Click to find out what's happening in the Chicago real estate market.
An Interview with Ribbon CEO Shaival Shah and Michael Facchini, Branch Manager, Fairway Independent Mortgage Corporation
The current U.S. housing market changes almost on a daily basis as homebuyers battle rising interest rates and home prices as well as competition due to limited housing inventory. Michael Facchini, Branch Manager at Fairway Independent Mortgage Corporation in Chicago, IL, still sees pent-up demand from buyers in the Chicago market, but even as prices continue to slowly rise, there could be greater stability.
While it’s impossible to predict what will happen in the Chicago market in the coming months, there may be a little bit of hope.
In a discussion with Ribbon CEO and cofounder Shaival Shah, Michael gives his thoughts on the current housing market in the Chicago metro area.
Shaival: What have you seen in the Chicago market this year?
Michael: It's been a wild year. Things were very busy with pre-approvals and a lot of people trying to find properties. A lot of people were getting multiple bid situations where they'd make offer after offer that never ended up getting under contract. I’ve also witnessed a big shift happening in the Chicago market since early July. With interest rates increasing so fast and coming to what's traditionally the end of the summer market, I think there's been a bit of a slowdown. While there are still multiple offer situations in the Chicago market, the housing inventory is increasing, making it easier to find homes than it was just several months ago.
But remember, while rates have gone up and have spooked some buyers, the rest of the buyers realize this is an opportunity to pounce, get their hands on a home without the same frenzy as six months ago, and then own an asset that they can refinance as rates come down - possibly even next year.
Shaival: Affordability has remained a top concern for buyers nationwide. According to a study released by Freddie Mac, higher housing costs and inflation have altered the plans for many potential buyers. In Chicago, home prices from July 2020 to July 2021 rose by 7.1% and by 8.3% the year before. What are you seeing in Chicago relative to your peers in other markets?
Michael: I think the Chicago market overall has probably been a little more stable than the East and West Coast. The Texas and Florida markets saw huge price increases. In those markets, they're probably seeing a little bit of softening. I think in Chicago, the increases have slowed down but they were never as fast here as they were in other markets, so I believe it'll continue to be a little more stable here.
Shaival: We have heard across the US that buyers are interested in purchasing, but their general time to do so has extended. Are you seeing something similar in Chicago?
Michael: Many people are sitting on the sidelines to see what happens. With rents increasing so much and with people who have been looking for 6-12 months, I feel like we'll see the market rebound in terms of volume because there's just so much pent-up demand from buyers.
With Chicago rent prices rising 8.7% over the past year, renters are looking for the right opportunity to enter the housing market. However, rising mortgage interest rates and home prices are forcing more would-be buyers to remain renters.
Michael has been a Branch Manager at Fairway Mortgage for over six years. He has been a top originator in Chicago since 2001 and a branch manager since 2003. While Michael has seen greater stability in the Chicago market, he still sees room for improvement when it comes to helping buyers entering the market. This is where Ribbon comes in.
Shaival: How are products like Fairway Cash Ready powered by Ribbon able to help your clients secure homes?
Michael: Chicago homebuyers continue battling rising costs in a city where homes sell for a median price of $370,000 in June – up 4.8% compared to last year. With Ribbon, buyers can have the edge ahead in buying their home with an upgraded cash offer and the time and flexibility to secure financing for their home when needed. On the other side of the transaction, Ribbon offers give sellers certainty that their homes will close on time, even in the most uncertain markets.
Shaival: If you were sharing Ribbon to realtors in your network or loan officers, how best would you describe the value?
Michael: RibbonCash solutions turn offers into all cash while eliminating common contingencies. This allows buyers to make their strongest offer in any market, which means less time looking for a home. Ribbon’s Buy Before You Sell solution also gives current homeowners the flexibility to make a cash offer on their next home before selling their existing one. Real estate agents and buyers have been asking for something like this for a long time because they have seen it in other markets. They can compete against cash as well as not have to worry about selling their home before buying. I think that will give leverage to a lot of people that have been asking for something like this for a long time.
Shaival: We’re honored to work alongside lenders like Fairway to help make homeownership achievable. Thank you for sharing your time and insight on the Chicago market, Michael.
Ribbon is working with Fairway Mortgage with its expansion into the Chicago market, given their successful partnership elsewhere. While providing plenty of benefits for buyers and sellers, Ribbon is also giving lenders consistent business from new borrowers able to go under contract as well as guaranteeing commissions for listing agents by ensuring their house will be sold.
To learn more, listing agents and loan officers are welcome to sign up on Ribbon’s platform.