With home loan rates falling to record lows a whopping 16 times in 2020, thousands of first-time home buyers likely have smiles on their faces.
11-Jan-21 Now is the time to gaze into the crystal ball and look ahead at the future of residential real estate in Chicago, and gaze back at 2020, the mind-bending year of the pandemic.
The Dow Jones Industrial Average hit a record high of 30,606 points at year end, meaning wealthy home purchasers likely have plenty of cash in their pockets.
Benchmark 30-year-fixed mortgage interest rates ended the year at an extremely affordable 2.67 percent on December 31, reported Freddie Macs Primary Mortgage Market Survey.
With home loan rates falling to record lows a whopping 16 times in 2020, thousands of first-time home buyers likely have smiles on their faces. A year ago, 30-year fixed mortgage rates averaged 3.72 percent.
All eyes have been on mortgage rates this year, especially the 30-year fixed-rate, which has dropped more than one percentage point over the last 12 months, driving housing market activity in 2020, said Sam Khater (left), Freddie Macs chief economist.
On December 31, lenders nationwide were charging an average of 2.17 percent on 15-year-fixed loans, down from 2.19 percent a week earlier. A year ago, 15-year fixed mortgages averaged 3.16 percent. On January 1, Gateway Capital Mortgage was quoting 2.667 percent on 30-year loans and 2.125 percent on 15-year mortgages, reported RateSeeker.
The Freddie Mac survey is focused on conventional, conforming, and fully amortizing home purchase loans for borrowers with excellent credit who put 20 percent down.
Heading into 2021 we expect rates to remain flat, potentially rising modestly off of their record low, but solid purchase demand and tight inventory will continue to put pressure on housing markets as well as house price growth, Khater predicted.
At its December policy meeting, the Federal Reserve Board said it expects to keep its short-term benchmark interest rate near zero through at least 2023.
The Fed has held its key rate there since March 2020, when it took a range of extraordinary steps to fight the pandemic recession by keeping credit flowing.
2021 will be another good year...for real estate
Lawrence Yun, chief economist of the National Association of REALTORS, believes that 2021 will be another record-breaking year for real estate.
The December 2020 North Side Market Analysis, drafted by Chicago Realtor John Irwin of Baird & Warner, pinpointed the following trends...
Despite the pandemic, social unrest, massive unemployment, and unprecedented government financial problems, Chicagoland home sales volume rose 6.3 percent in 2020 compared with the prior year.
The Lake View and North Center neighborhoods posted 2020 home unit sales increases over last year while Lincoln Park and the Near North Side experienced decreases.
Condominium and townhome sales in the Gold Coast, River North, and Streeterville have declined 18.4 percent from 2019 and inventories have risen 15.2 percent. There are currently 12.5 months of supply of inventory.
Social unrest and aging inventory with high assessments are partially responsible, observed Irwin.
Restrictions of the COVID-19 crisis have changed priorities of many homeowners.
Working from home has made the need for more space and a home office more important than proximity to the company office, said Irwin (left). Many people are looking to move away from the trendy neighborhoods with a new eye on Lincoln Park, Lake View, and Bucktown neighborhoods, where they can get more space.
While some families are opting to move to the suburbs, it does not appear to be having a significant effect on the North Side real estate market.
A smooth Presidential transition and positive news about a COVID-19 vaccine are the first big steps in re-establishing stability that the real estate market needs, in order to take full advantage of the pent-up demand on the North Side, Irwin said.