Chicago Real Estate Market Current Conditions
If you’ve always felt like the last USA Today article you read on “US Housing Starts” was little hard to relate to, you’re not alone.
What the heck do US housing starts have to do with your condo in Lakeview? How is a news clip about Chicago area home sales supposed to help you figure out if 2019 is the right time to buy?
It’s easy to find trends and predictions on the real estate market – it’s one of a news outlet’s favorite topics. But you’ll have a harder time finding trends and predictions on your local real estate market.
That’s where this report comes in.
Here, you’ll find live, up-to-date info on the real estate market in Chicago’s city center neighborhoods. We’ve broken down the most relevant stats and what they mean to you as a home buyer or seller, along with a forecast for what’s to come in 2019 and 2020.
Now, you’re a smart Chicagoan, so you know market trends in West Loop differ from ones in Lakeview, which will differ from ones in Avondale. Good news: Center Coast hand-crafts hyper-local market reports for every nook and cranny of Chicago. To get localized stats, forecasts, and the best advice for buyers and sellers in your neighborhood, fill out the form below.
We’ll check in here every month in 2019 to let you know how it’s going for our home buyer clients.
- February, 2019: The market is getting more competitive for home buyers – but not too competitive. Certainly not as competitive as the past few years. Some properties still sell quickly with multiple offers, but overall, buyers have a little less pressure to accept a seller’s every demand. If now’s the time for you to make your move, make it. If you haven’t seen “the one” just yet, this summer might be even better.
- March, 2019: Home buyers got an early present from the Easter Bunny in the form of falling mortgage interest rates. Combined with a 15% increase in the number of homes for sale, along with rising market times, buyers haven’t had it this good in a while. That doesn’t mean great listings don’t sell quickly, and sometimes with multiple offers; but putting in an offer for a home isn’t the fire drill it was in recent years.
- April, 2019: Chicago home buyers have been taking advantage of lower rates, creeping market times and more inventory this spring. It’s getting ever-so-slightly more affordable to buy a home in Chicago, but keep in mind: while we believe the long-term picture for the Chicago housing market is strong, our prediction is that home prices will likely fall a few percentage points this year, and perhaps again next year. So if you buy this year, make sure you plan to own your home for at least 5 years.
- May, 2019: Buyer’s rejoice – the Chicago real estate market is finally balancing out. The best listings still sell in a few weeks, but buyers are typically able to negotiate a small discount. If you see the perfect place you’ve been waiting for, you don’t have to fake a bout of food poisoning to get out of work and see it right away. The flip side of this coin is that once you do buy your home, you shouldn’t expect the massive appreciation that, say, buyers from 2015 experienced. That said, interest rates have gone through the floor in recent weeks, so your buying power has increased. It really hasn’t been this good to be a buyer in quite a while.
- June, 2019: You’ve got choices. Home buyers had an extra 561 homes to choose from in June 2019 than they did in June of 2018. That’s an 11.5% increase, and a 20.3% increase over June of 2017. Meanwhile, contracts ticked down 1.9% year-over-year. The result: 4.9 months of housing supply to work with, which is about as perfectly balanced of a market as you can get. Consider the playing field leveled. We think late summer is one of the best times of year to buy a home – there are still plenty of homes to choose from, but far less competition than in the spring. Now would be a great time to start searching for a home to buy.
- July, 2019: The next few months are shaping up to be something of a golden opportunity. The market is slow, and sellers are getting the hint. We’re seeing more and more price drops as sellers get used to the idea that they’re not running the show anymore. Inventory is as high as it’s been since the recovery started in 2012. Meanwhile, mortgage rates are about as good as they ever have been. Still, some have predicted that your choices may soon start to dry up again. If you’re thinking about buying your first home in the next year or two, this could be your best window.
What is the Chicago real estate market like for sellers in 2019?
What do all these numbers mean for Chicago home sellers? We’ll break it down each month in 2019.
- February, 2019: After a very slow fall, the real estate market is still a bit softer for sellers than last year. Contracts were down compared to February last year, and overall, the market is tipping away from sellers. But the party’s not over just yet. Even though it’s rising, months supply is still low in most neighborhoods. If you’re thinking about selling a home in Chicago, our prediction is that the next 8 weeks might be your best chance in the next 5 years.
- March, 2019: It’s still a seller’s market, but likely not for long. Both market time and inventory were up significantly in March compared to the past two years. After reaching an all-time peak in November, City Center home prices have dropped for 4 straight months. That’s the first time that’s happened since the market bottomed out in 2012. We think this is still a leftover from an extremely slow Q4 2018 – many homes sat on the market for a while before finally going under contract in January, then selling in March. Our forecast is that the decline will slow once the April, May and June numbers are out. But if you were looking for a sign that Chicago home prices have finally peaked, this could be it.
- April, 2019: City Center home prices have posted their 5th straight month of declines. We could explain away the drops in January, February, and March by saying that most of those homes went under contract (or at least hit the market) during a dreadful Q4. At this point though, most of the homes closing should be predictive of the 2019 market. But home sellers take heart! As predicted, a mid-spring drop in interest rates led to a 4.6% increase in contracts this April – the first month where the number of contracts has increased year-over-year so far in 2019. So, keep your fingers crossed for a slight bump in home prices in May and June. The market for selling your home varies quite a bit depending where you live, so make sure to check out our Chicago city center neighborhood pages for market-by-market info.
- May, 2019: Don’t call it a comeback – City Center home prices reversed their 5 straight month’s of decline with a slight uptick in May. That leaves them exactly even with median prices for May of 2018 ($408,000). This is not surprise, as the number of contracts in April increased from 2018. A boost in contracts is usually a good sign that prices will increase. So, how many contracts did buyers and sellers write in May? About 2.8% fewer. But with inventory still relatively low (4.1%), we’re hopeful that prices will increase a bit this month. After that, we expect they’ll decline further through the rest of the year.
- June, 2019: You’ve got work to do. Even though median home prices did tick up again in June, home buyers are getting their swagger back. Nearly as many home buyers bought properties in June of 2019 as back in 2017, when sellers ruled the roost. So it’s not a demand issue…what’s going on? More homeowners are finally selling, which pushed June median market times up by 35% year-over-year and has led to more price drops. If you’re planning to sell during the second half of the year, you best come correct – stage your home like a magazine, and price it right. Oh, and it wouldn’t hurt to work with Chicago’s best Realtors, either.
- July, 2019: The July median home price was essentially flat compared to July of last year, as prices have risen gradually every month since April. Another welcome sign for home owners – July was just the second month this year in which more homes went under contract than in 2018. Mortgage interest rates dropped substantially the last week of March, and probably not coincidentally, contracts were up in April as well. Overall, the market is still 488 contracts short of 2018, but July’s contract number is a welcome sign. So far, the second half of 2019 is showing a bit more life than in 2018, when contracts fell by 10%.
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Chicago Median Home Prices
“How much does it cost to buy a home in Chicago?” This is one of the most common questions we get, right after “Can you find me Jennifer Aniston and Vince Vaughn’s condo from ‘The Breakup??’” (answer: yes). This graph will give you your first clue. Here’s a look at how city center median home prices in the past month compared to the same month last year. Keep in mind, median home prices in some neighborhoods (River North, Streeterville) are much higher than what you’ll see in this graph. Other neighborhoods (Uptown, Humboldt Park) tend to be a bit more affordable. The best way to see what homes cost in your favorite neighborhoods is to search homes for sale on our website.
How fast are homes selling in Chicago?
Also known as “median market time,” this graph tells us how long it takes most city center homes to go under contract after they hit the market.
When a real estate market is highly competitive (ie: there are more people who want to buy homes than there are homes for sale), homes sell quickly and market time is low – usually less than 30 days. In very hot markets, homes can sell in as little as a week.
Is Chicago a Buyer’s Market or a Seller’s Market?
We answer this common real estate market question by looking at “months supply.”
It’s often said that if you want to know where a real estate market has been, look at median prices. But if you want to know where a real estate market is going, look at months supply. It will help us get an idea of what the forecast for 2019 and on will look like.
The higher the months supply, the better the market will be for buyers. When you see a real estate market with a 6-month supply or more, expect to see higher market times, more “room to negotiate,” and stagnant or falling prices.
When you see a real estate market with a 3-month supply or less, expect to see homes selling very quickly for at or above asking price, while overall prices trend up. A market with 4-6 months of supply is considered balanced.
Months supply refers to how many months it would take to sell all the homes on the market at the current rate of sales, assuming no new homes are listed. This stat is similar to “absorption rate.”
So, if there are 150 homes for sale in a real estate market, and homes are selling at a rate of 30 per month, that market has a 5-month supply.
How many homes are selling?
This is often a leading indicator of the overall economy. When people buy or sell a home, they spend money, which has a ripple effect on many other parts of the economy – think movers, furniture stores, contractors, attorneys, *cough* Realtors *cough*, etc.
A high rate of home sales is one of the hallmarks of a good real estate market. It means there are enough homes for sale and enough people who want to buy them.
City Center Neighborhoods: This is a term we made up. Or maybe we heard it somewhere and liked it. In any case, it refers to Chicago’s downtown neighborhoods and near-downtown neighborhoods. Another definition could be: our clients’ most-frequently requested neighborhoods. Need a visual aid? Here you go.
Month’s Supply: the number of months it will take to sell the current inventory of homes on the market based on the rate of current home sales. So, if there are 120 homes for sale in a market, and that market is selling 30 homes per month, there is a 4-month supply. A low month’s supply (anything below 4 months) is considered a seller’s market. A high month’s supply (anything above 6 or 7) is a buyer’s market.
Under Contract: Once a buyer and a seller have agreed on a price and terms, the property they’re agreeing to buy and sell is considered “under contract.” The home won’t actually transfer to its new owners until it clears several more key hurdles (inspection, attorney review, mortgage approval). You can read more about the whole process here.
If you still have more questions…
…about the Chicago real estate market, the current trends in your neighborhood, any of the graphs above, our favorite dog park in the city…anything. Ask away!