City Market Moved Down 1% - May 18th Update
Here is my news for you using the most up to data from the mls and the sales up to May 18th. I also included conclusions from the Chicago Association of Realtors news releases.
Because for most of my 750 deals I have been mostly a Seller’s agent I am sad to say that the median sales price in the City of Chicago for April 2022 was $370,000, a 1.0% decrease from April 2021.
The City of Chicago saw listings average 61 days on the market until contract, a 17.6% decrease from April 2021 . The fact that market time is still low, but the price increases are flat signals a possible topping out of price in Chicago for now.
If you want to see the actual graphs and have a visual feast in the data just click here. Check out the April 2022 FastStats.
“The interest rates at 5.5% worries some but not me. I am still bullish. There is no crash coming - certainly not like in 2007-9, but price increases are unlikely in the City for now….The market will move on just without the huge jumps up in value as Seller’s adjust down to meet the Buyer’s ability to pay.” - Phil Buoscio
STATE OF THE MARKET
Since the average 30-year fixed rate mortgage exceeded 5% in April (the highest level since 2011) there are fewer buyers right now. This worries some but not me. I am still bullish. There is no crash coming - certainly not like in 2007-9, but price increases are unlikely in the City for now. I sold hundreds of homes at 5.0%+ interest rates here. Five percent interest rates are still a normal borrowing level just not a bargain. What is about to happen is that Seller’s will adjust their prices accordingly in 2023 and 2024 to the buyer’s ability to pay and we will all move on and continue transacting. The market will move on just without the huge jumps up in value.
The recent surge in mortgage rates has reduced the pool of eligible buyers by about 20% by some estimates. That has caused mortgage applications to decline, with a significant impact on refinance applications especially. Mortgage applications overall for refinances and buyers are down more than 70% compared to this time last year. Wow.
A look ahead. For Seller’s it is my job to do is ask: as the rising costs of homeownership force many Americans to adjust their budgets what will be next? My advise is … “if you are a potential seller - sell now” and take the “top dollar” money and remove risk. Why take the risk the prices dropping a few percent each year in 2023 and 2024?
Chicago Association of Realtors says: “Affordability challenges are limiting buying activity, and early signs suggest competition for homes may be cooling somewhat. Nationally, existing home sales are down 2.7% as of last measure, while pending sales dropped 1.2%, marking 5 straight months of under contract declines, according to the National Association of REALTORS®.” I add in and reassure everyone: there is no drastic drop coming. The vast majority of the market is healthy: Loans are solid. No junk paper out there. The days of cooked up over appraised deals are gone. Further, the fact remains that Inventory remains low with only 2 months supply at present. That is an amazing fact in itself. In 22 years and 750 deals I have never ever seen the inventory this low and it will keep the market healthy for a long while.
To keep this in a bigger perspective let’s also review the wealth created by peoples homes. Homeowners have a lot more equity than they did just a few years ago. People are “equity rich” so to speak. The median existing home at $373,500, a 15% increase from this time last year alone. Up more than 30% from just a few years earlier. This is also why I encourage people who think they will sell “soon” ( in the next few years) to do it now while the margin of equity is highest.
INVENTORY
The City of Chicago’s inventory is down 27.2%, from 8,503 homes in April 2021 to 6,194 homes in April 2022.
The month’s supply of inventory decreased 28.1%, from 3.2 in April 2021 to 2.3 in April 2022.