2nd Quarter Economic Forecast by John Tuccillo

We are at the point of the economic cycle where economic data is pointing in different directions. The employment numbers are still dismal: June’s job losses were far in excess of expectations (although it should be pointed out that May’s numbers were better than expected by about the same amount) and the unemployment rate stayed high.But real estate numbers are looking good, the Dow is rallying and there are glints of progress in consumer spending. For housing, existing home sales numbers are rising, inventories have fallen and the pending sales index points to more of the same. Prices are still weak and falling in many places mostly owing to the number of distressed properties on the market, but buyers are showing real interest in these properties and this has set a bottom for the market. Lower priced properties go quickly (sometimes with multiple offers) while more expensive homes languish. All in all, the data are little help.
 
But wait (as they say on TV), there’s more. Actually, mixed data are a good sign because they occur when the economy is turning. The reason I threw the Dow in above is that historically, the economy emerges from recession six months after the Dow turns up. That now looks like it will be in September. The wild card here is the impact of the stimulus. There has been a great deal of criticism that the stimulus has not yet worked (usually from the same folks who didn’t want it in the first place). If you look back, the CBO projections were that 10 percent of the effect of the stimulus would be felt in 2009, 60 percent in 2010 and the rest in later years. The turn in the recession will depend on how soon that 10 percent takes effect. I’m still sticking with September.
 
What about the Chicagoland area? If you look back over the past thirty years, home values have tracked inversely to employment. This makes sense since jobs encourage people to buy homes (they also spark the demand for commercial real estate). The unemployment rate in the MSA has nearly tripled since the beginning of 2007, and the housing and commercial markets have reacted accordingly. Right now, the employment picture in the MSA is worse than the nation because Chicago is a secondary casualty-losing jobs as a result of other areas losing jobs-and the negative impacts of the recession are happening a little later.
 
Now let’s look at the second quarter housing statistics for the MORe market area. The MLS offers a wealth of information and should be your most important tool in educating buyers and sellers on the reality of the market. In looking at MLS data, you should be looking at data that best describes not only the current market but the direction the market will take over the next several months. I described the key indicators in the last quarter report. Unfortunately, for the second quarter, they are pointing in the wrong direction. As compared with the second quarter in 2008, sales for the second quarter of 2009 are down (with the exception of detached single family homes in Cook County) and days on the market are up. The ratio of sales to list price is about even and this suggests that there is increased buyer interest in the market. Bargain hunters, as they are in most markets in the U.S. are coming out in force. The numbers for the second quarter are a bit anomalous in that they don’t jibe with the first quarter, which was generally better than the first quarter of 2008. The numbers would suggest that the market is flirting with a bottom, but has not yet reached it.
 
The problem with looking at a large market area is that your business is often done in a sub area, and gross statistics often misrepresent conditions where you operate. That means that the most effective way to educate buyers and sellers is to take the MLS stats for the areas where you do business and calculate the indicators as described above. That will allow you to make the most accurate case to consumers. 

As I make sure that my listings show in all forms of internet programs…My question is:  Where are the responses and How do we accomplish having potential buyers find us..I understand SEO and I am supposedly connected to many different engines…wish I had the magic secret…if someone does…please let me know..and then try to find me as a professional Real Estate Broker in the Chicago area..I’m willing and able and anxious to be really busy…call:  Jackie 630-706-7213

DOWNERS GROVE, IL - Sales of single-family detached homes went up 1 percent in June compared with the same period a year ago, according to statistics released today by the Mainstreet Organization of REALTORS® (MORe), the first such increase since December 2006.
 
MORe measured activity on single-family detached homes in about 120 southern and western suburban communities through information from Midwest Real Estate Data LLC.
 
In addition, the number of homes under contract (but not yet closed) in the same West and South Suburban Chicago area was 40 percent higher than a year ago, the seventh consecutive month of year-to-year growth in pending sales.
 
“Many first-time home buyers are taking advantage of the $8,000 federal tax credit. This is helping to reduce the inventory of homes on the market,” said Mike Drews, president-elect of MORe, and a REALTOR® with Charles Doss, REALTORS®, in the Aurora and Oswego areas. “First-time buyers can receive the tax credit if their home purchase closes by December 1st, so to take advantage of that credit, they really need to have a home under contract by October 1st.”
 
There were notable home sales gains in many suburban communities, particularly in Addison (89 percent increase from a year ago); Bellwood (150 percent); Bloomingdale (350 percent); Calumet Park (200 percent); Flossmoor (100 percent); Geneva (59 percent); Markham (138 percent); Matteson (122 percent); Maywood (156 percent); Oak Lawn (58 percent); Richton Park (167 percent); West Chicago (59 percent); and Winfield (150 percent). 
 
The average 40 percent increase in contracts across the 120-community area was fueled by dramatic advances in some towns, where the numbers of homes under contract leaped by double- and triple-digit percentages.
 
Standouts in the south suburbs for number of contracts were Burbank (146 percent increase from a year ago); Harvey (150 percent); Lynwood (1,000 percent); Markham (133 percent); Matteson (107 percent); and Oak Lawn (93 percent).
 
In the DuPage County area, contract activity was highest in Addison (118 percent increase from a year ago); Bensenville (700 percent); Hinsdale (59 percent);
Villa Park (100 percent); Warrenville (160 percent); and West Chicago (69 percent).
 
Outstanding numbers for contracts were posted in the western Cook communities of Bellwood (250 percent increase from a year ago); Elmwood Park (333 percent); Franklin Park (217 percent); La Grange (75 percent); Melrose Park (200 percent); and Westchester (243 percent).
 
# # #
 
For nearly a century, MORe has been dedicated to anticipating and serving the needs of more than 14,000 REALTORS®, affiliates and licensed appraisers in South and West Suburban Chicagoland. MORe is the second largest REALTOR® member organization in Illinois, and the seventh largest in the nation. To learn what a REALTOR® can do for you, visit www.succeedwithmore.com.