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Optimism For Chicago’s North Side Market Rebound Fizzles


With mortgage rates inching upward towards 7 percent again, a forecasted rebound in Chicago’s North Side resale home market may have been premature, according to a recent Baird & Warner report.


That’s the cloudy pre-spring 2024 forecast from Baird & Warner’s February Market Analysis, co-authored by Realtors John Irwin and Jackie Lafferty.







“Positive economic news of the past two months – including the possible stabilizing and lowering of interest rates – had many North Side real estate brokers optimistic about the market in 2024,” said Irwin (left).







“The influx of showing requests and growing attendance at open houses is a sign that the market is beginning to turn. However, we still have a way to go before we can expect a full rebound,” he said.


On February 29, the Freddie Mac Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgages nationwide averaged 6.94 percent, up from 6.90 percent a week earlier. A year ago, the 30-year fixed-loan average was 6.65 percent.

The average rate on a 15-year fixed-rate loan rose to 6.26 percent on February 29, down from 6.29 percent a week earlier. A year ago, the 15-year fixed loan average was 5.89 percent.






“Consumer prices rose more than expected, and mortgage rates increased,” said Sam Khater (right), Freddie Mac’s Chief Economist. “The economy has been performing well and rates may stay higher for longer, potentially slowing the spring home buying season.”








According to Freddie Mac data, mortgage applications to buy a home so far in 2024 are down in more than half of all states in the U.S. compared to a year earlier, Khater said.


The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who place a 20 percent down payment and have excellent credit.


Higher home prices and sales volume but inventory remains low


Baird & Warner’s monthly market analysis for January detailed real estate comparatives in four neighborhoods – Lakeview, Lincoln Park, Near North Side, and North Center.


• Home sales. Transaction volume rose for the second consecutive month by 9.5 percent in January 2024. For the first time in two years, all four neighborhoods reported sales increases of 1.7 to 15.8 percent.


“Higher January sales volume was driven primarily by homes priced under $500,000 and luxury residences priced from $1 million to $2 million,” Irwin said. There was no change in homes priced over $2 million, and a 6.5 percent decrease for dwellings priced between $500,000 and $1 million.


• Home prices. In January 2024, home prices rose by 7.8 percent over the same month in 2023. Three of the four neighborhoods reported price increases. Lakeview reported a 9.2 percent decrease. Homes priced over $500,000 showed increases, while prices on homes priced under $500,000 fell 2.7 percent.


“Traditionally, low inventory levels significantly drive up prices, but this has not been the case on Chicago’s North Side in 2024,” Irwin said. City numbers are lower than the Chicago suburbs and many cities across the country, he noted.



“As we head into the spring residential real estate season, sellers should be careful not to fall victim to perceived market momentum,” he advised. “Homes need to be priced competitively to avoid extended market times and lower offers.”




• Listings. In addition to interest rate creep, historically low inventory levels are now the main obstacle to a real estate rebound. Inventory levels dropped 18.4 percent in January 2024, Irwin said.


“Lincoln Park, Lakeview, and North Center only have between 1.0 and 1.5 months of inventory supply, which is now at a critically low level with sales rising,” Irwin said. “These inventory decreases were consistent in all four neighborhood areas and price points. We will need a significant infusion of new listings in order to sustain a long-term real estate turnaround.”


• Under contract. Homes generally take between 30 and 45 days to close after going under contract. A total of 362 homes went under contract in January 2024, which was a 23.6 percent decrease compared with January 2023.


Gazing into Baird & Warner’s crystal ball, Irwin said it is still too early to predict the direction of the 2024 resale home market, but unlike 2023, there are positive indicators.


“Buyers and sellers need to stay updated on a regular basis for market changes in their specific neighborhood and property types,” Irwin advised. “This is going to be a very interesting year in real estate.”







Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

Commentaires


“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”

 

Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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