3-Sep-18 – Where do Chicago home and condominium owners stand a decade after the Great Recession and the 2008 housing crash?
Housing prices have rebounded dramatically on the east and west coasts, but generally Chicago and the Midwest still are in recovery mode. And many homeowners are still underwater, owing more than their houses are worth.
Of course, sale prices in hot lakefront neighborhoods are rising, but homeowners in the bungalow belt aren’t doing as well, housing experts say.
A report by Truth in Accounting, a nonpartisan think tank, computed that all debt run up by Chicago and its various governmental units, including schools, puts each city taxpayer on the hook for more than $75,000. Add to that a state debt of more than $50,000 per taxpayer, and every Chicagoan would owe more than $126,000 to bail out the city and the state.
Ever since the GI Bill expanded homeownership in the United States after World War II, owning a single-family home with a white picket fence has been the vision of the American Dream. However, the housing crash of 2008 brought tighter mortgage credit restrictions and a shortage of affordable housing units.
Add skyrocketing student loan debt and soaring real estate taxes, and that makes owning a home a luxury. The pendulum began to swing away from homeownership during the Great Recession, causing a fundamental shift toward apartment renting, especially for Millennials, experts say.
Homeownership once was the road to upward economic mobility, eventually providing a hefty financial nest egg for retirement. Now the American Dream of homeownership may not be attainable for many young Millennials.
Freddie Mac’s August Forecast reported that although the U.S. economy in the second quarter grew at its fastest pace in nearly four years, housing activity nationwide played a limited role in the expansion.
The report said new and existing-home construction, and sales of new residences, all declined in the last quarter because of builder challenges, limited inventory, and steady price gains.
Looking ahead to autumn, Freddie Mac expects market conditions to remain mostly the same, with a modest rise in housing starts slightly easing inventory constraints.
Total home sales – new and existing – for the year are now forecast to increase 0.2 percent, and home price growth – which has softened somewhat in recent months – is still anticipated to rise six percent.
The good news, says Khater, is that the economy and labor market are healthy right now and mortgage rates, after surging earlier this year, have stabilized in recent months.
“These factors should continue to create solid buyer demand, and ultimately an uptick in sales, in most parts of the country in the months ahead,” Khater predicted.