Despite Turbulent Market Chicago Home Sales Post 5% Gain
The Windy City’s real estate market in the summer of 2020 was hit by the COVID-19 pandemic, protests, marches for black lives, riots and looting from Michigan Avenue to the suburbs.
Despite the turbulent season, Chicago’s August existing-home sales skyrocketed to a strong 3,154 properties closed—the highest level for the year and up 5% over the same month last year, reported a new survey by RE/MAX Next.
Another trend sparking housing sales activity is record low home-loan interest rates.
On September 10th, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgage plummeted to an averaged 2.86%, the lowest rate in the survey’s history which dates back to 1971. During the month of August, the average mortgage rate nationwide has been below 3%. A year ago, the 30-year fixed rate averaged 3.56%.
The RE/MAX Next August market survey also reported the following surprising findings:
Pending under contract home sales in Chicago are at their highest level in two years.
The inventory of new listings reached its highest level since 2018.
The current median price for a sold home in Chicago is $335,500—the highest price in two years.
“Chicago as a whole saw a strong end-of-summer, but it does not paint a true picture of the market,” noted Mike Opyd, broker/owner of RE/MAX NEXT.
“The downtown Loop—plus immediate surrounding neighborhoods including Streeterville, the New East Side, South Loop, and River North—have been flooded with new inventory resulting in widespread price corrections,” Opyd said. “Buyers are taking their time making decisions because they have many options from which to choose.”
Apparently, the increase in home and condominium inventory in the once-hot downtown neighborhoods is a direct result of Chicago’s rocky summer and the failure of Mayor Lori Lightfoot and Chicago police to control the streets.
“Many sellers are opting to leave downtown for the suburbs and/or to sell their in-town properties because of the turmoil the Loop areas have recently endured,” Opyd said.
However, one major downtown broker, who had a half-dozen luxury listings, said he did not show a single property over the summer.
Meanwhile, the market for homes in safe neighborhoods around the city, and nearby suburbs have largely been thriving. “The outlying city neighborhood and suburban for-sale home inventory has offset the slower Loop market, resulting in a cumulative increase in the average sales price of Chicagoland,” Opyd said.
Record-low rates spark demand
“Record-low mortgage rates have ignited robust purchase demand activity, which nationwide is up 25% from a year ago and has been growing at double-digit rates for four consecutive months,” noted Sam Khater, Freddie Mac’s Chief Economist.
“However, heading into autumn it will be difficult to sustain the growth momentum in nationwide purchases because the lack of supply is already exhibiting a constraint on sales activity,” Khater predicted.
Rent debt a growing problem
A survey by Apartment List reported that 31% of renters nationwide began September owing rent for previous months. However, among those with accumulated pandemic rent debt, nearly half owe less than $1,000.
Renters are making significant financial sacrifices to try to stay afloat. Among renters that have fallen behind on their payments, 30% report running up credit-card debt, 31% have had to sell off assets, and 16% have dipped into their retirement savings.
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.