If you want confirmation that we are at the bottom and that prices will not drop more than another five percent in 2011, here is a good factoid to back up your argument. In the Rent Vs Buy Index in Trulia (which surveyed the 50 metro areas) 75 percent of the areas found it was more affordable to buy than to rent a two-bedroom dwelling. Buying was more favorable than renting! That’s good news if I’ve heard any lately. That should move some buyers into the market.
This is one of the reasons that I believe 2011 to be the “year of the bottom.” I predict a 3% drop in 2011 in Chicagoland prices and then a small appreciation of 1% or so for 2012 and 2013. It will take 7 to 10 years to recover the lost ground(equity) and turn many properties back “topside” from upside down. So if you are renting and can buy, it’s time to give me a call. Yes.. you.. call now… let’s get get you in a deal by April.
Supply and Demand. This is good news but take it lightly. If you are a seller and you’re getting excited at this… I would relax. The days of 10% jumps in value are long gone. When you see that it actually costs more to rent, at some point prices are going to fall so low that buying will make sense and the demand will increase and that reversal is starting to just kick in. But expect a slow as she goes 1 to 3 percent appreciation for 2013 and onward. Eventually housing will once again keep up with inflation or slightly outpace it. This was the way it was before the Wall Street lending fiasco and this will return.
Reasons cited for the reversal of rent prices expensive rise. People are and have been renting out of necessity. Hardship exists and many can’t buy because they have credit issues therefore creating more renters. And that has pushed rents up in many area making it more expensive to rent then buy in Chicago and other cities across the country.