Tatyana Turner Chicago Tribune
CHICAGO — Home sales across the country have slowed in recent months as interest rates began to rise, but Chicago real estate agents say the local market is still hot enough that buyers need to act quickly.
In 2020 and 2021, record-low interest rates on 30-year mortgages combined with rising demand as Americans searched for more space during the pandemic led to a rapid rise in house prices and home purchases nationwide.
But rates have risen, and this week US mortgage rates are up more than a quarter point to 6.29%, the highest the housing market has seen since August 2007, according to Freddie Mac. Rising interest rates are making monthly mortgage payments more expensive, and some potential home buyers are exiting the market.
According to data from Illinois Realtors, the number of Chicago-area home sales in August fell 21.6% from a year earlier. The median home selling price in the metro area last month was $311,000, up 3.7% year-on-year.
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Chicago real estate agents say that since the pandemic began, residents in the area have been willing to invest more money to buy a home, making for a “solid” housing market despite the decline in home sales and the rise in interest rates.
Mike Golden, co-founder and co-CEO of @properties, said he believes the pandemic has caused residents to appreciate their homes more.
“In the past, there was a trend of more people renting smaller spaces and going into smaller spaces,” Golden said. “People are looking at their homes differently now and understanding the space they need, which has been incredible for our market.”
Golden explained that the housing market has had an “incredible few years” in terms of market volume.
“2020 was a great year, 2021 was an all-time record,” Golden said. “And 2022 will still be lower than 2021, (but) we still see a solid market (and) we expect a good spring market next year.”
According to Redfin, a national real estate data brokerage, the average Chicago home sells for about 1% below list price and goes into limbo, meaning the seller accepted an offer in about 56 days. A “hot home,” which is a home for sale that is expected to be among the most competitive homes on the market, can sell for about 2% over list price, according to the company, and is pending in about 37 days.
Darrell Scott, who is president of The Scott Group, which is affiliated with Compass Chicago Real Estate, said buyers are still looking for homes even though interest rates are slightly higher now.
“Buyers have more influence now than they did 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 quickly as, say, April, but it’s still a great 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 this time it was more adventurous.
“We weren’t sure what to expect, but the condo sold a lot quicker than I expected,” Tammes said.
Their three-bedroom, two-bathroom condo went on the market on a Friday and had five listings by the following Monday, according to Tammes. They sold above their asking price.
Tammes and Richie had bought a new home in Edgebrook in early June.
It’s “a relief not to have two mortgages any longer than necessary,” Thames said.
Carmen Rodriguez, a real estate agent at Coldwell Banker and one of the two real estate agents who helped Tammes and Richie sell their home, considers summer to be one of the tougher cycles in town to buy or sell a home.
Rodriguez explained that there are breaks in the summer, typically after July 4th, because that’s when people usually go on vacation.
“Interestingly, there’s a big rush in Chicago in the winter,” Rodriguez said. “People aim to be in their new place by Christmas or New Year’s, but then it slows down again, and those are typical ups and downs of a Chicago housing market.”
Tammes warns anyone looking to either buy or sell in Chicago to “buckle up,” regardless of the current state of the housing market.
“The process may be frustrating, emotional and tiring, but keep working your way through the challenges,” Tames said. “We ended up buying in a neighborhood we hadn’t considered and we love our new home and our neighbors.”