According to the latest home sales numbers from the Illinois Association of REALTORS®, December, 2011, existing-home sales in Chicago hit 1,536, up 6.4 percent from the 1,444 homes sold in the same month one year earlier.

The news wasn’t as good when it came to the median sales prices of these homes. According to the association’s numbers, the median home sale price for Chicago stood at $156,000 in December of last year. That’s down 6.2 percent when compared to the same month in 2010. Back then, the median sales price of Chicago homes came in at $166,250.

Bob Floss, president of the Chicago Association of REALTORS®, was quoted in the press release accompanying the December numbers as saying that the December rally was a good sign for the future of Chicago housing sales. The numbers give hope that Chicago’s winter and spring home-selling seasons will be strong ones, he said.

Floss, though, expressed concerns about the median sales price of Chicago condominiums and single-family homes. This number shows no sign of rising, and, in fact, continues to fall. Floss pointed to the large number of distressed residential properties on the market: Foreclosures tend to drag down the median sales prices of homes near them.

Until the number of foreclosures falls, don’t expect the median sales price of Chicago residential properties to rise.

The association press release also quotes Loretta Alonzo, president of the Illinois Association of REALTORS®. She says that buyers in December simply found too many good housing deals to pass up.

That’s good news, of course, for sellers trying to move their properties. It’s not great news, though, for sellers trying to get top dollar for their homes. Buyers today simply expect to find bargains on the condos and single-family homes that they purchase.

According to a recent feature story in the Chicago Tribune, the number of homes in the foreclosure process rose 20 percent in November in Cook County when compared to one month earlier. The Tribune said that much of this increase stemmed from a jump of 57 percent in the number of homes in the county that were sent to court-ordered auctions.

Citing data from online foreclosure company RealtyTrac, the Tribune reported that foreclosure filings were reported on more than 224,000 properties across the United States in November. That’s a drop of 3 percent from October.

No matter how you look at the numbers there are too many housing foreclosures in Chicago and the United States. This is unfortunate because foreclosure has such a devastating effect on families.

If you’re struggling to pay your mortgage bills each month, call your mortgage lender immediately. The sooner you call your lender, the better your chances of working out a new payment arrangement, a reduction in your mortgage loan’s interest rate or some other way to avoid losing your home through foreclosure.

I understand that this is no easy thing, calling your mortgage lender and explaining that you’re struggling to pay your monthly housing bills. But lenders will often work with you to find some solution to your mortgage woes.

Foreclosures remain the number-one deterrent to a housing market rebound, both in Chicago and across the nation. Foreclosures make it more difficult for sellers to get the prices they want for their homes. Buyers would rather pay $50,000 less for a similar home down the street that’s gone through the foreclosure process.

If you don’t want to become the latest foreclosure statistic, call your lender. Ignoring your mortgage problems won’t help them go away.

Now comes word that the National Association of REALTORS® (NAR) has made its own mistakes when it comes to reporting the number of homes sold each month across the United States.

According to a story by MSN Real Estate, the national association over-reported the number of homes sold from 2007 to 2010. This means that even fewer homes were sold last year than the 4.91 million — the lowest number already in 13 years — that NAR reported.

The association says that it will release its new updated numbers on Dec. 21.

It looks like the errors could be large. The national association began looking at its past numbers after CoreLogic, a real-estate analysis firm, challenged the association’s numbers, saying that they could be as much as 20 percent too high.

According to MSN Real Estate, CoreLogic’s analysis showed that there actually should have been 3.3 million homes sold in the United States in 2010. That’s a big drop from the national association’s 4.91 million number.

After looking at their numbers, officials from NAR said that they have counted some home sales twice.

This is an unfortunate time for NAR to be proven wrong about its sales numbers. Many consumers already have negative feelings about the real estate industry. A mistake like this will only provide more fuel for this distrust.

But no matter whether you use the numbers from CoreLogic or those from NAR, one piece of information remains true: The number of home sales across the country remains far too low, especially when compared to the big home-selling pre-2007.

Think of it this way: Buyers are more than happy to spend $50,000 less on a foreclosed home or a short sale that sits three doors down from sellers trying to sell their similar residence the traditional way. Simply put, distressed homes sell for less, driving down the value of surrounding residences.

The Chicago Sun-Times, though, recently ran a feature story on an interesting new trend regarding foreclosure properties: According to the story, more of them are becoming rentals.

According to the Sun-Times story, more than one in 10 Chicago houses is now vacant. To help fill these empty spaces, the city and several nonprofit agencies are renting out a growing number of these properties. These groups are also offering buyers financial incentives to purchase these properties.

The Sun-Times story cites the efforts of the Neighborhood Stabilization Program run by the city and Mercy Portfolio Services. The program has received $169 million from the federal government in Recovery Act dollars, and so far has used some of these funds to pay for 51 demolitions and the purchase of 161 residential properties. The purchases are the interesting part of the equation: The residential properties total 819 housing units in 22 different Chicago neighborhoods. The Sun-Times reports that 75 percent of these housing units are for rent.

Foreclosures will continue to glut the Chicago housing market for years to come. There are just too many distressed properties on the market today. It’s good to see, though, the city and nonprofit agencies working together on creative ways in which to deal with them.

No one program will completely ease the burden that foreclosures and short sales place on the Chicago housing market. But the more programs that do attack this problem, the better.

According to a recent story in the Wall Street Journal, interest rates in the United States on 30-year fixed-rate mortgage loans averaged 3.99 percent for the week that ended on Dec. 8. That’s down just a bit from the 4 percent average interest rate of one week earlier and down significantly from the rate of 4.61 percent a year earlier.

Interest rates on 15-year fixed-rate mortgage loans were even more impressive, according to data from Freddie Mac. This rate stood at 3.27 percent for the week that came to a close on Dec. 8. That’s down from 3.3 percent from a week earlier and 3.96 percent from a year ago.

The 15-year fixed-rate mortgage interest rate is also just a tick above its all-time low of 3.27 percent, which it hit in October.

This is, of course, great news for consumers interested in purchasing a Chicago condominium or single-family home. Low interest rates mean that it is less expensive for buyers to borrow money. Buyers today, then, can save hundreds of dollars a month on their mortgage loan payments compared to the days when interest rates of 6 percent or 7 percent were considered solid.

On the downside, the process of applying for a mortgage loan isn’t easy today. Buyers will need to send their mortgage lenders paperwork proving that they make enough money each month to afford their new mortgage payments. They’ll also have to produce documents showing lenders how much they pay each month in debt.

Borrowers will also have to submit to a credit check. Lenders today reserve their lowest mortgage interest rates for those borrowers who have FICO credit scores of 740 or higher.

But for those buyers willing to submit their paperwork, and who have strong credit scores, buying a single-family home or condo today is more affordable than it’s been in a long time.

But according to a story by the Wall Street Journal’s MarketWatch Web site, this isn’t the case. In fact, as the story points out, most renters today would rather own a home.

The MarketWatch story reports on a survey by Whirlpool Corporation and Habitat for Humanity, conducted by the National Association of Home Builders, that found that 68 percent of renters would rather own their own homes.

The survey also found that 60 percent of renters were concerned that their rents were too high. A total of 52 percent of renters said that they felt the money they were paying for electricity and gas was too high, too.

The survey shows the enduring strength of housing in the United States. Even during one of the most challenging times for the housing industry, U.S. residents, overwhelmingly, still believe in the American dream of owning their own homes.
There’s a reason for this: A house isn’t just an investment. It’s a place where families share memories, where children grow up. It’s a safe harbor in a sometimes stressful world.

And this is why housing remains so important to so many U.S. residents. It’s also why a down economy and a slumping housing market are not nearly powerful enough to derail the American Dream of homeownership.

It’s also why I advise my buyers to consider all the positives of owning a home. Yes, we want our homes to increase in value, something that, historically, they have, especially in strong markets such as Chicago. But buyers also need to consider the other benefits of owning a home. When they do, the majority of them recognize just how desirable owning their own home is.

According to a USA Today feature story, the percentage of consumers falling behind on their monthly mortgage loan payments fell during the third quarter. And in October, building permits for new single-family homes reached their highest level in 10 months.

According to numbers from the Mortgage Bankers Association, the share of mortgage holders who have missed at least one mortgage payment, but are not yet in the foreclosure process, dropped to 8 percent in the third quarter. In the second quarter of this year that figure stood at 8.4 percent.

At the same time, the share of mortgage holders more than 30 days behind but less than 60 days late on their mortgage loan payments fell to a four-year low of 3.2 percent, down from a figure of 3.5 percent one quarter earlier.

In even more good news for the struggling housing industry, permits for new home construction jumped 5.1 percent for single-family homes and 24 percent for multi-family units in October, according to data from the U.S. Commerce Department.

Of course, these two pieces of good news do not mean that the housing market is on the way back. As long as unemployment remains high across the country, the housing market will remain sluggish. And until we see fewer foreclosures across the country, don’t expect housing prices, in Chicago or across the country, to rise, either.

But the new numbers regarding permits and delinquencies do at least offer some hope. And when it comes to the U.S. housing market, hope has been in short supply these days.

It’s easy these days to get down on the U.S. economy. The recovery from the Great Recession hasn’t been strong enough to please anyone. The national unemployment rate is still too high. Housing values are stagnant. Home sales are down.

But, no less a financial guru than Sam Zell says that the U.S. economy is now on the right track. And that certainly qualifies as good news.

The Bloomberg news service covered Zell’s recent speech at a real estate conference in Chicago. According to the story, Zell told audience members that the U.S. economy will continue to improve and that high-quality real estate remains a wise investment.

I couldn’t agree with Zell more, especially when it comes to his thoughts on the value of real estate. I’ve argued during even the worst days of Chicago’s real estate slump that city housing remains a top investment. Yes, the value of Chicago condominiums and single-family homes is down now. But that just makes this an even better time to purchase local real estate.

Housing in Chicago’s top neighborhoods, places like Lincoln Square, Lincoln Park, Lakeview, Bucktown and Ravenswood, remains a solid investment. It’s true that no one can predict how home values will react over the years. But historically, home values have risen over time. The key is for owners to hold onto their homes for a long enough period of time – usually five years or more does the trick.

Buying a house was never meant to be a get-rich-quick investment. Remember, when you buy a condominium or single-family home, you get the benefits of living in that home. You also get tax advantages that you don’t get when you rent. You can’t say that about any other investment you can make.

During the days of the U.S. housing boom, buyers in Chicago were able to purchase condos or single-family homes in hot neighborhoods, fix them up and sell them for sometimes double what they initially paid, all in a few months’ time. That isn’t happening today.

But that doesn’t mean that owning a home is a bad financial investment. Though nothing is guaranteed, those homeowners who are patient will usually find that their homes are good investments.

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Amy Hoak, a columnist for MarketWatch, lays out the bad news in a recent column: Fewer U.S. consumers seem to care.

Hoak was reporting from the Kitchen & Bath Industry Show in Chicago. This is a fun show, one that showcases the latest trends in kitchen sinks, whirlpool tubs and cabinetry. It’s a place to go to dream of that ideal kitchen or bathroom. It’s hard to imagine, though, that too many of the vendors working the show were having fun this year. As the housing industry has struggled, so have the remodeling and do-it-yourself businesses.

As Hoak writes in her column, consumers aren’t comfortable spending large sums of money today, even if mortgage interest rates are at record lows. They’re worried about losing their jobs. And why not? The national unemployment rate remains stuck near 10 percent. That’s too high to allow people to feel comfortable financially.

At the same time, a large number of homeowners can’t even take advantage of the low rates to refinance their existing mortgage loans. That’s because their home values have dropped since they purchased their condominiums or single-family homes. They may no longer have the 20 percent equity that most traditional lenders require homeowners to have before approving them for a refinance.

Don’t get me wrong: It is good news for home buyers that interest rates are at such low levels. First-time buyers who don’t already own a home are especially fortunate: They can buy more home, even in Chicago neighborhoods such as Lincoln Park, Lincoln Square and Lakeview, while spending less money on a mortgage loan each month.

But until the other fundamentals of the economy improve – lower unemployment, higher housing values – don’t expect a rush of buyers to take advantage of these low interest rates.

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This month, though, RealtyTrac actually brought some good news for Chicago: The number of housing foreclosures in Illinois fell in May, according to the company.

Residential foreclosures dropped more than 20 percent in May when compared with April, according to RealtyTrac. This means that slightly more than 15,000 state housing units, or one in every 350, received a foreclosure notice in the month.

A foreclosure notice, by the way, doesn’t have to be an actual foreclosure. It could be a bank notice, scheduled auction or bank repossession.

Granted, this is still far too many foreclosures. But Illinois saw a bigger drop in foreclosures than did the country as a whole. RealtyTrac.com reported that the United States in general saw a 3 percent drop in housing foreclosures in May.

Overall, though, Illinois housing foreclosures were still up 38 percent from where they stood in May of 2009. And across the country, one in every 400 homes – nearly 323,000 households – received foreclosure notices in May. That’s up 0.5 percent from the same month one year earlier.

I’m happy to see the foreclosure numbers go down. Few things hurt the overall economy of an area, whether it’s Chicago or the entire country, like housing foreclosures. Think about it: When a family loses its house that family is obviously devastated, both emotionally and financially. A housing foreclosure stays on the credit reports of former homeowners for seven years, making it extremely difficult for these consumers to borrow money at reasonable rates during this time.

But housing foreclosures also burden banks and lenders. These financial institutions don’t want to take back these homes. That’s not how they make their money. They don’t want to have to sell these homes at lower prices.

Finally, foreclosures hurt neighborhoods, too. It’s difficult for sellers to attract good offers for their residences when there’s a foreclosure two doors down going for $50,000 less.

So let’s hope that RealtyTrac’s latest bit of good news isn’t a blip. Let’s hope it’s a trend, one that will help the housing market and the economy recover at a faster pace.

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