Buyers are now king in Chicago’s home and condominium market while mortgage rates ease and prices continue to inch higher this summer.
The median price of a home in the city of Chicago in July was $306,250 up 0.4% from July of 2018 when it was $305,000, reported the Illinois Realtors. However, the city saw year-over-year home sales decrease 5.3 percent with 2,655 sales in July, compared to 2,803 a year ago.
“The Chicago market has pulled back tremendously from previous years,” noted Mike Opyd, managing broker and owner of RE/MAX Next in Chicago. “For the first time in a decade, we are seeing more inventory than buyers. Buyers are taking their time making decisions due to finally having options.”
Opyd said it is not uncommon for buyers to see properties two or three times before making a purchase decision. At the same time, sellers are learning to be patient.
“The same trends we’ve been seeing in the market lately continue to persist,” said Tommy Choi, president of the Chicago Association of Realtors and broker at Keller Williams Chicago– Lincoln Park.
“The market is in a stabilizing period. Days on the market remain low and prices are steady, so inventory is moving, and demand is there. We expect this to continue, particularly on the heels of the Federal Reserve’s interest rate cut,” Choi said.
“Price drops are the normal right now and sellers are being forced to take less than they would have in previous years. To sum it up, we are in the first buyer’s market in a long time,” Opyd concluded.
In the nine-county Chicago Metro Area, single-family home and condo sales in July totaled 11,697 units, up 0.2% from 11,672 units in July of 2018. The median price in July was $259,000 in the Chicago Metro Area, an increase of 3.5% from $250,151 in July of 2018.
“The warm-weather selling season appears to be ending with a flourish as sales picked up statewide from what we saw in June,” said Ed Neaves, president-elect of Illinois Realtors.
“Consumers are well positioned in this more balanced market where buyers still stand to reap modest gains, and sellers benefit from more stable pricing. Plus, interest rates continue to be attractive, making it easier for the on-the-fence buyer to justify looking for a home,” Neaves said.
On August 22nd Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgages averaged 3.55% nationwide, the lowest it has been since November 2016. A week earlier it averaged 3.60%. A year ago, the 30-year fixed loans averaged 4.51%.
“The decline in mortgage rates continues to stimulate the real estate market and the economy,” said Sam Khater, Freddie Mac’s chief economist. “Home purchase demand is up 5% from a year ago and has noticeably strengthened since the early summer months, while refinances surged to their highest share in 3.5 years.”
Freddie Mac estimated that households that refinanced at lower rates in the second quarter of 2019 will save an average of $1,700 a year, which is equivalent to about $140 each month.
“The benefit of lower mortgage rates is not only shoring up home sales, but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity,” Khater noted.
Statewide home and condo sales in July totaled 16,357 units, up 0.3% from 16,310 units in July of 2018. The statewide median price in July was $219,348, up 2.6% from July of 2018, when the median price was $213,825. The median is a typical market price where half the homes sold for more and half sold for less.
The time it took to sell a home in Illinois in July averaged 43 days, down 2.3% from a year ago. Available inventory totaled 59,600 homes for sale, a 4.2% decline from 62,218 homes in July of 2018.
“Gyrations in the stock market and the constant discussion about the possibility of a recession are likely to affect consumer confidence in the months ahead,” observed Geoffrey J.D. Hewings, a University of Illinois economist.
“Low interest rates and only modest price increases would normally be expected to boost sales, but there appears to be hesitation stemming from limited supply and the market turmoil.”
Sales and price information are generated by Multiple Listing Service closed sales reported by 27 participating Illinois Realtor local boards and associations including Midwest Real Estate Data LLC data.
The Chicago Metro Area includes the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.
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.