Chicago home and condominium buyers this spring are being whipsawed by sharply higher asking prices, more costly mortgage interest rates and a shortage of property listings.
According to Illinois Realtors, the median price of single-family homes and condos in Chicago in February was $272,000, up a hefty 10.6% over $246,000 in February of 2017.
Meanwhile, only 1,490 home and condo sales were posted in February, down from 1,529 units in February of 2017.
In the nine-county Chicago metro area, sales of single-family homes and condos in February totaled 5,722 units, down 4.2% from 5,971 units in February of 2017. The median price in February was $227,500 in the Chicago metro area, a strong increase of 8.3% from $210,000 in February of 2017.
Statewide home and condo sales in February totaled 8,151 units, down 5.1% from 8,585 units in February of 2017. The statewide median price in February was $185,000, up a solid 8.8% from $170,000 in February of 2017.
The median is a typical market price where half the homes sold for more and half sold for less. The sales and price analysis comes from closed transaction statistics generated by 27 Multiple Listing Services statewide and Midwest Real Estate Data, LLC.
Freddie Mac’s national Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgages eased to an average of 4.44% on March 29th from 4.45% a week earlier when the Federal Reserve Board raise the federal funds interest rate by a quarter of 1 percentage point to a range of 1.5% to $1.75%—its highest level since 2008.
“So far, U.S. housing markets remain resilient in the face of higher mortgage rates,” noted Len Kiefer, Freddie Mac’s deputy chief economist. “The National Association of Realtors reported recently that existing-home sales in February increased 3% month-over-month on a seasonally adjusted basis and are up 1.1% from a year ago.”
The Mortgage Bankers Association's Weekly Mortgage Applications Survey also reported that the home purchase mortgage applications index was up 6% from the same week a year ago, Kiefer noted.
“A chronic shortage of home listings is setting this spring market up to be one where buyers are going to have to move quickly and decisively," said Matt Difanis, president of Illinois Realtors. While the number of listings increased February, he said: “We're still a long way from having enough inventory to satisfy consumer demand.”
Statewide housing inventory in February totaled 47,108 units for sale, a 12% decline from February of 2017 when there were 53,522 homes on the market.
“Despite the obstacles posed by a lack of supply, the Chicago-area housing market remains quite vigorous,” observed Jeff LaGrange, vice president of RE/MAX Northern Illinois.
“Buyers must be proactive in this market,” advised Rebecca Thomson, president of the Chicago Association of Realtors. “With inventory tightening, buyers may need to account for a longer home search.”
Fewer homes listed for sale this spring make this a “Catch-22” market, Thomson said. “When the right opportunity arises, buyers will need to act quickly,” she said.
“Consumers seem to be apprehensive about future increases in interest rates and some uncertainties about the impact of the tax reform legislation,” noted University of Illinois economist Geoffrey J.D. Hewings. “With shrinking inventory and concerns about affordability at the lower end of the price scale, 2018’s year-over-year sales numbers are forecast to be lower than 2017.”
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.