Squeeze in lending rules choking condo market

Eliminate the 70% threshold but require 20% down or more from borrowers.

Hopefully things will improve.

Who's stupid enough to pay half a million bucks for a one bedroom condo anyway. Maybe some of these developers going broke will teach a lesson to those who remain.

Citizen wrote:

Hopefully things will improve.

HOPEFULLY?!?! Hope and change... but most likely it will be to little to late by the time the banks have the courage to do the loans. I'm in the trenches as a loan officer and they are looking for any excuse not to do loans. This year is already shot. Keep hoping. I wonder just how long good employees and customers will be patient enough to stay in the industry and/or customers decide there is not enough benefits to own. FHA is just a small part of the solution. PMI and mortgage insurance are just another monthly expense on top of principal and interest, taxes, and association dues. It all adds up.

Babbit wrote:

Eliminate the 70% threshold but require 20% down or more from borrowers.

This is an idiotic idea-- condo buyers are typically first time buyers with little to put down. That is why the FHA loan is so popular right w/ condo buyers-- they allow you to put only 3.5% down. A minimum of 20% down would KILL this market segment.

Remember what pays the Trib's bills - Real Estate ads!!

ANY real estate story will be the best possible spin.

Give those condos away to the homeless,

I see Barney is busy putting the screws to Fannie and Freddie again. What a jerk. He needs to go as much as Mayor Shortshanks Daley.

Nothing will improve until Lord Obama Jimmy Carter II is booted from office in 2012. Liberalism = failure. Always has, always will.

The banks are being cautious because the government
is trying to make sure that past lending mistakes
don't reoccur.
Even with the TARP money
it's still difficult to obtain
a mortgage.

If they are not selling when will developers stop building them? When will they stop bulldozing perfectly good industrials for these shabby pieces of junk? How about a park instead of yet another quasi-dormitory?

Well played wrote:

<quoted text>
HOPEFULLY?!?! Hope and change... but most likely it will be to little to late by the time the banks have the courage to do the loans. I'm in the trenches as a loan officer and they are looking for any excuse not to do loans. This year is already shot. Keep hoping. I wonder just how long good employees and customers will be patient enough to stay in the industry and/or customers decide there is not enough benefits to own. FHA is just a small part of the solution. PMI and mortgage insurance are just another monthly expense on top of principal and interest, taxes, and association dues. It all adds up.

I'm also in the business. The restrictions and requirements for all types of financing are so tight that real estate looks like its going to be stuck in the mud for years. Until financing eases up, real estate & the entire economy are going no where. The banks have got to loosen up or we're going to have a full scale depression.

I sold my last place 3 years ago at a substantial profit and have been waiting until the market stopped dropping so I could buy again.(I had no idea it would take this long.) My reading was that prices would stabilize this year and so am now working with an agent.

New construction in this town is crap esp in those 3 and 6 flats that sprouted like toadstools in the last 8 years. Most of these places looked like they were thrown together by amateurs and probably were considering all the people who jumped onto the bubble. Shoddy workmanship, cheap materials and you can hear everything your neighbors are doing...everything. As for design - yawn - 2 bed, 2 bath, kitchen/living room combo, etc. Aesthetics? Forget it! Everything from a plane brick box to a mix of styles I didn't think possible.

4,000+ condos coming on the market soon? Good luck with that!

Jeff wrote:

<quoted text>
This is an idiotic idea-- condo buyers are typically first time buyers with little to put down. That is why the FHA loan is so popular right w/ condo buyers-- they allow you to put only 3.5% down. A minimum of 20% down would KILL this market segment.

Maybe the first time buyers need to save a little more before they jump into such a risky investment. So what's the plan when the condo drops 10% in value and these people are underwater? Probably a taxpayer subsidized re-finance. No thanks. Let's go with the 20% down requirement.

The government needs to get the taxpayer money out of the mortgage business and let the banks manage their own risk.

As a former owner of a lakefront condo. I loved using the property as a weekend place. The costs of living in an older building and floods from people who cut corners during rehabs was enough to make me sell. Luckily I sold just before the market tanked a little over 3 yrs ago.

I agree, new condos are junk. The Museum Campus is badly built. The newer places are so much smaller than existing buildings. Like the park near Randolph. They have not built the school as promised which was a cornerstone of getting approvals to go ahead from the city. Another insider deal of promise one thing and deliver another.

There are simply way too many buildings, plus condo hotels, going up to see any rise in pricing anytime soon. On top of who wants to sell existing units.

My take is to stay away until 2012 as it will take that long to unwind the market, plus economy recovery and see what demographic/ real estate changes might occur with the flood of retirees happening.

Basically it is not a good to buy or sell unless your owning horizon is 7 yrs or more.

Some bank are calling in loans on investment properties even when the mortgage is paid on time each month. Some areas in Chicago are going totally down the tube because no loans are being given in some areas.

Bob wrote:

As a former owner of a lakefront condo. I loved using the property as a weekend place. The costs of living in an older building and floods from people who cut corners during rehabs was enough to make me sell. Luckily I sold just before the market tanked a little over 3 yrs ago.
I agree, new condos are junk. The Museum Campus is badly built. The newer places are so much smaller than existing buildings. Like the park near Randolph. They have not built the school as promised which was a cornerstone of getting approvals to go ahead from the city. Another insider deal of promise one thing and deliver another.
There are simply way too many buildings, plus condo hotels, going up to see any rise in pricing anytime soon. On top of who wants to sell existing units.
My take is to stay away until 2012 as it will take that long to unwind the market, plus economy recovery and see what demographic/ real estate changes might occur with the flood of retirees happening.
Basically it is not a good to buy or sell unless your owning horizon is 7 yrs or more.

Why do you think Museum Towers is poorly built? It's very similar to Presidential Towers. I think that one of the biggest drawbacks is that you can really hear everything. In Museum Towers, even above the 20th floor, you hear the traffic from Lake Shore Drive; not to mention what goes on inside the building. The views are fantastice though.

President Training Wheels DOES NOT GET IT!! Instead of actually doing something about the housing crisis which is what got us in to this mess, he is systematically destroying this country with pork laiden programs which do nothing but bankrupt in the long term and cost us more pain and foreclosures in the short term. With this inexperienced social worker in charge things will only get worse.

Todd wrote:

Nothing will improve until Lord Obama Jimmy Carter II is booted from office in 2012. Liberalism = failure. Always has, always will.

I agree. Lets bring back Bush and the Republicans back in 2012 so they can screw it all up again.

The first tower had lots of problems. Not exactly built square was one problem. People I know who owned places there pointed out that they bought 2000 sq ft and got less than that when actually built. The building was off skew somehow from front to back that people on one end of the building lost sq footage for the same unit. A few lawsuits were filed because people did not get what they want. Basically they were trying to sell the place before all the publicity got out the and final tower built that would block their view from the north.

I cannot remember which condo it is but one of the new ones leaks from the roof into units up to the first five floors.

I lived on top of LSD and would only hear a crash of a vehicle every so often. Never heard my neighbors as the place was built solid. The one benefit of an older place was solid interior construction. The newer units were built smaller and built with cheaper materials. I used to be a builder.

Still a developing area on the south loop, meaning dangerous at night and kind sketchy. This coming from a city boy. Amazing that you can feel safe on the north side of Grant park and not on the south end. Chicago is a place of neighborhoods.

I agree, living anywhere along the lakefront is nice.