Listing Desert In North Side Chicago Resale-Home Market
A shortage of for-sale existing homes is creating a listing desert on Chicago’s North Side this spring, analysts say.
Historically low inventory levels in April were responsible for a drop in home sales and units under contract for the second consecutive month, reported Baird & Warner’s “May 2022 Market Analysis” which focuses on four key neighborhoods—the Near North Side, Lincoln Park, Lakeview and North Center.
“Unlike other downturns that we have experienced in the past, there are plenty of buyers out there, but not nearly enough existing homes for sale to meet the demand,” noted John Irwin, veteran broker with Baird & Warner.
In April of 2022, home sales dropped 4.9% compared with the same month in 2021, and units that went under contract in April plummeted 16% compared with last year, the market analysis reported. “This will, in all probability, lead to a third consecutive month of decreases in May,” Irwin predicted.
The North Side continued its dramatic inventory slide with a 37% decrease in the number of homes listed for sale in April of 2022 compared with the same month in 2021.
Meanwhile, home resale prices rose 5.4% in April of 2022, compared with April a year ago, and market times have dropped 34% during that same time period.
Mortgage rates ease
Freddie Mac’s Primary Mortgage Market Survey reported on May 19th that benchmark 30-year fixed home loan rates nationwide averaged 5.25%, down slightly from 5.30% a week earlier. Last year at this time, the 30-year fixed loans averaged 3%.
Fifteen-year fixed rate loans rose to an average of 4.43%, down slightly from 4.48% a week earlier. A year ago, the average 15-year fixed mortgage averaged 2.29%. “Economic uncertainty is causing mortgage rate volatility,” said Sam Khater, Freddie Mac’s chief economist. “As a result, purchase demand is waning, and home-builder sentiment has dropped to the lowest level in nearly two years. Builders are also dealing with rising costs, meaning this posture is likely to continue.”
Prices inching higher
Home prices on the North Side already appear to be impacted by higher interest rates.
While median sale prices in the four surveyed North Side neighborhood in April rose 5.4%, compared with a year ago, there was some slippage in on the Near North Side, according to Baird & Warner:
Near North. Median home prices were flat, while units priced under $500,000 slipped 3.8%. On the sales side, the Near North area was cool.
Lincoln Park. Over-all median prices in the neighborhood rose 4.2% in April. However, there was no change in homes in the upscale price range of $500,000 to $1-million.
Lakeview. Median prices skyrocketed 12.4% in April. However, prices on luxury homes rose only 0.9% in the $1-million to $2-million bracket.
North Center. Median prices in this neighborhood, which includes the hot St. Ben’s area, rose 5.6% in April. The median price of homes priced at more than $2-million in North Center rose only 1.9%.
“Covid, inflation, soaring interest rates, supply chain issues, rising crime, and city financial issues are just some of the unresolved problems that the city faces,” Irwin noted.
“Some analysts believe that there will be a quick recovery, while others say we are headed for recession,” he said. “May will be a key month. Families looking to change school districts historically start shopping for new homes and listing their existing residences for sale in May and June.”