We’ve all witnessed the rise in interest rates this year. Rates are still near historic lows but also more than a full percentage point higher compared to earlier this year with 30 year fixed rates averaging 4.51 percent according to Freddie Mac’s chicago real estate is hotmost recent survey. (1)

But that hasn’t slowed home values as home prices inched up another 1.8 percent in July compared to June and up 12.4 percent year-over-year, this according to the most recent CoreLogic home valuation report.

 The real estate markets showing the greatest gains are the markets that experienced the full brunt of the housing crash with Nevada showing a 27 percent rise in prices and next door neighbor California up 23 percent. Foreclosure sales nationally also showed a slowdown with foreclosures down a full 25 percent compared to July of last year. Inventory is also drying up, which is giving new home builders a boost.

The Chicago area is currently very healthy for real estate investors. The Illinois Association of Realtors reported that homes sales in Chicago are up by 15 percent and prices are also up by 4.6 percent compared to the same period last year. Steady, methodical increases in home values indicate a solid growth pattern and not a housing “bubble” that can possibly be brewing in states like Nevada, California and Arizona.

The strength in Chicago’s real estate market is also indicated by a decrease in current inventory. Including distressed properties, available inventory is down 32 percent. This is a reduction of inventory by nearly one-third compared to June of 2012. For the casual real estate investor, finding profitable flips will be more difficult.

However, for the professional real estate investor the prospect of Chicago real estate indicates an ideal time to invest for either a flip or a long term hold. Decreasing inventory, steady price increases with a solid batch of buyers as well as renters bodes well.

 

(1) http://www.freddiemac.com/pmms/