24-Apr-22 – If you are a long-time Chicago homeowner, chances are good that you are sitting on a cash station.

Chicago-area single-family home prices rose by 12.5 percent in January, compared with January 2021, according to a new report by the S&P CoreLogic Case-Shiller Indices.

The January 2022 increase for Chicago was larger than the last four months of 2021, which posted price hikes ranging from 11.5 to 12.2 percent, compared with the same month a year earlier, reported Case-Shiller.

Home prices in the Chicago area have risen at an annual rate of more than 10 percent for nine consecutive months – their strongest run-up in at least three decades – according to Case-Shiller, which archives price data back to 1988.

During the housing boom of the early 2000s, home prices rose in the 9 percent range for 13 months. However, prices rose to the 10 percent level only once, in April 2005.

In late 2013 and early 2014, when the housing market was recovering from the Great Recession, home prices rose by double digits for seven consecutive months, Case-Shiller reported.

Booming prices and a shortage of for-sale home listings in 2022 is good news for existing homeowners with rising home equity. They have three choices:

• Sell now and move. With home prices at the highest level in three decades, now is the perfect time to retire, head south to a warmer climate, and benefit from a lower-priced market there.

• Do a cash-out refinance. Although interest rates have risen over the past three months, they still are low by historical standards. Why not go for a 15-year fixed refinance mortgage at the current 3.91 percent rate. Then, pull out $100,000 of home-equity cash. Use the money to buy a second getaway home in a warmer climate. Buy a boat or that exotic sports car you’ve always wanted.

• Sit back and grow wealth. The conservative choice is to just sit on your cash-station home and let the money continue to grow as a nest egg for retirement.

While Chicago’s January home price increase was robust, cities nationwide posted price increases of 19.2 percent.

Among the nation’s 20 largest cities tracked by Case-Shiller, Phoenix leads the United States with a 32.6 percent home price increase. Prices in the hot Phoenix market have risen for 32 consecutive months. Photo by Mark Skalny

In January, five other cities posted home price increases double that of Chicago. Tampa spiked 30.8 percent, Miami rose 28 percent, Dallas, 27.3 percent, San Diego, 27.1 percent, and Las Vegas, 26.2 percent, reported Case-Shiller.

Only two cities had lower price growth than Chicago in January. Minneapolis posted a gain of 11.8 percent, and in Washington, D.C., home prices rose 11.2 percent.

Home loan rates hit 5 percent nationwide, highest in a decade

Benchmark 30-year fixed home loan interest rates nationwide skyrocketed to 5 percent on April 14, up from 4.72 percent a week earlier, reported Freddie Mac’s Primary Mortgage Market Survey.

Mortgage rates have been inching higher since late December 2021. A year ago, the 30-year fixed home-loan rate was 3.04 percent.

“Mortgage rates averaged 5 percent for the first time in over a decade,” said Sam Khater (left), Freddie Mac’s chief economist. “As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices, and tight inventory are making the pursuit of homeownership the most expensive in a generation.”

Fifteen-year fixed home loans averaged 4.17 percent on April 14, up from 3.91 percent a week earlier. A year ago, the 15-year fixed mortgage averaged 2.35 percent.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.