The North Side Resale-Home Market Is Gradually Reviving
Despite battling the virus plague, protests, riots and social unrest, Chicago’s North Side real estate market surprisingly is showing some positive signs, according to a new Baird & Warner analysis.
“As expected, the May numbers reported in our June 2020 North Side market analysis are significantly down versus 2019 in most areas,” said John Irwin, broker with Baird & Warner’s Lincoln Park office. “However, if you look a little deeper at the same numbers week by week, the market has shown improvement.”
Irwin noted that this trend is best illustrated by analyzing homes that went under contract each week. The 2020 market began the year with significant increases over 2019. However, as COVID-19 fears began to grow and “Shelter in Place” policy was enacted, homes going under contract plummeted.
“Home sales hit a low point during the week of April 4th, but have increased week by week through May and into June,” Irwin noted. “By early June of 2020, the number of units under contract exceeded 2019.”
Here are the trends Baird & Warner sees in the North Side resale-home market going forward for the balance of the year:
• Increased buyer and seller comfort with the current situation. As the shock of social situations wears off and Chicago neighborhoods of Near North, Lincoln Park, Lakeview and North Center begin to reopen, both buyers and sellers will become more comfortable with re-entering the market.
“For many investors, the quick rebound of the stock market has also generated confidence,” Irwin noted.
• Buyer urgency can’t wait in some cases. Whether relocating for schools, growing families or business, there are some housing situations that can’t be put on hold.
• Inventory levels are dropping. North Side inventory alone declined 19.2% last month alone. This has led to many cases of multiple offers and lower market times.
• Median prices are holding as a result of falling inventory levels. On some competitive transactions, prices are increasing. For example, median prices rose 14.1% in Lakeview in May.
Prices for expensive North Side homes actually rose across the board in May. Luxury homes pegged at $1-million-plus were up 4%, while prices rose 3.2% on those priced between $500,000 and $1-million. Homes listed under $500,000 did the best—rising 4.7%, Baird & Warner reported.
“Buyers looking for a “great deal” due to the negative situation are being disappointed,” Irwin quipped. Current pricing trends could also change quickly if inventory levels begin to rise.
“All of this could change very quickly as the market continues to open up and sellers rush to list their homes,” Irwin said.
• Record-low interest rates continue to be a major buyer motivator. Most industry projections project rates to continue in the low 3% range for the near future.
At its June 10th meeting, the Federal Reserve Board left interest rates unchanged and near zero because of worries about unemployment and recession. Analysts said the Fed’s economic projections suggest that its policy will keep interest rates near rock-bottom for the foreseeable future.
30-year mortgages at 3.21%
On June 11th Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate home-loan rates nationwide averaged 3.21%, up slightly from 3.18% a week earlier. A year ago, the 30-year fixed-rate average was 3.82%.
“The rebound in home-buyer demand continued last week, driven by mortgage rates that hover near record lows,” said Sam Khater, Freddie Mac’s Chief Economist. “This turnaround in demand, particularly by those who have higher incomes than the typical household, also reflects deferred sales from the Spring.”
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.