Chicago’s real estate market has undergone a major transformation over the last 12 – 18 months, with inventory falling and home prices rising across the metro area. The latest housing data bring mostly good news for homeowners. Home buyers, on the other hand, are facing increased competition for fewer properties. Here are the latest numbers and trends for the Chicago housing market.
Big Price Gains at the Monthly Level
Chicago recently posted the second-largest monthly gain in the Case-Shiller 20-City Composite, which tracks prices in 20 key cities across the United States. According to the report, which was released last week, Chicago home prices rose 3.3% from May to June of this year. Among the 20 composite cities, only Atlanta posted a larger monthly gain (3.4%).
Annual gains are approaching double digits. According to Case-Shiller, home prices in Chicago’s real estate market climbed 7.3% from June 2012 to June 2013. Those were the most recent numbers available at publication, due to a two-month reporting lag.
Each month, Realtor.com publishes a monthly housing summary with trends and data for 146 metro areas in the U.S. According to their most recent report, published in mid-August, the median list price in Chicago has climbed nearly 20% over the last year. That puts it among the top-20 metro areas in the U.S., in terms of annual list-price gains.
Housing inventory, on the other hand, has declined. The total number of homes for sale in the Chicago area has dropped by 8.47% over the last year, according to Realtor.com. In July alone, for-sale inventory declined by more than 3%. This stiffens competition for homes and puts upward pressure on prices. As a result of these trends, prices will likely continue to rise in the Chicago housing market through the end of the year.
Also in July, the median price paid for homes across the nine-county Chicago metro area was 18.3% higher than the same month in 2012. This is according to a report released last week by the Illinois Association of Realtors. Within the city itself, the median sale price jumped 25% over the last year.
Home Sales Surging in Chicago Real Estate Market
Home sales also rose sharply in July, with 11,897 residential real estate sales logged across the Chicago area. That was an increase of 36.1% over last July, when 8,744 homes were sold.
According to local housing analysts, rising mortgage rates are doing little to weaken housing demand. The benchmark 30-year mortgage rate has climbed more than a full percentage point since the beginning of May. But it hasn’t affected home-buying activity in the Chicago housing market. Refinancing activity, on the other hand, has dropped significantly over the last few weeks.
Chicago home prices are still well below their 2006 peak level. That’s when the housing crisis first blew into the Windy City. Prices bottomed in the spring of 2012, rose a bit in the months following, and then dipped again at the start of 2013. Prices have been rising steadily since the beginning of this year, suggesting the Chicago real estate market may finally be out of the woods.
Predictions for the Rest of 2013
What’s ahead for this housing market? Here’s what Lance Ramella, a senior vice president at John Burns Real Estate Consulting, recently said to the Chicago Tribune:
“We think that price appreciation for resale homes will increase in 2013 by about 4 percent. That might be conservative. Next year, we see prices going up 11 percent … We see double-digit appreciation coming for the next two years across metropolitan Chicago.”
Due to the current supply-and-demand situation in this market, we expect to see a steady upward trend in local house values, through the end of this year and into next.
Disclaimer: This story contains predictions and forecasts for the Chicago real estate market. Such statements should be viewed as opinions, not as facts. We make no claims or guarantees about future home prices, sales, or other housing-related trends.