Home sales across the country have slowed in recent months as interest rates began to rise, but Chicago realtors say the local market is still active enough for buyers to move fast.
In 2020 and 2021, historically low interest rates for 30-year mortgages, combined with surging demand as Americans sought more space during the pandemic, resulted in rapid growth in home prices and activity. buying homes across the country.
But interest rates have been rising, and this week US mortgage rates rose more than a quarter point to 6.29%, the highest level the housing market has seen since August 2007, according to Freddie Mac. Rising rates are making monthly mortgage payments more expensive, and some potential homebuyers are pulling out of the market.
In August, the number of homes sold in the Chicago metro area decreased 21.6% from a year earlier, according to data from Illinois Realtors. The median home sales price in the metro area stood at $311,000 last month, up 3.7% from a year earlier.
Chicago realtors say since the start of the pandemic, area residents have been willing to spend more money when buying a home, making for a “robust” real estate market despite falling home sales and the increase in interest rates.
Mike Golden, co-founder and co-CEO of @properties, said he thinks the pandemic has made residents value their homes more.
“There was a trend in the past where there were more people renting and going to smaller spaces,” Golden said. “People now look at their homes differently and understand the space they need, (which) was amazing for our market.”
Golden explained that the real estate market has had an “amazing few years” by market volume.
“2020 was a great year, 2021 was an all-time high,” Golden said. “And 2022 will still be lower than 2021, (but) we’re still seeing a strong market (and) expect to have a good spring market for next year.”
The average home in Chicago is selling about 1% below list price and is pending, 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 home for sale that is expected to be among the most competitive homes on the market, can sell for about 2% above list price and be pending 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 are more influential now than they were 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 fast as they were in 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 she was more adventurous this time.
“We weren’t sure what to expect, but the condo sold a lot quicker than I could have imagined,” Tammes said.
His three-bedroom, two-bathroom condo was listed for sale on a Friday and he had five offers due 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 for longer than necessary,” said Thames.
Carmen Rodriguez, a broker for Coldwell Banker and one of two real estate agents who helped Tammes and Richie sell their home, finds summer one of the toughest cycles in the city to buy or sell a home.
Rodríguez explained that the breaks occur during the summer, usually after the 4th of July, because that is when people usually go on vacation.
“Interestingly, in Chicago there is a lot of rush during the winter,” Rodríguez said. “People make it a goal that they want to be in their new place by Christmas or New Year’s, but then it slows down again and those are the typical ebbs and flows of the Chicago real estate market.”
Tammes advises anyone looking to buy or sell in Chicago to “buckle up,” regardless of the current state of the real estate market.
“The process can be frustrating, emotional and exhausting, but it continues to rise above the challenges,” Tames said. “We ended up buying in a neighborhood we hadn’t considered, and we love our new home and neighbors.”