Chicago Home Sales Down 26% As Skyrocketing Loan Rates Hit
Skyrocketing mortgage interest rates, a plummeting stock market and soaring inflation have dramatically slowed the pace of home sales activity across Chicago’s North Side.
While combined sales of attached and detached homes were off -8.4% in the second quarter compared to the same period in 2021, a fairly modest decline, third-quarter sales fell by a shocking -26.3%, disclosed the quarterly Chicago North Side Market Report.
Combined sales of detached and attached homes on the North Side totaled 2,577 units for the July-September quarter, and the median sales price was $382,000, edging up 0.3%. For the seven-county Chicago metro area, the comparable results for the quarter were a -22.1% decrease in sales activity and a 4.3% rise in the median sales price.
The North Side Market Report, prepared by Mary Jo Nathan of Baird & Warner’s North Center office at 4037 N. Damen Ave., tracks home sales in Edgewater, Lake View, Lincoln Park, Lincoln Square, Near North Side, North Center, Rogers Park, Uptown and West Ridge.
On October 20th, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgage averaged 6.94% nationwide, up from 6.92% a week earlier. A year ago, the 30-year fixed-rate loans averaged 3.09%.
Fifteen-year fixed-rate mortgages averaged 6.23% on October 20th, up from 6.09% a week earlier. A year ago, the 15-year fixed rate average was only 2.33%.
“The 30-year fixed-rate mortgage continues to remain just shy of 7% and is adversely impacting the housing market,” said Sam Khater, Freddie Mac’s chief economist. In addition, home builder confidence has dropped to half what it was just six months ago and construction, particularly the single-family residential sector, continues to slow, Khater noted.
“Despite the slowdown in sales activity, demand for homes remains relatively strong, in large part because the inventory of homes for sale remains so low,” said Nathan, who has specialized in North Side residential real estate since 2000.
“The inventory of existing homes grew slightly during the quarter, but attached homes, which represent about 90% of the total North Side market, saw nearly a -30% decline in units for sale,” Nathan said.
As a result, homes continue to sell quickly, with the average market time for units sold during the third quarter of 2022 coming in at 53 days, compared to 70 days for the same period last year.
“That 53-day average is somewhat misleading because it is skewed by the relatively long market times for a few multi-million-dollar properties,” noted Nathan. “The Near North Side was the only one of the nine community areas with a third-quarter average market time of more than 48 days.”
Condos and townhomes
Sales of attached homes, which are primarily condominium apartments and townhomes, totaled 2,318 units for the quarter, a decline -26% from the same quarter last year, while the median sales price gained 0.9% to $350,000.
The decline in sales activity was fairly uniform across the North Side, with only two of the nine community areas not recording a unit sales decline of between -22% and -29%. The exceptions were Lincoln Square, were sales fell -7.3% and Uptown, where they were down -33.4%.
Price trends were more mixed, with Edgewater, Lincoln Park, Lincoln Square, Near North, Uptown and West Ridge all recording higher median sales prices, while Lake View, North Center and Rogers Park saw the median price fall. At the same time, the average market time for condos and town homes was 54 days for the quarter, down from 71 days last year.
The North Side’s single-family (detached) home market benefitted from an increase in inventory, which expanded from 197 homes for sale at the end of the second quarter to 237 homes for sale at the end of the third quarter. Nonetheless, sales were off -28.7% from the third quarter of last year.
The median home price, however, continued the upwards trajectory seen in recent quarters. For the North Side as a whole, the median single-family price was up 8.8% for the quarter to a whopping $1,299,900.
The median price rose in seven of the nine North Side neighborhoods surveyed, with the strongest gains occurring in the lakefront communities of Near North, Lake View, Uptown and Rogers Park.