Holiday Cheer Is In Air; Mortgage Rates Fall To New Low

Pandemic-weary Americans are huddling around hearth and home for the holidays, trying desperately to muster some Christmas cheer.


Although traditional large Thanksgiving gatherings likely will be greatly diminished, America refuses to be Scrooged.


Residential holiday décor sales are up 15% to 20%, compared to last year. And, hundreds of thousands of people are listening to Christmas music in late November, the Associated Press reports.


While COVID-19 virus cases and deaths are soaring to new heights, benchmark home-loan interest rates ironically have plummeted to 2.72%, the lowest level since 1971 and the 13th new record-low posted in 2020.


Meanwhile, sales of existing homes nationwide rose for the fifth month in a row in October, reaching a level not seen for 14 years. The annualized rate of home sales has reached 6.85 million units, up 26.6% from a year ago, and the median price rose 15.5% to $313,000.


“Weaker consumer-spending data, which accounts for the majority of economic growth, drove mortgage rates to a new record low,” said Sam Khater, Freddie Mac’s Chief Economist. “While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy.”


On November 19th, lenders nationwide were charging an average of 2.72% on benchmark 30-year fixed rate mortgages, down from 2.84% a week earlier, reported the Freddie Mac Primary Mortgage Market Survey. A year ago, the 30-year fixed-loan average was 3.66%.


In Chicago, Gateway Capital Mortgage was quoting 2.756% on a 30-year fixed loan, while Mutual of Omaha Mortgage was asking 2.923%, according to RateSeeker.com.


Fifteen-year fixed-rate mortgages averaged 2.28%, down from 2.34% a week earlier. A year ago, 15-year loans averaged 3.15%. The survey is focused on conventional, conforming, fully-amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.


Chicago’s rebounding downtown and North Side residential market mirrors the nation, reports broker-analyst John Irwin of Baird & Warner.


“After the COVID-19 shutdown in March and April of 2020, we saw the rebound take off again in May and has continued through the summer and into the fall,” Irwin noted. “October 2020 residential sales and homes going under contract continued to dramatically increase. In October, these increases exceeded the rise in inventory levels that we have been closely monitoring.”


Even the Near North Side which continues to suffer the most from social unrest and COVID-19 posted a 7.8% increase in homes that went under contract in October, Irwin noted.


“Are some people leaving the city? Are some neighborhoods struggling? The answer to both questions is yes,” Irwin said. “However, the numbers show that demand for homes on both the buy and sell side on Chicago’s North Side are very strong and that the market in general is quite healthy.”


Irwin said the big question remains: Where is the market going? The answer is analysts don’t really know. “While the market is currently healthy, it is going to be subject to changes by month and even by week,” Irwin said.


“We are currently experiencing another dramatic rise in COVID-19 which is resulting in increased restrictions and financial problems. While social protests have remained peaceful, another major incident of violence and looting would have grave consequences,” he said.


Gazing to the future, Irwin predicted that state and local financial problems remain “the elephant in the room” and could be negatively affecting real estate for some time to come.


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.

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”

 

Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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