Illinois Mortgage Experts Can’t See the Future

Illinois housing market predictions are generally best left to those in the know, but these days even the experts aren’t weighing in.

“If I had a crystal ball, it would be cloudy,” said Donald Parisi, president of the Realtor Association of the Fox Valley, which covers Kane County from Batavia north to Algonquin.

Home sales in Kane’s Fox Valley region have been a mixed bag so far this year. Although the number of homes sold through the end of March is up 17 percent over the same period last year, the average sale price is down 6.1 percent, and the average home spent 125 days on the market, or about a month longer than the comparable period last year, according to Multiple Listing Service data.

McHenry County home sales were down 26.8 percent for the first three months of 2007 compared with the same period of 2006, but values have remained fairly stable.

The average sale price, January through March, for a McHenry County home was $253,103, compared with $256,834 in the first months of 2006. The similar figures means that prices are not driving Illinois mortgage applicants away at least.

“I was frankly surprised to see it dip even a little bit,” said Jim Haisler, association executive for the McHenry County Association of Realtors.

Haisler said real estate agents had been reporting a rise in home values.

“There’s no panic selling,” Haisler said, noting that local sellers are willing to wait for a higher bid, even for a year or two.

When housing starts are up, they help drive the average sale price up because they generally carry a higher pricetag than existing homes, he said. As the economy of the region has grown, though, housing values have stabilized.

In Kane County, meanwhile, “weather has been the biggest factor,” Parisi said, noting the lack of home mortgage activity in the area. Parisi said January and February were slow, but the market picked up in March.

The inventory of homes is large this year because sellers held off until the weather warmed up, Parisi said. He also believes “doom and gloom” media coverage has hurt the market.

“We’ve seen some very ridiculous offers,” Parisi said. “People shouldn’t be desperate … The problem is some buyers are out there just to take advantage of the marketplace.”

Brian Wesbury, chief economist at First Trust Portfolios in Lisle, said in an online note earlier this week that current weakness in housing likely would not precede overall economic instability.

“Housing is not weak because [mortgage interest rates] are too high,” Wesbury said. “Housing is weak because the sector is no longer being artificially boosted by excessively low interest rates.”

Subprime lenders, who generally make low- or no-down payment loans to individuals with low credit scores, are seeing a dramatic rise in the number of borrowers defaulting on mortgages as low introductory interest rates head upward.

Foreclosure rates in both Kane and McHenry Counties were more than double the national average last year and are staying high. Last year, 2.28 percent of McHenry County households and 2.25 percent of Kane County households were in foreclosure, according to national foreclosure listing service RealtyTrac.

The year-to-date McHenry County numbers show there were 193 foreclosures in February, down 20.1 percent from January, but up 28.7 percent from the previous February.

Kane County had 707 foreclosures in the first two months of 2007, already more than 75 percent higher than the total for the full first quarter of 2006.

SOURCE: The Kane Country Chronicle