6 Trends You Must Know About The Chicago Real Estate Market
Mortgage Rates Fell- Lowest in More Than a Year
Mortgage rates dropped to a 15-month low this week, prompting a flurry of refinancing activity, although buying a home will likely remain tough for a while. Rates are still significantly higher than they were a few years ago, leaving many homeowners with low-cost loans reluctant to move.
The average interest rate on a 30-year, fixed-rate mortgage fell to 6.47% this week, according to Freddie Mac. That’s down from 6.73% a week ago and 6.96% this time last year. The drop in mortgage rates follows a sharp reduction in yields in government bonds after last week’s weaker-than-expected jobs report. Mortgage rates tend to track the yields set by investors in the country’s Treasury market. Many people with more expensive home loans hustled to take advantage of the falling rates. Refinancing applications jumped 16% last week, according to the Mortgage Bankers Association.
So far, there’s been little uptick in new mortgage applications from would-be homebuyers — though lower financing costs could eventually make buying a home more affordable.
“Despite the downward movement in rates, purchase activity only saw small gains,” says Joel Kan, deputy chief economist for the MBA. “Homebuyers might be biding their time to enter the market given the prospect of lower rates.”
No Matter Where You Look-Prices At All Time Highs
The median price of homes sold in June in the city was $379,925, the highest ever, according to data released July 23 by the Illinois Association of Realtors, a statewide professional group.
In the nine-county metro area, the median sale price was $375,000, also a record, according to Illinois Realtors.
Nationwide, the median sale price of existing homes was $426,900, according to data released separately by the National Association of Realtors, also on July 23. This too was the highest-ever monthly median price.
Price Growth Slowing Down
In the city, the median sale price in June was up 6.3% from the same time a year ago. That’s vigorous growth considering that in the three years prior to the pandemic, prices were generally growing by 4% or less.
But its the smallest monthly figure reported so far in 2024, and more than two percentage points below April’s 8.8% growth.
Same for the Metro area. Prices were up 7.1% in June from a year before, the least they’ve risen in any month this year. In each of the first five months of 2024, metro-area home prices were up 9% or more.
Nationwide, NAR reported home prices were up 4.1% across the U.S. in June from the same time a year ago.
Total Homes Sold Lowest in 13 Years
The number of homes sold in June was the lowest since 2011, in both the city and the larger metro area.
In Chicago, 2,235 homes sold in June. If you ignore June 2020 (Covid starts), no other June since 2011 has seen fewer homes sold in Chicago.
In the nine-county metro area, 8,661 homes sold in June, fewer than any other June, even 2020, since 2011.
Chicago One of Strongest Big City Markets in USA
The S&P CoreLogic Case-Shiller Indices measure the biggest U.S. cities’ real estate markets against each other.
In May — the index runs one month behind the data from Illinois Realtors, whose data above is for June — Chicago home values were up 7.5% from a year before. Among the 20 major U.S. cities the index tracks, Chicago’s growth was sixth highest, along with Cleveland, where prices were also up 7.5%.
Five big cities were stronger. Four of them are warm-weather cities: Las Vegas, Los Angeles, Miami and San Diego. The highest price growth was in New York City, where prices were up 9.4% in June.
Inventory Not Improving
Super-low inventory has been a key factor in rising prices, as buyers have to pay list price or more to win a home usually. Nationwide reports suggest inventory shortages are easing up, but not here.
In the week that ended July 28, there were about 19,370 homes on the market in the Chicago metro area, according to Redfin. That’s down 11% from a year ago and down nearly 35% from the same time in 2022, when the market started changing after huge interest rate increases.