The Bubble is Popping, Run For the Hills!
Okay, it's not that bad, but the National Association of Realtors reported yesterday that the national average price of existing homes dropped for the first time in 11 years. That sound you hear is the dozens of blogs who made their name tracking the bubble simultaneously climaxing and then realizing that their relevance is about to expire. Sales had been slowing for months now, but August was the first month with a measurable national decline.
The Chicago market stayed flat, but prices here will probably start to decline soon enough. Two industry research groups also released a report yesterday describing market valuation across the country, and Chicago is listed as being 20 percent overvalued. That doesn't necessarily mean that we can expect prices to drop 20 percent, but there is plenty of room to give. Carl Tannenbaum, chief economist for LaSalle Bank, summed up the local market as well as we've seen anyone do recently, calling the problem "paralysis" by both buyers and sellers. Local realtors report that Chicago buyers are taking their sweet time and waiting for better deals, while sellers still refuse to take anything less than what their neighbor got six months ago. At some point they'll have to give, but like we've said before, with such impressive gains in the past few years, unless you're trying to sell your place a few months after you bought it, chances are you still won't take a bath in Chicago.