Chicago house hunters, worried about rising prices and the post-election threat of higher mortgage rates, rushed to sign home and condo sales contracts in droves last month, experts say.
The city of Chicago posted a 13.2 percent year-over-year home sales increase in November with 1,881 sales, up from 1,661 deals in November of 2015, reported Illinois Realtors.
The median price of a home in Chicago in November jumped 11.3 percent to $260,000, compared with $233,500 in November of 2015, according to an analysis of data from Midwest Real Estate Data, LLC. The median is a typical market price where half the homes sold for more and half sold for less.
“The sharp uptick in both single-family home and condominium sales reflects consumers’ desire to enter the homeownership marketplace as opportunities present themselves, with the anticipated rise in rates and declining inventory boosting activity," said Matt Silver, president of the Chicago Association of Realtors.
“Buyers who’ve been watching from the sidelines and may have been distracted for a multitude of reasons—including the Cubs World Series run and the election—are being spurred into action, and both buyers and sellers are reaping the rewards,” Silver said.
Freddie Mac’s Primary Mortgage Market Survey reported that average fixed mortgage rates moved higher for the eighth consecutive week.
Interest rates on benchmark 30-year fixed home loans averaged 4.3 percent on December 22nd, up from 4.16 percent a week earlier. A year ago at this time, the 30-year fixed mortgage average was 3.96 percent.
In Chicago, 30-year fixed home loan rates ranged from 3.988 percent to 4.403 percent, according to a survey of banks and mortgage brokers by Bankrate.com.
Lenders were charging an average of 3.52 percent on 15-year fixed loans, up from 3.37 percent a week earlier, Freddie Mac reported. A year ago at this time, the 15-year fixed mortgages averaged 3.22 percent.
“A week after the only Federal Reserve Board rate hike of 2016, the mortgage industry digested the Fed’s decision and out survey reflects that response,” said Sean Becketti, chief economist, Freddie Mac.
“Following Yellen’s December 14th speech, the 10-year Treasury yield rose approximately 10 basis points. The 30-year mortgage rate rose 14 basis points to 4.30 percent, reaching highs we have not seen since April of 2014,” Becketti said.
In the nine-county Chicago area single-family home and condominiums sales in November totaled 8,093 units sold, up 16 percent from 6,979 units sold in November of 2015. The median price in the Chicago area in November was $215,000, an increase of 10.3 percent from $195,000 in November of 2015.
“Buyers were significantly motivated in November, with the depressed sales numbers from October suddenly seeing a reversal,” noted Doug Carpenter, president of Illinois Realtors.
“Sellers were the big beneficiaries of this surge in market interest, as buyers determined now that the election is over and interest rates might be moving higher, it’s time to finally make a decision.”
The time it took to sell a home in November averaged 62 days, down from 68 days a year ago, Illinois Realtors reported. Available housing inventory totaled 57,310 homes for sale statewide, a 14.7 percent decline from November of 2015 when there were 67,187 homes on the market in Illinois.
The monthly average commitment rate for a 30-year, fixed-rate mortgage was 3.77 percent in November, an increase from 3.47 percent in October, according to the Federal Home Loan Mortgage Corp. In November of 2015 the 30-year rate averaged 3.93 percent.
“With the election finally over, consumers appeared to have responded with a significant growth in sales (year-over-year),” said Geoffrey J.D. Hewings, an economist at the University of Illinois.
“Supply continues to be a problem, but prices of both regular and foreclosed properties increased and the forecasts suggest that these trends will continue into the first quarter of 2017,” Hewings said.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.