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Chicago Housing Market Glance - February 2010
Clock is Ticking for Tax Credit, Home Sales Up in 4th Quarter, Inventory of Downtown Condos Still High, Mortgage Rates Hit All-Time Low… Here’s the Scoop on What’s Happening in Chicago Real Estate.
Clock Is Ticking For Tax Credit
The federal home buyer tax credit is set to expire this spring. Chicago home buyers who want to claim the credit must have a signed contract of purchase by April 30th to qualify. Buyers have until the end of June to close on the home, though.
The credit, which originally only benefited first-time buyers, was expanded to include repeat buyers in early November. Eligible first-time home purchasers can get up to $8,000 through the program and repeat buyers can get as much as $6,500. The deadline for the tax credit was extended once, but is not expected to be prolonged again. So, with about 2 months left on the clock, buyers who want the tax credit shouldn’t wait too long to sign a contract on the home of their dreams. Income limits and other restrictions do apply, so it is best to consult with a real estate agent and/or tax professional about whether you are eligible.
Home Sales Up in 4th Quarter
The number of home sales in the state of Illinois rose in the final quarter of 2009 from the same period in 2008. According to reports from the Illinois Association of Realtors, sales activity went up more than 35% statewide and nearly 50% in the Chicago metropolitan area over 4th quarter sales last year. Sales levels in the city, however, remained unchanged with about 69,000 total transactions during October, November and December for both years. Industry experts purpose the federal tax credit, availability of bargain-priced homes and pent-up buyer demand are responsible for the jump in purchases.
Inventory of Downtown Condos Still High
The inventory of unsold condos in downtown Chicago remains high in 2009 as sales decreased for the second year in a row. About 20 fewer units sold in ’09 than ’08, both years logging under 600 sales in total (the previous decade saw average annual sales closer to 4,000 units sold per year). According to figures from Midwest Real Estate Data, there are approximately 5,000 condominium units on the market in Chicago’s downtown area. This provides a wide selection of condos to choose from in some of the city’s most sought-after neighborhoods, such as the Loop, Streeterville, Gold Coast and River North.
Many prices have been deeply discounted to attract buyers and diminish supply levels so developers can start projects that have been on hold. Appraisal Research Counselors estimates that development companies have curtailed construction plans on over 1,000 new units in downtown Chicago. However, a handful of residential buildings are expected to open this year, which will add 1,200 additional condos to the market in 2010.
Mortgage Rates Hit All-Time Low
In December, mortgage rates hit the lowest percentage ever on record at 4.71. Today, 30-year fixed rates are floating around the 5% mark, which is still very low and considered an excellent rate to lock into for a long-term home loan. There is speculation that mortgage rates will begin to rise when the Federal Reserve’s $1.25 trillion bond-purchasing program expires at the end of March. It is not known how much mortgage rates will be affected, but most industry analysts agree that they will rise in the future.
