On nearly every block, a house has a "For Sale" sign, weathered and
worn from the long period of time it's been in the elements, or a
house has deteriorated because the homeowner, unable to make the
mortgage payment, abandoned the home.
As Illinois' housing market continues to struggle, it weighs down
the state's economy and exacerbates a high unemployment rate,
according to the July 2011 Monthly Briefing report released this
week by the Commission on Government Forecasting and Accountability,
or COGFA, a bipartisan research arm of the Legislature.
The number of new, single-family housing permits for June -- 680
-- saw a 14.9 percent decline, or 120 fewer, compared with June
2010, according to the report. Single-family housing permits have
seen minuscule fluctuations during the past three years but have
been stagnant more or less since dropping dramatically after the
housing bubble burst in 2008.
"Builders are not building because of this oversupply of not only
new homes that are on the market, but all these foreclosures and
short-sales banks are doing and et cetera," said Edward Boss Jr.,
COGFA's chief economist and author of the report.
The housing market affects the state's economy by adding
construction jobs that lower the unemployment rate and by increasing
sales in ancillary consumer goods associated with houses, said
Geoffrey Hewings, a professor of economics and urban and regional
planning at University of Illinois at Urbana.
However, people should not expect this economic boost anytime
soon, as the national and global economies flounder and potential
homebuyers hesitate to take on this financial albatross, Hewings
"It's just very uncertain times, and this is not the time a lot
of people feel comfortable about going out and making a commitment
on a home," Boss said. "Not only may the price be lower a year from
now, but you may not have a job."
Another factor playing into the housing market melancholy is the
end of a stimulus program that gave federal tax credits to
first-time homebuyers, said Mary Schaefer, a spokeswoman for the
Illinois Association of Realtors, a trade association for real
estate agents in the state.
Additionally, home sales in the years leading up to the 2008
crash were likely artificially inflated due to lending practices
where people were given mortgages on homes without having to make
much, if any, of a down payment, Boss said.
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At least one program in Illinois is looking to push the housing
market upward, though how successful it will be is questionable.
The Illinois Housing Development Authority, a self-sustaining
entity that runs off tax-exempt bonds, announced this week that it
will offer up to $200 million in low-interest rate mortgages to
about 1,300 low- to moderate-income homebuyers. The homebuyers'
payments on these mortgages are used to pay for the bonds.
In addition to the 30-year mortgage, some people could qualify
for up to $6,000 in the form of a zero-interest, 10-year loan to
help with a down payment on their new home.
The authority said it's not creating a mini-housing crisis by
lending money to the same demographic that was a major player in the
national housing crisis.
"The program creates safe and responsible homeownership
opportunities," said Rebecca Boykin, a spokeswoman for the
authority. "Our program requires homeownership counseling ... as
part of the qualification process."
Beyond homeownership counseling, participants must have a minimum
credit score of 660 and contribute 1 percent or $1,000 of the
purchase price, whichever is greater, toward the down payment.
Hewings said that no matter what, risks are associated with this
and other similar programs.
"These folks may not have the capacity even with these incentives
... to sustain their payments," Hewings said.
Statehouse News; By ANDREW THOMASON]