First off, how did we get here?

There had been a fair amount of pressure in the last decade to expand mortgage lending.  Congress wanted to expand home ownership to people who typically wouldn’t have qualified for mortgages.  This led to subprime lending and the relaxation of mortgage qualification standards.  By increasing the pool of buyers, demand was driven up.  Over time, home prices went on an upward trajectory that was increasingly out of sync with incomes.

In the last year…

What has been driving the market down is that there were/are a lot of “Have to Sells” - home builders, developers and foreclosed properties in the Wheaton and Naperville areas.  The media has drummed into our heads that the real estate market is in a recession.  We’re not hearing that the market may have, in fact, actually corrected.  The media needs to point out that affordability is at its highest level that it’s been in five years.

Right now…

The latest figures from the National Association of Realtors show a current housing affordability index of 123, up from 106 for the same month the previous year.  A housing affordability index of 123 means that the median income is 123 percent of the income necessary to qualify for a mortgage to purchase the median-priced home.  The higher the number, the better.

This is the time that buyers should be jumping in to secure unbelievable investments.  Currently, interest rates are very low but there is a risk that they can go up at any time.  In Naperville Illinois and Wheaton Illinois, we are seeing historic price drops.  We are in a buyer’s market and that means it is a great time to buy that right piece of real estate.  Depending on the individual property, it could be either a good buy or an unbelievably, beyond amazing buy.

Many of the buyers in the Wheaton and Naperville areas are sitting out, waiting for the bottom they say.  Their problem is that by the time they recognize that we have hit the bottom, prices will have jumped 3-5%.  If you look at Wheaton single family homes and do some research, you will see that the months supply of inventory is dropping over the last 3-4 months.  In Naperville, you will see the same thing.

Maybe prices will drop 1-2% more before they bottom.  Maybe the won’t.  But it is still impossible for anyone to call a bottom until the market has already turned and once you figure that out, it will be too late.

Give me a call or email if you would like to discuss this topic, or as always you can comment on the blog.

Oh by the way, if you or anyone you know is looking to move to the Wheaton, Naperville or surrounding areas, give me a call.