A month ago, Dorothy Gillian, a realtor with Berkshire Hathaway, said that there were only four residential properties on the market in Forest Park at that time.
What is going on?!
Sandy Wasiliauskis, a Vice-President at the Forest Park National Bank, explained: Interest rates.
“In order to curb inflation,” she said, “the Federal Reserve Board has been raising their lending rate, and the banks peg their mortgage loan rates to the 10-year T-note, which has risen from 3.25% in March of 2020 to 8.5% now. A $300,000 loan at 3.25% interest would have a monthly payment of $1,306 back in 2020. Today at a rate of 7.25% the monthly payment for principle and interest would be $2,047.”
That is one reason why home owners aren’t selling. For example, if a home owner in Oak Park has a home loan at 3.25% on a home worth $500,000 and wants to downgrade to a townhouse in Forest Park worth $300,000 but the loan for that is 8 %, the monthly payment for the townhouse would be about the same as for the home in Oak Park.
What home owners are doing, Wasiliauskis said, is choosing to hold on to their existing homes if they are staying in the area and don’t have to move, and taking out a home equity line of credit, which at the Forest Park Bank goes for 3.99% for the first year, to upgrade their present homes.
Shawn Dahlstrand, owner of Dahlstrand Construction Company, echoed what Wasiliauskis said.
“I’m mainly a remodeling contractor,” he said, “and I can tell you is that things are busy. I have a bunch of customers waiting for bathroom and kitchen remodeling. Three of those projects are in Forest Park. It’s my opinion that a lot of the reason remodeling is so busy right now is because of interest rates. People are remodeling what they have rather than buying new and keeping their low mortgage rates they already have.”
Steve Glinke, director of Forest Park’s Department of Public Health and Safety, which incorporates the building department and the code enforcement department, issued a warning.
“Any realtor,” he said, “will tell you that the combination of low inventory and high interest rates is toxic.”
That’s the bad news if you are a buyer looking for a home in Forest Park. The good news, according to Glinke, is that “our housing inventory is robust and solid.” For example, the last two sales on the 7600 block of Monroe in the village sold for “north of 650 K.” In fact, he said, “we are inching our way out of mid-market housing prices, which is a symptom of the quality of our housing stock.”
In addition, Glinke said, there is a lot of affordable housing in this village with big-city access and small-town charm — if by “affordable” you mean housing that everyday working people can afford. For example, he said, “If you are employed and making $50,000 a year, you can afford a one-bedroom condo in Forest Park. We have more affordable housing than the state requires.”
Glinke pointed out the new development at the corner of Circle and Elgin called Forest Oaks that has 56 “income qualified” units. The developer is incentivized by what are referred to as “tax swaps,” which means that low rents are made possible for the landlord because of breaks on the taxes. Renters qualify for the low rents if they are over 55 and their income is under a certain threshold.
He said that another factor making Forest Park’s housing affordable is the predominance of rental units. About three-quarters of the housing in Forest Park is in multi-unit buildings and the majority of those are rentals. He added that many of the condos in multi-unit buildings are selling for a little more than $100,000.
“Frankly,” Glinke said, “we don’t have a whole lot of room to build anything right now. I have advocated for the North CTA lot to be developed, because nobody is taking the Blue Line anymore. We used to make $400,000 from parking in our lots, while now it’s down to $70,000.”
Wasiliauskis offered to put the housing market in perspective by looking at how it has behaved in the last forty years. “Rates are still not horrible historically today,” she pointed out, “even though they can be shocking to someone who bought a first home three years ago at a below 3% interest rate. Just ask someone who had a mortgage in the 1980’s and was excited to refinance to lower their interest rate from 15% to 11%. They will tell you today’s rates perhaps are not so bad.”