Coronavirus Imperils Chicago’s Residential Real Estate Market
While real estate is still listed as an “essential service”—just like groceries and liquor stores—the world-wide coronavirus epidemic nearly has shut down the housing market in Chicago.
The Illinois Department of Commerce and Economic Opportunity (DCEO) has issued the following regulatory edicts:
• Open houses are not permitted.
• Showings of occupied rental properties are not permitted.
• Showings of vacant or owner-occupied units are permitted if
necessary and scheduled in advance, but limited to no more than four people. Virtual showings are preferred.
“Many Chicago high-rise buildings are only allowing resident access,” noted veteran Realtor Jim Kinney of Baird & Warner. “No dog walkers, no trainers, no cleaning people, no construction, no Realtors, etc.”
An enterprising Kinney said: “After some pleading with the building manager, I was allowed to get the appraiser into my listing so we can hopefully get this deal closed. We had to go in through the loading dock and take the service elevator, but it worked.”
In late March, Baird & Warner’s “North Side Market Analysis” reported that since the
“Shelter in Place” order was issued by Gov. J. D. Pritzker, 178 sellers have chosen to take their homes temporarily off the market. Many were unlisted for safety reasons. There also were 113 cancellations of active listings.
“Surprisingly, despite the unfolding of events, there does not seem to be a rush to lower prices by sellers. There were only 34 price changes in the last week of March,” said broker John Irwin of Baird & Warner’s Lincoln Park office. “Some homes were relisted with lower prices, but many new sellers are waiting for some market stability before they list their homes.”
Exceptionally low interest rates sparked a boom in the Chicago residential market between December and February, Irwin noted, and that trend continues into April.
On April 2, Freddie Mac’s Primary Mortgage Market Survey reported that the benchmark 30-year fixed-rate mortgage average declined to 3.33% from 3.5%. A year ago, the 30-year fixed loan averaged 4.08%.
“Mortgage rates have drifted down for two weeks in a row and that drop reflects improvements in market liquidity and sentiment,” said Sam Khater, Freddie Mac’s Chief Economist.
“While the market has stabilized relative to prior weeks, home-buyer demand has declined in response to current economic conditions,” Khater said. “The good news is that the pending economic stimulus is on the way and will provide support for both consumers and businesses.”
Uncle Sam to rescue
The federal government has ordered that landlords who own buildings that are federally financed through the Department of Housing and Urban Development (FHA), Fannie Mae, or Freddie Mac, may not evict tenants for non-payment of rent, or charge fees or late payment penalties for a period of six months since the $2.2 trillion Care Act was enacted by Congress.
The legislation also prohibits foreclosures on all federally backed mortgage loans for a 60-day period, beginning March 18, 2020—and provides up to 180 days of forbearance for those impacted by a financial hardship related to the Covid-19 emergency.
Imagine what will happen if apartment tenants don’t pay their rent, and landlords don’t pay their mortgages and real estate taxes, which are earmarked to pay police, firefighters, paramedics and many health care workers.
U.S. leads world in virus cases
Since February 24, in world-wide coronavirus survey by nation, the U.S. now surprisingly leads the globe by a huge margin with 243,453 confirmed cases, according to a Johns Hopkins University study last updated on April 3rd.
Italy is second on the virus list with 115,242 cases, followed by Spain with 112,065, and Germany with 84,794. China—where the coronavirus allegedly started—has only 82,432 cases, even though it has three times the population of the U.S.
As a veteran journalist, this writer wonders how President Trump, the federal government and the American people got so far behind the bus on taking the virus seriously.
As late as this week, reports from friends and acquaintances residing in California and Florida say tens of thousands of people are partying at the beach in a “spring break” mood, while thousands of Americans in New York, Chicago and New Orleans are dying from the virus.
Hunker in a bunker
Cold-War tensions sparked the construction of thousands of private atomic-bomb fallout shelters in the U.S. during the 1950s and 1960s.
So, it is no surprise that inquiries and sales are skyrocketing for coronavirus bunkers and shelters across the country, reports the Los Angeles Times. The bunkers come equipped with special air-filtration systems, which buyers believe will come in handy to keep out a deadly virus that can reportedly linger in the air for several hours.
Since the Trump administration has ruled that gun shops are considered “essential businesses,” as coronavirus concerns multiply, more and more Americans are buying guns and the number of background checks are skyrocketing, reports the Associated Press. In Illinois, so are applications for Firearm Owners Identification (FOID) cards.
Apparently, for Americans who fear a broader societal collapse down the road, a secure bunker or safe room—with a year’s worth of food, and plenty of guns and ammo—may provide peace of mind.
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.