Looking back on 2019, analysts say it was a year of lost opportunities for many home buyers, who sat on the fence and watched prices rise while some of the lowest mortgage rates in years go to waste.
“Although interest rates are near historically low levels and financing guidelines have loosened, the buyer pool has not come pouring back into the market,” noted Mike Opyd, broker/owner of RE/MAX Next in Chicago.
“The result has been an increase in inventory and a slowdown in sales,” Opyd said.
“Buyers continue to take their time making decisions, knowing they have options and a better chance of getting what they want at a price they want. I expect this trend to continue into the new year.”
Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed home loan rates averaged 3.74% nation wide on December 26th, little changed from the prior week. Last year at this time, 30-year fixed loans averaged 4.55%.
On December 26th Chicago-area lenders were charging a range of 3.75% to 3.857% on 30-year loans, reported rateSeeker.com.
“Thirty-year fixed-rate mortgages averaged just 3.9% during 2019, the fourth lowest annual average level since 1971 when Freddie Mac started its weekly survey,” noted Sam Khater, Freddie Mac’s Chief Economist.
“Heading into 2020, low mortgage rates and the improving economy will be the major drivers of the housing market with steady increases in home sales, construction and home prices,” Khater said.
“While the outlook for the housing market in 2020 is bright, worsening housing affordability is no longer a coastal phenomenon and is spreading to many interior markets and it is a threat to the continued recovery in housing and the economy,” he noted.
Home prices rise 3.2% in Chicago
In November, the city of Chicago saw year-over-year home sales decrease a whopping 10.4% with 1,659 sales, compared with 1,852 in the same month a year ago, according to Illinois Realtors. The median price of a home in the city of Chicago in November was $270,000 up 3.2% compared with $261,745 in November of 2018.
“When you see an inventory decrease, like we did in November, you’ll likely also see a decline in closed sales, as well,” observed Maurice Hampton, president of the Chicago Association of Realtors. “Both are accompanied by a decline in days on market and uptick in median sales price. Clearly, the demand is there, but inventory isn’t.”
In the nine-county Chicago Metro Area, single-family home and condominium sales in November totaled 7,578 units, down 7.6% from 8,200 units in November of 2018. The median price in November was $240,000 in the Chicago Metro Area, an increase of 3.4% from $232,000 in November of 2018.
Statewide single-family home and condo sales in November totaled 11,026 units, down 7.1% from 11,866 in November of 2018.
The statewide median price in November was $200,000, up 5.3% from November of 2018, when the median price was $190,000. The median is a typical market price where half the homes sold for more and half sold for less.
“Home buyers were confronted with the dual challenges of diminished inventory and slightly higher prices in many portions of the state,” said Ed Neaves, president of Illinois Realtors. “This is a continuation of trends we have seen throughout 2019 where home sellers reap modest rewards and home buyers who move quickly and are willing to pay more are rewarded with a new home in time for the holidays.”
The time it took to sell a home in November averaged 53 days, a decrease of 1.9% from the year before. Available inventory totaled 52,709 homes for sale, a 6.7% decline from 56,510 homes in November of 2018.
“Increases in new-home starts in November provide some optimism that continued national employment growth and low interest rates will contribute to addressing the low inventory problem,” said University of Illinois economist Geoffrey J.D. Hewings.
“There is some cautious optimism about an increase in first-time buyers in 2020 as well as the strong increase in contract signings in recent months in both Illinois and Chicago,” Hewings said.
Sales and price information are generated by Multiple Listing Service closed sales reported by 26 participating Illinois Realtor local boards and associations including Midwest Real Estate Data LLC data.
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.