Week Of June 1 Update
As we head into June the latest data from Chicago Association of Realtor’s shows (1) buyer’s are increasing their down payments to cope with rising rates, (2) inventory is still very low (3) market time has dropped as things are still selling faster, (4) prices have stopped their climb in condos for now.
City Condos Down 0.6%
In Chicago’s MLS the Median Sales Price decreased 0.6% to $377,750 on condos even thought Market Time decreased 20.0%. In 22 years at this I can’t recall this opposite pattern of an actual price dip along with a Inventory and a market time drop like this. Usually an inventory drop means prices shoot up… not down especially when there is also a market time drop. These are unique times.
If you are at a barbecue and you hear “the market is crazy and everyone’s houses are selling quickly” that is true, but it’s likely not selling over much more than last years pricing anymore.. and by late summer there’s a good chance it will be for slightly less. I think in a year we will be saying that in Early Spring of 22 we hit the market high. It’s natural for a re-balance to occur and now, I think, that’s starting.
Single Family In City Homes Up Slightly 1.4%
Single family home prices in the City are still increasing slightly in value off last year but at a slowed pace of 1.4%. .
I think the peak prices will have arrived by late summer with just a month or two of final small upticks then we will go flat or tail down a little. The great news for Single Family Home owners is that the Single family Home inventory decreased yet again year on year another 4.5% to only 1,924 homes for the month of April. Buyer’s may not be able to pay more for much longer but homes will be in high demand for awhile. I think single family homes or larger sized condos have more resistance from correction because people want a 3rd bedroom and more space to work from home now. Rarity has value. A house, a yard, a garage, 4 beds and 3 baths holds value more than a smaller apartment you don’t have room to work from home in.
Buyers Ability to Pay.
I find it helpful to visualize the dynamic of the limits of Buyer’s ability to pay more. It is important to show this to Seller’s when pricing a condo so they go into a decision about selling with very realistic expectations and straight talk. Can your condo go up in value another 10% in the next year when the affordability index bottomed out like it shows in this chart? Likely no. The limits on the market area good to know to be grounded in reality. If the affordability index gets near 100 it is an alarm that buyer’s can’t pay more. The affordability quotient drops below healthy. It is a sign that due to interest rates higher, inflation higher and home prices being up that the market has to correct somewhat. Potential seller’s who thought their value would keep going up up up now have solid data points to know this is the time to sell if that was all they were waiting for.
What is your exact market doing?
These inventory and the price charts show the whole Chicago area Single family and condo market. I can pull these charts for your particular market in the mile surrounding your property if you are curious and do my best to predict what your house or condo’s future will be in 2022-23. The market is shifting more than this in several areas I have sold recently, but yet it is still popping up in some I am watching. It really is good to dig in and analyze your situation. It is worth considering this now if you have any desire to sell in the next 2 years.
BUYERS PUTTING MORE DOWN - RISING DOWN PAYMENTS
Chicago Association of Realtors stats show that with home prices and mortgage rates continuing to rise, down payments are increasing nationwide, as buyers aim to lower their monthly mortgage costs and make their offer more attractive to sellers. According to realtor.com®, buyers averaged a $28,000 down payment in the first quarter of 2022, averaging 13.1% of the purchase price, compared to the first quarter of 2020, when down payments averaged only $14,000, with buyers paying about 11% of the purchase price.