Archive for the 'Housing Market' Category
Do Record-Low Mortgage Rates Matter Today?
July 7th, 2010 categories: Chicago Info/News, Economic Recovery, Housing Market, Mortgage Info
Let’s talk about the good news first: The average interest rate on a 30-year fixed-rate mortgage fell to 4.58 percent for the week ended July 1. Freddie Mac says that this is the lowest since the mortgage financing company started tracking mortgage interest rates in 1971.
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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Foreclosures fall in Illinois
June 17th, 2010 categories: Chicago Real Estate News, Economic Recovery, Foreclosures, Housing Market
RealtyTrac.com has been the bearer of bad news lately. The online foreclosure data site has each month during the housing slump, it seems, provided us with the news that housing foreclosures are steadily rising.
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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April Was Another Big Month For Chicago Home Sales
June 3rd, 2010 categories: Chicago Info/News, Economic Recovery, For Buyers, For Sellers, Housing Market
April marked the eighth straight month in which Chicago home sales showed an increase, according to the Illinois Association of REALTORS®. Housing industry analysts, though, are wondering if April’s big showing was largely the result of the impending expiration of the federal government’s home-buying tax credits.
Both the first-time homebuyers’ credit – which provided first-time buyers a tax credit of up to $8,000 – and the move-up buyers’ credit – which gavemost other buyers a tax credit of up to $6,500 – expired at midnight on April 30. This has led economists and housing experts to wonder if buyers across the nation were in a race to beat this deadline.
And if that’s the case, they add, the housing sales numbers in May and beyond might suffer with no tax credit to inspire buyers.
Personally, I can’t deny that both tax credits have played a large role in encouraging buyers to enter the Chicago market. But I think that the city’s affordable housing prices have played as important a role. Buyers know that they can purchase a condominium or single-family home in even the best neighborhoods of Chicago, places like Lakeview, Lincoln Square or Lincoln Park, at extremely reasonable prices.
Whatever the case, you can’t deny that April’s sales numbers were strong ones. The sales of single-family homes and condominiums rose 41.1 percent in April when compared to the same month one year earlier. The city saw 1,985 housing sales in the month compared to 1,407 in April of 2009.
The best news is that housing sales have been trending up for quite some time now. April marked the eighth consecutive month in which housing sales showed a year-over-year sales gain.
At the same time, there was a glimmer of good news regarding Chicago housing prices. The city median sales price in April stood at $225,000. That’s up 3.2 percent from a year ago, when the median sales price had fallen to $218,000.
These are all solid numbers, and I’m glad to see them. I’m sure the tax credits did play a role in them. But I also think that buyers recognize just how good a value Chicago homes are today.
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Why Not Rent That Unsold Condo?
May 27th, 2010 categories: Chicago Info/News, Chicago Neighborhoods, For Homeowners, Renting in Chicago
It’s not easy selling a condo in Chicago these days. There are just too many vacant units on the market. Not surprisingly, a growing number of condo owners in the city are taking a bold step: They’re renting their units out for short-term stays.
Dennis Rodkin, the writer of Chicago Magazine’s Deal Estate column, tackled this issue last week. He wrote that the idea is gaining popularity among condo owners who are hoping to trim at least some of the costs associated with paying the mortgage on units they no longer want to own.
Rodkin cites a spokesperson from HomeAway, an online vacation-home rental company, who told him that the service had 120 listings in Chicago in April. That’s up 53 percent from the same month one year earlier. More importantly, the spokesperson mentioned that more than half of these vacation-home listings were city condos.
For vacationers, this is good news. Spending a week in a Chicago condo in Lakeview, Lincoln Park, Lincoln Square or just about any other hot city neighborhood makes for a great vacation. It’s a benefit for the owners of these units, too. They may not be able to sell their Chicago condos; but there’s no reason why they can’t at least collect a nice chunk of rent during the prime summer vacation months.
Unfortunately, not everyone is happy about this. Some condo residents worry that the increasing number of rentals will turn their buildings into party zones. Rodkin reports that the Chicago City Council’s Joint Committee on Zoning License is considering a new nightly vacation rental ordinance. If approved, the measure would force condo owners to pay licensing and inspection fees when they rent out their condos. The ordinance would also force them to pay taxes on their rental proceeds.
I understand the concerns of condo owners, but this ordinance does seem more than anything like a way for the city to squeeze even more money out of its residents. If this measure passes, I wonder, will it put a serious crimp in the short-term rental plans of Chicago condo owners?
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Does End of Housing Credit Signal End of Sales Increases?
May 24th, 2010 categories: Economic Recovery, Housing Market, Real Estate News, Taxes
I was a big fan of the federal government’s first-time and move-up home buyers’ tax credits. The housing statistics bore me out, too: Both of these tax credits – up to $8,000 for first-time buyers and as much as $6,500 for move-up buyers – helped boost housing sales. This year, for instance, housing sales in Chicago continually rose. This isn’t all because of the tax credits, but they certainly helped.
Unfortunately, both tax credits expired at midnight on April 30. It’s been nearly a month, then, since their demise. How has the end of the tax credits impacted housing sales? It’s too early to tell definitively, but the Chicago Tribune last week reported on at least one grim omen that suggests that the demise of the credits might have a negative impact.
According to the story, the Mortgage Bankers Association reported that mortgage loan applications for the week ended May 14 fell 27 percent from the number of applications completed one week earlier. According to the bankers, applications for the week reached their lowest level in 13 years.
In even more disturbing news, the bankers reported that mortgage loan applications have dropped nearly 20 percent for the month of May.
The Tribune story also pointed to a report earlier last week from the U.S. Commerce Department. According to that story, while housing starts did rise in April – that’s good news – the number of building permits dropped 11.5 percent. That represents the lowest that number has stood since October of last year. This is significant because housing permits represent future activity.
Of course, you can’t blame all of these potentially negative signs on the end of the housing tax credits. A lot of people have bought homes in the last six months; maybe it’s time for a bit of a natural slowdown.
If I had my way, though, Congress would have extended both credits. The housing market’s recovery, both in Chicago and across the nation, is still a tentative one. Anything that can give it a boost, including the first-time and move-up-buyer tax credits, should be used as a tool to keep the housing recovery’s momentum going.
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