The state of the Chicago residential market in mid-July is frustrating—for both sellers and buyers.
Interest rates are a frustration that is common to both sides of the transaction. Expectations of downward pressure on interest rates had buyers and sellers optimistic earlier in the year. But inflation remaining consistently above the Fed’s targeted 2% level has buyers and sellers eagerly waiting for a change to occur.
With lower interest rates not providing any sort of relief and the average days on the market increasing, sellers are being forced to demonstrate their motivation by lowering asking price. For the period from June 7 to July 7, 2024, the average list price of active properties was approximately $551,000, a decline of 12.8% from the previous 30-day period. The average days
on the market also increased to 71.68 days.
During the survey period, the number of sellers making price changes totaled 1,240 properties, an increase of just over 2%.
“Overall, buyers are feeling really challenged. And on the flip side, some sellers are seeing the benefits of this because they have built-in a lot of equity in their home and they’re able to sell for a premium,” said Helen Bailey, owner and managing broker, Pioneer Realty Group.
Bailey added that scenario is more applicable for those who are downsizing. Sellers who are trying to upsize are running into the same challenges as every other buyer because while they may have a lot of equity in their current home, they may also have a mortgage 3% interest rate. This creates tremendous sticker shock when selling an existing home at a reasonable mortgage to buy a bigger home for a higher price at an interest rate that could be twice their current rate. “It’s a huge jump and a real challenge,” Bailey said.
The frustration with market conditions impacts everyone. First time buyers, who may have more limited financial resources, aren’t eager to commit to a long-term mortgage with rates at or above 7%. Similarly, sellers whose homes may have increased in value are looking to capitalize on the limited supply that is available, but without eroding the sale price.
One of the trends that is becoming increasingly more common is for longtime homeowners to delaying buying a new home and instead renting to get better acquainted with neighborhoods, downsize their space and secure more flexible lease terms.
“That strategy gives them time to find that right next home,” Bailey added.