Low mortgage rates bring holiday cheer to housing market

LOW MORTGAGE RATES BRING HOLIDAY CHEER TO HOUSING MARKET

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Low mortgage rates bring holiday cheer to housing market

Supply of existing homes for sale is down, and prices keep going up - but mortgage rates are rock bottom. Don DeBat has crunched the numbers and says even the holiday season is a good time to buy.

30-Nov-15 - With Black Friday fever still raging and most people focused on last minute holiday shopping, the year's end can be the perfect time to buy a home in Chicago - if you can find one you like.


Photo by Eric Herzog


"There is still very keen interest in buying this late in the selling season, and there's no indication that the zeal to own a home is diminishing," said Dan Wagner (left), president of Chicago Association of Realtors.

However, existing home inventories are shrinking, and, says Wagner, "that's having a corresponding impact on sales and prices."

According to an analysis by RE/MAX Northern Illinois real estate network, over the past 33 consecutive months the median sales price of homes in the Chicago metro area has been higher than it was in the same month one year earlier.

2,109 existing homes sold in Chicago in October, down less than one percent from October 2014. The median price of a Chicago home was $240,000 in October, up 1.7 percent over the same month last year, reported the Illinois Association of Realtors (IAR).

Sales of single-family homes and condominiums in the nine-county Chicago area totaled 9,155 units in October, a decrease of two percent from the same month a year ago. The median price in October in the Chicago area was $200,000, up 8.1 percent from October 2014.

"A substantial decrease in the number of homes on the market is having an impact on sales," said Mike Drews, IAR president.


"While there typically is a drop-off in inventory this time of year as potential sellers become immersed in holiday activities, the decline in October was particularly steep," said Drews (right). "The result is strong median-price gains and a decrease in the number of days to sell a home."

Mike Drews

Statewide, it took an average of 68 days to sell a home in October in Illinois, down from 74 days a year ago. Available housing inventory in Illinois remained tight with 68,302 homes for sale, a 10.4 percent decline from October 2014.


Jim Merrion


"In our view, the Chicago-area housing market is actually stronger than the October unit numbers might suggest," noted Jim Merrion (left), regional director of RE/MAX. "New federal regulations governing closing procedures took effect in October, and that almost certainly slowed down the closing process for many transactions, pushing them back into November."

Another positive force in the housing market is near rock-bottom mortgage interest rates, analysts say.

Freddie Mac's Primary Mortgage Market Survey reported on November 25 that benchmark 30-year fixed rate home loans averaged 3.95 percent, down from 3.97 percent a week earlier. A year ago, 30-year loans averaged 3.97 percent.

The average 30-year fixed rate mortgage has not risen above four percent since July 23, 2015, which is helping home affordability in the face of rising prices due to low levels of inventory, Freddie Mac reported.


"In a quiet week leading up to the Thanksgiving holiday, there were no major negative news announcements, and none are expected in the next few days," says Sean Becketti (right), chief economist of Freddie Mac.

Sean Becketti

With the year winding down, analysts are waiting to see if the Federal Reserve Board will hike interest rates at its December 15 meeting - and that could inspire would-be homebuyers to take action.

 Previous story: New luxury homes gift wrapped for holidays as loan rates rise

By Don DeBat | Loop North News | ddebat@loopnorth.com

Published 30-Nov-15 12:24 AM