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Your local news source :: Look for your community» Towns A - F GO Towns G - M GO To Search» Go suntimes.com Member of the Sun-Times News Group Site STNG Make us your Home Page Home News Sports Business Entertainment Classifieds Columnists Lifestyles Ebert Search Archives Site Information Advertising About Us Feedback About Us Terms of use Privacy Policy RSS feeds [ Back to Search Results Printer Friendly Version ] 2007: The year ahead: More Internet, higher rents, rising sales Publication: Chicago Sun-Times (IL) Date: December 29, 2006 Author: Celeste Busk The Chicago Sun-Times Section: Real Estate and Home Life Edition: Final Page: S1 / Front Word Count: 1531 Economists and local housing experts have been busy analyzing statistics and trends to make their annual forecast for the housing market in 2007. To get an edge on predictions, estimates -- and even wild and far-flung guesses -- the Chicago Sun-Times polled local and national housing experts. We also had some fun and asked a Chicago psychic. Here's what we heard. Chicagoland Apartment Association. The 300-member association represents more than 2,500 apartment professionals responsible for 600-plus properties and 136,000 apartment units in the greater six-county Chicago area. The CAA sees rents in Chicago and the surrounding suburbs continuing to move higher by 5 percent to 6 percent in early 2007. These increases will top off increases already posted for the third quarter 2006. Speakers at "Preview 2007," the association's annual industry outlook, agreed that landlords will be able to command higher rents in 2007. In the city of Chicago, landlords will hold the upper hand and not have to make any concessions to renters. Illinois Association of Mortgage Brokers. President Bill McNamee sees interest rates falling slightly in the first part of the new year. "Thirty-year rates are currently hovering just above 6 percent with Freddie Mac reporting the national average at 6.12 percent," he said. "We have been in a downward trend, which I believe will continue through most of next year. We should start the early part of the year breaking below 6 percent, which will help spur home sales along with refinance activity. By June, I think we will see rates around 5.5 percent. PRICING This archive has a variety of purchasing options for articles. Choose from the following options: Single article: $2.95 Day Plan: $5.95 for 5 articles Month Plan: $14.95 for 30 articles Year Plan: $149.95 for 360 articles HAVING TROUBLE? If you are having technical difficu payment options, contact NewsB Phone: 1-800-896-5587. E-m INSIDE :: School report cards Search for your school or find individual results for schools statewide. Unclaimed property Search to see if your name is listed. If it is, you have at least $100 in cash and/or stock. The Fixer Getting the runaround over a consumer problem? Tell your story to The Fixer. Sudoku puzzles Test your skills with our interactive puzzle and print edition versions.
"With many buyers choosing to sit on the sidelines in 2006, they won't be able to resist the lower interest rate environment along with lower heating and gasoline prices," he said. "Not to mention the fact that people continue to outgrow their current home and want larger ones; get divorced and need a new residence; become empty nesters and want smaller digs that don't require maintenance. "Let's not forget about the first-time buyers who are just establishing themselves after college and the long-time renters who may finally decide this is their time to get a piece of the American dream," he said. "You also have over a trillion dollars worth of adjustable rate mortgages that will be resetting [adjusting upward]. These folks will either refinance, sell or get something new," he said. "The current buyers' market won't last much longer. By July, we should see inventories of homes for sale start to drop along with marketing times. In 2007, we should see normal appreciation of 6 percent throughout the Chicago metro area with pockets of higher and lower appreciation in selected areas." Rizzo Realty GRoup. "The law of supply and demand, more than anything, is going to be the housing market's biggest indicator in 2007," said Santo Rizzo, chief executive officer of the Chicago-based firm. A recent report released by the U.S. Census Bureau and the Department of Housing and Urban Development found housing starts and building permits down in October 2006, 28 percent below the year-earlier estimate. "Ironically, this is good news for the housing market," Rizzo said. "We'll continue to see historically low interest rates and homes selling closer to market price. The law of supply and demand, more than anything, is going to be the driving force that keeps the market relatively 'flat'" throughout the year. Until surplus is absorbed, competition will be fierce among builders to clear their inventory, forcing homeowners to set realistic prices when it comes time for them to sell." Jameson Realty Group. A sweeping change in the housing industry next year will be the continued and increased use of the Internet, said Harry Huzenis, president of Jameson Realty Group. "More brokers are using the Web to reach buyers, and they will show a prospective purchaser 75 properties online to make a sale," Huzenis said. "In 2007, buyers will see some great values, and they will search for irresistible deals on the Internet." National Association of Realtors. The 30-year fixed-rate mortgage is forecast to gradually increase to 6.7 percent by the fourth quarter of 2007, said David Lereah, NAR's chief economist. Early in December, Freddie Mac reported the 30-year fixed rate dropped to 6.11 percent. Existing-home sales are expected to rise gradually in 2007 from current levels, with annual totals comparable to 2006, while new-home sales will continue to slide, according to the latest forecast by the National Association of Realtors. Lereah said there are mixed conditions around the United States. "Roughly three-quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year," he said. "Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards. "Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many
areas until early spring when inventory supplies are likely to become more balanced," Lereah said. The national median existing-home price for all of 2006 is projected to rise 1.4 percent to $222,600, with another 1 percent gain next year to $224,700. The median new-home price should ease by 0.5 percent to $239,700 this year, then rise by 0.8 percent in 2007 to $241,700. "Keep in mind that overall home prices were still appreciating at double-digit rates in the first quarter of this year. Prices in this buyer's market are temporarily a little below a year ago when we were in a strong sellers market," Lereah said. "This correction is one of the factors drawing buyers into the current market, but most sellers are still seeing very healthy long-term gains." Baird & Warner. "Hot neighborhoods in Chicago will continue to be the Near North Side, Lake View, Near West Side and South Loop," said Steve Baird, chief executive officer of Baird & Warner says. "These areas have a nice mix of new and old stock and enjoyed better than average sales volume [last year]. "In terms of the suburbs," he said, "we continue to see lots of activity in the collar areas like McHenry County, Aurora, Naperville, Long Grove, Lake Zurich, and Plainfield. Those areas saw continued growth, development and as a result, higher sales volume." Kiser Group: "While the condo conversion market has slowed to a crawl downtown, values of smaller rental buildings in solid neighborhoods are on the rise," said Chicago apartment broker Estella C. Kiser, managing broker and co-owner of the firm. "The future of condominium conversion in Chicago is in the neighborhoods," said Kiser at the recent Lincoln Park Builders of Chicago 2006 Real Estate Forum. "Veteran condo converters are still in the market for rental buildings with good location, parking and nice-size units. However, high occupancy rates and a shortage of new apartments will likely push rents higher in 2007, and apartments definitely are back in the real estate investment market, so investors had better start looking, Kiser said. Appraisal Research Counselors Ltd. "Occupancy rates are so high that landlords see an opportunity for more rental growth," said Ron DeVries, vice president of the real estate appraisal and consulting firm. As a result, DeVries forecast 2007 rent increases of 5 percent downtown and 6 percent in the suburbs at the recent CAA industry outlook. RUBLOFF RESIDENTIAL PROPERTIES. James Kinney, president of the firm, says the company "foresees that the 2007 [Chicago area housing market] market will mirror 2006 in many ways and will probably be better toward the second half in year to year comparisons. "We see home loans remaining fairly flat and staying under 7 percent in 2007. As for area home prices, we see continued appreciation on average between 5 to 7 percent for this coming year." Sonia Choquette, Chicago-based psychic. "My vibes suggest that interest rates are not going to climb too much higher, and may in fact slip a little lower around the end of 2007," Choquette said. "Housing prices will hover around the same or 5 percent less than 2006. We will not really see the real estate bubble, that so many predict will burst, do so here. It may lose a little stamina but not collapse at all. There could be a short-term disruption in the market around May and June but by the fall the real estate market will be back on solid legs relative to the rest of the US anyway."
cbusk@suntimes.com - - - NAR PREDICTS 30-year fixed-rate mortgage up: will reach 6.7 percent by 4th quarter 2007. Existing-home sales up: annual totals comparable with 2006. National median existinghome price up: 1.4 percent to $222,600 National median new-home price up: by 0.8 percent in 2007 to $241,700 Color Photo: (See microfilm for photo description). Color Photo: "Most of the correction is behind us," says David Lereah, Chief Economist for the National Association of Realtors. Photo: 'We will see rates below 5.5 percent,' - Bill McNamee, IAMB Color Photo: 'Supply and demand the driving force,' - Santo Rizzo, Rizzo Realty Color Photo: 'Irresistible deals on the Internet,' - Harry Huzenis, Jameson Color Photo: 'A nice mix of new and old stock,' - Steve Baird, Baird & Warner Color Photo: 'Value of smaller rental buildings on rise,' - Estella C. Kiser Color Photo: '2007 will mirror 2006,' - James Kinney, Rubloff Color Photo: 'By fall, the market will be back on solid legs,' - Sonia Choquette Copyright (c) 2006 Chicago Sun-Times, Inc. suntimes.com: Feedback Contact Us About Us Advertise With Us Media Kit Make Us Your Homepage Chicago Sun-Times: Subscribe Subscriber Services Online Photo Store The Sun-Times Store Copyright 2006 Sun-Times News Group User Agreement and Privacy Policy