Monthly ArchiveSeptember 2007

chicago-condos Stephen on 21 Sep 2007

Fed Chairman Bernanke Back on Capital Hill

Ben Bernanke, Chairman of the Federal Reserve, was back on Capital Hill to discuss concerns that growing problems in the real estate market around the country could lead to a recession.

The testimony came two days after the Fed moved to lower interest rates, giving many homeowners with adjustable mortgage rates an immediate reprieve on rising mortgage payments.

The mortgage market was hit by an increase in foreclosures, particularly in the subprime market.  The inventory of homes and condominiums on the market continues to increase as foreclosures rise and new developments are completed.

Bernanke reassured lawmakers that the Fed would work aggressively to offer homeowners some relief from mounting financial pressures.  However, he stressed the need to clamp down on poor loan practices that led to many foreclosures.

President Bush has also stressed the need to work with Congress in addressing the nationwide credit crisis.  Whether lawmakers will be able to offer a solution to the growing problem remains to be seen.

In the Chicago area, foreclosures on Chicago Condos and homes were up 12.5 percent during August, according to RealtyTrac, Inc.

Many experts believe that the Fed will once again lower interest rates later this year.

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chicago-condos Stephen on 21 Sep 2007

Conversions of Chicago buildings down

Recent data from the Chicago Association of Realtors shows that the number of multi-unit dwellings sold across the city has dropped significantly.

According to the report, the number of multi-unit homes sold dropped to its lowest level since 1992.  A total of 786 multi-unit dwellings were sold during the second quarter of 2007, down almost 50 percent from the same period last year.

Problems in the condominium market in Chicago have made condo conversions a risky proposition in the city.  Developers are taking a wait and see approach.

Owners of multi-unit dwellings around the city are also waiting longer to find a buyer.  It now takes an average of 98 days to find a buyer for this type of property in Chicago, up 5 percent from the second quarter of 2007.

These types of condo conversions coming from older stock of multi-unit buildings around the city cater to first time buyers.  However, the pace of construction of luxury condominiums in the city continues to be strong.

Several major developments are underway in the city, including the Trump International Tower and Hotel, Chicago Spire, Mandarin Oriental, and many others in downtown Chicago.

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chicago-condos Stephen on 20 Sep 2007

Fed offers lifeline to homeowners

The Fed lowered interest rates by a half percent on Tuesday, giving homeowners with an adjustable interest rate loan a brief reprieve on mortgage costs.

Mortgages with an adjustable rate will immediately feel the effects of the rate change.  However, whether this action by the Fed will spur long term growth in the housing market remains in doubt.

The Chicago housing market is experiencing a downturn in neighborhoods throughout the city.  According to the most recent report from the Chicago Association of Realtors, the number of single family homes sold during the second quarter of this year dropped by 25 percent around the city.

The Fed cut may not help spur demand.  Banks and lenders are pulling back from riskier loans due to the increase in foreclosures across the nation.  The foreclosure rate for Chicago is twice the national average, according to RealtyTrac, Inc.

Until banks and lenders decide to loosen requirements for mortgages, demand for homes will continue to remain stagnant as many potential buyers are unable to qualify for a loan.

Inventory of Chicago Homes around the city is sitting on the market longer.  It now takes an average of 116 days to sell a home.

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