It’s spring time in 2018, and we’re about 6-7 years removed from the bottom of the housing crash. The stock market is doing very well as the Dow Jones hit record highs earlier this year. For the 5th month in a row, unemployment rate numbers in February came in at 4.1%. And the housing market seems to be booming across the country in most areas, as prices have exceeded their previous highs from the pre-recession days.
In recent months, we’ve also seen interest rates jump up almost a full 1%. When the economy does well, interest rates tend to rise. While they’re still at historically low levels, gone are the days of getting a 30 years fixed in the 3.5% range.
But what does this mean for Chicago home sellers and buyers, and what is going on in Chicago’s housing market, more specifically?
Overall, most Chicago areas have seen significant price gains over the last 5-6 years. According to MRED LLC data, in March 2012 the average sale price for Chicagoland area homes was at $164,000. In February 2018, the average sale price jumped up to $236,000.
Some areas have taken more time to come back than others. For instance, the “hot” areas in the city (West Loop, West Town, Ukranian Village) didn’t get hit as hard, or for as long, as some of the far northwest or west suburban homes. And they were able to rally quicker, as location is still everything in real estate. According to MRED LLC, in August 2012, the average sale price in Chicago’s West Town was $335,000. In February 2018, the average sale price jumped to $472,125!
As for the far northwest suburbs, IE – homes in Algonquin, Lake in the Hills, Huntley and Crystal Lake, it took a little longer for home values to come back, and it’s still not all the way “back”. According to MRED LLC data, in July 2013, the average sale price for an Algonquin home was $170,000. In February 2018, the average sale price rose to $235,000. (If you would like to see where home values are in your specific area, send me an email with your address and contact information and I can put together some information and send it your way! firstname.lastname@example.org)
While the economy is strong again, and home prices are steadily on the rise, the biggest issue that home buyers in Chicago face today is the lack of inventory available. In a healthy housing market, there is usually around 6 months of inventory. Anything below 6 months supply is a seller’s market, and above 6 months supply is considered a buyer’s market… In 2018, according to MRED LLC data, the Chicagoland area had as much as 18 months inventory available for sale! In January 2013, that number dropped down to 8 months supply. And in April 2015, we were at 5.2 months supply.
Fast forward to today, in February 2018, we’re looking at roughly 3.6 months supply of inventory available! That’s a staggeringly low number, and has made it a very competitive in most sub-markets. We are in a seller’s market indeed, and if you’re a buyer today you should be prepared to act quickly on a property or you may lose out. I’ve had many clients within the past few years get into bidding wars and bid above the list price, but still not get their bid accepted. Most updated homes are selling in the first few days or weeks on the market, with multiple offers. This is very common.
In talking with many prospective home sellers and home buyers, many are fearful to put their home on the market today as they feel it will sell too fast, and they’ll be left without a home because inventory is so low! This has come a long ways from 6 years ago, when most people couldn’t considering buying a place before selling their home. It’s done a complete switch!
Overall, the Chicago housing market is in a much better place than it was 6 years ago. Jobs are strong, unemployment is down, and home values are on the rise.
What does this mean if you’re selling selling a Chicago area home? It’s a great time to put your home on the market and expect a quick sale. At the same time, you still have to price it right and make sure your presentation is A+. Questions on how to get started, or feedback? Contact me, Pat Kalamatas at any time via phone at (312) 880-7862 or email email@example.com