With Chicago’s summer housing market rolling into full swing, prospective home buyers currently are benefitting from an unexpected easing of mortgage rates, experts say.
After a rapid increase throughout most of the spring, home-loan rates have now declined in five of the past six weeks, reported Freddie Mac’s Primary Mortgage Market Survey.
“The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels by about 20 basis points,” said Sam Khater, Freddie Mac’s chief economist. “What that means for home buyers is good news. Mortgage rates may have a little more room to decline over the very short term.”
Although the current economic expansion is in its 10th year, Khater said residential single-family real estate was initially slow to recover. “Now—backed by the demographic tailwind provided by Millennials reaching the peak age to buy their first home—the housing market should have some room to grow going forward,” he predicted.
Benchmark 30-year fixed-rate mortgages averaged 4.52% for the week ending July 5th, down from 4.55% a week earlier. A year ago at this time, the 30-year fixed-rate loans averaged 3.96%.
Fifteen-year fixed mortgages averaged 3.99% on July 5th, down from 4.04% a week earlier. A year ago at this time, the 15-year fixed-rate mortgages averaged 3.22%.
Chicago-area lenders were charging 4.376% to 4.486% last week on 30-yeare fixed-rate loans, according to rateSeeker.com.
Meanwhile, Illinois Realtors reported that single-family homes and condominiums sold quickly and at higher prices in May even as tight inventory drove sales slightly lower for the month.
The city of Chicago saw year-over-year home sales decrease 2.2% with 2,978 sales in May, compared with 3,046 a year ago. The median price of a home in Chicago in May was $306,000 up 0.1% percent compared with $305,600 in May of 2017.
“Buyers are feeling the pressure to move quickly, with shorter market times and fewer homes to choose from,” said Rebecca Thomson, president of the Chicago Association of Realtors. “For sellers, it’s all about positioning. With prices holding steady, sellers need to price it right from the beginning.”
In the nine-county Chicago Metro Area, sales of single-family and condominiums in May totaled 12,384 units sold, down 2.5% from 12,706 units in May of 2017. The median price in May was $255,000 in the Chicago Metro Area, an increase of 3.3% from $246,910 in May of 2017.
“Median prices showed a healthy, sustainable uptick in May, giving property owners an opportunity to continue to gain a return on their investment while at the same time allowing consumers a solid shot at getting into a home," said Matt Difanis, president of Illinois Realtors.
“The overall trend of decreasing inventories is unabated, so it’s likely this market dynamic will continue to place upward pressure on home prices through the summer,” Difanis said.
Statewide sales of single-family homes and condos in May totaled 16,937 units, down 2.7% from 17,401 units in May of 2017. The statewide median price in May was $215,000, up 3.4% from $208,000 in May of 2017. The median is a typical market price where half the homes sold for more and half sold for less.
Sales and price information are generated by Multiple Listing Service closed sales reported by 27 participating Illinois Realtor local boards and associations including Midwest Real Estate Data LLC data.
The time it took to sell a home in May statewide averaged 49 days, down from 52 days a year ago. Available housing inventory totaled 55,126 units for sale, a 7.6% decline from 59,644 units in May of 2017.
“While month-to-month sales in the last quarter recorded solid gains, the sales volumes were slightly lower than a year ago,” noted University of Illinois economist Geoffrey J.D. Hewings.
“The continued expansion of the economy has certainly helped sustain the housing recovery, although rising interest rates and uncertainty about the impact of the current trade war may dampen growth in the rest of 2018,” 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.