Rising home values offset by high-interest loans.
In the 60620 ZIP code, home values rose 12.2 percent during the 12-month period ending Sept. 30, 2006, the largest increase of any Chicago-area ZIP code during that span.
Behind the news:
The benefits of increasing property values in the 60620 ZIP code. which includes the South Side's predominantly black Auburn Gresham community, are tempered by the high-interest loans received by most single-family-home buyers there.
In 2005, 75 percent of the conventional loans for owner-occupied, single-family homes in the 60620 ZIP code were judged to be high-interest mortgage loans. Just 38 percent of such loans in the rest of Cook County were deemed high-interest loans.
The Federal Reserve defines "higher-price loans" to be first-lien loans that are 3 percentage points above Treasury rates and second-lien loans that are 5 percentage points higher.
The combination of steep interest rates and appreciating property values does not surprise Deborah Moore, executive director of Auburn Gresham's Neighborhood Housing Services, a city-funded organization that provides lending services and home-ownership education.
"They go hand-in-hand," Moore said. "People in lending business get more aggressive in obtaining these loans hoping they can earn some of the appreciating value."
Federal data reveal that 1,036 homes were purchased in 2005 in the 60620 ZIP code, where 98 percent of the residents are black.
According to the Woodstock Institute, a nonprofit economic development organization that analyzes home mortgage lending data each year, Auburn Gresham has seen an increase in middle-class residents since 2003. The median home price in the neighborhood is now $165,000.
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|Title Annotation:||SPINOFFS: Keeping Current|
|Publication:||The Chicago Reporter|
|Date:||Mar 1, 2007|
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