Northern Illinois Housing Market Faces Interesting Mix of Challenges, Opportunities in 4th Quarter, RE/MAX Brokers Report
CHICAGO, Oct. 11, 2018 /PRNewswire/ — An unusual confluence of trends in the northern Illinois housing market presents an interesting mix of challenges and opportunities to buyers and sellers during the final months of 2018, according to an analysis by the RE/MAX Northern Illinois regional network.
“We’re seeing sales activity and price levels comparable to what we experienced a year ago, but with some important differences,” said Jeff La Grange, Vice President of the RE/MAX Northern Illinois Region.
One significant change has been a turnaround in the inventory of homes for sale. The supply of listings in the Chicago area shrank for two years until May of this year but has slowly expanded since then, noted LaGrange. However, most of that growth involved attached homes and luxury homes. Listings of moderately priced single-family homes remain in short supply in most submarkets.
The inventory situation has yet to improve in the Quad Cities market on Illinois’ western side. There the current inventory is about half as large as it was a few years earlier, reported Starr Fell of RE/MAX On Track in Aledo, Ill. Nonetheless, she said, “The overall strength of the economy is giving a major boost to home sales.”
Another noteworthy change emerging in 2018 has been a slowdown in overall appreciation, with prices still rising but at a slower pace.
“The metro-Chicago median sales price for the first eight months of 2018, as an example, was +2.1% higher than the same period in 2017, but last year the comparable result was a gain of +5.7%,” LaGrange said.
Home values are rising most quickly for entry-level and moderately priced homes, reports Amy Pecoraro of RE/MAX Achievers, Lombard, Ill.
According to Dave Shalabi of RE/MAX Synergy, Orland Park, Ill., homes priced from $250,000 to $500,000 continue to sell briskly.
“There are many first-time buyers in that segment, so it’s very competitive with short market times and multiple offers, a situation that clearly favors sellers,” Shalabi said. “These young buyers are more interested in quality of life than the size of the home. They are willing to pay top dollar for the right home in top condition. At the same time, buyers are more fiscally conservative now than I’ve seen at any earlier time in my career, and I’m delighted with that,” he continued, “because we don’t want clients to end up in financial trouble.”
That strong demand for homes doesn’t extend into the upper priced precincts of the market, said Basel Tarabein, of RE/MAX At Home, Rolling Meadows, Ill.
“Pricing is definitely under pressure for homes listed at $800,000 or more, and that is creating some excellent buying opportunities,” he said. “Rising property taxes are dampening the potential price appreciation for those homes, and rising mortgage interest rates may be having a similar impact.”
On the other hand, observed Jay Rodgers of RE/MAX All Pro, St. Charles, Ill., the tax cuts passed by Congress earlier this year seem to be having a positive impact on the high-end market, but that is at least partially offset by the limitation on the deductibility of property taxes that was in the same legislation.
Rising mortgage interest rates may constrain some home buyers, but if mortgage rates stay below 5%, Esther Zamudio of RE/MAX Horizon, Elgin, Ill., expects the more affordable segment of the market to remain active through the winter.
“We’re seeing plenty of demand, and with prices for those homes now approaching their 2007 highs, we’re also seeing more creativity from both buyers and lenders,” Zamudio said. “Lenders are being more flexible on the debt-to-income ratio. A few years ago, they were holding the line at 38%. Now, some lenders are at 50% or a bit more. As for buyers, many are considering multifamily buildings they can either share with a relative or bring in renters to help cover the mortgage.”
Val Hatzelis of RE/MAX 10, Oak Lawn, Ill., has been impressed by buyers’ growing preference for homes that require little or no fix up after purchase.
“Over the past several months we’ve seen plenty of buyers, but they all want the same property – move-in ready, updated, freshly painted, new flooring, almost perfect homes with no work needed. When a property like that comes along, multiple buyers will bid, but only one gets it. Then there are still seven to nine buyers out there waiting for that next perfect home,” she said, noting that this behavior was common with both first-time buyers and trade-up buyers.
With more than 2,200 sales associates and 106 offices throughout the area, RE/MAX Northern Illinois has helped thousands of families with their home buying and selling needs. For more information, visit www.remax.com or download the RE/MAX mobile real estate app.
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SOURCE RE/MAX Network