Foreclosures Accelerating Move Ups in Chicago

Foreclosures have pushed down home prices to a point that many prospective buyers with cash savings and no home to sell are buying condos and homes they could not have afforded during the housing boom.

Due to foreclosures, home prices have dropped to 2002 price levels, with many sellers accepting price reductions of 25 percent or more if the buyers are ready with their cash payments or have fully pre-approved home loans.

Although mortgage rates have returned to their upward direction, rates are still low compared to previous years. First time home buyers are also helped with the $8,000 federal tax credit.

The housing market is currently ruled by home buyers, according to many property sellers and analysts. With prices pulled down by foreclosures, buyers are able to purchase larger and more beautiful homes in better neighborhoods with more amenities.

Based on homes for sale records in Chicago, the number of first time home buyers has increased in 2009, comprising more than 50 percent of all home buyers. In previous years, the share of first timers was below 35 percent.

Recently, a couple planning to retire sold their house in Homewood and then bought a two-bedroom 1,400-square-foot condo unit in River North. The condo was first offered for sale at $599,000, dropping to $550,000 in 2008. When the couple saw the condo unit, they thought the price was out of their range, but they tried making a low-ball offer of $475,000 which was surprisingly accepted.

The couple contended that the seller accepted because they were paying in cash. Property analysts said that the couple made a good deal because the condo unit had a prime Chicago address, a parking space, a large walk-in closet, a big tub and stainless steel appliances.

Foreclosures made possible what the couple could not buy in previous years.
People buying their second or third homes are also taking advantage of the market made affordable by foreclosures. A surgeon and her psychologist-wife recently purchased a large corner condominium in Water Tower for $1.2 million, almost one-third down from the initial $1.7 million listing price.

The couple and their children live in Dyer, Indiana and they plan to rent out the condo unit at break-even level while waiting for foreclosures to slow down. Their agent said they can resell the unit for $2.2 million when the housing market recovers from foreclosures.

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