Like those last few beers of the evening, mortgage rates have been sneaking up on us for a while now. The average 30-year fixed-rate mortgage was 6.53 percent over the last week, up from 6.49 percent the previous week, according to Freddie Mac’s weekly survey, released today. That’s the highest level in four years, and there are signs that rising rates are starting to take the wind out of Chicago’s booming real estate market. Agree, disagree, don’t care? We’d love to hear from you. Click on “Comments” below and let us hear your arguments for why the bubble is bursting, or slowly deflating, or nothing more than a figment of journalists’ imaginations.
There’s certainly no bubble in Chicago. Just as nearly all local economists and housing market experts agree, there will be a leveling off period – a return to something more closely resembling normalcy. A quick check shows that over the last 10 years, the average weekly 30-yr fixed rate comes out to around 6.9%. As long as rates stay below approximately 7.25%, sales will remain strong (although down moderately from record levels). As almost universally expected, look for price appreciation to slow considerably to roughly 3-6% annually for the next few years. There will not be outright price declines market-wide (of course when you drill down to the neighborhood level, there is always much greater variability and volatility. The downtown market will remain robust – look for 2006 to deliver the 2nd-highest number of new condo sales on record. Granted, there is a lot of competition with new developments being announced almost every week. So, there will be more diversity in relative success levels – some developers will strike out while others will hit mammoth grand slams.
You know when you say there are signs of the rising rates are starting to take the wind out of the market you should really present these signs. Like crop-circles, I believe many of these signs are a product of ignorant speculation and many times based on the views of a groups personal experiences.
So do your blog readers a favor and present some points with your posts Barry 😉