Market Conditions: April Sales Up 5.5% YOY: Is the Bottom in Sales Finally In?
The April sales data is out from the Illinois Association of Realtors.
Inventory remains near record lows in Chicago. But sales appear to have bottomed for this cycle as they jumped 5.5% year-over-year in April.
The city of Chicago saw a 5.5 percent year-over-year home sales increase in April 2024 with 2,189 sales, up from 2,074 in April 2023. The median price of a home in the city of Chicago in April 2024 was $370,000, up 8.8 percent from April 2023 when it was $340,000.
Here are the sales statistics for April since 2007:
- 2007: 2419 sales
- 2008: 1886 sales
- 2009: 1407 sales
- 2010: 1984 sales
- 2011: 1466 sales
- 2012: 1816 sales
- 2013: 2392 sales
- 2014: 2256 sales
- 2015: 2435 sales
- 2016: 2706 sales
- 2017: 2647 sales
- 2018: 2700 sales
- 2019: 2595 sales
- 2020: 2057 sales
- 2021: 3360 sales
- 2022: 3249 sales
- 2023: 2074 sales
- 2024: 2189 sales
Here are the median prices:
- 2007: $289,800
- 2008: $300,000
- 2009: $218,000
- 2010: $225,000
- 2011: $169,000
- 2012: $182,000
- 2013: $223,500
- 2014: $250,000
- 2015: $271,325
- 2016: $286,000
- 2017: $297,500
- 2018: $307,500
- 2019: $310,000
- 2020: $338,000
- 2021: $373,750
- 2022: $370,000
- 2023: $340,000
- 2024: $370,000
“In April, closed sales and median sales price increased, which are signs of an active spring season and consistent with historical trends this time of year,” Erika Villegas, president of the Chicago Association of REALTORS® and broker and owner of RE/MAX In the Village said. “Sellers considering listing may want to make plans to act quickly in a pinched inventory market and buyers should talk to their REALTORS® about multiple offer scenarios in a competitive Chicago market.”
It still remains difficult to buy a single family home versus a condo. Sales of single family homes fell 1.6% to 726 while condo sales were up 9.5% to 1463.
Median price of single family homes soared 14.3% to $340,000 whereas condo median price was up just 1.3% to $385,000. But, remember, median price is about the mix.
“It is pleasing to see the increase in home sales from a year ago, but interest rates and the limited numbers of homes available for sale are still a major concern for consumers right now,” says Matt Silver, Illinois REALTORS® 2024 President and partner and senior broker for Corcoran Urban Real Estate in Chicago. “We are trying to work with elected officials at every level to provide incentives and take other steps to increase the number of affordable, available homes in Illinois.”
Statewide, inventory was at the second lowest in the last 16 years, which is when the data was first collected. 16,403 homes were available in April 2024, down 5.3% from 17,322 last year.
For comparison, statewide inventory was 56,094 homes in April 2019.
However, April 2024 was up from March 2024 when it was 15,988. March 2024 was the lowest level for statewide inventory since 2008.
In Chicago, inventory continued to decline. It fell 9.4% to 4,495 homes from 4,964 homes last year. There doesn’t appear to be a bottom yet in falling inventory.
- April 2021: 8,502
- April 2022: 6,681
- April 2023: 4,964
- April 2024: 4,495
Days on the market fell 18.4% year-over-year to 31 days from 38 days. However, last year it was the complete opposite. Days on the market jumped 18.1% to 38 days from 32 days in 2022.
Days on the market has hovered around 30 days throughout this cycle so I don’t consider April’s data to be out of the norm.
Average 30 year fixed mortgage rate rose to 6.99% in April from 6.82% in March. It’s also higher than last year when it was 6.34%.
After 2 years of mortgage rates over 6%, Chicago buyers have seemed to have adjusted.
Inventory in the GreenZone, which are among the most in-demand neighborhoods in Chicago, remains near record lows.
As of May 31, 2024:
- Lincoln Park: 201 properties
- Lakeview: 234 properties
- Bucktown: 72 properties
- Andersonville: 34 properties
- West Loop: 178 properties (includes east of the expressway per Redfin)
- River North: 371 properties
There are currently no new condo buildings under construction downtown. New buildings were always a source of more inventory but for the next several years, there isn’t going to be any.
Will Chicago home prices keep rising due to lack of inventory?
Illinois home sales rose in April despite lagging inventory [Illinois Association of Realtors, Press Release, by Bill Kozar, May 22, 2024]
On average, anyone with a 3% rate is locked into their current abode.
“After 2 years of mortgage rates over 6%, Chicago buyers have seemed to have adjusted.”
Based on???
“There are currently no new condo buildings under construction downtown”
Why does it have to be downtown? I though I heard all the mega projects were a lock and were going to start pumping condos out
Ah, the joys of the Chicago real estate market—where the only thing rising faster than home prices is the blood pressure of potential buyers.
Why does it have to be downtown? I though I heard all the mega projects were a lock and were going to start pumping condos out
————
Not to mention that Chicago continues to lose population, circa 90,000 between 2020 and 2023.
“Not to mention that Chicago continues to lose population, circa 90,000 between 2020 and 2023.”
Not the best metric as family dynamics/function are changing
Looking at May closings shown on Redfin, there’s been one SFH sold for $340k.
The coincidentally “median house” seems to me to be bang on for the median Chicago SFH:
https://www.redfin.com/IL/Chicago/8035-S-Wabash-Ave-60619/home/13226872
“Based on???”
Sales are no longer falling and are now rebounding. If only we had more inventory, we’d see even more sales. But it’s just not there. There are multiple bids on many properties in the GreenZone because there are thousands of people looking to buy and 10 properties.
“Why does it have to be downtown? I though I heard all the mega projects were a lock and were going to start pumping condos out”
Because this is where, for the most part, the high rise towers have zoning.
Lots of building in West Loop/Fulton Market but those mostly aren’t condos either. Only apartments.
This is the first time in a decade that there are no condo buildings being built downtown. There are a couple that are still selling, however (including the Reed on the Chicago River in Printers Row.) But nothing is under construction and nothing is even in the planning stages.
Doesn’t mean that some of the new apartment buildings won’t become condo buildings at some point. We’ve seen this changeover in the past when there has been slow construction. I’m still surprised there hasn’t been a conversion yet in Fulton Market. There IS demand for condos there.
All the other big new developments on the River are for hundreds of apartments.
“Not to mention that Chicago continues to lose population, circa 90,000 between 2020 and 2023.”
Hasn’t mattered in the housing market, has it? Apparently, those who left were not owners. And I doubt those who left were going to buy a 2/2 condo downtown. We know many who have left are from the south and west sides. Have moved to the suburbs or to the Southeast.
Chicago isn’t going to have enough apartments in the next 2 years to meet demand. Should see a pick-up in construction when rates come down. But when will we see condos? Still not happening.
Nice flip with that house at 8035 S. Wabash anon(tfo). They bought it for $165,000 last year. Sold for $340,000. Those brick bungalows have good bones if they are fixed up.
The lack of new construction is great news for current condo owners though. Finally, inventory has been absorbed. Little competition if you decide to list yours. Should help push prices up in most downtown neighborhoods.
Still too much inventory in the upper bracket though. They haven’t sold out the St Regis or Tribune. That means there is just too many units out there.
But if you have a 2/2 under $750k in another building? You’re in the driver’s seat.
“The lack of new construction is great news for current condo owners though. Finally, inventory has been absorbed. Little competition if you decide to list yours. Should help push prices up in most downtown neighborhoods.”
And where are they going to move?
The fact that for the 98.3% of the 2/2 owners, there’s no path to move up.
“Because this is where, for the most part, the high rise towers have zoning.”
None of the Mega developments have high rise zoning?
“This is the first time in a decade that there are no condo buildings being built downtown. There are a couple that are still selling, however (including the Reed on the Chicago River in Printers Row.) But nothing is under construction and nothing is even in the planning stages.
Doesn’t mean that some of the new apartment buildings won’t become condo buildings at some point. We’ve seen this changeover in the past when there has been slow construction. I’m still surprised there hasn’t been a conversion yet in Fulton Market. There IS demand for condos there.”
If only they had the wisdom of Sabrina.
“Sales are no longer falling and are now rebounding.”
So we had an early start to the sales season and only saw a 5% bump?
Man you really like twisting N=1 to absurd levels
“If only we had more inventory, we’d see even more sales. But it’s just not there. There are multiple bids on many properties in the GreenZone because there are thousands of people looking to buy and 10 properties.”
Other than leaving the city, SELLERS HAVE NO WHERE TO GO
My Best Friend’s Sister’s Boyfriend’s Brother’s Girlfriend Heard From This Guy Who Knows This Kid Who’s Going With The Girl Who moved from a 2/2 in RN to a $4MM home in LP
Ergo, Happens everyday
“Not to mention that Chicago continues to lose population, circa 90,000 between 2020 and 2023.”
Hasn’t mattered in the housing market, has it? Apparently, those who left were not owners.
—————————————
Sabrina, declining population means the pipeline of buyers is declining. Also, you have to ask yourself why those people think they’d be better off somewhere else. People leaving is not the hallmark of a well run city.
Given the buffoonish heights that the clowns in the mayor’s office, City council, and the state (“justice impacted individuals” anyone?), no wonder people are bolting for the exits.
Yet the latest Case Shiller data shows home prices rising 8.7% over the last year. Of course, that’s for the entire metro area so hard to say how the city is doing.
“Sabrina, declining population means the pipeline of buyers is declining.”
Hasn’t happened in the last decade and certainly not in the last 4 years. Surprisingly, Illinois inventory has also dropped to a record low even with thousands fleeing over the last 4 years as well.
Must mean that those fleeing were not owners. And also means some are moving from renters to owners who already lived here.
The statewide inventory drop is truly shocking. People are moving to Champaign, Springfield, Peoria, Rockford and Carbondale. Who knew?
“So we had an early start to the sales season and only saw a 5% bump?”
Sales have been declining since the Fed started raising rates in March 2022. In April, they appeared to have bottomed. It’s just one month so we’ll see what happens in May and June.
Hard to see a bump up in sales, though, with inventory still inching lower. But many properties are going under contract almost immediately after being listed.
“Other than leaving the city, SELLERS HAVE NO WHERE TO GO”
That has always been the case in markets with tight inventory.
So you’re saying we will never have inventory again in Chicago? Because sellers have nowhere to go?
“None of the Mega developments have high rise zoning?”
Mega developments are all downtown. There hasn’t been any talk, for instance, of putting 50 story towers on the old steel site on the south side.
“And where are they going to move?
The fact that for the 98.3% of the 2/2 owners, there’s no path to move up.”
People tire of neighborhoods and buildings. Many who live in River North may now want to live in Fulton Market, for example. They may need more space and decide they can get a 3-bedroom in Lakeview for the price of their 2-bedroom in Streeterville. Some may be tired of paying the higher assessments in high rise. Others had a baby and decide they want to be closer to a park and a certain neighborhood school.
Most Chicagoans don’t stick around in their homes for 20 years. This is why there are bidding wars all over the north side. Lots of buyers who can afford those prices but not enough properties.
“Hasn’t happened in the last decade and certainly not in the last 4 years. Surprisingly, Illinois inventory has also dropped to a record low even with thousands fleeing over the last 4 years as well.”
Thats not why inventory has dropped
“That has always been the case in markets with tight inventory.
So you’re saying we will never have inventory again in Chicago? Because sellers have nowhere to go?”
You’re being intentionally obtuse or are dumb as a stump by clipping one portion of a discussion and not reading it as a whole.
I’m saying that until homeowners can meaningfully upgrade, you will not see inventory rise. This excludes a couple of black swan type events. The fact that you are unable to grasp the effect of rates a 3% Vs 7% is baffling.
“Mega developments are all downtown. There hasn’t been any talk, for instance, of putting 50 story towers on the old steel site on the south side.”
Lincoln Yards and the 78 are downtown?
“People tire of neighborhoods and buildings. Many who live in River North may now want to live in Fulton Market, for example. They may need more space and decide they can get a 3-bedroom in Lakeview for the price of their 2-bedroom in Streeterville. Some may be tired of paying the higher assessments in high rise. Others had a baby and decide they want to be closer to a park and a certain neighborhood school.”
The issue is that most cant afford it
The owners of a 2/2 in RN cant swing the payment at 7% and little capital appreciation to upgrade to FM
“Most Chicagoans don’t stick around in their homes for 20 years. This is why there are bidding wars all over the north side. Lots of buyers who can afford those prices but not enough properties.”
You’re taking a relatively very short economic period of low rates, low inflation and increasing home prices (tho lagging the rest of the US) as “Normal”, when its not likely to return. LOL
Different economic parameters are going to drive different outcomes
You used to actually post this way. Not sure what happened
“The issue is that most cant afford it
The owners of a 2/2 in RN cant swing the payment at 7% and little capital appreciation to upgrade to FM”
You KNOW they can’t? They likely have decent equity in the current place. They got pay raises, some massive, in the last 10 years.
You just can’t give up on your theory that 7% mortgage rates are somehow dooming Chicago’s housing market. But they aren’t. Buyers have adjusted to those rates now. And, yeah, many ARE able to move up to a more expensive property even with the higher rates.
By the way, GenZ buyers have no recollection of “low” rates or what that even means. Americans buy the monthly payment. They will fit their budget to it. And that’s what we will see over the rest of this decade as rates remain elevated.
In addition, Baby Boomers and GenX will have paid off their homes. Mortgage rates will be irrelevant to them. Big difference for the housing market going forward.
“Lincoln Yards and the 78 are downtown?”
78 is definitely downtown. Lincoln Yards would not be. I don’t know the height of the buildings they were going to put on that site. Zoning is allowing taller towers near the river and in some former manufacturing zones. I guess there aren’t neighbors to complain about it as we’re seeing in Old Town.
“The fact that you are unable to grasp the effect of rates a 3% Vs 7% is baffling.”
Life dictates when you move. Not the rate. We’re a monthly payment nation. As long as you can afford the payment, you will move. Chicago is blessed with actually having affordable housing. It’s easier to become a homeowner here and move up in a decade.
Not to mention prices have nearly doubled in some neighborhoods since the bottom of the housing bust in 2012. Lots of home equity out there.
“Thats not why inventory has dropped”
Sales at 15 year highs and inventory at record lows. You tell me “why” the inventory dropped? Please enlighten us.
“You KNOW they can’t? They likely have decent equity in the current place. They got pay raises, some massive, in the last 10 years.”
Everyone in Chicago 2X their income in 3 years…LOL
Whats decent? Does it offset a 4% increase in mortgage rates? Inflation?
“You just can’t give up on your theory that 7% mortgage rates are somehow dooming Chicago’s housing market. But they aren’t. Buyers have adjusted to those rates now. And, yeah, many ARE able to move up to a more expensive property even with the higher rates.”
Facts are a stubborn thing. Its not just Chicago, its nationwide.
They’ve adjusted by not trying to trade up on properties every 5 years, otherwise, where’s the inventory?
Whats many?
“By the way, GenZ buyers have no recollection of “low” rates or what that even means. Americans buy the monthly payment. They will fit their budget to it. And that’s what we will see over the rest of this decade as rates remain elevated.”
This is why they’re building apartments Vs condos? LOL
“In addition, Baby Boomers and GenX will have paid off their homes. Mortgage rates will be irrelevant to them. Big difference for the housing market going forward.”
What? As an GenX’er thats paid off their house and is making significantly more than I did when we bought, this is wrong. No one is moving – Home improvements, yes moving, no. Throw in paying for kids college and you are absolutely wrong. Again if this was the case where’s all the inventory?
I’ll let you discuss the Boomers
“Life dictates when you move. Not the rate. We’re a monthly payment nation. As long as you can afford the payment, you will move. Chicago is blessed with actually having affordable housing. It’s easier to become a homeowner here and move up in a decade.”
If you were born with a silver spoon, maybe. For the rest of us mere mortals, no
If inventory is a metric, people arent moving, even if they’ve gotten ‘UUUUGE raises.
“Not to mention prices have nearly doubled in some neighborhoods since the bottom of the housing bust in 2012. Lots of home equity out there.”
You realize that 7% Vs 3% is about a 60% increase in P&I right?
“You tell me “why” the inventory dropped? Please enlighten us.”
I have
You either lack the intelligence or are unwilling to admit that I’m correct
Either way, rates are the issue
“Not to mention prices have nearly doubled in some neighborhoods since the bottom of the housing bust in 2012. Lots of home equity out there.”
One last point on this.
Lets take a 2/2 owner in RN
Assume PP of $500k
Assume 20% DP + $100k in equity from loan payments – so a theoretical $200k in equity
Now the only what they’ll come close to selling for close to the original PP is if they’ve done substantial upgrades – excluding pergolas and wall units with sophisticated chips. Lets call it $100k (As someone is wont to say, highrise construction is VERY expensive). So their DP is slightly >, call it $150k in equity for a DP on new place ($750k).
Where are they moving in a land of 7% rates, based upon existing P&I of $1700/mo (I’m excluding the $ for the remodel) to P&I of $4000/Mo? And is the new place an upgrade to their existing?
I’m non accounting for non-shelter inflation
“You tell me “why” the inventory dropped? Please enlighten us.”
“I have”
So you have no clue. Why did Illinois inventory crash to record lows, and continues to be near those lows, yet its soaring in Texas, Florida and several other states?
Same interest rates for everyone.
Anyone know?
“This is why they’re building apartments Vs condos? LOL”
Nope. They are building apartments because they couldn’t get the loans on condos. There hasn’t been demand. Young people wanted to rent and all the new apartment buildings rock. Amenities out the wazoo. Who would want to move to some old condo building with a postage stamp size gym.
“Again if this was the case where’s all the inventory?”
In Florida and Texas?
“Everyone in Chicago 2X their income in 3 years…LOL”
Yeah. Tech salaries went insane. If those people still have their jobs (lots of layoffs in tech) they are making bank. Also have stock options which are back to all-time highs.
Don’t need “everyone” to have seen the big salary increases.
“So you have no clue. Why did Illinois inventory crash to record lows, and continues to be near those lows, yet its soaring in Texas, Florida and several other states?
Same interest rates for everyone.
Anyone know?”
You are comparing Chicago with boom locations that saw astronomical appreciation and built like crazy
Noodle on this before responding
“Nope. They are building apartments because they couldn’t get the loans on condos. There hasn’t been demand. Young people wanted to rent and all the new apartment buildings rock. Amenities out the wazoo. Who would want to move to some old condo building with a postage stamp size gym.”
What?!? We arent talking about existing stock LOL (Nice moving of the goal posts)
Glad to see that you’ve come around on the fact that no one wants a 2/2 shitbox. LOL Only took you 4 years of arguing like an insane person, but you’ve finally got a brief glimpse of reality.
They’re building apartments because they cant get the proforma to work to support condo construction
On one hand you state there is this insatiable demand for home ownership and on the other everyone just wants to live in an apartment
Make up your mind Sybil
“Yeah. Tech salaries went insane. If those people still have their jobs (lots of layoffs in tech) they are making bank. Also have stock options which are back to all-time highs.”
Shouldnt this be increasing inventory? All those Salesforce and tech Thousandaires laid off and having to sell their FM Condos
JU says
“You realize that 7% Vs 3% is about a 60% increase in P&I right?”
and JU also says
“Either way, rates are the issue”
The NYT says (partial link
“People who bought their starter home a few years ago are finding themselves frozen in place by what is known as the “rate-lock effect” — they bought when interest rates were historically low, and trading up would mean a doubling or tripling of their monthly interest payments.
They are locked in, and as a result, families hoping to buy their first homes are locked out.”
https://jumpshare.com/s/HGHqf9U4MJ0hGvqZn47q
JU
citation with this article was chosen as they article had specific chicago metro example and also extension to nationwide
on a side note, why spin round and round with the Sabrina persona?
https://www.therpf.com/forums/attachments/2-jpg.1511250
They are locked in, and as a result, families hoping to buy their first homes are locked out.”
But this doesn’t explain why this is NOT happening nationwide. Texas inventory, for instance, is now back to pre-pandemic levels. It’s up 2% since 2019. Illinois, however, is down 69%.
“Shouldnt this be increasing inventory? All those Salesforce and tech Thousandaires laid off and having to sell their FM Condos”
I guess they got a job JohnnyU. Or maybe they are running a lucrative YouTube channel.
“Glad to see that you’ve come around on the fact that no one wants a 2/2 shitbox. LOL Only took you 4 years of arguing like an insane person, but you’ve finally got a brief glimpse of reality.”
Not what I said. That’s YOU all bitter about 2/2s. I don’t understand why.
“You are comparing Chicago with boom locations that saw astronomical appreciation and built like crazy”
Has nothing to do with it. Those homeowners in Texas should have to want to stay in their 3% rate at all costs even MORE than a Chicago homeowner because their prices have doubled. No way they can sell, even with the equity withdrawal, and get something MORE expensive with an affordable payment.
Yet inventory is SOARING in Texas. Why? If it’s all about those people locked in, why is everyone selling in Florida? Why isn’t anyone selling in Illinois, Michigan and Massachusetts?
I was going to crib on this Park Castle renovated 1-bedroom in the Indian Boundary Park neighborhood but it went under contract before I could get to it. 13 days.
It’s so cute. $169,900
https://www.redfin.com/IL/Chicago/2422-W-Greenleaf-Ave-60645/unit-1/home/13584487
“JU
citation with this article was chosen as they article had specific chicago metro example and also extension to nationwide
on a side note, why spin round and round with the Sabrina persona?
https://www.therpf.com/forums/attachments/2-jpg.1511250”
LOL I feel like I’ve been hung on the Tree of Woe
As for why, morbid curiosity about narcissistic psychopathy
“Not what I said. That’s YOU all bitter about 2/2s. I don’t understand why.”
Not bitter, just a healthy distain for those of your ilk that we’re telling young buyers to but the 2/2 shitbox and upgrade in 5 years. Great strategy, 60% of the time it works all the time
“Has nothing to do with it. Those homeowners in Texas should have to want to stay in their 3% rate at all costs even MORE than a Chicago homeowner because their prices have doubled. No way they can sell, even with the equity withdrawal, and get something MORE expensive with an affordable payment.”
It has everything to do with it
There were a large number of speculators driving a significant part of the boom (Go ask your kids to show you some tik-tok/youtube rEAl EsTaTe mILlIonAires). They, like you were of the belief that rEaL EstATe oNLy GoEs uP and that the boom would last forever
“Yet inventory is SOARING in Texas. Why? If it’s all about those people locked in, why is everyone selling in Florida? Why isn’t anyone selling in Illinois, Michigan and Massachusetts?”
Hmmmm what do Florida and Texas have in common Vs Il, Mi & Ma?
I’ll hang up and listen
Its really interesting to see in realtime your ability to block out any and all information that does support your incorrect thesis LOL
I do know that insurance rates in Texas and Florida are skyrocketing. Florida is out of control. Could this be the beginning of people abandoning those states?
JU
attempt at link broke so here is another link from the NYT article
this one should stay up
https://d1e00ek4ebabms.cloudfront.net/production/uploaded-files/wp2403-cc934cce-4518-41ed-8ced-f40298cdd60b.pdf
from the abstract
This paper finds that for every percentage point that market mortgage rates exceed the origination interest rate, the probability of sale is decreased by 18.1%. This mortgage rate lock-in led to a 57% reduction in home sales with fixed-rate mortgages in 2023Q4 and prevented 1.33 million sales between 2022Q2 and 2023Q4. The supply reduction increased home prices by 5.7%, outweighing the direct impact of elevated rates, which decreased prices by 3.3%.
These findings underscore how mortgage rate lock-in re- stricts mobility, results in people not living in homes they would prefer, inflates prices, and worsens affordability.
The thing I don’t understand is that when someone decides not to move that decreases supply by one unit but it also decreases demand by one unit so why isn’t it just a wash?
“Park Castle renovated 1-bedroom in the Indian Boundary Park”
Dec-23 foreclosure into REO from Aug-17 mortgage for $75,200.
Originally bought in Jun-78 for $35,500 (+CPI = $183k)
Looks like the owner died in Dec-19.
Have to imagine it was un-updated since ’78.
Most recent closed sale of a 1/1 was for $155k:
https://www.redfin.com/IL/Chicago/2448-W-Greenleaf-Ave-60645/unit-1/home/13584217
“why isn’t it just a wash?”
Mix, right?
Someone looking to sell is *more likely* to be looking at move-up properties, and *more likely* to be selling a starter-type property.
And there certainly has been less new construciotn of starter-type properties over the past 5 years.
“And there certainly has been less new construciotn of starter-type properties over the past 5 years.”
What are you talking about? I’ve been reliably informed that all grads in Chicago are making > $200k 3 years out of school. Thats plenty of money for a starter-type property
“JU
attempt at link broke so here is another link from the NYT article
this one should stay up
https://d1e00ek4ebabms.cloudfront.net/production/uploaded-files/wp2403-cc934cce-4518-41ed-8ced-f40298cdd60b.pdf
from the abstract
This paper finds that for every percentage point that market mortgage rates exceed the origination interest rate, the probability of sale is decreased by 18.1%. This mortgage rate lock-in led to a 57% reduction in home sales with fixed-rate mortgages in 2023Q4 and prevented 1.33 million sales between 2022Q2 and 2023Q4. The supply reduction increased home prices by 5.7%, outweighing the direct impact of elevated rates, which decreased prices by 3.3%.
These findings underscore how mortgage rate lock-in re- stricts mobility, results in people not living in homes they would prefer, inflates prices, and worsens affordability.”
Well Sabrina knows a gal, whos brothers, sisters cousins babysitter moved without paying attention to the rates. This N=1 >> and data driven paper
Gary says
“The thing I don’t understand is that when someone decides not to move that decreases supply by one unit but it also decreases demand by one unit so why isn’t it just a wash?”
for the record the NYT link is (paywall I know)
https://www.nytimes.com/2024/06/02/realestate/housing-market-rates-prices-slow.html
some extracts
For decades, the U.S. has failed to build enough housing to keep up with demand — a problem that is widespread and affects all types of housing, but is especially pronounced for starter homes, economists say.
During the 1970s, more than 400,000 entry-level homes — defined as those that are no more than 1,400 square feet — were built in the United States each year, according to a report by Freddie Mac. In the 2000s, that number shriveled to about 150,000 a year. By 2020, just 65,000 starter homes were built. Yet 2.38 million people purchased their first homes that year, according to the report.
and also
With buyers and sellers in higher price tiers effectively paralyzed, the weight of the housing market is pressing down hardest on those with the least to spend.
“The trade-up buyer has just disappeared,” said Sam Khater, chief economist at Freddie Mac, explaining that homeowners who are unable to upgrade are instead going down in the price continuum. “The lack of supply, it’s not just that it’s causing prices to go up, but it’s causing prices in the bottom half of the price distribution to go up even more.”
Prices in the lowest tranche of the housing economy are growing at a faster rate than in any other category. Over the past 20 years, the price for entry-level homes — defined as homes that cost 75 percent or less than the median in a given market — has nearly tripled, according to CoreLogic, a property information firm.
….
If those conditions weren’t tough enough, first-time buyers and people in their first homes are now competing against a wave of investors and all-cash buyers who can forgo the mortgage game — 28 percent of U.S. homes sold in April were bought entirely in cash, according to the National Association of Realtors.
“Well Sabrina knows a gal, whos brothers, sisters cousins babysitter moved without paying attention to the rates. This N=1 >> and data driven paper”
Apparently homeowners in Texas and Florida don’t care about the rates. Inventory soaring in both states now.
“What are you talking about? I’ve been reliably informed that all grads in Chicago are making > $200k 3 years out of school. Thats plenty of money for a starter-type property”
Chicago built starter homes in some of the neighborhoods where the housing bust was most extreme so we saw them in Avondale, parts of Logan Square, Humboldt Park, West Town. Land got cheap enough for some developers in 2012 to build those modern looking starter homes but those started in the $400,000s (now re-selling in the $700,000s and $800,000s).
The starter condo never came back after the bust because there was simply too much inventory and it took over a decade to absorb everything built during the boom but the $500,000 luxury 2/2 did. By 2012, they were building that.
Starter homes are still being built but only in select non GreenZone neighborhoods like south of the Ike near Rush and in south side neighborhoods like Woodlawn and South Shore. But even there, the “starter” prices are $400k to $600k.
You have to mostly leave Chicago and go to the burbs to get “new” construction starter properties. You can still get re-sale properties at the starter price. But even those are up big. A renovated bungalow on the south side will now cost you $300,000 in many neighborhoods. That’s not really a “starter” price with 7% rates.
It is two different types of buyers when you are talking GreenZone versus citywide. GreenZone buyers are upper middle class and rich.
“Have to imagine it was un-updated since ’78.”
I’m sure. That’s why this went under contract right away. They did a nice renovation on it. Buyers love “new.” And this is a lovely building with great architecture features. Indian Boundary Park is a wonderful neighborhood as well.
Nice starter condo.
“I do know that insurance rates in Texas and Florida are skyrocketing. Florida is out of control. Could this be the beginning of people abandoning those states?”
Not sure Gary. Still people moving into both of those states, the last I checked. Also, insurance has skyrocketed in California and many can’t get it there at all. Shouldn’t even more people be abandoning California?
Or it will mean only the rich will remain who can self-insure. I know a rich couple who is self-insuring their Florida house because the premium was so outrageous. They don’t have a mortgage, so there’s no demand for the insurance from a bank. Still seems risky to me.
“Hmmmm what do Florida and Texas have in common Vs Il, Mi & Ma?”
Massive numbers of people moved to FL and TX during the pandemic. They left Illinois, Michigan and Massachusetts. Yet inventory has continued to fall in IL, MI and MASS but has only risen in FL and TX. Yet there is no indication that people aren’t STILL moving to FL and TX. Last I checked, 1,000 a day were still moving to Florida.
But maybe that has abruptly ended and there is now reverse migration? But we know from posters like chichow on this blog that thousands are leaving Chicago. So our low inventory isn’t due to people returning from Florida.
In Illinois, inventory is 69% below 2019’s level. That is statewide. Inventory remains incredibly low in Springfield, Champaign, Peoria, Cardondale and the like.
But yet, people are still leaving the state of Illinois. Is it only renters who are leaving? Why aren’t their properties being listed? We know sales are low right now.
“Not bitter, just a healthy distain for those of your ilk that we’re telling young buyers to but the 2/2 shitbox and upgrade in 5 years. Great strategy, 60% of the time it works all the time”
Who told young buyers to do that? You mean in 2005? You’re always living in the past JohnnyU. I beg of you to get into this era. It is 2024. It was GenXers who bought 2/2 condos in big cities in 2001-2008. Many got stuck in them. Many were foreclosed on and walked away. They are likely in a house somewhere by now.
Some stayed and sold in the mid 2010s when prices had started to recover a bit. Few in Chicago “made” money but at least they had some equity they could roll over.
It wasn’t until 2020 to the present that Chicago real estate took off in the neighborhoods. Prices are up considerably there which is why there are not many 2/2s in the $400,000s any longer. Only place you can find them in the GreenZone is downtown because of all the reasons that have been listed on this blog the last few years (too much inventory, out of favor neighborhoods etc.)
By the way, in downtown, it’s cheaper to buy that 2/2 than to rent it even with the higher mortgage rates. If you think you’re going to be there a while, it may make more sense for many to buy it.
“By the way, in downtown, it’s cheaper to buy that 2/2 than to rent it even with the higher mortgage rates.”
Hmmm…
You think this one would be cheaper to buy:
https://www.redfin.com/IL/Chicago/130-N-Garland-Ct-60602/unit-1206/home/12647526
Let’s say that the owner would agree to take the $465k they paid:
P+I on $372k (80%) @ 7% = $2,475
HOA ~ $650
Taxes ~ $1,000
Cost to purchase = $4,000+/mo, plus $93,000 down.
Asking rent = $3,750/mo, plus $7,500 down. AND IT’S FURNISHED.
“Apparently homeowners in Texas and Florida don’t care about the rates. Inventory soaring in both states now.”
So real estate is global now? Funny, you were singing a different tune when FL & TX were seeing massive increases and Chicago was languishing.
“Massive numbers of people moved to FL and TX during the pandemic. They left Illinois, Michigan and Massachusetts. Yet inventory has continued to fall in IL, MI and MASS but has only risen in FL and TX. Yet there is no indication that people aren’t STILL moving to FL and TX. Last I checked, 1,000 a day were still moving to Florida.
But maybe that has abruptly ended and there is now reverse migration? But we know from posters like chichow on this blog that thousands are leaving Chicago. So our low inventory isn’t due to people returning from Florida.”
FL & TX overbuilt, hence why there’s inventory
Who says they’re moving back to Chicago? Big country, lots of options
“In Illinois, inventory is 69% below 2019’s level. That is statewide. Inventory remains incredibly low in Springfield, Champaign, Peoria, Cardondale and the like.
But yet, people are still leaving the state of Illinois. Is it only renters who are leaving? Why aren’t their properties being listed? We know sales are low right now.”
So according to you, somehow this mass exodus is having a negative impact on inventory? is that what you are saying?
“Who told young buyers to do that?”
Look in a mirror
“You mean in 2005?”
No For you even this is poor form
“You’re always living in the past JohnnyU. I beg of you to get into this era. It is 2024. It was GenXers who bought 2/2 condos in big cities in 2001-2008. Many got stuck in them. Many were foreclosed on and walked away. They are likely in a house somewhere by now.”
We’re not talking about GenX But typical of you, moving the goalposts
“Some stayed and sold in the mid 2010s when prices had started to recover a bit. Few in Chicago “made” money but at least they had some equity they could roll over.”
Show me a 2/2 shitbox that someone purchased in the early 00, that was at breakeven by ’10?
“It wasn’t until 2020 to the present that Chicago real estate took off in the neighborhoods. Prices are up considerably there which is why there are not many 2/2s in the $400,000s any longer. Only place you can find them in the GreenZone is downtown because of all the reasons that have been listed on this blog the last few years (too much inventory, out of favor neighborhoods etc.)”
And you kept up the lie it was cheaper to buy the 2/2 shit box Vs rent
For shame
“By the way, in downtown, it’s cheaper to buy that 2/2 than to rent it even with the higher mortgage rates. If you think you’re going to be there a while,”
Drunk and delusional
“Hmmm…
You think this one would be cheaper to buy:
https://www.redfin.com/IL/Chicago/130-N-Garland-Ct-60602/unit-1206/home/12647526
Let’s say that the owner would agree to take the $465k they paid:
P+I on $372k (80%) @ 7% = $2,475
HOA ~ $650
Taxes ~ $1,000
Cost to purchase = $4,000+/mo, plus $93,000 down.
Asking rent = $3,750/mo, plus $7,500 down. AND IT’S FURNISHED.”
That one doesnt count, for imaginary reasons – Sabrina
“It wasn’t until 2020 to the present that Chicago real estate took off in the neighborhoods. Prices are up considerably there which is why there are not many 2/2s in the $400,000s any longer. Only place you can find them in the GreenZone is downtown because of all the reasons that have been listed on this blog the last few years (too much inventory, out of favor neighborhoods etc.)”
So WP, LS, Bronzeville, Andersonville didnt see any appreciation prior to 2020?
Why would a couple of college grads in chicago need to shoot so low, at $400k HHI, they can easily do > $1MM
You are so intellectually dishonest that I feel sorry for you
“Show me a 2/2 shitbox that someone purchased in the early 00, that was at breakeven by ’10?”
2000 to 2010? Nominal dollars? That’s a cake walk.
The lowest that C-S Condo was in 2010 was 117.75 in December.
2005 to 2010? Definitely much harder.
Real dollars? also tough Jan-00 to Dec-10: 100 to ~130
“Show me a 2/2 shitbox that someone purchased in the early 00, that was at breakeven by ’10?”
People were waiting in line to buy those 2/2 “shitboxes” in 2000 in River North.
By 2010, the bust was happening and picking up steam. So, it would be tough.
Reminder: $10,000 invested in the S&P 500 in 2000 was still $10,000 in 2010. Many forget just how tough that decade was. Dot-com bust, 9/11, record high oil prices, the great recession, housing bubble bursting.
“So WP, LS, Bronzeville, Andersonville didnt see any appreciation prior to 2020?”
Nope, not what I said. After the bust JohnnyU. Plenty of price appreciation during the housing bubble.
Lincoln Square prices were up like 300% during the housing bubble.
“That one doesnt count, for imaginary reasons – Sabrina”
I’m comparing buying with renting in one of the nice Class A buildings, JohnnyU. But yes, if the condo hasn’t been updated and has older finishes, then it might rent out at the same price as buying in that same building.
“Who told young buyers to do that?”
“Look in a mirror”
I’ve been running this blog for 17 years. Most of those who have been around that entire length of time know that I was a housing bear for, what, 10 years? Lol. Hilarious that you think I was telling people to buy.
My advice has been consistent that entire time. Look at the NYTimes rent-to-own calculator. Run the numbers. Ask yourself how long you intend to be in the property- which you can then adjust on the calculator. If you don’t intend to stay at least 10 years, it might not make sense to buy anything (not just a 2/2). Chicago real estate hasn’t appreciated like other cities.
That advice was before the recent 4 year period where the inventory has plunged and prices have actually risen for the first time in a long time.
But some parts of the city are still struggling, such as downtown.
Real estate is not an “investment.” It’s somewhere to live. Plan accordingly.
And I see nothing wrong with buying a 2/2 depending on your circumstances. Many people are foregoing marriage and kids in the younger generations. A 2/2 could work for many for their entire lives. A 2/2 would be a luxury in many other cities like LA, SF and NYC. Nothing wrong with making one your home.
“FL & TX overbuilt, hence why there’s inventory”
They did? But that would mean someone is selling all of those properties. WHY ARE THEY SELLING WHEN THEY LOCKED IN WITH A 3% MORTGAGE IN 2021?????
“You think this one would be cheaper to buy:”
Are we going to look at every building and pick and choose?
“Oh look Sabrina, here’s one where it’s cheaper to rent than to buy. You are wrong. Oh, look Sabrina, here’s another in a building 2 miles away that is also cheaper.”
Really?
It’s cheaper to buy these properties than it is to rent in any of the new Class A buildings. Units are much bigger for the price.
“So real estate is global now? Funny, you were singing a different tune when FL & TX were seeing massive increases and Chicago was languishing.”
Nope. But if you’re going to argue that it’s rates keeping the inventory down, then those same rates apply to all 50 states.
“It’s cheaper to buy these properties than it is to rent in any of the new Class A buildings.”
So comparing apples to oranges.
People prefer to rent in the rental buildings, and pay a premium for it, versus renting in a condo building.
But they’ll happily pay more to live in the condo building than it would cost to rent in that same building.
Basically: people are not behaving like economically rational actors.
Which is fair enough, but it’s not the same thing as “it costs more to rent”. People are chooinsg to pay more than they have to for non-(purely-)economic reasons.
“People prefer to rent in the rental buildings, and pay a premium for it, versus renting in a condo building.”
Yes. They want “new.” They also don’t want to put down a month’s worth of rent or pay a move-in fee, which some buildings can charge up to $1000.
Imma just leave this here – https://www.nbcdfw.com/news/local/fort-worth-report-finds-over-a-quarter-of-homes-are-owned-by-commercial-interests/3559340/
I eagerly await Sabrina’s nonsensical rant
“I eagerly await Sabrina’s nonsensical rant”
I’m glad I don’t live in Texas. Or Florida. Their housing markets are in for a trip the next few years.
Chicago and the suburbs have a very low percentage of institutional ownership. Investors hate our market because it’s been so crappy for so long. Same with the homebuilders. There are few national homebuilders in Chicagoland.
JFC – Zero self awareness
“There are few national homebuilders in Chicagoland.”
DR Horton, Pulte, Lennar & Toll Brothers don’t count? You do realize that the exurbs kept expanding out for the past dozen years or so and they’re still building, constrained only by the supply chain issues from beer flu?
“DR Horton, Pulte, Lennar & Toll Brothers don’t count?”
4 national homebuilders is NOTHING. They are ALL in states like Texas and Florida. Most of the nationals abandoned the Chicagoland market years ago.
Toll Brothers has ONE community in Chicago or Chicagoland and it’s in Elgin.
Imagine being the nation’s largest luxury home builder and you have just ONE development in the Chicagoland area which has some of the richest suburbs in the country and richest city neighborhoods.
Wow.
Lennar has 16 communities with 90 homes available. Some are townhouses and condos.
There are millions of people living in the Chicagoland area. “Supply chain issues” have nothing to do with building in Chicagoland and never did. They couldn’t make the same money here so they left. (FYI: National builders said that the supply chain normalized well over a year ago.)
Pulte is doing fairly well with its 55 and over communities though. Not everyone wants to move to Las Vegas, Arizona or the Villages in Florida. Pulte figured this out a decade ago.
By the way, on Lennar’s website, there are quite a few price cuts on various communities.
Sabrina, if Chicago’s market has been crappy for so long, why have you spent years telling us it’s the place to be?
“Sabrina, if Chicago’s market has been crappy for so long, why have you spent years telling us it’s the place to be?”
I’ve never said it’s the place to be. This blog is simply about featuring Chicago real estate and market conditions. That’s it. Market was in a bubble when I started it, went into a bust with 40% of sales foreclosures. Then slowly heeled. Pandemic hit downtown hard, and prices fell there. But over the last 2 years inventory has fallen to new lows so now prices are up in many of the neighborhoods and certain buildings downtown.
It’s now cheaper to buy, even with these mortgage rates, than to rent, in some downtown buildings.
Every buyer has to decide what works best for themselves. Chicago has always been a buy and hold type market. If you are going to sell within 5 years, you probably shouldn’t be buying. Our prices just don’t go up fast enough to cover the closing costs.
Sorry, I wasn’t feeling well yesterday so I couldn’t get to a new post for today until this morning. I’m wondering if maybe I didn’t catch COVID on my travels as it’s circulating in the hot states again (as it does every summer). All of my planes were packed and I was indoors with a lot of people, due to the heat.
Ugh.
The Chicago market has seen a distinctive slowdown in just the last 6 weeks. Properties are staying on the market longer. Even the “nice” ones.
“The Chicago market has seen a distinctive slowdown in just the last 6 weeks. Properties are staying on the market longer. Even the “nice” ones.”
Unpossible
Someone posted that its cheaper to buy than rent
Dont people have to live?
“Someone posted that its cheaper to buy than rent”
In some neighborhoods, it is.
A slowing off of the red hot market in the spring isn’t a surprise. But inventory has ticked up slightly and you can feel it in the market. It has slowed. Also starting to see the higher end properties (over $2 million) sitting and now having to do price cuts.