale price in the second quarter this year is 2.6% higher than that of last year.  What we are seeing is a market correcting back toward normal after a peak.  Let me explain further

The large price reductions that have become the norm are indicators of changes in listing or asking price not sales prices.  Meaning that at the height of the market a couple years ago listings were being severely over-priced and for good reason too.  Realtors were trying to get the most money possible for their clients and buyers were willing to pay it.  As supply increased, (new developments + resales) buyers were unwilling to buy over-priced listings and that is where price reductions and incentive plans began to come into play,  when supply surpassed demand. 

This article from Crain’s Chicago Business should help further illustrate the point: http://chicagorealestatedaily.com/cgi-bin/news.pl?id=26012

In light of these factors, buyers have myriad options to choose from and moreover, room to negotiate.  It’s a great time to find a DEAL!

 Happy Home Hunting!

 Best,

JLC