Monday, November 10, 2008

CRYSTAL-BALL GAZING: IS A HOUSING REVIVAL ON THE RADAR FOR 2009?

Now that the 2008 Presidential election is history and a new man is headed to the White House, the nation is looking forward to prospects of an economic and housing revival in 2009.

With change on the horizon, it is a good time to crystal-ball gaze and look for potential good news about the economy, home and condominium buying and ownership of the American Dream in perhaps the best buyer’s market in 40 years.

“The current housing downturn may be worse than 1981-1982 when home-loan rates hit 18 percent, but the good news is it is a far cry from the Great Depression of the 1930s,” said veteran real estate lawyer and Lincoln Park developer Mickey Brown.

Consider these post-election real estate talking points for holiday cocktail parties:

• Exaggerated economic gloom. Despite political speeches that said were are in the worst economic recession since the Great Depression, things aren’t that bad. Maybe America is eating more hamburger and less filet mignon, but we aren’t selling apples on the corner and turning our shoe leather into soup like Charlie Chaplin.

• Gas-price future. While the oil crisis is far from over, gasoline prices have tumbled into the upper $2 per gallon range from for north of $4. Sharply lower gas prices may or may not boost Hummer sales, but don’t be surprised if more smart developers plan transit-oriented developments within an easy stroll of Metra stations as a hedge against future oil-price volatility.

• Job-market outlook. Unemployment is running about 6 percent. The current job market is a far cry from the 25-percent unemployment during the 1930s. And, it isn’t even close to the 10-percent plus unemployment we experienced in the 1980s. If you are hunting for a job, the information technology and medical sectors appear promising, experts say.

• Mortgage market stability. Despite efforts of the Federal Reserve Board to push interest rates lower, worried lenders appear to be holding home-loan rates in the mid-6 percent range. But, this is not such a bad deal assuming you are a borrower with a good credit score, down payment cash and a job security. Rates on benchmark 30-year mortgages are a little more than 1 percentage point higher than the 40-year historical rock-bottom of the market—5.21 percent in June of 2003, according to Freddie Mac.

• Apartment rehab loans. If you are shopping for an apartment-rehab loan for a building with more than five rental units, the Chicagoland Apartment Assn. reports that there is “no lending crisis at the Community Investment Corp.” In late October, the CIC was offering attractive rates such as 3-year adjustable-rate mortgages at 5.25 percent and 5-year ARMs at 5.75 percent. And, the organization is willing to roll construction and permanent financing into the same loan. Rates are subject to change. Call 312-258-0070 or visit www.cicchicago.com.

• First-time buyer incentives. Uncle Sam is pushing Federal Housing Administration-insured home loans with down payments as low as 3.5 percent, and offering a new $7,500 federal tax credit which acts like an interest-free loan for first-time buyers. • Housing deals from the city. Home buyers could see savings of as much as $60,000 under an incentives package put together for “Find Your Place in Chicago,” a campaign to accelerate sales of residential units which the city has an investment. Nearly 200 available city residences are priced from $150,000 to $450,000. They include new or rehabbed single-family homes, townhomes, condominiums and 2-flats in 27 city neighborhoods. For more information on all programs, visit the city’s website: www.findyourplaceinchicago.org.

• Real estate tax breaks coming? Chicago and Cook County homeowners who appeal “illogical” real estate tax assessments likely will see a reduction to reflect the downturn in the housing market, according to Mayor Richard M. Daley. Cook County Assessor James Houlihan said he is eager to make assessment “factor adjustments,” based on the consumer price index and other real estate indicators. However, such a move may require an additional appropriation from the Cook County Board or approval from the Illinois General Assembly.