Families planning to buy a home or condominium in the Chicago area this autumn are faced with three market conditions—higher prices, shrinking inventory and interest-rate creep.
Median single-family home and condo prices in the nine-county Chicago area increased 5.1 percent to $218,000 in September, up from $207,500 in September of 2015, reported the Illinois Realtors.
However, sales volume was flat. Some 9,895 units were sold during the month, compared with 9,887 units in September of 2015.
In Chicago, home and condo prices rose 4.6 percent to a median of $261,500, up from $250,000 in September of 2015. However, sales volume slipped in the city. Only 2,336 sales were recorded in Chicago in September, down 3.2 percent from 2,414 transactions in the same month a year ago.
As the 2016 Presidential election race winds down, a slow job market and economic uncertainty pushed interest rates higher, analysts said.
Benchmark 30-year fixed mortgage rates averaged 3.52 percent on October 20th, up from 3.47 percent a week earlier, reported Freddie Mac’s Primary Mortgage Market survey. A year ago, the 30-year loan average was 3.79 percent.
“This is the first week in four months that 30-year rates have risen above 3.50 percent,” noted Sean Becketti, Freddie Mac’s chief economist. “Mortgage rates seem to be catching up to Treasury yields, and returning to pre-Brexit levels.”
“Annual existing home sales growth in September was flat in Illinois and Chicago,” said University of Illinois economist Geoffrey J.D. Hewings. “Prices continued to increase and this trend is expected to prevail for the next three months.”
Hewings said job growth in Illinois has been significantly below the national level, and this trend has dampened housing sales.
Doug Carpenter, president of the Illinois Realtors, said sellers are benefiting in the current housing market, “where prices have consistently risen for the past four years.”
However, buyers are seeing a “tight inventory of homes on the market and a decline in the average time it is taking to sell,” Carpenter said. So, serious buyers seeking a dream home may find that property elusive to find this autumn.
Jack Kreider, executive vice president and regional director of RE/MAX Northern Illinois, noted that one reason for the declining inventory can be found in the distressed homes segment of the market. Distressed homes consist of foreclosures and short sales.
“There were 4,043 sales of distressed homes in the metro area during the third quarter this year, a 29 percent reduction from the same quarter of 2015,” Kreider said. “Distressed homes are still selling, but many fewer of them are available.”
Matt Silver, president of the Chicago Association of Realtors (CAR), said Realtors continue to see “a vibrant Chicago real estate market” with homes moving quickly and with steady median price gains. “It is taking an average of 42 days to sell a home, indicating buyers are eager to purchase when they find the right property,” he said.
A RE/MAX analysis of home sales data collected during the third quarter of 2016 by Midwest Real Estate Data, the regional multiple listing service, recorded 33,444 home sales in the seven-county Chicago area for the quarter. That’s a gain of 1 percent over the results of the same quarter in 2015.
The analysis covers sales of homes, condos, co-ops and townhouses in Cook, DuPage, Kane, Kendall, Lake, McHenry and Will counties.
The median sales price in the seven-county area climbed 4.5 percent to $230,000 and the average time spent on the market by homes sold during the quarter was 76 days, down from 82 days a year earlier.
According to RE/MAX, median sales prices rose in all seven counties, topped by an 11 percent gain in Will and a 10 percent increase in Kendall. The other increases were 8 percent in Kane and McHenry, 4 percent in Cook, 6 percent in DuPage and 0.5 percent in Lake. Median sales prices rose 2 percent in Chicago.
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.