Are you trying to time the market to purchase at the bottom? If you aren’t there is a really good chance you know someone who is. The media spits out national housing statistics and it scares most people because they forget real estate is local.
What happens in California has little to do with our real estate market, yet what happens in California has a huge impact on the national statistics. The national housing statistics are about as useful as the national education statistics.
One company that keeps a very close eye on the housing market is PMI Mortgage Insurance Co. PMI Mortgage Insurance Co. releases a market risk index every quarter. This is an in depth report on the status of the real estate market as a whole and on a local level with 381 “MSA’s” (metropolitan statistical areas and divisions) tracked. The largest 50 are watched very closely and naturally Chicago metro is one of the largest areas tracked.
Chicago’s Real Estate Market Risk Index
With the background information out of the way it’s time to dive into the key numbers from the report and what they tell us about our real estate market.
The key number that PMI Mortgage Insurance Co. releases is a Risk Index Score. This score is the likelihood that prices will decrease over the next 2 years. If the index score is 100 then there is a 100% chance that the Metro area will see a price decrease over the next 2 years.
Chicago received a Risk Index Score of 1.5, or 1.5% chance of home prices falling over the next two years. This number is down from 2% in the 4th quarter of 2007. It is well below the average of the top 50 metro areas of 29.5%.
Chicago’s Real Estate Market Affordability Index
Another important number released in this report is the Affordability Index which measures how affordable a home is compared to 1995. This number takes into account home prices, incomes, and interest rates. A number above 100 means that homes are more affordable then in 1995 for the average household, a number below 100 means they are less affordable. Metro Chicago has an Affordability Index score of 101.89, this shows that our homeownership affordability is directly in line with 1995.
If you have been trying to time the market and are expecting home prices to continue to fall it might be time to make a move. This report shows even more evidence that the Chicagoland real estate market is at or is very near the bottom. Please keep in mind that this report only takes into account the average median prices for the whole Chicago metro market and that local markets can vary greatly by city, neighborhood, and even block. For information about your neighborhood and it’s current market conditions contact us and we will be happy to provide you with a market report.
Source: Economic Real Estate Trends Published by PMI Mortgage Insurance, Co. (PDF)
2 responses so far ↓
jswede || Jul 25, 2008 at 5:31 pm
we’re not even close. nobody in this town has 20% to put down.
Ken Smith || Jul 25, 2008 at 11:24 pm
Not sure what you have heard, but you don’t need 20% down to purchase a home. There are still 100% mortgages available for buyers with average credit. Notice I said average credit, not even good or great credit. If someone has said otherwise they are incorrect.
Even if a buyer did need 20% down there are plenty of buyers who put at least that much down.
If a buyer is in need of 100% financing and no closing costs our preferred lender has options available. Feel free to fill out the contact form and ask for his information.
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