North Side Chicago’s Real Estate Market On A Wild Ride
Who—but God Himself—could understand and interpret the post Covid-19 real estate market on Chicago’s North Side?
It is a wild roller-coaster ride marked by soaring interest rates, rising home prices and a great shortage of listings. What a weird world to navigate for the average would-be buyer and seller.
According to the Baird & Warner August, 2022 “Market Analysis for Chicago’s North Side,” home sales have declined for the past five consecutive months, when compared to 2021, because of the impact of Covid-19, rising home-loan interest rates, a declining stock market, high gas prices, and rampant crime.
“The record-setting home sales increases in 2021 have magnified the sales decreases of 2022,” noted John Irwin, who developed Baird & Warner market analysis covering the neighborhoods of Lincoln Park, Near North Side, Lakeview and North Center.
Then, Baird & Warner managing broker David Bailey suggested that Irwin compare 2022 numbers with 2019, which was the last “normal” year before Covid.
“The results were interesting and put our current market in a different perspective,” Irwin said. “The purpose of this exercise is not to try to ‘put lipstick on a pig’, but rather to compare what is happening in this unpredictable market to a more stable time.”
Once 2021 numbers were tossed out, the following results emerged in the comparison of 2019 and 2022 North Side real estate activity from January through July:
Home sales. Year-to-date 2022 existing home sales rose a whopping 33.9% over the same period in 2019.
Home prices. Year-to-date 2022 home sales prices rose a solid 9.8% over the same period in 2019.
Market time. Year-to-date average market time dropped 25.2% from 2019.
Listing inventory. Year-to-date listing inventory levels are down 25% from 2019. While the existing home sales industry faces a number of challenges, Irwin said sinking inventory levels continue to be one of the major issues.
“It should be noted that while inventory levels are dropping compared to 2021, they are slowly rising when compared month-over-month in 2022,” Irwin said.
In summation, Irwin noted: “A significant number of homes are being sold, prices are up and market times are down. As inventories rise, we should see some impressive results.”
Here is a list of median pricing for homes sold in the month of July, 2022 in the four neighborhoods surveyed:
Near North Side. Overall, resale home prices rose 1.5%. However, prices of homes and condominiums priced under $500,000 declined 2.1%.
Lincoln Park. While overall resale dwelling prices declined 2.4%, homes priced from $500,000 to $1-million rose 0.3%.
Lakeview. Resale home prices rose a solid 5.5%. However, resale prices of luxury homes priced from $1-million to $2-million declined 7.7%.
North Center. Resale home prices rose a whopping 14.8% in July. However, the median price of luxury units priced at more than $2-million dropped 4.4%.
Home-loan rates jump to 5.5%
On August 25th, benchmark 30-year fixed home-loan interest rates rose to 5.55% from 5.13% a week earlier, reported Freddie Mac’s Primary Mortgage Market Survey. A year ago, 30-year loans averaged 2.87%.
Fifteen-year fixed mortgages averaged 4.85% on August 25th, up from 4.55% a week earlier. A year ago, 15-year loans averaged 2.17%.
“The combination of higher mortgage rates and the slowdown in economic growth is weighing on the housing market,” said Sam Khater, Freddie Mac’s chief economist. “Home sales continue to decline, prices are moderating, and consumer confidence is low. But, amid waning demand, there are still potential home buyers on the sidelines waiting to jump back into the market.”
The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.
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.