Market Conditions: 2nd Best May Sales in the Last 14 Years as Market Remains Tight
The Illinois Association of Realtors is out with the May market report. Chicago remains a robust market even as mortgage rates rise.
It was the second best May for sales in the last 14 years.
From the IAR:
In Chicago, home sales (single-family and condominiums) in May 2022 totaled 3,299 homes sold, down 4.5 percent from May 2021 sales of 3,453 homes.
The median price of a home in the city of Chicago in May 2022 was $352,500, a 0.7 percent increase from May 2021, when it was $350,000.
May Sales:
- May 2008: 2119 sales
- May 2009: 1557 sales
- May 2010: 2057 sales
- May 2011: 1705 sales
- May 2012: 2037 sales
- May 2013: 2834 sales
- May 2014: 2453 sales
- May 2015: 2750 sales
- May 2016: 2980 sales
- May 2017: 3046 sales
- May 2018: 3047 sales
- May 2019: 2952 sales
- May 2020: 1701 sales
- May 2021: 3453 sales
- May 2022: 3299 sales
Median Price Data:
- May 2008: $319,500
- May 2009: $225,000
- May 2010: $230,000
- May 2011: $190,000
- May 2012: $203,000
- May 2013: $234,000
- May 2014: $269,250
- May 2015: $281,000
- May 2016: $290,750
- May 2017: $305,600
- May 2018: $305,000
- May 2019: $315,000
- May 2020: $313,000
- May 2021: $350,000
- May 2022: $352,500
“Despite rising mortgage rates and a significant drop in inventory, buyer activity remains high, as shown by the continued decline in days on market and slight uptick in median sales prices,” said Antje Gehrken, president of the Chicago Association of REALTORS® and president and designated managing broker of A.R.E. Partners. “The market continues to slowly return to pre-pandemic behavior and normalize after a frantic pace.”
Inventory continued to tighten statewide, declining 24.4% to 21,718 from 28,717 properties. Days on the market fell to 24 days from 33 last year.
“Prices increased again while the number of sales remains low throughout Illinois,” said Dr. Daniel McMillen, head of the Stuart Handler Department of Real Estate (SHDRE) at the University of Illinois at Chicago College of Business Administration. “The SHDRE forecast now indicates an increase in the number of sales over the next three months. Foreclosures are down significantly since the same time last year. Inflation continues to be a concern for consumers, particularly among higher-income household, and interest rates are expected to rise this summer.”
Inventory also fell sharply in Chicago down 24.1% to 6497 properties from 8558 last year. Days on the market until sale fell to 29 days from 34, or a decline of 14.7%.
Single family home sales were up 2.1% to 1056 sales while condos fell 7.3% to 2243 sales from last year.
The 30-year average fixed mortgage rate jumped to 5.23% from 4.98% in April. That’s up dramatically from last May when it was just 2.96%.
We’ve all been waiting for Chicago’s housing market to slow this spring.
But we now have the data from March through May and it remains the strongest in the last 15 years.
Will summer finally bring the slowdown as mortgage rates rise into the 6s?
Prices rise, available Illinois homes sell quickly in May as demand stays high [Illinois Association of Realtors, Press Release, by Bill Kozar, June 21, 2022]
Don’t forget that with 30, 45, 60 day closing periods, May sales represent buyers who had offers accepted in March and April of this year. I think more places are sitting on the market and having to reduce their asking price.
“ Don’t forget that with 30, 45, 60 day closing periods, May sales represent buyers who had offers accepted in March and April of this year. I think more places are sitting on the market and having to reduce their asking price.”
Shocked that Sabrina didn’t mention this tidbit. But then again a Shill is gonna shill
Citadel leaving Chicago? First B, then CAT, ouch
“I think more places are sitting on the market and having to reduce their asking price.”
What neighborhood?
I’m not really seeing that on the north side. Downtown has some growing inventory. Not seeing too many price cuts yet. But it’s still early. We know Chicago sellers will remain stubborn with their prices. And given the low inventory, why wouldn’t they?
“Don’t forget that with 30, 45, 60 day closing periods, May sales represent buyers who had offers accepted in March and April of this year.”
Yep. Many buyers had rate locks at the lower rates. We won’t see the 6% hit until July.
But rates have been rising all of spring now. And it still doesn’t seem to be hitting sales very much. But we only have a week left in June so it’s possible that we will finally see a slowdown this month.
“Citadel leaving Chicago? First B, then CAT, ouch”
Caterpillar is not in Chicago but it’s a loss for Illinois, for sure.
As I’ve said in the past, any time Illinois loses a corporate HQ it’s a blow. It’s a loss of jobs and tax revenue. But you conveniently leave out that Kellogg just announced it was moving its snack business HQ to Chicago from Battle Creek. It already employs 300 people in River North and the company hasn’t said how many additional jobs may come here. It’s usually just the upper management, the lawyers, head of HR and head of finance.
Boeing has said most of its employees will actually still stay in Chicago even when HQ moves.
And Citadel is moving about 300 people to Florida while about 1,000 will remain in Chicago. Again, it’s a blow for sure but Chicago will become a satellite office for Citadel like their NY office is.
No one should be surprised about Citadel’s move. Griffin has been talking about it for years. He also left Chicago at the start of the pandemic and never moved back. He’s from Florida and has already been living there for 2 years. As have other employees as they opened up an office in a hotel at the start of the pandemic.
Bigger hikes are needed to actually put a chill on housing. Sure, the rate of appreciation is dropping but the pool of buyers still exceeds inventory.
“But rates have been rising all of spring now. And it still doesn’t seem to be hitting sales very much. But we only have a week left in June so it’s possible that we will finally see a slowdown this month.”
So buyers are irrational?
In a rising rate environment, short term, shouldnt this accelerate purchases?
“What neighborhood?”
I can’t speak to price cuts but inventory is definitely increasing in Bucktown over the past month or two. At the beginning of spring there was ~20 homes for sale and ~50 under contract <$700. Today there is 45 sale and 28 under contract.
Next door a unit has been on the market for 45 days now with one price cut. The units in that building were previously going under contract within 2 weeks last year through early spring.
““I think more places are sitting on the market and having to reduce their asking price.”
What neighborhood?
I’m not really seeing that on the north side. ”
Using Redfin, about 14% of Chicago listing have a price reduction in the past 30 days–maybe they’re all $1 off, I dunno.
Looking at just the “North Side” (north of about Division, east of the River), it’s about 12%. Again, all could be $1 off.
Both sets include contingent listings, so some are dropping price and then getting contracts.
“Looking at just the “North Side” (north of about Division, east of the River), it’s about 12%. Again, all could be $1 off.”
Thanks for the data anon(tfo). 12% doesn’t seem like a big deal. Some sellers are likely still pricing as if its January 2022 instead of 6% rate June 2022 market.
“I can’t speak to price cuts but inventory is definitely increasing in Bucktown over the past month or two. At the beginning of spring there was ~20 homes for sale and ~50 under contract <$700. Today there is 45 sale and 28 under contract." Wow. That inventory is so low. Incredible. It's similarly low in Lincoln Park and Lakeview. I bet we'll see that 50% of properties are selling within a week still.
“Thanks for the data anon(tfo). 12% doesn’t seem like a big deal. Some sellers are likely still pricing as if its January 2022 instead of 6% rate June 2022 market.”
why? These buyers have locked in rates <6%, no?
Or are you moving the goalposts again?
“So buyers are irrational?”
They are doing what I said they’d do. They’re trading down to a different property with the same monthly payment. Hooray.
We’re so lucky in Chicago. You CAN do this. Instead of buying the $750,000 home you buy the $650,000 home and there are actually properties to choose from. Other states/cities, you wouldn’t be that lucky. Not enough properties in the lower price points.
But some will also move to the sidelines and “wait” to see if mortgage rates fall again, I’m sure. After all, over the last 10 years, the rates have always fallen within a year or 18 months.
“Bigger hikes are needed to actually put a chill on housing. Sure, the rate of appreciation is dropping but the pool of buyers still exceeds inventory.”
5% rates cooled Chicago considerably in 2018 and 2019. We’re higher now in June 2022. But job market is stronger and wages have risen.
“why? These buyers have locked in rates <6%, no?"
There are people buying all the time JohnnyU. Some may have decided to buy 3 weeks ago and got locked then. They're not locked at 3% or even 4%. This market is different than January 2022. But sellers can sometimes be the last to get it and are slow to adjust.
Inventory is still tight but sellers need to price competitively with those higher rates.
Prices are always sticky on the way down. Sellers will be angry they can’t get the price their neighbor got 3 months or 6 months ago. They will be reluctant to lower.
I cannot believe this isn’t under contract yet. They lowered $10k. Their neighbors just closed for $635k. And that’s the one in the back, which isn’t normally as desirable.
https://www.redfin.com/IL/Chicago/3543-N-Bosworth-Ave-60657/unit-A/home/13384074
“I cannot believe this isn’t under contract yet.”
Neighbor was u/c on April 22. Assume Buyer got a rate in late March, a 5/1 ARM is about 1.5 point higher now; FHA 1.25 higher.
They listed about 3 weeks too late.
I do think that the D unit has the better kitchen layout and the nicer baths, but that’s so subjective. The largest objective difference is D has a larger and nicer roof deck.
Lowering expectations of what you can afford works, see San Francisco suburbs over the past 20 years. That models proven.
More likely scenario people will pile into 5/1 and 7/1 arms with the expectations of a refinance in the future.
“ 5% rates cooled Chicago considerably in 2018 and 2019. We’re higher now in June 2022. But job market is stronger and wages have risen.”
How’s inflation doing relative to those time periods?
Let me actually bring personal experience into the equation rather than stale data and speculation. We sold our home in Bucktown at the end of April 2022. We had 16 showings the first day on the market, an over-ask offer accepted that evening, and a short close. I legit don’t think we would have the same experience today.
We are thrilled to be out of the state and looking forward to building a modern farmhouse on the 15 acres of land that we now own.
“ They are doing what I said they’d do. They’re trading down to a different property with the same monthly payment. Hooray.”
Yet median sales price is (nominally) higher
Does not compute. It’s almost like you’re making it up
“ But some will also move to the sidelines and “wait” to see if mortgage rates fall again, I’m sure. After all, over the last 10 years, the rates have always fallen within a year or 18 months.”
Let me know the last time in 10 years we’ve had +8% inflation.
“I cannot believe this isn’t under contract yet. They lowered $10k.”
Take a step back and think this through using a brain.
1. It is ugly AF from the street. Look at the first picture. It looks like some sort of an abandoned post office with a shared front entry with a random neighbor. Imagine how impressed your friends and family will be as they pull up to your new home (not really, more a duplex type situation). The utility poles adjacent are stunning. The landscaping is lazy and the window sills are mildew-ridden.
2. What a cozy living room on the first floor. Suggestion – the rug pad should be smaller than the rug. I love the couch against the front of the house – perfect for a Chicago-style drive-by shooting. The fireplace is everything (that you don’t want).
3. A dining room to die for (literally, that painful).
4. That kitchen looks fresh outta Menards. Have you ever heard of a counter-depth refrigerator? It allows you to open drawers and not have an appliance jutting into your kitchen space.
5. That looks like a geriatric bath fitter tub.
6. Imagine having guests (max 2) out on the deck. Lots of “excuse me” “pardon me” “beep beep”s.
7. Everybody loves sharing the master bathroom with another “kid’s bedroom”. But don’t worry, the other kid can live in the basement with his or her own bathroom.
8. It looks like someone forgot to put a bathroom on the main floor. You, and your guests can run upstairs or head to the basement to go to the bathroom – not to worry!
9. Did I mention that you have 500 square feet on each floor? Pure luxury!
10. How fun to pay HOA fees to live here. With a shared wall. Love that.
11. Do a street view please. The lovely brick facade (I kid) with gorgeous siding to not match.
So, maybe you can suspend your disbelief if you just put some thought into this place…
“ Take a step back and think this through using a brain.”
Yeah, that’s not gonna work
To Jon’s list
Front porch is hinky as all get out
Kitchen/Dr design is horrible. Either add an island or shift the DR into the wasted kitchen space
This place is going to get monkey stomped. Gonna be lucky to sell for what they paid.
“Take a step back and think this through using a brain.”
Excuse me? The unit BEHIND this one which isn’t the preferred location in this kind of development, just CLOSED at $635,000.
I don’t care about your 11 points. The other unit sold $10k OVER list. It has the same layout.
Yes, I’m surprised it isn’t under contract and they’ve had to lower the price.
“Let me know the last time in 10 years we’ve had +8% inflation.”
I didn’t say the sellers who were moving to the sidelines to “wait” for rates to come down would be correct. But they have been taught over the last decade that if they just “wait” that rates will fall again.
“Let me actually bring personal experience into the equation rather than stale data and speculation. We sold our home in Bucktown at the end of April 2022. We had 16 showings the first day on the market, an over-ask offer accepted that evening, and a short close. I legit don’t think we would have the same experience today.
We are thrilled to be out of the state and looking forward to building a modern farmhouse on the 15 acres of land that we now own.”
You haven’t lived in the state for 2 months and you’re telling US that you have “personal experience” with market conditions in Chicago?
Tsk. Tsk. Come now.
As of June 26, there are only 120 properties, of ALL price points, available to buy in Bucktown, as designated by Redfin’s boundaries.
One hundred twenty.
And you think you wouldn’t have the “same” experience today?
Maybe not. Maybe you would have had only 8 showings instead of 16. Maybe someone would pay you “ask” instead of “over ask.”
By the way, I’ve been told for years that the Chicago market isn’t hot. That there weren’t bidding wars. That no one got “over ask.”
Go figure.
“More likely scenario people will pile into 5/1 and 7/1 arms with the expectations of a refinance in the future.”
Or, more likely scenario, buyers will be terrified of rising rates and want to lock in whatever low rate they can, for as long as they can.
KB Home just said last week that 100% of those that financed in the last quarter were in fixed rate loans.
The market is so hot I’m going to take a week off. There is simply no inventory. And anything that comes on the market goes under contract within days.
“The market is so hot I’m going to take a week off. There is simply no inventory. And anything that comes on the market goes under contract within days.”
Aw cmon. There is plenty out there. Here is one: https://lucidrealty.com/properties/listing/mred/11446107/Chicago/1756-W-Erie-Street It’s been on the market for 36 days. Went under contract for a few days and came back on the market just the other day. The almost identical home closed next door, but on the corner, in May for 1.3 MM.
“You haven’t lived in the state for 2 months and you’re telling US that you have “personal experience” with market conditions in Chicago?”
I mean, it’s a bit of an extreme real estate and lifestyle change to go from Bucktown to rural living (seems a bit predisposed to take a negative view of urban living), but are you saying that someone who stopped owning and living in Chicago 8 weeks ago is cluelesss about the market? I’ve got opened containers of salsa and almond milk in the fridge that are 8 weeks old. If I stop checking on my zip code on Redfin for two months, and hide the handful of neighborhood brokers I know on Facebook, wouldn’t I effectively be in the same boat as someone who hasn’t lived in my market for two months?
“You haven’t lived in the state for 2 months and you’re telling US that you have “personal experience” with market conditions in Chicago?”
By US, do you mean the market bystanders who haven’t prepared for a sale, sold a property, realistically looked for a property, or bought a property in months, maybe years? So, yes, that is what I am telling YOU. Less than eight weeks removed isn’t that stale actually, especially when you consider that I have looked at the market to make an assessment of whether we sold at the right time (we did).
“And you think you wouldn’t have the “same” experience today?
Maybe you would have had only 8 showings instead of 16. Maybe someone would pay you “ask” instead of “over ask.”
If you think that is the “same” experience, you should consider getting a math tutor.
“ Aw cmon. There is plenty out there. Here is one: https://lucidrealty.com/properties/listing/mred/11446107/Chicago/1756-W-Erie-Street It’s been on the market for 36 days. Went under contract for a few days and came back on the market just the other day. The almost identical home closed next door, but on the corner, in May for 1.3 MM”
The way the ad is worded, the upgrades were done prior to their purchase. (Can’t see any pics of the 19 sale)
The initial ask was $1.325MM. Expecting to net $400k after 3 years – LMFAO
Sucks for them they didn’t sell in May, they can keep walking the price down…
“Aw cmon. There is plenty out there. Here is one: https://lucidrealty.com/properties/listing/mred/11446107/Chicago/1756-W-Erie-Street It’s been on the market for 36 days. Went under contract for a few days and came back on the market just the other day. The almost identical home closed next door, but on the corner, in May for 1.3 MM.”
————————————–
I’m sold on it, Gary! The high-end battery for the new sump pump does it for me! It’s like having a Tesla in the basement!
“I didn’t say the sellers who were moving to the sidelines to “wait” for rates to come down would be correct. But they have been taught over the last decade that if they just “wait” that rates will fall again.”
Here’s your original statement:
“After all, over the last 10 years, the rates have always fallen within a year or 18 months.”
Anyone comparing todays economic conditions with anything over the last 10 years is either an idiot or is acting out of malice
Honestly, I dont think you know the difference between the truth and a lie anymore.
“By the way, I’ve been told for years that the Chicago market isn’t hot. That there weren’t bidding wars. That no one got “over ask.”
It wasnt HAWT ™ compared to the rest of the US.
How many properties went over ask?
“It wasnt HAWT ™ compared to the rest of the US.”
All real estate is LOCAL. Doesn’t matter what is happening in Alaska or Vermont. Heck, in Chicago, it’s particular down to the block and/or high rise building.
So, yeah, it WAS hot. And remains so. In fact, I would argue that Chicago is one of the strongest big city housing markets in June 2022.
But we never had a bubble here and the economy remains strong (for now). As long as the economy is strong, our housing market will be too. And inventory remains near record lows.
nice house gary, I dig it
“All real estate is LOCAL. Doesn’t matter what is happening in Alaska or Vermont. Heck, in Chicago, it’s particular down to the block and/or high rise building.”
At best you could call it Chicago HAWT ™
In truly HAWT ™ Markets, its not that granular
“So, yeah, it WAS hot. And remains so. In fact, I would argue that Chicago is one of the strongest big city housing markets in June 2022.”
One month? Based on what criteria, your feelings?
“But we never had a bubble here and the economy remains strong (for now). As long as the economy is strong, our housing market will be too. And inventory remains near record lows.”
How is that any different than Nashville, Austin, etc? (Except they’ve seen Huuuuge increases)
From Redfin:
“In May 2022, Nashville home prices were up 22.1% compared to last year, selling for a median price of $470K. On average, homes in Nashville sell after 17 days on the market compared to 29 days last year. There were 1,256 homes sold in May this year, down from 1,410 last year.”
HAWT ™
“In May 2022, Chicago home prices were up 1.0% compared to last year, selling for a median price of $355K. On average, homes in Chicago sell after 55 days on the market compared to 17 days last year. There were 3,714 homes sold in May this year, down from 3,716 last year.”
Not HAWT ™
Now stop pissing in everyones ear and telling us its raining
Clownshoes…
“I’m sold on it, Gary! The high-end battery for the new sump pump does it for me! It’s like having a Tesla in the basement!”
Thats a good price for Bucktown
“By US, do you mean the market bystanders who haven’t prepared for a sale, sold a property, realistically looked for a property, or bought a property in months, maybe years?”
You have NO clue about Chicago real estate on June 27 Jon. Absolutely none. And I’m glad you sold two months ago and can clue us in on what was going on back in early spring before rates rose to 6%. It’s good to know.
But we just had the quickest rise in mortgage rates ever. So, again, I say, you have NO clue what the Chicago market is like right now because you sold 2 months ago and moved to another state.
It’s laughable.
Also, you come on this blog and tell us you “know” what the results would be in Chicago today, at the end of June, when you don’t live here, aren’t selling here and have no idea what is going on with real estate here.
So if you’re going to call out all of “us” posters on this blog who haven’t bought or sold a home in years for not knowing anything, surely, Jon, you have to acknowledge that you don’t know what is going on in Chicago either as you left 60 days ago.
Rental market also remains extremely tight in Chicago. As reported in Crain’s, the two most expensive rental towers in the city are:
Shorter, cheaper one: 90% leased in less than a year
Taller, expensive one with condos at the top: 40% leased in just a few months.
Downtown Class A occupancy of 94%.
There are bidding wars for apartments in Chicago now. Gary, have you heard of this? I have heard of multiple bids on condo rentals downtown, especially anything priced under $2000 a month.
From the WSJ:
Chicago real-estate agent Jodi Dougherty of Downtown Apartment Co. has told her clients to write in their best offers on any rental application they submit. Many applicants are losing out when they assume the asking rent is enough, she said.
Earlier this month, a client succeeded by pre-emptively offering $1,000 over the asking price for a three-bedroom apartment near downtown Chicago that was listed for $4,000. “We did not win it by a landslide, by any means,” Ms. Dougherty said.
https://www.wsj.com/articles/bidding-wars-overheated-the-home-buyer-market-now-theyre-coming-for-renters-11656322200?mod=hp_trending_now_article_pos2
“One month? Based on what criteria, your feelings?”
Nope. Data.
Media reporting that luxury home sales have ground to a halt in NYC and the Hamptons, but it’s just not happening in Chicago. Record sales have continued to start the summer.
Additionally, Lennar stated last week that Chicago’s market was stable and they weren’t doing much price cutting here.
We didn’t have a bubble. Job market is still strong. People are working and rents continue to rise. It makes sense to buy.
“In May 2022, Chicago home prices were up 1.0% compared to last year, selling for a median price of $355K. On average, homes in Chicago sell after 55 days on the market compared to 17 days last year. There were 3,714 homes sold in May this year, down from 3,716 last year.”
You have to use IAR data, which we do on this blog to keep consistency. The only way you will know if Chicago is “hot” or “cold” is based on what it has done before. Comparing to Nashville, Birmingham, Austin or any other city is worthless and meaningless.
A housing market can only be compared to itself. Location matters and always has. Even in a WFH environment.
Here’s the actual Chicago data for market times from May 2022:
“Inventory also fell sharply in Chicago down 24.1% to 6497 properties from 8558 last year. Days on the market until sale fell to 29 days from 34, or a decline of 14.7%.”
We’re still seeing many listings selling in the first week so until that starts to change, there isn’t going to be much change in inventory or market times. And both indicate a very tight and very hot market.
Really, you need more job losses to see a slowdown in Chicago’s housing. But that’s not happening yet.
I’ve run this blog for 15 years and it’s so tight out there, and properties selling so quickly, that I can’t even find anything to crib about.
These kind of market conditions have only happened a few times in that time period.
If you have a property to sell, now is the time. Job market is still good. Don’t wait until unemployment rises to list.
“You have NO clue about Chicago real estate on June 27 Jon. Absolutely none. And I’m glad you sold two months ago and can clue us in on what was going on back in early spring before rates rose to 6%. It’s good to know.
But we just had the quickest rise in mortgage rates ever. So, again, I say, you have NO clue what the Chicago market is like right now because you sold 2 months ago and moved to another state.”
What special insight do you have on the Chicago market (other than shilling)? Gary & Russ – Sure but you? All your bloviating aside, are consistently wrong, talk smack about how hot the Chicago Market is yet have zero skin in the game
“It’s laughable.”
Yes you are
Embarassing
“A housing market can only be compared to itself. Location matters and always has. Even in a WFH environment.”
I really hope you dont offer investment advice
“but are you saying that someone who stopped owning and living in Chicago 8 weeks ago is cluelesss about the market?”
Yes. He is claiming on this blog that he “knows” that he would not have gotten 16 showings and an over ask bid on his house if he listed it at the end of June, or 2 months later.
He has no way of “knowing” this. And no “clue” about the Chicago housing market. Honestly, absolutely none.
Heck, even agents have no idea how to price properties after those rates rose from 4% to 6% in just 2 weeks. And they are “on the ground.”
So, no, I really don’t care what Jon “thinks” the Chicago market would be doing 2 months later. He has no idea.
We’re all assuming it has slowed. You would think so with the rate increases. But the data, so far, isn’t showing much slowing. Still record low inventory. For some properties, like single family homes in popular neighborhoods, there may be NOTHING on the market so when a property IS listed, it’s still selling for over ask in days.
We have seen it just with the properties I have posted on this site in the GreenZone in the last few weeks. I can go out, take a picture on Saturday of a new listing, and it’s under contract on Monday. But it depends on neighborhood, price, etc.
So, no, it’s not slowing that much yet. But maybe we’ll see it in July or August as those 6% rates take hold.
“Aw cmon. There is plenty out there.”
If I want to post the boring new construction boxes, then sure. But given the lack of comments on this blog whenever I post on those boring properties, no thanks.
Sorry, taking the week off as there’s nothing out there to blog about right now.
“Nope. Data.”
Link?
“Media reporting that luxury home sales have ground to a halt in NYC and the Hamptons, but it’s just not happening in Chicago. Record sales have continued to start the summer.”
What happened to its all local? What does NYC & the Hamptons have to do with Chicago?
“Additionally, Lennar stated last week that Chicago’s market was stable and they weren’t doing much price cutting here.”
Interesting they’d offer the following –
“For a limited time only, lock in an interest rate of 4.625% (4.252% APR)* or save up to $7,500 toward closing costs** if you close by July 29th. The 7/6 Adjustable rate remains fixed at 4.625% (4.252% APR) for the first SEVEN years of your loan. Starting in year EIGHT, the rate can adjust every six months based on index changes.”
“We didn’t have a bubble. Job market is still strong. People are working and rents continue to rise. It makes sense to buy.”
It makes sense to buy smartly. Buying a house priced at 3% mortgage rates is dumb, really, really dumb. Like Sabrina level dumb
“I really hope you dont offer investment advice”
Gee, it’s NOT an investment. It’s a home. You are living there. When you move to Chicago, you don’t care what is happening in Nashville or else you’d just live in Nashville.
All real estate is local. No one compares Lake Geneva real estate to the Hamptons or Santa Barbara, do they? No.
Stupid to even discuss.
“What special insight do you have on the Chicago market (other than shilling)? Gary & Russ – Sure but you? All your bloviating aside, are consistently wrong, talk smack about how hot the Chicago Market is yet have zero skin in the game”
The data matters. We are on a thread that includes ALL of that data going back 14 years.
If you don’t even understand basic data, then I have nothing for you.
All the bears on this site have literally been preaching for over 2 years now that Chicago was doomed and the housing market was going to crash. Just not happening. And, in fact, on the luxury side, it’s been the best 2 years in the last 7 years. And it’s the hottest market since the housing boom.
Go ahead and gaslight all the data. But the bears have been wrong for a LONG time now.
It’s laughable.
“Sorry, taking the week off as there’s nothing out there to blog about right now.”
Yep absolutely nothing…
https://www.zillow.com/homedetails/1718-W-Gregory-St-Chicago-IL-60640/3697501_zpid/
“Gee, it’s NOT an investment. It’s a home. You are living there.”
Unless you are UHNW, Said no one ever
“When you move to Chicago, you don’t care what is happening in Nashville or else you’d just live in Nashville.”
Yet you did just this 5 minutes ago, LOL
Go sober up
“What happened to its all local? What does NYC & the Hamptons have to do with Chicago?”
NOTHING! Just like Austin and Nashville have NOTHING to do with Chicago real estate either. To suggest otherwise, which you are, is laughable. And stupid.
As you just pointed out. You just proved my point JohnnyU.
Your argument that Chicago isn’t “hot” because Nashville or Austin are “hotter” is just stupid. You just look foolish when you make these arguments which aren’t even legit arguments.
The data hasn’t turned yet. The Chicago market is holding up quite well in the face of rising rates. Why? Because the job market is strong.
JohnnyU hasn’t lived in Chicago for over 30 years, if ever. And he hasn’t been here in a decade most likely. It’s a different city. Dozens of apartment buildings going up all over the city but we need more. Too much demand, not enough supply. That also feeds into condos and SFH. Not enough of those either. If you lived here, you would “see” what is going on. You would know someone who got outbid on a house or had a multiple bid scenario. You would know someone who got outbid on an apartment or can’t find one because there is nothing available.
The facts matter. The housing market hasn’t ground to a halt with 6% rates. Not yet. Impacts will be delayed due to buyers locking in 30 or 60 days ago. Will see slowing over this summer. Maybe? Or maybe not? Don’t know anymore. The job market remains strong. Always people getting married, starting families, getting new jobs, moving to town from out of state. They need either an apartment or a home/condo. Very few of either on the market right now.
“The data matters. We are on a thread that includes ALL of that data going back 14 years.”
Where’s the June 22 data you were claiming to have?
“If you don’t even understand basic data, then I have nothing for you.”
You dont, because you only see what you want to see
“All the bears on this site have literally been preaching for over 2 years now that Chicago was doomed and the housing market was going to crash. Just not happening. And, in fact, on the luxury side, it’s been the best 2 years in the last 7 years. And it’s the hottest market since the housing boom.”
The Lux market has been great everywhere – as the rich are getting richer
Define Crash – and lets see if its sane
“Go ahead and gaslight all the data. But the bears have been wrong for a LONG time now.”
Sober up and find a new $0.50 word
“The Lux market has been great everywhere – as the rich are getting richer”
But it has slowed in other markets already.
https://therealdeal.com/2022/06/27/paralysis-hits-manhattan-home-buyers/
“There are bidding wars for apartments in Chicago now. Gary, have you heard of this?”
Sorry, I don’t pay attention to the rental market. But I could have sworn that I read somewhere (not about Chicago) that the rental market has slowed down as well. Not sure why that would be since people have to move occasionally.
Chicago didn’t have a bubble the last 2 years. It’s pretty stable. Many people here made fun of it for not soaring like other cities but maybe Chicago will have the last laugh.
Nothing stopping you from running your own blog JohnnyU.
“NOTHING! Just like Austin and Nashville have NOTHING to do with Chicago real estate either. To suggest otherwise, which you are, is laughable. And stupid.
As you just pointed out. You just proved my point JohnnyU.”
You are drunk. This is sad even for you
“The data hasn’t turned yet. The Chicago market is holding up quite well in the face of rising rates. Why? Because the job market is strong.”
I thought you had THE DATA?
Shocking that you’d lie once again…
“JohnnyU hasn’t lived in Chicago for over 30 years, if ever. And he hasn’t been here in a decade most likely. It’s a different city. Dozens of apartment buildings going up all over the city but we need more. Too much demand, not enough supply. That also feeds into condos and SFH. Not enough of those either. If you lived here, you would “see” what is going on. You would know someone who got outbid on a house or had a multiple bid scenario. You would know someone who got outbid on an apartment or can’t find one because there is nothing available.”
Thought you looked at THE DATA, not feelings?
“The facts matter. The housing market hasn’t ground to a halt with 6% rates. Not yet. Impacts will be delayed due to buyers locking in 30 or 60 days ago. Will see slowing over this summer. Maybe? Or maybe not? Don’t know anymore. The job market remains strong. Always people getting married, starting families, getting new jobs, moving to town from out of state. They need either an apartment or a home/condo. Very few of either on the market right now.”
You wouldnt know a fact if it bit you on the ass
Typical Sabrina Doublespeak – Why maybe or maybe not? Would have thought that the way you shill it would be a clear cut case of the market not slowing
“The way the ad is worded, the upgrades were done prior to their purchase. (Can’t see any pics of the 19 sale)”
The sale closed at the end of June 2019. I guess it’s possible but I find it hard to believe that they did $100K in improvements just before selling the place.
I just find it interesting that this is going to sell for quite a bit less than 1758 Erie even though it doesn’t have the corner lot.
““The Lux market has been great everywhere – as the rich are getting richer”
But it has slowed in other markets already.
Have someone sober read to you my statement and ask to have it explained to like you’re 5
“You wouldnt know a fact if it bit you on the ass”
Facts matter. Yet when you’re wrong JohnnyU you go on and on and on.
This blog post lists all the May data going back 14 years. That’s the facts.
The Chicago housing market is not slowing. Sorry. Not yet. There is no data that shows it is slowing. Going forward, there probably will be.
And no, we don’t care what is happening in Nashville or Asheville or Boise. They are irrelevant to Chicago buyers and sellers. As I have said several times now. All real estate is local. Always will be.
The fact that you are making “arguments” based on “but in Nashville” tells everyone that your argument about Chicago is wrong.
As I’ve said many times over the years, when mortgage rates rise to 5% it has usually meant Chicago’s housing market has slowed. That’s what happened in 2018-2019.
But maybe this time it’s a little bit different.
1. Lowest housing inventory on record.
2. Record high rents, which continue to rise.
3. Wages rising.
4. Best job market in 20 years.
These things could be conspiring to keep housing elevated even with the higher rates.
But I still expect to see some slowing over the summer as the market has been red hot over the last 2 years so it needed to cool and stabilize. It can’t stay that hot for forever. Slowing is inevitable. And if we start to see layoffs, it will slow too as buyers get cautious.
“But I could have sworn that I read somewhere (not about Chicago) that the rental market has slowed down as well. Not sure why that would be since people have to move occasionally.”
Yeah- it’s just the opposite. Really, really tough in the rental market right now in Chicago and many other cities. If you are priced out of buying, you have to rent. Everyone has come back to the cities and they aren’t building enough to meet demand. Even the mega-towers with 700 units are sold out in Chicago. But similar tightness in rental condos too.
“Unless you are UHNW, Said no one ever”
My husband and I didn’t buy our home as an investment. Everyone knows homes are money pits. But you have to live somewhere and I’d rather own and do what I want with the property than rent.
My grandparents owned two properties for their entire lives (over 90 years). One was in Olympia Fields that they lived in for 30 years. The second was in Indiana that they lived in for 45 years. They never thought of either one as an “investment.”
“The sale closed at the end of June 2019. I guess it’s possible but I find it hard to believe that they did $100K in improvements just before selling the place.”
The original ask in 5/18 was $1.2MM, sold 7/19 for $900k. So yeah, its likely the current owners bought and did the tear off. Depending on who popped for windows (Possible water infiltration from the roof), etc this could be a huge money pit for the current owner, unless there was an insurance claim
Might be why people are shying away
Are you repping this property – what do the disclosures say?
“Have someone sober read to you my statement and ask to have it explained to like you’re 5”
Luxury market hasn’t slowed in Chicago. On pace for another record year.
It’s slowed in other markets though. I’m sure Chicago will be next.
All real estate is local though. Chicago didn’t have Austin’s big bubble. We also have a more diverse economy with many other industries other than tech.
https://www.mansionglobal.com/articles/even-deep-pocketed-buyers-are-starting-to-back-away-from-the-u-s-housing-market-01654876724
Two years ago, Austin real-estate agent Amy Deane, of Moreland Properties, was working with so many wealthy out-of-state buyers that she showed one $15 million house five times in 30 days. Now, she might get one call every other week for showings in that price range. “That big buyer pool has slowed down,” she said. “The first movers committed and moved.”
After an epic two-year run—not just in Austin but in major cities around the country—the luxury real-estate market is finally cooling.
Real-estate agents in places like New York, Los Angeles, and the Hamptons say the frenzied deal making and record-setting prices that characterized the past few years has eased, thanks to a growing disconnect between what sellers want and what buyers will pay. Meanwhile, buyers are grappling with inflation, this year’s interest-rate hike and the volatile stock market. Gas prices and the war in Ukraine are adding to feelings of economic uncertainty, effectively throwing cold water on luxury sales.
“1. Lowest housing inventory on record.
2. Record high rents, which continue to rise.
3. Wages rising.
4. Best job market in 20 years.”
5. Real wages are negative, Inflation >8%
6. Corp HQ’s fleeing the area
7. Mortgage rates rising
8. Free money spigot getting shut off. Speculation is getting crushed – Crypto, Rolex, etc
9. Layoffs happening in the high paying tech sector
Yet none of these facts ever makes it into your discussion
“The sale closed at the end of June 2019. I guess it’s possible but I find it hard to believe that they did $100K in improvements just before selling the place.”
The way the listing is written, it wasn’t improvements, but replacement of a severely defective roof:
“$100k+ tear-off roof in 2019.”
If you spend $100k on a flat roof, it better have either a sweet deck, a ton of solar, or both.
“If you spend $100k on a flat roof, it better have either a sweet deck, a ton of solar, or both.”
Yeah, no one was/is paying $70/sf for an EDPM or PVC roof.
A pergola alone will run $125k
“The original ask in 5/18 was $1.2MM, sold 7/19 for $900k. So yeah, its likely the current owners bought and did the tear off. Depending on who popped for windows (Possible water infiltration from the roof), etc this could be a huge money pit for the current owner, unless there was an insurance claim
Might be why people are shying away
Are you repping this property – what do the disclosures say?”
So the home is owned by a realtor that I know. It’s in our neighborhood. We went to the open house on Sunday. He replaced the glass block because they were in bad shape. There are no disclosures online.
Seems like some people have too much time on their hands. Every one of these becomes an argument between the same person and Sabrina.
“Layoffs happening in the high paying tech sector”
You mean the layoffs that are the lowest since 1993?
Lol.
Doom. Doom. Doom.
Betting against America again.
You will lose every time JohnnyU. I don’t get it. You are literally betting against the greatest economy the world has ever known.
Numbers tell the story about Chicago right now.
Rental market bidding wars.
I’ve never seen that in Chicago. Ever.
Go pound sand bears. It’s simply not happening. Cities are booming right now. Fed has to get more aggressive. Needs to raise faster because the economy is still humming along.
How many people here saw restaurants close over the weekend because they didn’t have staff?
I was in a Starbucks on the north side that didn’t have any workers to stay open past 4:00 pm. I also walked by a taco restaurant that was closed on Sunday with a sign on the door saying they would be closed all day due to the labor shortage.
It’s just really tough on businesses out there right now. And we’re back at High levels on COVID. If you get it, you’re out of work for at least 5 days and maybe more depending on how severe your symptoms are. That’s not helping companies either.
Nothing to see here, totally heathy and normal
https://www.trueup.io/layoffs
Where are those June stats you said you had?
“So the home is owned by a realtor that I know. It’s in our neighborhood. We went to the open house on Sunday. He replaced the glass block because they were in bad shape. There are no disclosures online”
Replacing rubber roofs, windows and Glass block in < 15 years is not normal
“Seems like some people have too much time on their hands. Every one of these becomes an argument between the same person and Sabrina”
You can name names
It’s getting to the point where the shilling is getting comical and transitioning to flat out lies
Take it to Stormfront, or the InfoWars forums.
sorry but I can not fathom anyone getting in a bidding war to rent a place in Chicago, sounds quite a bit like fake news or anecdata to me, especially in this current economic environment
then again morons are still paying over MSRP for vehicles so /shrug
“morons are still paying over MSRP for vehicles”
Right?
As to the rentals, I read the assertion to be w/r/t condos for rent, rather than normal apartments. I, too, am dubious that it is even arguably common, but it’s certainly possible that there are a few instances of a temporary/accidental LL really mispricing an ask, and getting an offer over ask.
Car market is crazy. You can get good deals if you are willing to wait and order from factory. However, if you just want to buy off the lot immediately it is bonkers. Just bought a hard to find Jeep and got it significantly below invoice but had to drive to Iowa to get it and took about 8 mos of waiting. Local dealers asking $20-$30k dealer markups above MSRP on the lot.
I’m selling my totally loaded but 80 mile range electric bmw i3 to carvana for 850 more than I paid for it 3 years ago… lol I even put 12k miles on it
also selling another car for like 40k more than I bought it for 2 years ago
sucks as an enthusiast to acquire things but nice when you already own many vehicles and haven’t paid over MSRP ever
“I, too, am dubious that it is even arguably common, but it’s certainly possible that there are a few instances of a temporary/accidental LL really mispricing an ask, and getting an offer over ask.”
From what I’m hearing, there are bidding wars on anything under $2000 downtown (in the condo rental market.) Doesn’t matter if a studio or 1-bedroom. Also have to jump through hoops for the landlord in terms of verifying employment, giving multiple years of W-2s etc. Worse than getting a house loan, apparently.
There is simply too much demand. But we should get some data in the next few weeks about the Class A downtown market and occupancy rates for the first half of the year.
“sorry but I can not fathom anyone getting in a bidding war to rent a place in Chicago, sounds quite a bit like fake news or anecdata to me, especially in this current economic environment”
You left years ago sonies. Chicago has changed a lot. Had the big exodus during the start of the pandemic and now have everyone coming back. And Chicago remains top for young people because it’s considered an “affordable” big city (also looked darn good on Love is Blind. ha ha.) New York and San Francisco are out of reach. Chicago is a nice alternative.
NEMA was 100% occupied in the spring and has few openings. It’s over 700 units and top of the price range. It’s extremely tight in the apartment market.
Again, OneChicago, the most expensive 2 buildings in the city are:
1. 90% rented
2. 40% rented
And neither one has even been open a full year yet.
19,000 new apartments in the pipeline just for Fulton Market/West Loop over the next few years. All of them won’t get built but it tells you the demand they are thinking is going to be there.
“Nothing to see here, totally heathy and normal”
Layoffs are still near lows since 1993. We have 11 million job openings. And yeah, layoffs ARE normal, actually. Many companies overhired during the pandemic and got drunk off of free money. We’ve all seen this game before, right? Over 200,000 laid off in Silicon Valley alone in 2000-2003 when the punch bowl was taken away. You could finally get an apartment.
“You left years ago sonies. Chicago has changed a lot. Had the big exodus during the start of the pandemic and now have everyone coming back.”
When I spent nearly a couple weeks in Chicago last summer, and then a week or so at Thanksgiving, I did not see the semi-apocalyptic hellscape that you had been describing months before. I found things to be vibrant and overall a very positive energy (albeit with pretty much every place running on a fraction of pre-Covid employees, but that’s the way it is in most areas). Got here late this afternoon, and after dinner in Old Town, strolled up Wells to get some things at the Walgreens. I’ve been in there a hundred times at around 9 on a warm evening, so I know not to expect it to be the most pleasant and posh environment. And I don’t want to sound like a single outing or experience can color my entire perception of a place. But man, I have to say the there was a palpable negative energy in the place. The whole staff was generally in a state of despair. A handful of sketchy guys milling around. And lots of 25-30 year old looking white kids, presumably professionals or white collar workers of some kind, who were giving off such a toxic, aggressive vibe. Very strange.
“Got here late this afternoon, and after dinner in Old Town, strolled up Wells to get some things at the Walgreens. I’ve been in there a hundred times at around 9 on a warm evening, so I know not to expect it to be the most pleasant and posh environment. And I don’t want to sound like a single outing or experience can color my entire perception of a place.”
The city is humming right now. When you were here previously, yeah, I wasn’t carrying my phone with me when I went out. I still don’t if I can help it (sometimes I cannot.) People are still being mugged in the daylight on prominent streets like Clark in Lincoln Park and Lakeview by people jumping out of their cars and brandishing guns.
However, with more people out and about things have gotten better. Subway is a bit better but I just read the CTA drivers may stage a protest over the increase of violence.
But your description of an old Walgreens is a bit bizarre anonny. I’m sure you’d find a different “vibe” at the Foxtrot across the street. (Also, by the way, they are going to redevelop that corner the Walgreens is in. I’m hopeful it will be a pretty big development. Could use more density there.)
Walgreens are depressing because of the theft. I don’t blame the workers. I witnessed my first theft off the shelves a few weeks ago in a Walgreens where the person just walked in with supermarket bags, loaded up with razors, and walked out. No one said anything to him. What’s there to say? Many Walgreens are keeping very little on the store shelves right now as a result.
“ sucks as an enthusiast to acquire things but nice when you already own many vehicles and haven’t paid over MSRP ever”
Unless you’re lucky enough to be on the list, you’re going to pay well over list for a Ford GT or other HAWT cars.
“ Layoffs are still near lows since 1993. We have 11 million job openings. And yeah, layoffs ARE normal, actually. Many companies overhired during the pandemic and got drunk off of free money. We’ve all seen this game before, right? Over 200,000 laid off in Silicon Valley alone in 2000-2003 when the punch bowl was taken away. You could finally get an apartment.”
Look at the last 6mo of 21 Vs first 6 of 22 and even you would have to admit (if there’s an honest bone in your body) that it’s not a positive
“I’m sure you’d find a different “vibe” at the Foxtrot across the street. (Also, by the way, they are going to redevelop that corner the Walgreens is in.”
I want to emphasize that what was most striking was the vibe of all the people who I presume rent or own units in the immediate vicinity of the store. I get it, it’s a Walgreens, and they, like me, were in there at 9 getting a few essentials, so I’m not expecting people to be skipping around with joy and singing Disney hits. But most of them (men and women, post college through about 30, probably big firm lawyers, finance bros, tech, sales or marketing people by day, etc.) looked miserable and ready to turn on each other and fight to the death any moment. I’ve been around people in that age range and demographic consistently for 15 years or so and have never observed and sensed the sort of thing on display there last night.
“Old Town Walgreens”
So it has returned to form? That’s what that one was like in the mid-90s.
Does it again look like it hasn’t been cleaned in 2 years, nor refreshed in 10? Most I’ve been in in the past 3 years are pretty soul sucking.
“Does it again look like it hasn’t been cleaned in 2 years, nor refreshed in 10? Most I’ve been in in the past 3 years are pretty soul sucking.”
Pretty much, yes. And so much stuff requires a staff member to unclock (deodorant?).
“(deodorant?)”
There are thousands of listings on ebay for deodorant–I don’t think those are traditional retailers seeking another distribution channel.
And that doesn’t account for the product finding its way to the independently owned convenience stores, or being sold at flea markets.
Drove past a guy selling laundry detergent (Tide and All) on a folding table, not in front of a laundromat. Don’t think he got that from a regular wholesaler.
“sorry but I can not fathom anyone getting in a bidding war to rent a place in Chicago”.
I own a crappy one bedroom that I rent out in the Gold Coast. There were six offers over list for a July 1 start. I cannot imagine paying $2k for a place without a dishwasher or w/d. Glad to finally see a rent increase after the last two years. I had a new tenant scheduled to move in June 1, 2020 that turned out his moving truck back to Ohio after seeing the aftermath of the weekend’s riots.
“Does it again look like it hasn’t been cleaned in 2 years, nor refreshed in 10? Most I’ve been in in the past 3 years are pretty soul sucking.”
My Walgreens complaint is that the standards for their pharmacy assistants are incredibly low. I miss the loop Walgreens pharmacist who was great and kept her assistants in line, but I’m almost never there these days.
My other Walgreens complaint is that the mail order system is insanely flawed. It keeps on turning auto refill off, which I would suggest is thereby not so “auto”.
Gary, do you have a theory for why buyer rebates don’t seem to have had a lot of traction?
DZ, consumer behavior in residential real estate is not rational and the costs not completely transparent.
The mortgage guy will get beat up over an .125 on the rate or a few hundred in closing costs, while consumers don’t seem to be as price conscious with agents. I think it is because you see your monthly payment and cheaper is always better so the mortgage just makes people more cost sensitive.
On the other hand, you don’t really see what you are paying the agent at least on the buy side and thus there isn’t as much of a push to lower the costs. Agents aren’t paid unless the transaction closes and the buyer isn’t typically writing a check directly so there just isn’t the same level of cost pressure.
If agent comp were decoupled where the buyer actually wrote the check to pay the agent, then you’d see more pressure on commissions.
However, this still doesn’t explain the lack of cost pressure on the listing side. While I won’t call it collusion, agents seem to be good about saying this is what they work for and there isn’t the race to the bottom unlike with mortgages….
“On the other hand, you don’t really see what you are paying the agent at least on the buy side and thus there isn’t as much of a push to lower the costs. Agents aren’t paid unless the transaction closes and the buyer isn’t typically writing a check directly so there just isn’t the same level of cost pressure.”
That makes a good deal of sense but I still don’t quite get why offering $12k [Gary, the rebate calculator on your page seems to have an error] or even $6k on a $1mm house isn’t more attractive. I get that there would be more pressure if buyers were paying directly but I guess I thought there would have been more pressure even as is.
Also, why don’t sellers at least in a hot market offer a lower coop commission? What will happen? Will buyer agents boycott that property or retaliate in some way? (I also get that when you’re selling, you might think why rock the boat for e.g. 1 percent. Better to get the traffic which might get you the higher price.)
It seems like more of the effort of eg Redfin is to compete on the seller side than buyer side (either in offering rebates or driving the coop commission down). When, with all due respect to everyone, I see the need for a buyer agent much less than a seller agent with all the technology we have now.
“While I won’t call it collusion”
Yeah I wonder how much there is. Not nec explicit collusion but pressure of some kind.
“While I won’t call it collusion”
I will!
The lack of cost pressure on the listing side of residential real estate commissions is largely (but not! exclusively!) the result of collusion and a moderately effective cartel disguised as a professional organization.
“That makes a good deal of sense but I still don’t quite get why offering $12k … or even $6k on a $1mm house isn’t more attractive.”
So, something related to this was in Rodkin’s Crain’s post yesterday:
“Another rate beater that Schaub says is getting traction is an interest rate buy-down, done by the seller on the buyer’s behalf. Also known as buying points, this is where the seller kicks in enough cash to bring down the buyer’s interest rate. Buying points has a greater impact than cutting the price. Schaub explains that a seller kicking in $10,000 on a $500,000 sale can reduce the buyer’s monthly payment by about $220 a month, while a $10,000 price cut would reduce the monthly payment by about $50.”
https://www.chicagobusiness.com/residential-real-estate/how-homeowners-are-selling-interest-rates-rising
It’s really that $10,000 on a million dollar purchase doesn’t move teh needle. Is *anyone* buying one house for $990k, instead of another they like better for $1m? Only lunatics, right?
“It’s really that $10,000 on a million dollar purchase doesn’t move teh needle. Is *anyone* buying one house for $990k, instead of another they like better for $1m? Only lunatics, right?”
Isn’t it more like buying the house you want for $1mm or buying the *exact same* house for $990k?
“the *exact same* house”
Not really, bc there would be some agents offering the rebate, and some not.
There would never be two agents–one offering rebate, one not–working with the same seller-buyer pairing on the same property.
Perhaps it’s 990 v 1000 for two different houses you like the same amount, but you’ll never have two genuinely identical houses except direct from the builder–and even then, they’re on different lots, or different floors, or have different view angles, or simply have different unit numbers.
“There would never be two agents–one offering rebate, one not–working with the same seller-buyer pairing on the same property.”
I mean from the buyer agent angle. I can work with gary and get the 10k (or actually 12.5k) rebate or someone else and get zip. All the same houses will be available to me. Plus gary will give me taqueria recs.
“Pretty much, yes. And so much stuff requires a staff member to unclock (deodorant?).”
Deodorant is one of the most stolen items. It really makes no sense what is taken though. I don’t understand the business model, personally.
That Walgreens is going to be redeveloped soon enough. Already chatter of what may go in there (along with the Treasure Island.)
“But most of them (men and women, post college through about 30, probably big firm lawyers, finance bros, tech, sales or marketing people by day, etc.) looked miserable and ready to turn on each other and fight to the death any moment. I’ve been around people in that age range and demographic consistently for 15 years or so and have never observed and sensed the sort of thing on display there last night.”
I suggest you go hang out in the Foxtrot. Might find a different “vibe”.
Maybe people were depressed about the election results.
“I own a crappy one bedroom that I rent out in the Gold Coast. There were six offers over list for a July 1 start.”
Thanks for the real world insight Lauren. I don’t think anyone posting here who lives in another state has any idea how quickly the Chicago rental market came back and how hot it is in 2022.
“I mean from the buyer agent angle.”
Well, if you have a business model that involves being just a ‘broker’ for people who have already identified their desired house, that could work. Especially if you get paid for your time that goes beyond X.
But that’s still the minority of buyers in the re-sale (as opposed to buying new from the developer) market, isn’t it?
“While I won’t call it collusion”
Yeah I wonder how much there is. Not nec explicit collusion but pressure of some kind.
Agents seem to hold the line on commissions. They don’t bow to taking lower commissions as easily because their competition doesn’t so there isn’t industry pressure to lower them. Like I say, I wouldn’t call it collusion so much as it is the industry just seems to train agents not to work for too cheap.
On the mortgage side, it is a race to the bottom. Before Dodd Frank, mortgage brokers would cut commission in a heart beat if it meant winning the deal.
“Well, if you have a business model that involves being just a ‘broker’ for people who have already identified their desired house, that could work. Especially if you get paid for your time that goes beyond X.
But that’s still the minority of buyers in the re-sale (as opposed to buying new from the developer) market, isn’t it?”
My hypothesis is that while the seller side commission may be a little high, the big overcharge is on the buyer side, where the need for an agent is a lot less, especially with search tools etc that exist now. If that’s right, there should be room for agents to rebate back on the buyer side. How much do you really need an agent to find a house for you, beyond getting you set up with having automated searches and some comps when you’re ready to buy?
So that with competition, a “full service” buyer’s agent could afford to rebate a quarter or half of the coop commission. But it’s not widespread.
“a “full service” buyer’s agent could afford to rebate a quarter or half of the coop commission. But it’s not widespread.”
Who is in business to do more transactions, and make less total money? No one, right? If you can make $X on Y transactions, what’s the incentive to make $X-z on 3Y transactions?
There *should* be room for a lot of discount brokers, at varying levels of service, but I think that most consumers will blow right past any agreed service limits, or fire their buyer agent, if things aren’t perfectly to expectation.
“I suggest you go hang out in the Foxtrot. Might find a different “vibe”.
Maybe people were depressed about the election results.”
Was awoken by two very close, very loud gunshots at 4 this morning (sounded like it was near the Cardinal’s property). Was there something particularly controversial on the ballot?
“two very close, very loud gunshots”
Are you *sure* they weren’t large fireworks?
Like, 1,000% sure, not “I was in the Guard in the 70s” sure.
It’s the time of year where nextdoor, etc. are filled with “who else heard the gunshots” and 103 replies of “fireworks”.
But whatever it was, I’ll just hang out at Foxtrot, and forget all my cares, and the fact that I need an ankle brace from Walgreens.
“Who is in business to do more transactions, and make less total money? No one, right? If you can make $X on Y transactions, what’s the incentive to make $X-z on 3Y transactions?”
Make less total money (ie profit)? Of course not. But if your costs are 0.5X (and that that includes all of your costs for each tranx), then you make 0.5*XY by charging X, versus 0.75*XY by charging 0.75X if that triples biz.
Obviously no one wants to make less per tranx, but you would do it if it gets you more biz and increases total profits, which will be true if costs are substantially lower. That is the way competition (and not collusion) is supposed to work…
“It’s the time of year where nextdoor, etc. are filled with “who else heard the gunshots” and 103 replies of “fireworks”.”
My dog won’t go out after dusk.
“Car market is crazy. You can get good deals if you are willing to wait and order from factory. ”
I’m interested in a BMW Z4 and can’t even find one to look at, sit in, and test drive. Anywhere. How the hell are you supposed to shop for a car?
“Obviously no one wants to make less per tranx, but you would do it if it gets you more biz and increases total profits”
But it has to also only require 1x time commitment/labor input. If you make 50% more, but it takes 2x the labor, it’s not a win.
“BMW Z4. Anywhere.”
Looks like there are some on lots in California.
Also, Carmax in NC has a couple of 2019s, with 20-25k miles, asking the current MSRP for a new one.
“Gary, do you have a theory for why buyer rebates don’t seem to have had a lot of traction?”
It mystifies me. I don’t think it’s a coincidence that most of our clients are highly educated and analytical. After 15 years I’m convinced that the consumer is just dumb. There is also a lot of really illogical decision making: I owe it to my friend, I’ve been using this agent for 20 years, I see their signs everywhere, you get what you pay for, etc…
“However, this still doesn’t explain the lack of cost pressure on the listing side.”
I have a better understanding of this phenomenon. Behavioral economics explains a lot of it and I’m even seeing it myself now as I get ready to list my own home. It’s partly the endowment effect and partly the lack of control when selling. When you buy you are in the driver’s seat. When you sell you are at the mercy of what buyers are in the market. So you try to get control by, erroneously, looking for the agent that you think is going to get you more money for your home. It’s a total myth but people fall for it and they’ll pay whatever.
“Gary, the rebate calculator on your page seems to have an error”
Bad number or just not there? It’s a new site and we’ve been having some problems.
“Also, why don’t sellers at least in a hot market offer a lower coop commission?”
We do that occasionally and have had mixed results. In theory you are correct. We’ve cut it on 400K listings without any problem but have gotten blowback at higher price points if you can believe that. A lot of the agents that work those price points are really full of themselves. They tell us they are offended and then you can’t be sure what they might do to undermine a deal, though that would be illogical and unethical. I’m going to offer the regular 2.5% on my house because I can’t afford to piss off realtors I work with on a regular basis.
“I see the need for a buyer agent much less than a seller agent with all the technology we have now.”
I definitely got an agent in NC and, of course, I get a rebate de facto in the form of a referral fee. We don’t know the builders or the areas that well or the negotiation conventions or the listing agents who might leak information to someone they know or the construction issues (septic systems, crawl spaces, etc…) Not to mention that, seriously, buyers without agents are on average a bit weird to deal with.
“But it has to also only require 1x time commitment/labor input. If you make 50% more, but it takes 2x the labor, it’s not a win.”
I feel like your theory of price setting would mean they should charge even higher prices. If you had been charging 1.25X, why would you ever cut the price to 1X.
Firms and individuals facing ~ constant returns to scale are willing to cut prices all the time down to competitive levels.
“Bad number or just not there? It’s a new site and we’ve been having some problems.”
Not there. Says “NaN” which I think is the missing value indicator some programs return.
“Firms and individuals facing ~ constant returns to scale are willing to cut prices all the time down to competitive levels.”
See, eg, large law and accounting firms, who are well known for cutting their billing rates? All the time?
At least on the Buyer’s Agent side, they are essentially selling their (professional? at least hopefully) time.
“They tell us they are offended”
Isn’t part of that if they don’t believe you if you say it’s still an even split of an overall lower commission?
I could be somewhat insulted if–in a market with a traditional 50/50 split–I believed that I was being offered 2 and the other side still getting 2.5.
“Who is in business to do more transactions, and make less total money?”
I can assure you that using a sliding scale, like we do, does not mean you make less total money. We are very profitable on higher priced deals with rebates or discounts. It’s more like do you want to make $10K on one deal and twiddle your thumbs some of the day or 16K on two deals?
Why am I twiddling my thumbs?
Can’t I drive to my lake house and have a cocktail? Or whatever?
“Isn’t part of that if they don’t believe you if you say it’s still an even split of an overall lower commission?”
I guess that’s possible but most of the agents we get this from are familiar with our own discounting policy. However, maybe they don’t like us discounting their piece.
But what is funny is that there are parts of the city where the a 2% co-op is like standard.
“But whatever it was, I’ll just hang out at Foxtrot, and forget all my cares, and the fact that I need an ankle brace from Walgreens.”
Huh? I avoid the yucky Walgreens, if possible. There’s always a CVS, Target or another Walgreens just a few blocks away. Or I order what I need on line from Amazon or Ulta.
“Was awoken by two very close, very loud gunshots at 4 this morning (sounded like it was near the Cardinal’s property). Was there something particularly controversial on the ballot?”
I’ve heard gunshots in my neighborhood many times over the last year but turns out it actually WAS fireworks. So annoying. But we’re all on edge after 2020’s protests.
Also, Chicago Scanner isn’t indicating gunshots or a police response in the Gold Coast last night. Doesn’t mean it didn’t happen. Could be no one called the police, I suppose.
“maybe they don’t like us discounting their piece”
Sort of proves the lie of the ‘agency’ relationship. Fiduciary duties are a pain.
“I’m interested in a BMW Z4 and can’t even find one to look at, sit in, and test drive. Anywhere. How the hell are you supposed to shop for a car?”
It is annoying for sure, I’m driving 2 hours this Saturday to look at a car as it is the closest one and proper spec that we’re looking for… most of the vehicles I’m interested in are 3000 miles away in florida lol
“See, eg, large law and accounting firms, who are well known for cutting their billing rates? All the time?”
I’m suggesting your price theory is not an equilibrium theory bc they’d be better off under your logic by charging 25% or whatev more.
“not an equilibrium theory”
Well, sure.
Of course, some law firms *do* take the “charge more” approach, at least in the time since the $1,000/hour barrier was crossed. But that’s only the case where at least the perception of the service provided for the higher cost is significantly better, as opposed to Buyer’s Agents where the theory is than anyone you don’t actively dislike can provide substantially the same service.
I’m just saying that, in a personal/professional service context, there are only so many hours one has, and charging less per hour, in order to work more hours, has a diminishing (and then vanishing) returns *at some point*. If I can work 40 hours a week at $100/hour, do I really want to work 60 hours at $90 per, even though that is 35% more in total?
For Gary, that point apparently involves more hours than he currently works. For me, I don’t think I would dedicate more hours to work unless the remuneration was *greater* than what I get for current hours–and not marginally greater, substantially greater.
Yes, I get that this is all premised on realtors who in many cases commit far less than 40 hours per week to work. But it’s still the same premise–if I can work 10 hours a week and make $10,000, do I really want to work 20 hours a week and make $15,000? Some will, some won’t, and there is more than one sort of ‘rational man’ once your close to the top of the hierarchy of needs–depends what actualizes one.
“Yes, I get that this is all premised on realtors who in many cases commit far less than 40 hours per week to work. But it’s still the same premise–if I can work 10 hours a week and make $10,000, do I really want to work 20 hours a week and make $15,000? Some will, some won’t, and there is more than one sort of ‘rational man’ once your close to the top of the hierarchy of needs–depends what actualizes one.”
Why does this price remain fixed in busts (or booms for that matter)? During the crash, surely hours were nowhere close to what realtors wanted? And there are also firms, rather than individuals, involved.
“I could be somewhat insulted if–in a market with a traditional 50/50 split–I believed that I was being offered 2 and the other side still getting 2.5.”
Is the 50/50 split just convention? Does a seller agree to a rate coop commission separate from the total commission (or a net sell side commission)? Does the seller generally pick the commission (I assume s/he has to agree to it ultimately)?
Gary –
Not sure if you know exactly what you want or if you’re trying to decide what you want but at a minimum this should give you an idea as to where the markets at for the Z4 – https://bringatrailer.com/bmw/z4/
The peanut gallery is usually pretty helpful if something isnt sorted
Warning – The site is like crack
Good luck
More Chicago Tech Layoffs
https://techcrunch.com/2022/06/27/fintech-amount-which-was-valued-at-1b-last-year-lays-off-18-of-staff/?guccounter=1
“For Gary, that point apparently involves more hours than he currently works. For me, I don’t think I would dedicate more hours to work unless the remuneration was *greater* than what I get for current hours–and not marginally greater, substantially greater.”
The vast majority of realtors are not fully utilized. The hard part of real estate is not doing the deals. It’s getting the business. If you discount you spend less time trying to get business and you could make the same per hour but be fully utilized. But a lot of realtors aren’t very smart and they just can’t wrap their head around discounting.
“Is the 50/50 split just convention? Does a seller agree to a rate coop commission separate from the total commission (or a net sell side commission)? Does the seller generally pick the commission (I assume s/he has to agree to it ultimately)?”
It’s convention and it is in theory totally up to the seller. But it’s often not presented that way. And often not even broken down on the listing agreement. Most sellers have no idea what the plan is.
“Not sure if you know exactly what you want or if you’re trying to decide what you want but at a minimum this should give you an idea as to where the markets at for the Z4”
Thanks. That’s interesting. My thought was I’d check out the new ones and order one from the factory – assuming I could get in and out of it easily at my advanced age and it drives well. Looks great.
I might actually have to rent one for a day to really check it out.
Gary, use Turo to rent whatever strange car you would like for a day
“ Thanks. That’s interesting. My thought was I’d check out the new ones and order one from the factory – assuming I could get in and out of it easily at my advanced age and it drives well. Looks great.”
Do they have the test track option in Germany for the Z4’s like they do with the M’s?
I rented a Z4 for a week to drive up the PCH and around Carmel in CA about about 8 years ago. Fun little car if you like small sporty convertibles. It wasn’t super fast, but handled great.
I don’t think it would be great here in Chicago, but can see why someone in an area with nicer weather would want one.
“Gary, use Turo to rent whatever strange car you would like for a day”
Supposedly this is the the only z4 for rent in the Chicagoland area. The owner does look like he might kill you if you get a ding though.
https://images.turo.com/media/vehicle/images/vEJgYAJNRci2diufTWyDJw.1440×700.jpg
Yeah, I actually found that car on Turo a while back. $179/ day. I’m thinking I might have to rent it but I’m preoccupied right now with more pressing matters.
Market is slowing in Chicago. Properties that came on the market in June are sitting. I’m seeing a bunch of “relistings” as “new” as the listings are getting stale on the market as buyers have dried up.
I also saw 2 short sales in my tracker which I haven’t seen in a long time. One of them last sold in 2006, so that’s kind of shocking to see.
It’s going to be an interesting summer.
But demographics and Chicago stronk?
“But demographics and Chicago stronk?”
6% mortgage rates matter. In every market. Buyers have moved to the sidelines. No one has ever said otherwise. I have said for months that 5% mortgage rates would slow the Chicago market, as they did in 2018-2019. But 6%? We haven’t seen those in a long time. And it’s definitely slowing the market.
Inventory is rising for the first time in 2 years.
Layoffs were up 59% yoy in June but for the year, still remain lower than last year.
From Challenger Gray & Christmas:
In the second quarter, employers announced 77,515 job cuts, the highest quarterly total since the first quarter of 2021, when 144,686 cuts were recorded. It is 39% higher than the 55,696 cuts announced in the first quarter of 2022 and 14% higher than the 67,975 cuts announced in the same quarter last year.
So far this year, employers announced plans to cut 133,211 jobs, down 37% from the 212,661 cuts announced through the first half of 2021. It is the lowest recorded January-June total since Challenger began tracking monthly job cut announcements in 1993*.
https://www.challengergray.com/blog/job-cuts-surge-in-june-2022-up-57-from-may-59-from-june-2021-highest-quarterly-total-since-q1-2021/
“Market is slowing in Chicago. Properties that came on the market in June are sitting. I’m seeing a bunch of “relistings” as “new” as the listings are getting stale on the market as buyers have dried up.”
I’m working on my June update. Running a bit late with it due to other pressing matters. However, definitely signs of slowing. Contract activity has been on the decline for several months and you’re going to see it in the closings for June. But inventory still very low. Lots of nuances in the data. Stay tuned.
“ Layoffs were up 59% yoy in June but for the year, still remain lower than last year”
Didn’t you utter “What layoffs”?
Years not over yet
6% rates only matter when sellers don’t adjust to the HMAM reality
Sabrina on June 26, 2022 – The market is so hot I’m going to take a week off. There is simply no inventory. And anything that comes on the market goes under contract within days.
Sabrina on June 27, 2022 – So, no, I really don’t care what Jon “thinks” the Chicago market would be doing 2 months later. He has no idea.
Sabrina on 7/6/2022 – Market is slowing in Chicago. Properties that came on the market in June are sitting.
Why did you come for me when I told you that things have changed and the market isn’t hot any more? It is refreshing to see that you have come around and now realize and understand what I told you last month.
p.s. That Bosworth property that you were “shocked” to see had not sold is still on the market (probably for all of the reasons I pointed out and market conditions).
“p.s. That Bosworth property that you were “shocked” to see had not sold is still on the market (probably for all of the reasons I pointed out and market conditions).”
Still shocked it hasn’t sold but that tells you how quickly the buyers moved to the sidelines. Inventory building is a lagging indicator. It was still low as recently as 2 weeks ago. But I would estimate it has built by at least 1,000 listings on the North Side alone, mostly due to sales screeching to a halt.
We knew the high rates would eventually hit, and they are.
Inventory still really low though. Buyers certainly don’t have to rush out to see new listings in the same way they had to a few months ago.
“Didn’t you utter “What layoffs”?”
Keep rooting against America JohnnyU. It’s pathetic.
Still lower than last year and no one was getting all crazed about the layoffs in 2021. Gee- wonder why?
Fed is intentionally trying to slow the US economy. They will be successful. More people will get laid off as the funny money dries up. People doing “nothing” at Facebook will get laid off. If you aren’t sure what your job duties are going to be in that new job, be warned.
We’ve all seen this before, right?
200,000 laid off in the Bay Area alone in the last tech bust.
But right now, in July 2022, the economy is still strong. Layoffs are low.
“Contract activity has been on the decline for several months and you’re going to see it in the closings for June. But inventory still very low. Lots of nuances in the data. Stay tuned.”
Cool, thanks Gary. Sales are definitely down.
Also, Jon, you were clueless about the Chicago market. You have no idea what is going on here as you left months ago. The market has been hot the entire time you’ve been gone until about 2 weeks ago.
So, no, I don’t care what Jon who lives in some other state “thinks” is going on in Chicago which he left months ago.
“Keep rooting against America JohnnyU. It’s pathetic.”
Personally, I’m not rooting against the U.S. But are you saying that you’re feeling positive about the future of the U.S.?
“feeling positive”
13% say ‘right direction’, so Sabrina’s in that 1/8, that is (imo) mainly made up of single-issue anti-abortionists, rose-shade wearers, the new aristocracy, and trolls.
Penthouse in the vintage beauty at 3500 N Lake Shore Drive is under contract.
Listed at $2.4 million with 5196 sq feet.
https://www.redfin.com/IL/Chicago/3500-N-Lake-Shore-Dr-60657/unit-17PH/home/28846333
Finally posted my June update: https://www.chicagonow.com/getting-real/2022/07/chicago-real-estate-market-update-june-sales-finally-take-a-hit/
Yeah, sales were down quite a bit but last year was a record. However, condo/ townhome inventory is way down and that could be restraining sales. Things are still selling very fast.
“However, condo/ townhome inventory is way down and that could be restraining sales. Things are still selling very fast.”
Downtown condo inventory is building but it was never as low as the neighborhoods and crime is still deterring people from buying in the high rises.
CPI at 9.1%
HAWT ™
It was nice of WH to blatantly front run it yesterday.
surprised at the premiums some homes are still getting. this house closed for $275k over list. high end market still going strong?
https://www.redfin.com/IL/Chicago/2041-W-Cortland-St-60647/home/113096098
and this one just down the street went under contract in a week. should close soon.
https://www.redfin.com/IL/Chicago/1900-N-Hoyne-Ave-60647/home/64226601
Wow. Thanks for the link marco. $3 million for Bucktown. And a bidding war too. Came on the market after rates were already rising but clearly rates weren’t the issue for that buyer.
Still low inventory in many neighborhoods in SFH. There are plenty of condos available in the St Regis but not so many single family homes in Bucktown.
“and this one just down the street went under contract in a week. should close soon.”
Really high prices for Bucktown now. Hard to believe it’s a $3 million+ neighborhood for those on multiple lots. But I used to be surprised about that price point in Southport too.
“this house closed for $275k over list. ”
Sold with a pending foreclosure case seemingly connected with a divorce.
“this one just down the street”
Appears they may be in the Miami exodus. Not a Griff-esque beachfront compound, but nice enough channel-front place.
“Hard to believe it’s a $3 million+ neighborhood for those on multiple lots”
Why? Vacant lots in A locations in bt/wp (these are A locations, imo) are ~$700k each, and having two is a bit of a premium, so that’s $1.5m of dirt.
Having “only” a $1.5m home on equal value dirt is historically out of whack. Should be closer to 2x dirt value, but that’s incredibly rare in GZ Chicago.
“Sold with a pending foreclosure case seemingly connected with a divorce.”
do you think that had anything to do with pricing. probably not. the listing certainly doesn’t scream foreclosure. quality photos, decent listing agent.
“Why? Vacant lots in A locations in bt/wp (these are A locations, imo) are ~$700k ”
not likely anymore, especially on the typical 100′ deep Bucktown lot that these are on. maybe closer to 600k
“maybe closer to 600k”
So, $625. Plus a little premium for having the double–$1.3m-ish.
Still (traditionally) indicates a finished house closer to 4 than 3, much less so much less than 3 that 3 is “hard to believe”.
But then Chicago GZ dirt has mostly been overvalued compared to new house prices for 20 years–because so much of it involves tearing down a decent, if small and dated, structure.
“do you think that had anything to do with pricing”
Reasonably possible there was some pressure–once everyone was on board to list–to get it done quickly, which usually involves pricing to induce bids. But maybe not–just speculation, know nothing more than public records.
Could they have gotten more if they’d started high (say $3.25)? Who knows! Might have ended up with less sometime in ’23, which would be a lot less in real $$ and net of carry costs. I’d take a bird in the hand, especially to stop the clock on my lawyers and the banks lawyers.
It real dollars, haircut even with selling over ask–PP+CPI = $3.225m
“Appears they may be in the Miami exodus.”
Quit speculating on something you know NOTHING about anon(tfo). I hate these kind of comments about properties. Stop trying to act like you “know” the buyers and sellers and what is motivating them. You know NOTHING. Absolutely NOTHING.
Also, as someone is moving out of Chicago, others are moving IN. Both of these houses just sold so there is still demand for the upper bracket, at least in Bucktown.
Lovely neighborhood. Very different feel than Lincoln Park or Lakeview. Maybe because there are more cottages. Also the smaller lots make it seem more intimate.