The news recently has been all over the place. Some are talking about a market shift, and others are suggesting the markets are moving, so let me explain to you what’s actually going on in the Chicagoland area.
Ultimately, it depends on the price range of the property: Homes in the lower price range typically still operate within a seller’s market. The higher the price range, the more likely they are to operate in a buyer’s market.
In fact, in the last week, I have been inside properties in an area where they have 1.5 years' worth of inventory—that is a lot. I’ve also been in areas where they have only two months' worth of inventory.
We must be getting near the end of the year now that the first big snow of the year has hit. I just wanted to give you a quick market update to let you know what’s going on in real estate around this time of year.
Many people think that the market is pretty dormant during this time of year, but we actually have seen 152 properties go under contract in the Chicagoland area in the past seven days. At the same time, a little over 2,500 homes have come off the market and only 1,472 new homes have come on the market.
With these numbers, you can see why this time of year is actually a great opportunity to sell your home. There is a decrease in inventory, which can help you find a buyer. Once we see that first snowfall, and with the holidays around the corner, many people decide to take their homes off the market. This means that it’s a great time for you to prepare to get your home on the market.
New listings jumped 8% year-over-year nationally, the largest increase since 2013
Total listings in the 45 largest markets are now up 6% on average over last year
This increase in housing inventory has sparked two different reactions. Some are saying this is the first sign of a potential collapse while others are saying it is a welcomed reprieve from the lack of inventory that has stalled the market recently. As Zelman & Associates reported in a recent ‘Z Report’:
“With the rate of home price appreciation starting to decelerate alongside the uptick in inventory, we expect significant debate whether this is a bullish or bearish sign.”
Is this a sign the market might crash?
There are those who look at the increase in inventory as a sign that we are returning to the market we saw last decade. However, a closer look shows that we are nowhere near the levels of inventory we reached before the crash in 2008.
After several years of continuous price gains, the real estate market seems to be reaching its price cap.
In June, the last month for which we have complete numbers, 14% of all listings saw a price cut. That's up from a low of 11.7% at the end of 2016.
Several other statistics support the idea of an emerging buyer’s market.
In the same month, housing demand fell 9.6%, the largest decline in over two years.
Unsurprisingly, the number of people requesting home tours has fallen by 6.1%. Mortgage applications to purchase a home has decreased as well.
A few things are at play here. One is rising mortgage rates, which have been steadily climbing for much of this year. Another is an overall decrease in affordability, resulting from a combination of the growth in home prices and mortgage rates.
There’s another important thing I should point out: If this is the start of a buyer's market, it's unlikely to be just a momentary blip.
One sign of this is that homebuilder sentiment has recently fallen to the lowest point in almost a year. In other words,...