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Housing boom begins to slow down in Illinois

Illinois Watchdog.Org

Wednesday, October 31, 2018  |  Article  |  By Cole Lauterbach

Economy (34) , Housing (51)
The booming housing market has put many Illinois homes enticingly close to being back above the value of their mortgages, but property values may have peaked.

After months of home values rising with the booming economy, Attom Data Solutions said the third quarter of 2018 saw 49 percent of markets across the nation slow down, indicating home prices may be close to topping out.

Vice President Daren Blomquist said rising mortgage rates are a factor in the slow down.

“We would expect interest rates not to come down substantially over the next year and, in fact, they’re more likely to go up,” he said.

The Attom report shows homeowners who sold in the third quarter received an average of $61,232 more than their original purchase price, the highest average home seller price gain since summer 2007.

“I think the key factor underpinning the decelerating price appreciation is the impact of rising rates on the monthly payment,” Tendayi Kapfidze, chief economist at mortgage marketplace LendingTree, said in Attom's report. “Absent financing, structures that allow a borrower to increase leverage while mitigating an increase in the monthly debt service, buying power is decreasing across the board.”

Statewide home sales in September totaled 12,432, a more than 10 percent drop from September 2017, according to Illinois Realtors. 

In Illinois, all three of the area markets that Attom measured – Chicago, Peoria, and Rockford – showed deceleration. Blomquist said property taxes and the higher mortgage rates can bring appreciation to a crawl.

“We are seeing, in most of the Illinois markets that we track, a slowing of home price appreciation this year,” he said.

The nonprofit Tax Foundation has said Illinois has the nation’s fifth-highest property taxes. Attom Data solutions said Illinois has the second-highest property taxes in the nation, with New Jersey having the highest.

Home listing company Zillow shows 22 percent of Illinois homes for sale on its site had reduced prices, among the highest count in the nation alongside Nevada.

The site also forecasted home value growth across the U.S. to slow over the next 12 months.