The tight credit conditions have kept many homeowners from selling existing homes resulting in a shrinking inventory of properties in the Metro Chicago region. But, recent changes that are loosening mortgage restrictions could be a game-changer. And it may have come just in time. It was recently reported by the U.S. Department of Commerce that the economy shrank considerably during the first quarter of this year, with a GDP (Gross Domestic Product) output of 0.2%. This was far below analyst expectations. A recession is generally defined as two consecutive quarters of negative economic growth.
A healthy rebound in the housing market could give the economy a much needed boost. Increasing demand and low inventory has pushed sales prices higher. According to Zillow, the median sales price for all homes in Chicago was $239,000 in March, up 32% since February 2012. Inventory in the City is also up reaching 2,118 properties for sale by the end of March, a year-over-year increase of 13%, according to the Illinois Association of Realtors®. “Chicago’s spring market is showing bounce with back-to-back months of sales increases signaling strengthening demand,” said Hugh Rider, president, Chicago Association of REALTORS®.
Mortgage rates are likely to increase. Currently, the national average for a home mortgage is still hovering barely under four percent. As the housing market continues to recover many believe that mortgage rates will go up, especially if the Fed decides to raise its rates later this year. Any increase will likely be gradual to avoid “shocking” the market. However, the surprise shrinking of GDP in the first quarter is likely to delay any Fed rate hike to at least the last half of 2015.
With homes selling quickly and a thriving local economy, Chicago real estate agents and brokers are very busy helping eager buyers find their perfect home. As we approach the summer moving season, easing mortgage restrictions and historically low interest rates may finally make it possible for more Chicagoans to become homeowners, many for the first time.