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The Home Front

Mortgage hunters in Chicago still have a chance to avoid having a lump of coal stuffed into their Christmas stocking this year.

12-Dec-22 – Benchmark 30-year fixed home loan interest rates eased to 6.33 percent on December 8 from 6.49 percent a week earlier, reported Freddie Mac’s Primary Mortgage Market Survey. It is the fourth consecutive week rates have declined after peaking at 7.08 percent on October 27. A year ago, 30-year fixed-rate loans averaged an affordable 3.10 percent.

Freddie Mac

“Mortgage rates decreased due to increasing concerns over lackluster economic growth,” said Sam Khater, Freddie Mac’s chief economist. “Over the last four weeks, mortgage rates have declined three quarters of a percentage point – the largest decline since 2008.”

Sam Khater

While the decline in rates has been large, unfortunately home buyer sentiment remains low. “There has been no major positive reaction in purchase demand to these lower rates,” noted Khater (left).

Fifteen-year fixed mortgage rates averaged 5.67 percent on December 8, down from 5.76 percent a week earlier. A year ago, 15-year fixed loans averaged 2.38 percent.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.

However, mortgage hunters who shop around can find even better below-market deals. For example, on December 9, Guaranteed Rate was quoting 5.99 percent on a conforming 30-year fixed mortgage for borrowers willing to pay 0.979 percent of the loan amount in discount points, or special fees.

On the purchase of a $400,000 home, borrowers who place a 25 percent down payment could lock in a principal and interest payment of $1,796. Points on the $300,000 mortgage would add $2,937 to the closing costs.

“Borrowers who qualify for a single-family conforming Freddie Mac or Fannie Mae loan can finance up to $726,200 with lower credit scores, lower down payments, higher debt-to-income ratios, less documentation, and no reserves, in most cases,” said J.D. Cortese (right), Senior Vice President of Mortgage Lending at Guaranteed Rate.

J.D. Cortese

Buyers and sellers wait for market rebound

Existing home sales on Chicago’s North Side slumped again in November for the ninth consecutive month, a new analysis by Baird & Warner reported.

John Irwin

“Many buyers and sellers are staying on the sidelines, waiting for some stability,” noted John Irwin (left), author of Baird & Warner’s December 2022 Market Analysis covering the Lakeview, Lincoln Park, Near North, and North Center neighborhoods.

“Rising real estate taxes, higher crime rates, stock market woes, and inventory issues are all having a negative effect on the market,” Irwin said. “Demand is out there, but there are just not enough homes for sale. There are real estate opportunities, and as the economy improves the market could rebound quickly. The question is when will the market rebound?”

The Baird & Warner analysis shows the following residential activity for November in the Lakeview, Lincoln Park, Near North, and North Center neighborhoods:

Home sales. Year-to-date 2022 existing home sales volume is down 13.2 percent when compared with the same period in 2021.

Home prices. Year-to-date 2022 median home sales prices rose 3.8 percent over the same period in 2021.

Market time. Year-to-date 2022 average market time plummeted 49.7 percent from 2021.

Listing inventory. Year-to-date listing inventory levels are down a whopping 34 percent from 2021.

The survey showed the following median-pricing results for homes sold in November, compared with the same month in 2021 in the four neighborhoods surveyed:

Photo provided by Don DeBat

Near North Side. Overall, resale home prices slipped 6.0 percent.

Lincoln Park. Overall resale home prices fell 16.7 percent. However, the median price of homes in the $500,000 to $1 million bracket declined only 1.7 percent.

Lakeview. Resale home prices declined 6.4 percent, while resale prices of luxury homes priced from $1-2 million declined only 1.4 percent.

North Center. Resale home prices rose a modest 1.1 percent in this hot neighborhood. However, the median price of luxury units priced at more than $2 million dropped 19.3 percent.