Stock prices are up, home sales continue to steam ahead and more Americans went back to work. If you ended the day feeling like you’re worth more today than you were yesterday, you’re probably right.
The day started with the welcome news that the economy finally added 57,000 jobs last month. That was enough to get the stock market popping and send mortgage interest rates over 6 percent for the first time in about a month. But higher mortgage rates aren’t expected to put a damper on residential real estate sales.
In August, the most recent month for which statistics are available, real estate sales were up 10 percent over last year. And the price of homes in the Chicago metro area rose an average of 9.9 percent since 2002, bringing the median price of a single-family home in Chicagoland to just over $238,000.
But in some communities north and west of the city, you may be seeing a lot more for sale signs. The number of home sales dropped dramatically, even as the median price of homes rose.
For example, in Skokie, the number of homes sold last spring dropped by 60 percent, but the median price of homes there rose nearly 13 percent.
The housing market has also slowed considerably for pricier homes in the city and suburbs.
“The move-up buyers are a little slower right now because what we’ve seen is since the rates were so low, a lot of people refinanced,” says John Kmiecik, Illinois Assocation of Realtors.
But the first-time buyer market remains strong and there is a growing demand for investment real estate.
“People are coming out of the stock market, coming out of the bond markets, coming out of mutual funds. They have no place to put their money. CDs, banks, savings accounts, money markets are not getting more than 1 to 2 percent, so when they see publications that say the real estate market is increasing 3 to 5 percent per year, where should they put their money?” Kmiecik says.
That’s a good question, but if the stock market continues to strengthen, real estate sales could suffer.
The recent change in the capital gains tax could help keep real estate sales strong. Capital gains were once taxed at your marginal rate of income. Now, depending on your income, your capital gains will be taxed at a maximum of 15 percent.
For more information, go to www.realtor.com Copyright Ãƒâ€šÃ‚Â© 2003, WGN-TV