The Big Truth about Jumbo Loans in Chicago Real Estate Market
As a Chicago real estate professional I would never be so dense as to say I cover the entire city of Chicago or all of the outlying Chicagoland area.
Instead I concentrate on a geographic swath within the city that essentially extends from the Chicago River to Devon Avenue, from Lake Michigan to west of Western Avenue. I go beyond these artificial boundaries to the South Loop and Hyde Park, and I go to those western and North Shore suburbs as my clients express affinity.
But for conversational purposes my “sweet zone” is within the boundary I have indicated.
Ask me about any and all of these areas and I will rattle of statistics that will make you yawn and wish me silent. That is, unless, you are looking to either buy or sell in any of these locations. I mention my knowledge of the market to make the following point – the decision to exclude Chicago from one of the country’s 100 “high cost” areas where Freddie Mac and Fannie Mae can purchase mortgages larger than the $417,000 standard limit is absurd and does a disservice to the Chicago real estate market.
Every once in a while I will receive an email or phone call from somebody who wishes to buy a median-priced home. Truth be known, I would like to buy the selfsame home at the same price. But the fact of the matter is that I have never seen a median-priced home in the mid $300s in Chicago. They surely exist – that’s how the number is derived in the first place.
But they don’t exist in Lakeview or Bucktown, in the Gold Coast or Edgewater, in Wicker Park or Roscoe Village. They don’t exist in a range of Chicago neighborhoods because the so-called price of admission is much higher either incrementally or substantially than the $417,000 cap. And though this is the case the overall metropolitan Chicago area was excluded from the Economic Stimulus Act of 2008 which would have enabled Chicagoans easier access to more providers of so-called jumbo loans.
In the Chicago Tribune this week Thad Wong of Chicago’s @properties said leaving Chicago off the list was an oversight or mistake. He went on to say, “If the limit were raised, there would be a wider pool of lenders. There would be buyers who could qualify for a lower rate. It would add more people to the market. It would accelerate pricing and reduce the market time.”
On behalf of the team at The Real Estate Lounge Chicago I agree wholeheartedly.
But here we are, defined by HUD as not a “high cost” market. As a result, with fewer jumbo loans available and those available being for higher interest rates we pay the price with consumers who wish to participate in the market not being able to do so with the freedom that is prevalent in other areas like Boston or San Francisco.
What seems more sensible to me is making the “high cost” determination based on more local terms such as zip code. Given the very local nature of real estate this approach seems more reasonable.
Efforts are underway to extend the 2008 Stimulus Act beyond this year. Make a call to your congressional representative to push for a more localized definition so the Chicago real estate market will feel some of the love of this stimulus package. Here’s some contact information to facilitate you making the call:
Rep. Bobby Rush (D-1st)
Chicago: (773) 224-6500
Rep. Jesse Jackson, Jr. (D-2nd)
Chicago: (708) 798-6000
Rep. Dan Lipinski (D-3rd)
Chicago: (312) 886-0481
Rep. Luiz Gutierrez (D-4th)
Chicago: (773) 384-1655
Rep. Rahm Emanuel (D-5th)
Chicago: (773) 267-5926
Rep. Peter Roskam (R-6th)
Bloomingdale:(630) 893-9670
Rep. Danny Davis (D-7th)
Chicago: (773) 533-7520
Rep. Melissa Bean (D-8th)
Palatine: (847) 358-9160
Rep. Janice Schakowsky (D-9th)
Chicago: (773) 506-7100
Rep. Mark Kirk (R-10th)
Deerfield: (847) 940-0202
Rep. Jerry Weller (R-11th)
Joliet: (815) 740-2028
Rep. Judy Biggert (R-13th)
Clarendon Hills: (630) 655-2052
Tell them Tom McCarey referred you…
By the way, Sunday brings two open house opportunities…
1858 W Race a contemporary masterpiece East Village Single Family Home priced under $1MM – open from noon – 3p
1934 W Thomas a corner condo one minute south of Division Street – open from noon – 2p
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