Chicago Housing Market Glance - Summer 2010
Home Buyer Tax Credit Closing Deadline Extended, Chicago Home Sales Up 32% in May, Mortgage Rates Hit Record Lows… Find Out What’s Happening in Chicago Real Estate.
Home Buyer Tax Credit Closing Deadline Extended
A much needed measure to extend the closing deadline for the federal home buyer tax credit was enacted in early July. It prolongs the cutoff date from June 30th to September 30th, giving eligible home buyers three additional months to close on their properties and claim the tax credit.
Call for an extension was obvious as the end of June approached and there were still thousands of qualified buyers who had the prerequisite signed contract by April 30th, but were delayed on the final close due to matters outside their control. For instance, many lenders are overwhelmed with the sheer volume of mortgage applications as a result of the tax credit incentive and simply could not process every single one before the old deadline. Also, a number of the transactions these days are short sales which, contrary to the name, take much longer than traditional real estate deals. Across the U.S., there were an estimated 180,000 people who would not get the tax credit simply because they could not get to the closing table in time.
Fortunately, federal lawmakers and real estate industry officials campaigned for an extension to draw out the closing date, enabling everyone who is entitled ample time to finalize their home purchases. It doesn’t allow additional people to get the tax credit, only gives those who are already lined-up for the incentive a grace period to close. So, if you had a binding contract of purchase on or before April 30 and meet all the requirements, you will now have until September 30 to close on your new home.
Chicago Home Sales Up 32% in May
The number of residential properties sold in Chicago increased dramatically in May from the same month last year. According to the Illinois Association of Realtors, there was a 32.1% increase in condo and single-family home sales this May as compared with May of 2009. It equals roughly 2,050 transactions in the city during the month of May and is the eleventh consecutive month of year-over-year gains in the Chicago area. Median home prices in the city also experienced a slight uptick with a 2.2% rise to $230,000.
Real estate trends throughout Illinois showed improvement from a year earlier with 33.6% more home sales in the Chicagoland area and a 27.1% growth throughout the state. Statewide, median sales price inched up from $156,000 in May ’09 to $157,000 in May 2010.
Mortgage Rates Hit Record Lows
Mortgage rates dropped to an all-time low last month. According to an article in The Washington Post that cited figures from Freddie Mac, fixed mortgage rates for 30-year conforming loans dipped to 4.69% at the end of June. It is the lowest level ever on record since the organization started keeping track in 1971.
Apprehension about the strength of the global economy is partly responsible for today’s very affordable home loans. Industry analysts believe rates are down right now largely because investors are putting capital into areas they feel are most stable, such as mortgage-backed securities from Freddie Mac and Fannie Mae. But despite the historically unbeatable mortgage rates, people are still hesitant to purchase properties. There continues to be a lot of trepidation about the job market and many Americans are either out of work or fearful of a wage reduction. Consumers are not interested in taking on the major debt of homeownership until matters on the employment front make a surefire recovery.
For the time being, record low mortgage rates seem to mainly affect the refi business. Folks who already have a home loan want to reduce monthly payments by refinancing for a better rate. However, sizeable closing costs, outstanding credit score requirements and devaluation of properties has made it near impossible for some borrowers to follow through with the refinance procedure.
