Business World

In November the median home sale price fluctuated in a modest range across Illinois unlike many areas of the country that have seen steep price depreciation.

According to the Illinois Association of REALTORS latest report, the Chicago PMSA median home sale price in November was $247,000, up 0.8 percent from $245,000 in November 2006.

Statewide, the median sale price was $193,000 for the month, down 3.0 percent from $199,000 a year ago. The median is a typical market price where half the homes sold for more, half sold for less. The statewide average home sale price in November was $253,131, up 1.3 percent from $249,799 a year ago. The average home sale price for the Chicago PMSA was $323,458, up 4.4 percent from $309,832 in November 2006.

“People have been sitting on the sidelines so there remains a lot of selection on the market and it will continue to be a good market for buyers in 2008 with mortgage interest rates still at historically low levels,” said REALTOR Kay Wirth, president of the Illinois Association of REALTORS. “Illinois has been averaging a 70 percent homeownership rate and sheer demand is a factor that bodes well for a stabilizing housing market next year including younger buyers who form a powerful demand group. Buyers with good credit have access to many conventional financing options and first-time buyer programs have expanded in Illinois.”

Statewide there were 9,021 total home sales (which include single-family homes and condominiums) in November 2007, down 20.4 percent from November 2006 which logged 11,332 home sales. Year-to-date, sales were down 16.3 percent to 131,497 homes sold January through November 2007 compared to 157,183 homes sold during the same period last year.

The monthly average commitment rate for a 30-year, fixed-rate mortgage for the North Central region was 6.25 percent in November 2007, down 0.16 points from the average rate during the previous month, according to the Federal Home Loan Mortgage Corporation. Last year in November it averaged 6.27 percent.

In the Chicago PMSA, home sales totaled 5,772 in November 2007, down 23.9 percent from 7,583 home sales in the same month last year. Year-to-date, sales were down 19.6 percent to 87,624 homes sold January through November 2007 compared to 108,997 homes sold during the same period last year.

“The slower growth rate for jobs in Illinois, especially outside Chicago, continues to be a drag on the state’s recovery from the 2000 recession,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois. “It is hoped that the recent declines in interest rates (mortgage rates are now as low as they were in September 2005) may help stimulate the housing market. In the interim, consumer sentiment is moving to a cautious mode.”

In the latest forecast from the National Association of REALTORS, senior economist Lawrence Yun said: “All real estate is local. Some areas will see housing activity and prices moving up and some moving down. Local real estate professionals are critical in properly ascertaining local market conditions. In the aggregate, the national home sales and home prices will be very similar in 2008 as in 2007.”

“The FHA Modernization Act of 2007, passed on December 14 by the U.S. Senate, will help protect the interest of current and future homeowners by giving borrowers a safer alternative to riskier mortgage products while also helping many homeowners who may be facing foreclosure,” said Wirth, a broker with Re/Max Unlimited Northwest in Crystal Lake. “We are hopeful the House and Senate will agree to send the bill on to President Bush as it will help first-time homebuyers, minority buyers and people who do not qualify for conventional mortgages.”

Sales and price information is generated from a survey of Multiple Listing Service sales reported by 35 participating Illinois REALTOR local boards and associations. The Chicago PMSA, as defined by the U.S. Census Bureau, includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.

The Illinois Association of REALTORS is a voluntary trade association whose 60,000 members are engaged in all facets of the real estate industry. In addition to serving the professional needs of its members, the Illinois Association of REALTORS works to protect the rights of private property owners in the state by recommending and promoting legislation that safeguards and advances the interest of real property ownership.
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Delinquency on credit card debt in America is rising at shocking levels, with more and more people falling behind on payments and spikes in accounts with over 90 days of missed payments, according to an Associated Press report.

The AP surveyed 17 large lenders and credit card issuers and found that payment delinquencies of 30 days jumped 26 percent from 2006, to a total of $17.3 billion. Delinquencies of 90 days or more were up 50 percent, and defaults, where the lender writes off the debt as uncollectable, surged 18 percent to $961 million.

Top retailer Target reported a spike of “charge-off” bad debt in its $8 billion credit card portfolio, from 6.42 percent to 7.05 percent, but claimed this was a normal cycle of the holiday shopping season, as consumers run up debt to pay for gifts and pay the cards down in the new year.

Credit cards have been one of the few reliable revenue generators for a financial industry battered by the American mortgage market collapse and a worldwide credit crunch.

Interest rate hikes and late fees have continued to bring in money for lenders even as they lose their shirts on Wall Street. Cards with particularly predatory terms and “gotcha” fees have been issued primarily at “subprime” markets, targeting black and Hispanic borrowers particularly.

But American consumers of all stripes, who were formerly using equity in their homes as cash machines to pay off credit card debt and fund other big-ticket purchases, simply do not have that resource to call on as home values sink and the ability to refinance has disappeared.

The new bankruptcy laws have made it much tougher for Americans to discharge credit card debt, requiring them to submit to a “means test” to determine if they have any money available to pay their debts.

If they are determined to have even $100 above the level of necessary expenses for food, clothing, and shelter, they are required to pay that to their creditors.

A global problem

Increasing credit card debt is by no means limited to the United States.

Australians’ outstanding credit card debt rose to $41 billion in October, and a survey of Australians found 54 percent of the respondents used their plastic to pay for necessities between paychecks.

Canadians are even more crushed by credit card debt. A recent survey found that 25 percent of the respondents had credit card debt between $10,000 and $40,000, and many of the respondents not only had no savings, but no budget set up for their income.

The global increases in debt could lead to even more defaults around the world, which could increase problems for big financial firms that package credit card debt and sell it to investors much as they did mortgage-backed securities.

If these securities collapse as mortgage loans did, that could lead to even more writedowns for financial lenders across the globe, increasing the risk of recession in America and an economic slowdown abroad.

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