Market Conditions: April Sales Down 26.9% Year Over Year
Sales continued to decline in Chicago in April while prices are also down sharply from the year ago period.
From the Illinois Association of Realtors:
In the city of Chicago, April total home sales (single-family and condominiums) were up 16.7 percent to 1,378 sales compared to March 2009 sales of 1,181; sales were down 26.9 percent from 1,886 in April 2008.
The city of Chicago median price remained unchanged at $220,000 in April and March 2009; the city of Chicago median price in April was down 26.7 percent from $300,000 in April 2008.
“We continue to see homes in foreclosure and short sales driving prices lower in many areas of the city,” said David Hanna, president of the Chicago Association of REALTORS®.
“Policy changes such as allowing first-time homebuyers to use the $8,000 tax credit at closing and a streamlined process for short sales will help, but the critical issues are the rising numbers of foreclosures and restrictive lending guidelines not crafted for our urban market. The federal loan modification program has not yet slowed the pace of foreclosures, a must for turning housing around in the Chicago metropolitan area. Regulators and lenders need guidance and latitude in creating a lending environment that addresses regional and in particular urban housing differences. That is not happening right now, and our numbers reflect the result.”
For the entire state, sales were down 20.9% year over year. In the 9-county Chicagoland area, sales fell 22.1% from April 2008.
“Illinois home sales are showing some signs of life as people take advantage of the favorable buyer’s market conditions and the federal stimulus package incentives,” said REALTOR® Pat Callan, president of the Illinois Association of REALTORS®.
“Those waiting on the sidelines should act now while the window of opportunity is still open and before mortgage interest rates rise above these lows. The $8,000 first-time homebuyer tax credit ends December 1, 2009, and we anticipate details soon to be released by the U.S. Department of Housing and Urban Development allowing FHA consumers to use this credit as a down payment at the closing table.”
April Illinois Home Sales Signal Buyers Getting Off the Sidelines
Statewide Sales Up 9 Percent; Median Price at $150,000 [Illinois Association of Realtors Press Release, May 27, 2009]
*Those waiting on the sidelines should act now while the window of opportunity is still open and before mortgage interest rates rise above these lows*
Why bother. Housing will soon be completelyed owned by the government and be completely free.
In other news (WSJ) 65-75% of all loan modifications end up in foreclosure within 12 months.
Can’t wait to own a decent 3/2 in a close neighborhood for less than 200K around mid 2010!
NOTHING TO SEE HERE MOVE ALONG IM STEVE HEITMAN IGNORE THIS EVERYTHINGS GREAT AND ROSY AND NOW IS THE BEST TIME TO BUY!!!
“Regulators and lenders need guidance and latitude in creating a lending environment that addresses regional and in particular urban housing differences.”
So we can make crazy loans to people that can’t afford them. How on earth does the market affect an individuals ability to make a sound financial decision.
Can anyone show me where Pat Callan or David Hanna have ever advocated “not” buying due to market conditions. Don’t they get that they are a huge part of a problem that created our current financial mess. Good to see we are back to business as usual, heck even American Invesco is back with interest only loans.
*before mortgage interest rates rise above these lows*
Seriously… when do they think this rise will happen? at the end of 2010? Obviously the second rates go up and make housing more expensive, sales will crater. People are still having a problem buying within their means (or pricing appropriately for sellers)
im so shocked that now that lending standards have become stricter, sales are slower! /sarcasm off
Oh and dont ever listen to a damn thing any realtor association says. they are all morons!
it’s all about the job market. when the jobs come back, RE will stabilize. until then, it’s anyone’s guess.
“Regulators and lenders need guidance and latitude in creating a lending environment that addresses regional and in particular urban housing differences.”
I think the point behind this statement is more about what is taken place with Fannie and Freddy. Case in point, a friend of mine has been approved to purchase a home for $X, but the lenders are restricting his purchase to specifice condo developments. Not intentionally, but rather he can not get the loan he is already qualified for, because a particular condo develpment is not currently more than X% sold. It has nothing to do with his ability to afford the mortgage, just these little road blocks being set up by policy makers that don’t work well with larger urban geographies.
Sold % (and owner-occup %) are not new “road blocks.”
It was the policy makers removing these longstanding, sensible requirements that helped fuel the speculative bubble.
Their return is welcome and necessary.
“The $8,000 first-time homebuyer tax credit ends December 1, 2009, and we anticipate details soon to be released by the U.S. Department of Housing and Urban Development allowing FHA consumers to use this credit as a down payment at the closing table.”
Back to the same ol’ sh**. Trying to prop up the sales and prices of homes to people that can’t afford them. Your tax dollars at work. Have we learned nothing??
the NAR has learned one thing… “greed is good”
My dream home is in the 500-600k range so I’m going to wait until they bump up the homebuyer tax credit to a more reasonable 250k.
“In other news (WSJ) 65-75% of all loan modifications end up in foreclosure within 12 months”
Thank you Obama for the free rent for a year!
I am an Obama fan, but I know this wouldn’t work.
Loan mods don’t work? Here I thought the problem was that the person with the 50k/year household income and the 500k mortgage just didn’t know where to send the payments!
This makes sense because I haven’t seen a loan mod come through my office in months. It’s like 6 months ago the banks just stopped doing them. Which is funny because more and more people want them. That’s the moral hazard with giving your neighbor a break on his mortgage then pretty soon everybody wants one. I had a lady call up the other day, she says she wants a loan mod. She described her situation: $90k+ a year household income, bought a new home in 2006, drives two new cars, credit card debt, etc etc, but in early ’09 her husband lost his overtime and she lost her job. She said “but what is obama supposed to do for me? How is he going to help me? I lost my job, i can’t be expected to make these mortgage payments. what is the government and banks supposed to do for the people who need help?” she thought she was entitled to keep her lifestyle and that the banks should give her a break because she was unemployed. It wasn’t her fault, you know. Oh btw, they hadn’t missed a credit card payment yet but are going to purposely stop paying this month.
““In other news (WSJ) 65-75% of all loan modifications end up in foreclosure within 12 months””
“Sold % (and owner-occup %) are not new “road blocks.”
It was the policy makers removing these longstanding, sensible requirements that helped fuel the speculative bubble.
Their return is welcome and necessary.”
G, this doesn’t make much sense to me. what is sensible about this? In our urban local, the majority of new condo developments are in areas that are “up and coming” or on the fringe of existing/established neighborhoods. These developments are a big attraction to first time buyers who can not afford the established neighborhood, etc. By limiting their ability to purchase any of these units on the basis of owner occupancy %, etc. and not on the basis of the affordability of their respective mortgages, kinds defeats the purpose, if the goal is to stimulate first time buyers.
Correct me if I’m wrong, but it seems counter productive to me.
“She said “but what is obama supposed to do for me? How is he going to help me? I lost my job, i can’t be expected to make these mortgage payments. what is the government and banks supposed to do for the people who need help?”
Given how Wall Street and the big banks were bailed out and handed several trillions in taxpayer dollars I don’t think her sense of government entitlement is entirely misplaced.
“the majority of new condo developments are in areas that are “up and coming””
Jason R,
Please see my previous post on gentrification. The gist is: don’t count on it. Up and coming? LOL. Yeah and I know this horse that is perfect to win every race too.
“By limiting their ability to purchase any of these units on the basis of owner occupancy %, etc. and not on the basis of the affordability of their respective mortgages, kinds defeats the purpose, if the goal is to stimulate first time buyers.
Correct me if I’m wrong, but it seems counter productive to me.”
You are exactly right it IS counter-productive if the goal is to stuff people into home loanership. The government never does anything very efficiently. But you should ask yourself why the FHA is the leading originator of loans these days and why our taxpayer dollars are essentially propping up the low end of the market and preventing transaction volume from falling off a cliff. Why are my taxpayer dollars even playing in this market? I can’t for the life of me figure it out.
“Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.”
http://online.wsj.com/article/SB124139474675481713.html
Yeah great idea Jason R lets stuff more people into home loanership. Look at what great and high quality these FHA loans are..
“The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent — nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in “serious delinquency,” which means at least three months overdue.”
Bob, I’m not looking at it from a gentrification stand point, but rather a cost of ownership for first time buyers. Ideally as a first time buyer, you would like a nice place that you can afford in your choice neighborhood. Now that people can not get loans for more than they are worth, they are not able to just pick up a $500K unit in LP/LV, or wherever they would like. The second option is find a nice new unit in a neighborhood that is not as developed.
If the second scenario is not available because of owner occupancy%, then over time, I can see crappy vintage units becoming a premium because they are the only places that banks are willing to finance. While that is good for some, it will also help to keep the insane number of new units in this city, empty. who is going to buy those then?
I’ve always been an advocate of high percentage down on the loans. Currently FHA is the backdoor to home ownership with a very low downpayment. To my understanding banks won’t have these dumb requirements (owner occupancy percentage) if you come to the table with 10% or 20% down and the unit appraises out.
I’ll not be crying a river if they can’t afford the condo without FHA assistance. The FHA was created initially for moderate income (working class) people to attain home ownership and initially had a 20% down elgibility requirement. I don’t think it was created with the intention of helping a yuppie afford a condo in LP/LV/Wicker Park//etc.
I wonder if there is any difference in defaults between the old FHA scams where people were actually GIFTED 3% down and had negative money in the game, and now where you are required to pony up 3.5% with no assistance… oh wait, now they are giving away more than 3% to use as a down paymenr with this stupid 8k tax credit… nevermind!
So, it seems that knowing the distribution of mortgage types (conv., FHA, etc.) in a building or a neighborhood might be a useful metric. Can I get this information on a prospective building or neighborhood?
“Can I get this information on a prospective building or neighborhood?”
Do you feel like spending a lot of time (and more than a couple of dollars) looking at docs on ccrd.info? I’m not aware of anything else that can drill down to a ‘hood or smaller level.
I’ll tell you this: all of steve’s neighbors make lotsa money and none of them used exotic financing to buy their homes. It’s some block in Lincoln Park.
Is the bond bubble finally bursting? Mortgage rates jump 30% in ONE DAY. Buy TBT now if you haven’t already, this is going to get UGLY.
http://www.mortgagenewsdaily.com/mortgage_rates/blog/77945.aspx
Homedelete,
You can find this block in Lincoln Park at the end of the yellow brick road.
Bob,
It’s more like 25-30% down and it’s not just the FHA. All the major banks will have these requirements if you’re even a little below the down payment amount and the condos are more than half rental/ unoccupied.
Well there’s two ways of looking at it. We could say we’re down compared to last year, or we could say we’re up from last month.
“We could say we’re down compared to last year, or we could say we’re up from last month.”
Are we still up from last month if you adjust for seasonal fluctuation? I actually don’t know the answer, but April is ALWAYS higher than March, so what matters is how much higher.
The site I check wholesale mortgage loans for to check the pulse of rates just brought back all kinds of ARMs available.
Not sure if its related to the recent rise in interest rates or what but 3/1, 5/1, 7/1 & 10/1 ARMs & IO ARMs are back with rates down to 3.125% with low closing costs. Its my guess the government’s next move will be to force FNM & FRE to allow loans underwater up to 130% LTV to refinance from the current 105%.
So instead of giant waves of defaults on option-ARMs & Alt-As the govt will just push the problem out a year at a time either hoping for a rebound/stabilization in housing OR until rates finally rise.
The government just extended the limit to which people underwater can refi up to 125% LTV, very similar to the 130% I had predicted a month ago..
http://money.cnn.com/2009/07/01/news/economy/Obama_refi_program/index.htm?postversion=2009070112&iref=topnews
It might help prevent some foreclosures but I doubt it–if someone is massively enough under water on their home they might not care about saving a few bps in interest expense and still walk.