Despite the interest rates increase, the Chicago Real Estate Market is staying relatively strong, according to Chicago real estate agents.
Recent reports from real estate data analytics firm Attom have placed Chicago as one of the most vulnerable states to home value decline or most at risk of a housing downturn in a potential economic slowdown in the US housing market. Looking into the projections for the Chicago housing market, many experts have agreed with this sentiment and have said that Chicago Real Estate Market is in a vulnerable state right now as interest rates are high and only expected to decline over the course of 12 months, according to Norada Real Estate Investments.
The general statistics for the Real Estate Market states that they will be a decline of 6.7% in house sales overall. Still, in the case of Chicago, the housing market has seen a rapid sale in the month of August 2022 despite of the increase in home prices and this is due to the increased power from market buyers, this has helped real estate agents in the Chicago area remain optimistic as the market remains competitive. Homes are selling in 57 days overall. Although the local Chicago website has seen a decrease in the number of homes purchased in recent weeks, mentioning that interest rates are a significant factor.
According to the Chicago Agent Magazine, home sales were down 18.6% in August 2022. Still, the average home sold in 23 days, one day faster than August 2021, despite the median home price rise to $311,000, a 3.7% bump from August 2021, which shows there’s still a high demand for houses in Chicago despite the high-interest rate.
How Is The Interest Rates Affecting Home Buyers In Chicago
As stated by Anna Fiascone, a Realtor in the Chicago suburbs, there has been an increase of 26.6% in home inventory to a year ago in August. According to a Realtor.com report, the home interest rate increase may be why.
Home buyers are stepping back, and some sellers are as well because the rising rates are making the monthly mortgage payments a bit more expensive for devalued properties. Also, adding to the inflation and record-high home prices, home buyers consider the best move right now is to wait.
The Federal Reserve has affirmed its commitment to reducing house rates. However, as stated by the Federal Reserve, one of the measures to fight inflation is to increase its rates. Still, many consider this move not helpful. They may be the cause that could derail the economy into a recession even faster and not the other way around, as everything from mortgages to student loans will be impacted by the rate hike.
Although long-term rates for fixed-rate mortgages are not affected by federal rates, experts advise staying up to date with changes from the federal reserve so you get a deal that suits your budget when shopping around for homes.
The truth is many buyers are taking a break and saving more money while waiting for the best time to make a move. However, buying a home represents the largest single purchase most of them will make in their lifetime, so it’s crucial to be in a good financial position before buying.
What real estate agents in the Chicago area are saying
Despite all this refusal from home buyers to buy now, real estate agents remain optimistic and consider the market strong despite the hike in interest rates and most buyers backing down. Many agents use the term “hot homes,” a marketing trend to keep buyers interested in buying.
According to Redfin:
“A Hot Home is a home for sale that is expected to be among the most competitive homes on the market.
The Hot Homes algorithm automatically calculates the likelihood by analyzing more than 500 attributes of each home – including price, property type, and neighborhood – and buyer preferences in the area.”
When a house is referred to as a hot home, it’s meant to attract buyers during low sales, especially during the end of September, as this is considered a time when they are fewer buyers in the market, meaning they are less competent or less bidding wars, which buyers don’t really like, and more home options. This may allow a buyer to get a better deal while the market calms down from the summer rush. Because of this, buyers are willing to take a risk and invest in the market.
Chicago-based Redfin agent Ashley Arzer has said that buyers are still looking to buy a home: “They’re willing to purchase a home despite rising rates because they finally have a window of opportunity to get an offer accepted,” and he may be right.
Overall, the interest rates are definitely influencing buyers’ decisions at this time as market rates fluctuate often, there’s a lot of uncertainty related to the recession, and buyers are just trying to play it safe. According to experts, the Chicago housing market has slowed down, and it’s not very competitive. This information is based on how long it takes to sell a home, how long it remains pending and if it sells below its listed price.
Ultimately, the question of whether to buy or not to buy a home right now remains a question many seem to be struggling with right now. Still, according to September’s Fannie Mae Home Purchase Sentiment Index, a monthly survey gauging consumer thoughts on the real estate market, 73 percent of consumers believe it is the wrong time to buy a home. In addition, housing-market experts are stating that it is increasingly likely to see a recession in the near future, so whether to buy at this time or not is definitely a personal decision base on budget and needs to avoid any buyer’s remorse in the future or even losing your home.