Low Rates Keep Home-Hunting On Buyers’ Minds Despite Holiday Cheer
With Black Friday fever raging and most people focused on last-minute Christmas shopping, the year’s end can be the perfect time to buy home in Chicago—if you can find one you like.
“There is still very keen interest in buying this late in the selling season, and there’s no indication that the zeal to own a home is diminishing,” said Dan Wagner, president of the Chicago Association of Realtors (CAR).
However, existing home inventories are shrinking, and “that’s having a corresponding impact on sales and prices,” Wagner said.
According to an analysis by the RE/MAX Northern Illinois real estate network, over the past 33 consecutive months the median sales price of homes in the Chicago metro area has been higher than it was in the same month one year earlier.
Some 2,109 existing homes were sold in Chicago in October, down less than 1 percent from October of 2014 when 2,128 homes were sold. The median price of a Chicago home was $240,000 in October, up 1.7 percent over $236,000 in the same month last year, reported the Illinois Association of Realtors (IAR).
Sales of single-family homes and condominiums in the nine-county Chicago area totaled 9,155 units in October, a decrease of 2 percent from the 9,344 sales in the same month a year ago. The median price in October in the Chicago area was $200,000, up 8.1 percent from $185,000 in October of 2014.
“A substantial decrease in the number of homes on the market is having an impact on sales,” said Mike Drews, president of the IAR.
"While there typically is a drop-off in inventory this time of year as potential sellers become immersed in holiday activities, the decline in October was particularly steep. The result is strong median-price gains and a decrease in the number of days to sell a home.”
Statewide, it took an average of 68 days to sell a home in October in Illinois, down from 74 days a year ago. Available housing inventory in Illinois remained tight with 68,302 homes for sale, a 10.4 percent decline from October of 2014 when there were 76,205 homes on the market.
“In our view, the Chicago-area housing market is actually stronger than the October-unit numbers might suggest,” noted Jim Merrion, regional director of RE/MAX. “TRID, the new federal regulations governing closing procedures took effect in October, and that almost certainly slowed down the closing process for many transactions, pushing them back into November.”
Another positive force in the housing market is near rock-bottom mortgage interest rates, analysts say.
Freddie Mac’s Primary Mortgage Market Survey reported on November 25th that benchmark 30-year fixed rate home loans averaged 3.95 percent, down from 3.97 percent a week earlier. A year ago, 30-year loans averaged 3.97 percent.
The average 30-year fixed rate mortgage hasn’t risen above 4 percent since July 23, 2015, which is helping home-buyer affordability in the face of rising house prices due to low levels of inventory, Freddie Mac reported.
“In a quiet week leading up to the Thanksgiving holiday, there were no major negative news announcements, and none are expected in the next few days,” said Sean Becketti, chief economist of Freddie Mac.
With the year is winding down, analysts are waiting to see if the Federal Reserve Board will hike interest rates at its December 15th meeting. And that event could move would-be home buyers into action.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.