Recently, the real estate market in Forest Park has experienced a low inventory of residential properties. The main reason behind this shortage is the rise in interest rates, according to experts. The Federal Reserve Board has been increasing its lending rate to curb inflation, which has led to a significant increase in mortgage loan rates. For example, the 10-year T-note has risen from 3.25% in March 2020 to 8.5% at present.
As a result of these high rates, homeowners are choosing to hold onto their existing homes instead of selling. This is particularly true for those who are staying in the area and do not need to move. Instead of downsizing, homeowners are opting to upgrade their present homes by taking out a home equity line of credit. This allows them to make improvements while maintaining their low mortgage rates.
The impact of these interest rates is also reflected in the remodeling industry. Contractors are seeing a surge in demand for renovations as people choose to improve their current homes rather than purchasing new ones. The availability of low mortgage rates is a key factor driving this trend.
Despite the low inventory, Forest Park’s housing market remains robust and solid. The village offers a range of housing options, including affordable units. Many working individuals with an annual income of $50,000 can afford a one-bedroom condo in Forest Park, thanks to the presence of affordable housing. Additionally, the development of income-qualified units at Forest Oaks, supported by tax incentives, contributes to the affordability of housing in the area.
However, the village faces limitations on new construction due to limited available land. The director of Forest Park’s Department of Public Health and Safety has advocated for the development of the North CTA lot to address this issue. He suggests that the decreased demand for parking in the area could make space for new housing developments.
While the current interest rates may seem high, they are still relatively favorable from a historical perspective. Homeowners who purchased their homes at lower interest rates a few years ago may find the current rates shocking. However, considering the rates experienced in the 1980s, the current rates are not exceptionally high.
In conclusion, the rise in interest rates has had a significant impact on the real estate market in Forest Park. Homeowners are reluctant to sell due to the higher rates, leading to a low inventory of residential properties. However, the village still offers a range of affordable housing options and has a solid housing market overall.
Definitions:
– Home equity line of credit: A loan in which the borrower uses the equity in their home as collateral to borrow funds for various purposes.
– Remodeling contractor: A professional who specializes in making changes and improvements to existing homes or buildings.
– Income qualified units: Housing units that are reserved for individuals or families who meet certain income requirements.
Sources:
– Dorothy Gillian, realtor with Berkshire Hathaway
– Sandy Wasiliauskis, Vice-President at Forest Park National Bank
– Shawn Dahlstrand, owner of Dahlstrand Construction Company
– Steve Glinke, director of Forest Park’s Department of Public Health and Safety
(Note: Sources are mentioned but without URLs as per the given instructions.)