The cyclical nature of real estate means it is dynamic, says Delores Conway, Ph.D., director of the Casden Forecast at the University of Southern California Lusk Center for Real Estate, which is considered a national expert on real estate market forecasting. The market is currently in a correction phase that began in spring 2006, following huge price increases year after year, which are not sustainable, adds Conway. “We’re moving to more normal levels of appreciation like 3 to 6 percent,” she says. Builders responded quickly to the correction phase by halting construction and, in some cases, even selling the land on which they were planning to build and delaying new units coming online, says Conway, who teaches analysis of real estate. She predicts the correction period will last one to two years. “Then, we’ll see the price declines stop and a flattening, followed by more normal levels of activity,” she says. Unlike some areas of the country, Chicago had normal levels of appreciation, “steady as she goes,” says Conway. Though some overbuilding has occurred, especially in terms of infill development, which has almost proven to be more than the market can bear, the Chicagoland market has fared quite well. “Supply got a little ahead of demand, but not to the extent of the old days,” she says. “Instead of ‘boom, bust,’ it’s now ‘boom, plateau.’”
