Monday, November 16, 2009

CHICAGO-AREA HOUSING MARKET READY FOR LONG-AWAITED HOLIDAY CHEER

If your holiday dream is to enjoy the warmth of a crackling fireplace with your family your own home this Christmas, better go shopping right now for that single-family house, townhome, condominium or two-flat.

For Chicagoans who aspired to become homeowners in 2009, experts say it is likely that for would-be buyers who have a job and good credit the housing deals may never be better. Consider the following positives boosting year-end home shopping:

• The recession is ending. Home and condo sales in the Chicago-area counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will totaled 21,298 units in the third quarter of 2009, up 2.4 percent from 20,802 units in the same period last year, reported the Illinois Association of Realtors. • Home prices are low. The median home sale price in the nine-county Chicago area was $205,000 in the third quarter of 2009, down 16.3 percent from $244,900 during the same period last year. In Chicago, the median home sale price was $230,000 in the third quarter, down 20.7 percent from $290,000 in the third quarter of 2008, reported the IAR survey.

In Chicago’s Lakeview neighborhood during the third quarter, 16 two-flat apartment buildings were sold at an average price of $490,796, down 24 percent from a year ago. Three-flat resales were better. Thirteen were sold in Lakeview at an average price of $758,384, down only 5 percent from the third quarter of 2008.

• Rock-bottom mortgages available. Lenders were charging an interest rate of 4.98 percent on benchmark 30-year-fixed mortgages in early November, down from 5.03 percent a week earlier, according to Freddie Mac. Last year at this time, the average rate on 30-year loans was 6.20 percent.

“Lower mortgage rates should help homeowners lower their monthly payments and feed the ongoing recovery in the housing market,” said Frank Nothaft, Freddie Mac vice president and economist.

• Help from Uncle Sam. Congress recently extended the $8,000 tax credit for first-time buyers through April 30 of next year for homes closed by June 30. The income limits were raised to $125,000 for singles and $225,000 for couples to broaden its impact. In order to claim the credit, a home must be under contract by the end of April and closed by the end of June.

“A new provision, offering a credit of up to $6,500 to existing homeowners who have owned their residence for at least five years, also will boost the local housing market,” noted Jim Merrion, regional director of the RE/MAX Northern Illinois real estate network. “By offering the credit to existing homeowners, we should get more of that entry-level housing on the market as existing owners move up to larger homes,” Merrion said. “That beneficial impact should eventually work its way up to the higher priced segment of the housing market, where the pace of sales has declined markedly this year.”

The first-time buyer tax credit boosted sales momentum in the third-quarter. Home sales in the nine-county Chicago area marked the first positive year-over-year increase in more than three years while price declines moderated but continued to be influenced by entry-level and distressed sales, according to the IAR.

“The expanded and extended home-buyer tax credit will be critical to helping move buyers off the fence and into homes in Chicago.” said Genie Birch, president of the Chicago Association of Realtors and a broker associate with Koenig & Strey GMAC. “There are great deals on the market for buyers across the board.”

Mike Onorato, president of the IAR, said: “This stimulus measure has proven it works and the impact goes beyond the sale of a home. The home sale transaction spurs an economic boost for moving and storage companies, the home improvement industry, inspection and legal services.”