The Chicago Home Shortages Hit Startling Low What Happens Next Year?
Chicago homes for sale, already low for years, sank to the lowest point in at least 17 years.
The Chicago Association of Realtors reported Monday that 5,352 city homes were listed for sale as of Dec. 2. That’s down nearly 25% from the same time a year ago and the lowest figure since they began tracking it in 2007. These figures are for Chicago only- we will update you on suburban figures once they are published. It will be the same though.
Most home sales are in the spring or early summer, with inventory dropping between Thanksgiving and the New Year for holidays and travel. The normal sales cycle.
So how is current drop different from the normal year-end slowdown? Inventory usually rises the first 3 quarters of the year then drops, but in 2023 the expected rise did not happen. Buyers had slim pickings all year only to see selection drop to almost nothing this 4th quarter.
Why is Inventory at Record Lows?
The main reason is that owners don’t want to sell and give up their great interest rates. 90% of homeowners have 30-year fixed rate mortgage rates at 5% or less. Many buyers in the early 2020s have rates closer to 3%. While falling from near 8% highs to around 7% now, that is still a huge difference in a mortgage payment especially since home sale prices remain high in Chicago (versus other cities where prices are dropping).
There is also uncertainty about the future. Will the Fed’s raising rates create a soft landing for the economy or trigger a recession in 2024? No one knows for sure yet as the experts seem split 50/50 on the subject.
Considering Selling? Listing Right Now Good Idea
All evidence suggests that buyer demand remains strong. Rates fell a bit to 7% in recent weeks and buyers are ready to gobble up properly priced homes. In the past, sellers wait for after the Super Bowl to list, but listing now might provide a strong advantage. This all depends on your market and would warrant a consultation.
My 2024 Predictions
We will have more to say about this in the coming weeks as all the big players (including the National Association of Realtors) make their predictions. The answer probably depends on whether have a recession. A recession would probably cool mortgage interest rates which would result in more home inventory, reduced home prices, and a slower more balanced market then years past.
We will be sending you a summary of predictions of all major players plus our own closer to the New Year as the final numbers come in.