Home sales across the country have slowed in recent months as interest rates have started to climb, but Chicago realtors say the local market is still warm enough that buyers need to act quickly.
In 2020 and 2021, historically low interest rates for 30-year mortgages, combined with growing demand as Americans sought more space during the pandemic, led to rapid growth in home prices and housing prices. nationwide home buying activity.
But interest rates have climbed, and this week US mortgage rates have risen more than a quarter point to 6.29%, the highest the housing market has seen since August 2007, according to Freddie Mac. . Rising rates are making monthly mortgage payments more expensive and some potential buyers are pulling out of the market.
In August, the number of homes sold in the Chicago metro area was down 21.6% from a year earlier, according to data from Illinois Realtors. The median home sale price in the metro area was $311,000 last month, up 3.7% from a year earlier.
Chicago real estate agents say since the start of the pandemic, area residents have been willing to invest more money when buying a home, creating a ‘strong’ housing market despite the downturn home sales and rising interest rates.
Mike Golden, co-founder and co-CEO of @properties, said he thinks the pandemic has pushed residents to value their homes more.
“There was a trend in the past where more people were renting and going to smaller spaces,” Golden said. “People now look at their homes differently and they understand the space they need, (which) was amazing for our market.”
Golden explained that the housing market has had “incredible years” in terms of market volume.
“2020 was a great year, 2021 was an all-time high,” Golden said. “And 2022 will still be down from 2021, (but) we still see a strong market (and) we expect to have a good spring market for next year.”
The average home in Chicago sells for about 1% below list price and remains on hold, meaning the seller has accepted an offer, in about 56 days, according to Redfin, a national real estate data brokerage firm. A “hot house,” which is a house for sale expected to be among the most competitive homes on the market, can sell for about 2% above list price and be put on hold in about 37 days, according to the company.
Darrell Scott, who is president of The Scott Group, affiliated with Compass Chicago Real Estate, said that even though interest rates are a bit higher now, buyers are still looking for homes.
“Buyers have more clout now than a few months ago with less competition and fewer buyers looking to buy,” Scott said. “From a seller’s perspective, they may not be able to sell as quickly as April, for example, but it’s still a good time to sell.”
Eric Tammes and his partner, Maurie Richie, put their Albany Park condo on the market in early July.
The couple sold another Albany Park home in 2017, but Tammes said this time around was more adventurous.
“We weren’t sure what to expect, but the condo sold out much faster than I expected,” Tammes said.
Their three-bedroom, two-bathroom condo went on the market on a Friday and had five offers the following Monday, according to Tammes. They sold above their asking price.
Tammes and Richie had bought a new house in Edgebrook in early June.
It was “a relief not to have two mortgages longer than necessary,” Thames said.
Carmen Rodriguez, a Coldwell Banker broker and one of two real estate agents who helped Tammes and Richie sell their home, considers summer to be one of the toughest cycles in town to buy or sell a home.
Rodriguez explained that lulls take place during the summer, usually after July 4, because that’s when people usually go on vacation.
“Interestingly in Chicago, there’s a big rush during the winter,” Rodriguez said. “People are setting a goal to be in their new place by Christmas or New Years, but that’s slowing down again and it’s the typical ebbs and flows of a Chicago real estate market.”
Tammes warns anyone looking to buy or sell in Chicago to “buckle up,” regardless of the current state of the housing market.
“The process can be frustrating, emotional and tiring, but keep pushing through the challenges,” Tames said. “We ended up buying in a neighborhood we hadn’t thought of, and we love our new home and our neighbors.”