How the economy impacts Chicagoland Real estate
“Lately, the economy hasn’t been all that fun to watch. Wild stock market fluctuations in the final weeks of 2018, uncertainty over the impact of economic tariffs and a predicted drop in the gross domestic product are all a bit stomach-turning.” writes Jason Porterfield in his article for the Chicago Agent Magazine.
“You have a broader economy, and how it functions is going to have a big effect on housing demand,” says Geoff Smith, executive director of the Institute of Housing Studies at DePaul University. He adds that factors that impact borrowing power are especially important for real estate professionals to watch. “Interest rates are always a key macroeconomic factor around housing and mortgage lending.”
Nationally, rates on a 30-year, fixed-interest mortgage stand at about 4.7 percent, according to
BankRate. In Chicago, rates currently fall between 4.4 percent and 4.8 percent. While the prospects of purchasing another home at a rate in the neighborhood of 4.5 percent can be daunting to homebuyers who last bought at 3 percent or so, the rate shock effect is not nearly as bad as it’s been in the past.
Debra Dobbs of Compass in Lincoln Park recalls that interest rates were between 13 percent and 18 percent when she started working in real estate in 1984. “Five percent or 4 percent is incredibly cheap money,” she says. “Yes, there was a blip on the screen a couple of years ago where you could get a rate between 2.8 and 3.5 percent, and I understand the differential. This is why I think we’re seeing sluggishness in the market.”
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