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North Park Home Sales Are Up, Realtors Say, But Interest Rates May Rise

By Patty Wetli | March 26, 2013 8:39am

NORTH PARK — Employment is on the rise, the gross domestic product is growing and the stock market is booming.

"So how come my house is still only worth 12 bucks?"

That's the question frequently asked of realtors Carmen and Tony Rodriguez, brokers with Coldwell Banker, who presented their fourth annual "Real (E)state of our Neighborhood" report to a meeting of the Hollywood-North Park Community Association, held at Northside College Prep High School.

Housing is lagging behind other economic indicators, said Carmen Rodriguez, who's also a neighborhood resident. But after years of gloom and doom, "things are starting to look up."

The good news, according to the pair's presentation: housing starts, nationally, are beginning to recover after flatlining. In Chicago, the number of closed sales was up more than 22 percent in December 2012 versus December 2011, and the average number of days on the market for properties dropped 13 percent in that same time period.

In Hollywood-North Park, the number of short sales and sales of bank-owned properties is gradually decreasing, from 26 between March 2010 - February 2011 down to 10 between March 2012 - February 2013.

Illinois has been particularly slow in releasing bank-owned properties, a situation that seems to be turning around, according to Tony Rodriguez.

The amount of time taken to close on a bank-owned property has dropped from six months to three months, he said.

"It's a good sign that they're moving inventory," he said.

The neighborhood has now reached a point where the number of available units — particularly single family houses — can't keep up with demand, said Carmen Rodriguez.

As a result, sellers are receiving offers closer to their asking price. The average home price rose more than 17 percent in 2012 versus 2011.

"There is a real drought in inventory in our neighborhood right now," she said. "This community, with this tight-knit group of people, has done a great job of protecting our home values. We survived."

Tony Rodriguez recounted a recent instance where 73 people attended a single open house for a two flat, with the owner receiving 25 offers and ultimately selling above asking price.

According to the latest survey by Freddy Mac, 30-year fixed-rate mortgage rates averaged 3.54 percent for the week ending March 21, down from 4.08 percent a year ago. The lowest in Freddie Mac records is 3.31 percent in November of 2012.

Now for the bad news.

Interest rates have been "unsustainably low" and are likely to rise, said Carmen Rodriguez.

A 1 percent increase in interest rates translates into an 11 percent drop in purchasing power for buyers, she said. "Affordability has already reached its peak," she said.

For those who bought at the height of the boom and are holding onto their property waiting for housing values to return to those inflated levels, Rodriguez has two words: "Brace yourself."

"In our lifetimes, we may never see 2006 prices," she said, and had the charts to back up her claim. (See slideshow.)

"Everybody was making money, we got greedy, we ate too much and we got sick," she said. "The reality is, there should never be a bungalow in our neighborhood worth half a million dollars."