Once seemingly confined to subprime lending, problems in the Illinois mortgage industry showed signs of spreading to more-creditworthy borrowers Friday, triggering concerns about the potential fallout on the real estate market.
Read the rest of this entry »
Families facing Illinois mortgage problems have a new place to turn.
Read the rest of this entry »
Home sales in the Chicago housing market plummeted 20.7% last month compared with May 2006, according to the Illinois Association of Realtors.
Read the rest of this entry »
On recent evenings, Pat Wendelken goes online and peeks at the posted mortgage rates. She winces at what she sees.
Read the rest of this entry »
Home prices in Illinois held steady in the first quarter of 2007, but sales plummeted more than 14 percent from the year-ago figures, according to the Illinois Association of Realtors.
Read the rest of this entry »
Dashing hopes that the housing slump would soon bottom out, new-home sales in the Chicago housing market fell even faster in the first quarter as the market meltdown spread from the suburbs to the city.
It didn’t take Teena Stults long to find the right house for the right price, after meeting with her real estate agent Wednesday afternoon to discuss buying the house, located in Collinsville, Ill.
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.
With inventory stacking up and few Illinois mortgage seeks in sight, home sellers are starting to sweeten the deal - dangling plasma TVs, free appliance upgrades and offers to pay a year’s worth of assessments or property taxes - in the hope of enticing casual house hunters into signing on the dotted line.
“We all need buyers quite a bit,” says Tom Gilfillan, a northwest suburban Coldwell Banker agent.
Spring is traditionally the residential real estate industry’s busiest time. But with mounting inventory and a dearth of buyers, this selling season promises to be one of the most painful in memory for agents. Some say it could be a test of just how deep the real estate recession is in the Chicago housing market.
“This (season) will be one of the most closely watched in a while,” says Carl Tannenbaum, chief economist at LaSalle Bank in Chicago.
Some agents say traffic at open houses is picking up now that it’s spring, but they acknowledge that it’s harder to convert that traffic into sales.
“I’m telling all of my sellers, give me six months,” says Barbara Floyd, a Re/Max Signature real estate agent who’s sold real estate in Chicago for more than 20 years. “It’s taking longer to sell. . . . You can’t sugarcoat it.”
With homes languishing on the market for an average of 131 days — up from 84 in March 2006 — the supply of homes for sale in Cook County as of last week had risen 38% from last year to 43,339, according to the Multiple Listing Service of Northern Illinois (MLS).
Prices, however, have held up: The average sale price for a single-family home in Cook County rose to $303,375 in February, an 8% increase from a year earlier, MLS says.
But there are signs that sellers are beginning to crack on price.
Steven Huck helped his mother sell her Mount Prospect home last summer. The house was on the market for four months, one of 42 for sale in town within the same price range. After slashing the price 20%, the Hucks found a mortgage loan borrower for it.”We thought it was going to go a lot quicker because everyone liked the house,” Mr. Huck recalls.
The oversupply situation isn’t lost on those few buyers out there, says LaSalle’s Mr. Tannenbaum. The result: a game of chicken.
“If buyers sense that there are going to be bargains out there, and a lot of sellers are very reluctant to lower (prices) . . . the result of that is the waiting game,” he says.
And as property listings are multiplying, the pool of potential buyers is shrinking, notes Paul Kasriel, chief economist at Chicago’s Northern Trust Co. Stricter mortgage financing terms will disqualify many people looking to buy this spring, Mr. Kasriel predicts.
In the past, “anyone who had a pulse could get a mortgage,” he says. But “people who would have been able to buy a year ago are not going to be able to buy now.”
The slowdown in sales — fewer than 1,500 single-family homes sold in Cook County in February, a 20% drop from last year — has been sobering for some agents, especially those who flocked to the business during the boom, says Coldwell Banker’s Mr. Gilfillan.
“This is a rude thing for them,” he says. “They thought you could just get a license and stop by the Mercedes dealer, but that’s not how it works.”
Northern’s Mr. Kasriel sees no relief ahead.
“Realtors are going to have to work harder, and some of them are going to be taking other jobs because there’s not enough income to go around,” he says. “I think this spring will be a standout as one to remember - or maybe one they’ll want to forget.”
Illinois moved ahead this week with a new version of a controversial predatory lending law, but the revision came under fire immediately from both the home mortgage industry and some community groups who support it in principle.
The proposed revision, Gov. Rod Blagojevich announced Wednesday, will require that first-time home buyers and others in Cook County who take out certain kinds of home mortgages, including interest-only mortgage loans and some adjustable-rate loans, undergo counseling to assure they understand the obligations involved.
According to the Chicago Tribune, this would replace an earlier version, which required financial counseling for some mortgage borrowers in 10 Chicago ZIP codes, that took effect in October and was suspended by Blagojevich in January.
That program, popularly known as HB 4050, was attacked as racist because it singled out home buyers in predominantly minority neighborhoods, and as a plan that would ultimately mean depressing the real estate market.
“The new rules will help protect our consumers by focusing scrutiny on the lenders and their home loans, rather than the consumers and their credit history,” according to a statement issued by the governor’s office.
This means they could affect thousands more consumers, though the state is not sure how many. The loan types involved were once considered exotic, but the lending industry has made them increasingly popular options for home buyers trying to stretch their ability to borrow.
Many mortgage industry representatives said the new rules would sweep in consumers who probably do not need the counseling and would cause home mortgage lenders to flee Cook County.
“You’re going to have doctors and lawyers who are going to be affected by it,” said Bill McNamee, president of the Illinois Association of Mortgage Brokers. “There are going to be people who are inconvenienced by this who really don’t need it.”
The law revision, first reported by the Tribune, is being considered at a time of mounting concerns about rising foreclosures, many involving subprime loans, typically offered at higher mortgage rates to less-credit-worthy customers.
Questions were immediately raised about the availability of enough counselors to cover the program’s expansion.
“We’re really concerned that there’s capacity among the housing counselors to provide this kind of countywide program,” said Bob Palmer, a spokesman for Housing Action Illinois, which trained the HUD-certified counselors for 11 organizations in the first phase of the law.
Palmer suggested another problem: Because most of the program counselors were city-based, suburban home buyers could meet delays and inconvenience in getting their Illinois mortgage deals to close.
“We are encouraged by the governor’s decision to reimplement HB 4050,” said Jeff Bartow, executive director of the Southwest Organizing Project, which includes several of the counseling groups.
“Given the number of impending [bad credit mortgage] failures on a countywide basis, we also understand wanting to make this a countywide program. But expansion of the area will make sense only if increased resources and time are available to hire and train housing counselors to address the increase in the volume of reviews that will take place.”
To give an idea of the possible scope of this plan, Casey Griffin, deputy recorder of deeds for Cook County, said last year that his office recorded about 423,000 property transactions.
To file the deeds the agency must obtain documentation showing that home buyers have had the required mortgage loan counseling or are exempt.
He said on Wednesday that his office did not know the state was planning to revive the 4050 program and was uncertain about its ramifications.
“We will have to sort this out,” Griffin said.
Continue reading in the Chicago Tribune …