Things took a wild turn this year when it came to buying a home in Chicago! Here is a rundown of what's happening with the market, starting during the pandemic, all the way up to 2023!
Do you remember the booming pandemic real estate market that started in May of 2020? We definitely do! Want to know what drove it all? Families realized that being stuck in their current homes was less than ideal. Couple that feeling with historically low-interest rates, and the housing market was on fire! Before you know it, everyone was buying a home in Chicago! The same was true for much of 2021. Inventory was shockingly low and buyers could scoop up a home with rates as low as 2-3%. It was basically “free money”. For homeowners who weren’t purchasing a new home at that time; they instead looked at these rates as a way to refinance & remodel their current home.
As we headed into 2022 we thought the housing market trend would be on a somewhat similar track. But suddenly, it was as if we hit a wall. Those low rates began to inch up bit by bit just as a war broke out in Ukraine. Those two things coupled together caused the market to come to a screeching halt. When the spring market approached, home buyers in Lake Forest, the North Shore, and the Chicagoland area slowly started to dip their toes back in. Although the spring market was slow, things at least started to move. But every time we saw those rates begin to rise, home buyers ran back into hiding. Then a few weeks later they could come back, and this continued for the rest of the year. After all, who wants to buy a home in Chicago when rates are at their highest if they know, without a doubt, it's just temporary until they fall again a few weeks later? Needless to say, we understand it was a frustrating time for many of our clients who were attempting to buy their dream homes. But we guided them at every twist and turn, while also educating them on what was best for their situation given the current landscape of the housing market.
Then, in late 2022 rates were high, well into 5% & 6%. While prices of homes had fallen a bit, we watched as sellers gave our buyers incentives and rate buy-down credits in order to urge them toward a purchase.
After all that, The Oertel Group had no idea what 2023 would bring! Would it be a full recession? In all honesty, we had not witnessed such huge swings from one year to another in our 23 years of experience! It was truly a wild and confusing time, to say the least. And if you were looking to buy a home in the 'burbs during this time, you might’ve felt the sting of what started to feel like a constant see-saw.
We quietly welcomed 2023 as a family while waiting patiently to see what the market would bring for our business. January and February were quiet to say the least. There wasn’t a whole lot of new inventory coming on the market. Additionally, homes that were listed 4-6 months prior to the new year were still on the market. Our personal thought from our perspective was, opportunity! When there’s a will there’s a way, right? We started to look at some “flips”! As 2023 progressed, we started to see rates at 6%, 7%, and 8%! As those rates grew to their highest, the spring market started to warm up.
Inventory was still extremely tight. Any home that did come on the market; especially if it was updated and priced accordingly, was seeing 10-15 offers within the first few days! Excellent news for our clients who were selling of course, but what did that mean for our clients who were buying? It meant that prices began to soar again! Some of our clients who sold and bought a new home in 2021, now needed to sell all over again. Only this time they were, of course, making a bigger profit than they did in 2021. It seems odd, doesn’t it? Interest rates were higher than they had been in decades. But homes that were newly on the market (and there weren’t many!) were selling for well over the asking price.
So here we are now, just about ready to put 2023 behind us. If you ask any real estate agent they’ll tell you what a challenge the market has been this year. The market only seems busy. But, sales volume has seen a decline year after year. We've watched homes selling well over asking, with those increased rates. It’s a classic example of supply versus demand coupled with the ever-present thought of location, location, location.
However, not all areas are experiencing the same effect. Not all homes are flying off the market. But, what The Oertel Group has personally experienced in Lake Forest, the North Shore, the 'burbs and the Chicagoland area are updated homes, priced accordingly, with buyers who are patiently waiting and willing. Regardless of the rates we just discussed! Families moving to the area are still searching for homes that suit their needs with the best school districts the area has to offer! In fact, the Chicago Tribune recently reported that as of June 2023, the average value of a single-family home in the Chicago area was just under $369,000. Which is about $19,000 above the national average
So, as local realtors, what can we do about it? How do we help these families buying a home in the 'burbs or the North Shore find what they need while still acquiring an affordable mortgage payment? We have found an easy solution for our clients by working closely with the president of Gold Coast Bank! What we’ve been able to do is partner with them in order to provide our clients with more options. Options that fit their specific needs. So while we can’t control the climbing rates and the constant pendulum of the housing market, we can always find the most amazing solutions for families who want to buy a home in Chicago & the ''burbs!