On September 30th, members of ULI Chicago gathered at the Westin O’Hare to listen to John Burns, CEO, John Burns Real Estate Consulting, LLC, discuss the national and local housing market outlook for 2015. John Burns has been advising real estate companies for over 25 years.  He was joined later in the program by ULI member and Chicago Suburban Program Committee member, Lance Ramella, Senior Vice President, John Burns Real Estate Consulting, LLC.

John Burns prefaced his macro look at the housing market by stating that he has “a more optimistic outlook on Chicago than any other area in the country”. He went on to explain some of the mis-information around the idea of “tight credit”. Lending standards are not necessarily tight according to John; credit standards, LTVs and debt-to-income ratios are at normal and reasonable levels. Some of the new factors that affect the banks such as “put back risk” are affecting the lending environment more than constraints on the actual applicant. “Put back risk” refers to the new rule that makes the banks responsible for loans that they write that go bad.

John also explained crucial demographic shifts that have occurred and reviewed behavioral trends according to the five most recent generational groups. He pointed out that the millennial trend of delaying home ownership is due to factors such as student loan debt, more conservative views of debt, and, a desire for flexibility.

Despite demographic changes and banking constraints, John pointed out that in some markets, such as Chicago, demand is exceeding supply by a rate of 2-1. Looking forward Lance stated that we can expect to see interest rates increasing by 50 bps per year for the foreseeable future.  Read full Meeting Summary

The presentation was followed by an hour of cocktails and conversation among ULI Chicago members and guests.