Monday, May 26, 2008

HOME-LOAN RATES UNDER 6 PERCENT UNDERSCORES BRIGHTER SIDE OF MARKET

There are bright spots in the Chicago housing market this spring, despite the gloomy national picture, analysts say.

Mortgage rates continue to be very affordable for those who can qualify for a loan. Condo resale prices are rising in the Chicago area, and so are home prices in several city neighborhoods and many suburbs, experts say.

Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate home loans dipped to an average of 5.98 percent in late May, down from 6.01 percent a week earlier. Last year at this time, the 30-year loan averaged 6.37 percent.

The first-quarter commitment rate for 30-year, fixed-rate mortgages for the North Central Region averaged 5.91 percent, according to the Federal Home Loan Mortgage Corp. That compares with 6.27 percent in the fourth quarter of 2007.

However, it is likely that mortgage rates may be near the bottom for 2008, and the Federal Reserve Board may not pursue any more rate cuts over the near term, according to Frank Nothaft, Freddie Mac vice president and chief economist. “The fundamental elements of a solid housing market are in place with low interest rates and ample inventory of homes,” said Realtor Kay Wirth, president of the Illinois Association of Realtors (IAR), who noted that Illinois real estate agents report more interest from buyers at showings who waited out last fall and are ready to buy for long-term value.

The IRA reported that the median price of a home in Chicago increased 5.4 percent in the first quarter to $295,000 compared to $280,000 in the first quarter of 2007. Median condo resale prices rose 6.6 percent in Chicago to $233,500 from $219,000 in the first quarter of 2007.

Total sales of single-family and condominiums in Chicago reached 4,618 sales in the first quarter, off 19.9 percent from 5,768 homes sold in the first quarter of 2007.

“In an economy where housing markets are fluctuating nationally, the value of homes in the city of Chicago continues to steadily increase, underscoring our message that now’s the ideal time to buy,” said David Hanna, president-elect of the Chicago Association of Realtors.

In Chicago, home sales in the Loop totaled 305 units, up 89 percent for the quarter, while activity in the Near South Side neighborhood increased 15 percent to 219 units, according to sales data from Midwest Real Estate Data, LLC, (MRED), analyzed by RE/MAX Northern Illinois. Further north, homes sales for the quarter in Albany Park rose 18 percent to 60 units, and they were up 2 percent in North Center to 100 units. When results are combined for the mid-north neighborhoods of Albany Park, Lake View, Lincoln Square, North Center and Uptown, sales activity declined only 10 percent during the quarter compared to the same period in 2007, with 830 homes changing hands.

“The city continues to be the strongest segment of the housing market in the Chicago metropolitan area, said Jim Merrion, regional director of RE/MAX Northern Illinois. “Interestingly, if you exclude the Loop and Near South areas of the city, where almost all homes are condos, single-family sales actually outperformed condominiums during the first quarter.”

According to Merrion, 15 city neighborhoods saw sales of single-family homes increase during the first quarter of this year compared to the same three months a year ago. Only 11 city neighborhoods experienced an increase in the sale of condos and other attached dwellings.

In the suburbs, the picture was more balanced, with 27 communities seeing an increase in single-family home sales for the quarter, and the same number experiencing higher sales of attached homes.