North Side Chicago Existing-Home Market Does “Flip” In January
Chicago’s North Side existing-home market posted a “complete flip” in four lakefront neighborhoods in January as a “new trend appears to be emerging.”
That’s the opinion of Baird & Warner’s “February 2020 Market Analysis for Chicago’s North Side.” The analysis, prepared by veteran Baird & Warner broker John Irwin, posted a solid 15.1% increase in used home sales on the Near North Side—after more than two years of decreases.
Irwin noted that extremely low home-loan interest rates likely were the spark that final got the market ignited over the past three months. On November 7, 2019, benchmark 30-year-fixed mortgages averaged 3.69%, down from 3.78% in late October of 2019, reported Freddie Mac’s Primary Mortgage Market Survey. A year ago, rates averaged 4.94%.
Rates have stayed low throughout November, December, January and early February, fueling the year-end market boom. On February 20, 2020, Freddie Mac reported that lenders were quoting an average of 3.49% on 30-year-fixed loans. A year ago, the 30-year-fixed loan average was 4.35%.
On February 20th, Chicago lenders were quoting a range of 3.3% to 3.5% on 30-year-fixed mortgages, according to rateSeeker.com.
Mortgage rates reached a historical rock bottom on November 21, 2012, when the 30-year fixed mortgage average hit 3.31%, according to Freddie Mac’s archives. That milestone could be surpassed in early 2020 if current trends continue.
“The low mortgage-rate environment continues to spur home-buying activity, with applications to purchase a home up 15% from a year ago,” said Sam Khater, Freddie Mac’s Chief Economist. “We’ve seen new residential construction surge over the last few months, on pace to reach the highest level in more than a decade. This is a good sign for the inventory-starved housing market and is a promising indication for the spring homebuying season.”
Khater noted that refinance application activity is once again surging, rising to the highest level in seven years. “This surge coupled with strong purchase activity means that total mortgage demand remains robust, reflective of a solid economic backdrop and a very low mortgage-rate environment,” Khater said.
Here are the highlights of Baird & Warner’s February market analysis, which the firm compiled directly from the Chicago Multiple Listing Service:
• Home sales. North Side home sales in January rose 19% over January of 2019. Homes priced from $500,000 to $1-million rose 7%. Lincoln Park led the four neighborhoods with a 46% increase in unit sales, followed by Lakeview with a 17.4% gain. Sales in North Center slipped 2.8%.
• Median prices. Prices continued to ease in January. Median existing home prices decreased 4.5% in Lincoln Park and plummeted 29.7% in North Center. (The median is a typical market price where half the homes sold for more and half sold for less.)
“Some of the price declines could be attributed to price adjustments to inventory that has accumulated excessive market time,” Irwin noted. “Sellers are becoming more realistic about pricing in this market.”
• Market time. Despite the positive January numbers, market times continue to increase. January saw an 11.1% rise in market time which was significantly higher than 3.4% for all of 2019.
For more information on Baird & Warner’s January 2020 Market Analysis for Chicago’s North Side, contact John Irwin via email: john@johnirwinChicago.com, or call 773-294-8664.
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.