Chicago Real Estate Boom: Simply Unlike the Last One
Last week, the Wall Street Journal addressed a topic that’s been on the back burner for some time: the likelihood (or not) that the steady rise in housing prices might be a precursor of a future bust like the one that racked this century’s first decade. Real estate reporter Nicole Friedman’s piece presented a persuasive case for differentiating the two sets of circumstances—a welcome backdrop for this season’s home sellers and buyers (and for Chicago real estate in general).
“It’s Different from the Last One” was the top-line verdict regarding what the Journal called “the current housing boom”—a characterization based on the nation’s home sales, which “are hitting peaks last seen in 2006.” Some of the statistically verified reasons:
- Mortgage-lending standards are stricter.
- Down payments are higher.
- Tight inventories are nearly certain to continue to support prices.
- Economists say there are more barriers to entry—making buyers less prone to default.
- Demographics indicate a number of long-term trends “that will keep the housing market hot,” enabling even debt-ridden homeowners to sell at a profit rather than slide into foreclosure.
- New buyers are being attracted by historically low-interest rates rather than easy access to credit.
With new-home construction continuing to lag demand—and as millennials age into their prime homebuying years—the demographic picture is substantially different from that which preceded the 2007 collapse. If this is anything like a bubble, it’s more like a cast-iron one!