In most of the Chicago area, the number of home sales is down about 30 to 40 percent this year, according to MRED, the real-estate data service. In the Round Lake section of Lake County, it’s down 77.9 percent. That means only a little more than one-fifth as many houses have sold there in the past 12 months as did in the prior year. And some agents in town say it comes on the heels of a big drop the year before. (The data I have access to don’t go that far back.)
MRED’s records put four towns together under the name Round Lake. (They are Round Lake, Round Lake Beach, Round Lake Heights, and Round Lake Park.) The four towns cover a crescent-shaped area in western Lake County with a mix of new or newish subdivisions and fishing cottages built by Chicagoans in the early and middle 20th century. House prices start below $100,000 and go up to about $300,000, with most sales in the $150,000 to $195,000 range.
“It’s the most affordable part of Lake County,” says Mirtha Pistrana, a Century 21 Marketplace agent who sells in the area.
And that may be precisely why sales have dropped off so sharply this year. As several Round Lake agents explained to me this week, the pool of moderate-income buyers, which just a few years back was buying upwards of 700 homes a year in the area, has dried up.
- Mortgage lenders have become much stricter with their money, pulling back from the stated-income loans and low- or no-down-payment loans that converted many renters to buyers in the last decade.
- There was such a flood of buyers over the past few years that there’s hardly anyone left to buy a house.
- Undocumented Hispanics with no Social Security numbers, who make up a large segment of the first-time home-buying population, have been almost completely locked out of mortgage borrowing for the past two years.
Pistrana is certain reason 3 has impacted Round Lake sales. She says that as recently as three years ago, more than two-thirds of her clients who bought in Round Lake were undocumented, moderate-income Hispanics looking for housing they could afford. At the time, she says, “I had several lenders who would make loans to a buyer with [an ITIN, a tax identification number for non-citizens], but they have all been closing their doors, turning their backs. There is only one left: Harris Bank.”
The Hispanic buyer population has been booming for years; some estimate that 40 percent of first-time buyers are Hispanic. But, Pistrana says, since the political skirmishes over immigration reform began in 2006, it’s not only lenders turning their backs, but some of the buyers themselves. “They worry if they invest all their money and then they get deported, it will all be lost,” she says, “so they don’t buy a house.”
Whether Hispanic or not, all moderate-income homebuyers have been hurt by the other two factors cited by Round Lake agents.
Elizabeth Splitt, a Coldwell Banker agent who sells in the Round Lake area, cites reason 2: “During the boom, we borrowed our future buyers. We helped everyone get into houses then,” leaving a shrunken pool of buyers now.
Ken Bieschke, a Re/Max Advisors agent in the Round Lake area, refers to reason 1. “You’re not seeing as many people qualified for the [easier] mortgages anymore,” he says. “In more expensive areas people might put 10 or 20 percent down,” he says, “but in Round Lake, a lot of homes were sold with no money down.” He estimates that at least half of his area’s sales at the height of the real-estate boom were done with zero down. Many of them were stated-income loans, in which the borrower didn’t have to prove an income history. Both types are largely gone now (and good riddance).