Higher Rates Spark Slow Down In North Side Home Market
With inflation and interest rates on the rise, the once booming market for existing homes on Chicago’s North Side suddenly is a forgotten memory.
Historically low inventory levels in June were responsible for a drop in home sales and units under contract for the fourth consecutive month, reported Baird & Warner’s “July 2022 Market Analysis,” which focuses on four key neighborhoods—the Near North Side, Lincoln Park, Lakeview and North Center.
Despite an abundance of buyers, year-to-date home sales have declined 2.1% compared with the first six months of 2021, and inventory levels plummeted 34.9%, noted John Irwin, veteran broker with Baird & Warner.
“Rising interest rates and a plunging stock market have driven some buyers to the sidelines,” Irwin said.
“Homes that are priced well are selling quickly, but there is not enough inventory to match last year’s sales numbers. This looks like it will be the new normal for the foreseeable future.”
Mortgage rates rise again
Freddie Mac’s Primary Mortgage Market Survey reported on July 14th that benchmark 30-year fixed home loan rates nationwide averaged 5.51%, up from 5.30% a week earlier. Last year at this time, the 30-year fixed loans averaged 2.88%.
Fifteen-year fixed rate loans rose to an average of 4.67%, from 4.5% a week earlier. A year ago, the average 15-year fixed mortgage averaged 2.22%.
“Mortgage rates are volatile as economic growth slows due to fiscal and monetary drags,” said Sam Khater, Freddie Mac’s chief economist. “With rates at the highest level in more than a decade, home prices at escalated levels, and inflation continuing to impact consumers, affordability remains the main obstacle to homeownership for many Americans.”
Prices inching higher
North Side home prices already are being impacted by higher interest rates. Home resale prices rose 8.6% in June of 2022, compared with June a year ago. Meanwhile, market times have dropped 33.7% to 51 days during that same time period.
In June, median sale prices in all four surveyed neighborhoods rose, compared with June a year ago, according to Baird & Warner:
Near North. Over-all median home prices rose 3.4%, in June, while units priced under $500,000 fell 4.8%. On the sales side, the number of Near North homes closed slipped by 9.0%.
Lincoln Park. Over-all median prices in the neighborhood rose 6.7% in June. However, homes sold in the upscale price range of $500,000 to $1-million declined 0.8%. On the sales side, the number of Lincoln Park units closed slipped by 22.1%.
Lakeview. Over-all median prices rose a solid 9.3% in June. However, prices on luxury homes in the $1-million to $2-million bracket slipped 4.6%. On the sales side, the number of Lakeview units closed plummeted by 18.8%.
North Center. Over-all median prices in this hot neighborhood—which includes the popular St. Ben’s area— rose a hefty 13.5% in June. However, the median price of homes priced at more than $2-million declined by 0.9%. On the sales side, the number of North Center units closed rose by 7.6%.
“Covid, inflation, the stock market, interest rates, supply chain issues, rising crime, and city financial issues are just some of the variables both buyers and sellers are trying to analyze before getting into the market,” Irwin noted.
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.