Both the National Association of Realtors and the Illinois Association of Realtors released data on Thursday comparing June of ’07 to June of ’08 real estate sales and what we saw was not pretty. 

 

Illinois reported sales volume (number of homes sold) for the Chicago metro area were down nearly 28% with the median sales price slipping 3.3%.  

 

I broke out the numbers for Naperville and found us none the better. In fact we’re a bit worse off. Using sales data from the MLS I found that our sales volume was down 35% and our median sales price slipped nearly 10%!  

 

Now before everyone begins to panic, let’s look at the numbers a little differently.  We’ll start with our median sales price. June of ’07 was the highest in the past two years.  If you look back, June of ’08 was actually a 1.5% increase compared to the same month two years ago (when the market supposedly peaked). The most likely reason would be the slow down in the high end of the market.  Homes under $500,000 have had the strongest demand and have not seen as much of a decline.

 

Next let’s look at our sales volume decrease. The number of homes selling has certainly slipped.  It’s difficult to spin that into a positive. But if you look at the monthly sales for the first half of ’07 and this year, you’ll see the two years are following the same trend with this year posting lesser numbers.

 

This data just tells us what we already know, the market is slow.  If you don’t have to sell don’t. And if you do, make sure your home is priced to sell.  This is not the time to test the market. On the flip side, now is defiantly the time to buy.  

With the declining housing market, home builders across the country are faced with a problem. The homes they have been building are no longer selling. Buyers’ tastes in homes have changed and home builders have to adjust their plans to meet the new needs of the consumer. 

 

First, builders have to reduce their current inventory of homes they have already built. This usually means price cuts. New developments are often seeing a base price decline between phases. Many people who purchased homes in the first phase of a development are now seeing their exact same model selling for thousands less in later phases.

 

After the builders have reduced their inventory, they are focusing on building smaller homes. With tougher financing requirements, buyers are looking for smaller, lower priced homes. 

 

According to Kelly Evans of the Wall Street Journal, “over the past three decades, prosperity and a demand for space to accommodate home theaters, offices, gyms, and palatial kitchens has pushed up the average size of newly constructed single-family homes by nearly 45 percent even as the size of the average family has declined.” The US Census Bureau reported that the median square footage of a single-family home in 2007 was 2,248, up from 1974’s median of 1,560.