Let's put it this way. The froth in the market is being eliminated due to the oversupply. That's a good thing IMO for the general health of the local real estate market. Now the big question is what happens to price? Answer is, depends where you live. Condos in downtown Chicago are ridiculous. If you are talking 300K for a 2 bedroom in a decent area, no problem. But, if you are talking 500K for a 2 bedroom, give me a break. There are areas where that's a bargain, but for how many people?
Where we bought, I can tell you there is very little if any 100% financing going on. If, however, you are speaking about the SW side of the city, then that area will suffer more because lender requirements for these types of loans are stiffening. In addition, Michael Madigan jammed through a law by putting some legislators in a headlock.
Here's the gig. Any borrower under a 620 score or any borrower with a 621-650 score who has an interest only loan, arm loan with 3 year or less fixed(this includes option arms) or has refinanced in the last 12 months is required to go to mandatory credit counseling before closing on any loan. If any of the terms of the loan change, ie, loan amount, rate, fees or term, the process must be started over again. This affects 60620, 60621, 60623, 60628, 60629, 60632, 60636, 60638, 60643 and 60652. Watch values in that area plummet. When they eventually pull the plug on this thing(it's a 3 year "pilot program" and I doubt it will live that long) that will be the time to invest in that area. Ah, the folly of mice and politicians. This is going to affect both A and B paper lenders.
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