The National Housing Environment

In July of 2009, the National Association of Realtors (NAR) conducted a study that consisted of an eight page questionnaire sent to over 120,ooo consumers that purchased a home between July 2008 and June 2009. The list of consumers was obtained from Experian, a credit and financial services company that maintains an extensive database of home buyers derived from county records.  From that list of buyers, those that sold a home in order to purchase their new home were also considered sellers, for the purpose of this survey. This study, interpreted by NAR for the Illinois Association of Realtors (IAR) discusses home buyers and sellers in Illinois.

The National Housing Enviroment appears to be emerging from the Great Recession, although slowly. Significant job loss is consistent across most sectors, with the exception of healthcare. It is also expected that, even in the best circumstances, it will take several years to shrink the unemployment rate and absorb the lost jobs of the past few years.  Compounding the unemployment situation is the overwhelming loss of trillions of dollars of household wealth since 2005.  Recent Federal Reserve data shows homeowner equity holdings relative to the value of their homes is near an all-time low. Downward home prices and second mortgages and lines of credit have brought this to light.

However, signs are becoming evident that homeowners are trying to strengthen their balance sheets through increasing their savings and paying down their debt.  The national savings rate has risen from nearly zero to the high single digits. Cautious homebuyers and some of the pent up demand contained in the market have drawn some consumers back into the market. The federal tax credit also contributed to first -time home buyers sales, with that segment at 47% of the sales, up from 40% in a typical market.

In Illinois and the Chicago Real Estate market, first-time home buyers made up 51% of the market. The typical first-time home buyer was 29 years old, while the typical repeat buyer was 45; compared to 30 and 48 nationally. 21% of those Illinois first-time home buyers were single females, 11% were single males. Median income among first-time home buyers was $64,400, compared to $92,800 for repeat buyers.

Stay tuned to Chicagoland Real Estate Forum over the next few weeks for more from this survey.