Monday, February 5, 2007

Bank of America Survey: Chicago’s Healthy Spring Traffic Shapes Up

According to a Bank of America survey of Real Estate Agents in 50 metropolitan areas around the US, indications are that buyers are out shopping but not all indicators are positive. In the Chicago Market, the number of buyers met expectations and the trends indicate that price reductions are moderating and fewer incentives need to be offered.

Nationally, traffic improved for the 3rd straight month in January. Traffic met agents’ expectations for the first time since June 2005.

Price declines moderated – it seems sellers are waiting until later in Spring for the next round of price reductions.

The length of time to sell is still on the rise, however, and there is risk of rising inventory levels throughout the Spring. This causes concern because the additional inventory will cause pressure from competition on pricing, and time to sell will inevitably increase.

In Chicago, agents saw a clear increase in buyer activity (shopping) and offers. Locally, January was the first month buyer traffic met expectations since February 2006 and marks a very positive start to the 2007 selling season. Buyer confidence is buoyed by lower mortgage rates and signs of price stabilization. Agents are still noting, however, a gap between sellers’ expectations and those of buyers.

Fewer agents noted price declines in January, indicating stabilization. Further declines are still expected in order to clear out excess inventory, but the higher buyer traffic is expected to soften the decline.