Highlights from this report:
- The Chicago housing market is starting to favor buyers over sellers.
- It could become a classic “buyer’s market” by late 2019 or early 2020.
- Home prices appear to have peaked in the Chicago area.
- Many other cities in the U.S. are undergoing a similar shift right now.
Like many cities across the country, the real estate market in Chicago, Illinois is experiencing a shift in 2019. Home prices have leveled off, and properties listed for sale are taking longer to sell. In short, the local housing scene is starting to favor home buyers over sellers.
It’s a bit premature to say that Chicago is currently a buyer’s market. But it does appear to be headed in that direction. Here are the latest trends and predictions for the Chicago real estate market through 2019 and beyond.
Chicago Housing Labeled as ‘Buyer-Friendly’
Last week, we published a report about the top 10 “buyer-friendly” real estate markets across the U.S. These are places where home buyers have plenty of inventory to choose from, and where the competition has eased. That report was based on research conducted by Realtor.com.
Chicago, Illinois ranked high on the list of buyer-friendly housing markets. It was number two in fact, right after Albany, New York.
According to the research team at Realtor.com, Chicago had approximately a six-month supply of homes for sale as of June 2019. That was a higher level of inventory than most other metro areas across the U.S., and it indicates a fairly “balanced” housing market.
Additionally, the median selling price for homes sold in the Chicago area remained flat over the past year (when this study was published).
Javier Vivas, Director of Economic Research for Realtor.com, said that a lackluster economy was partly responsible for these trends:
According to Vivas:
“In Chicago, L.A. and Providence, the relative slowdown can also attributed to a pace of economic growth that’s behind the rest of the country, pushing more buyers to find options elsewhere … Job creation is also lagging behind the US average and similar sized metros, up 0.6%, 1.0% and 1.0% respectively.”
Both of these indicators — sufficient inventory and price plateaus — suggest that Chicago could become a full-fledged buyer’s market in the near future. Whether that happens in late 2019 or early 2020 is beside the point. The key takeaway here is that a shift is occurring, and it seems to be benefiting buyers.
Zillow: Prices Are Dropping in Chicago
The latest data published by Zillow show a drop in home prices within the Chicago real estate market. In late July 2019, the company’s research team wrote that the median home value in the city declined by -0.6% over the past year.
Looking forward, they predicted that prices would “fall -1.6% within the next year.” That housing market forecast was issued in July, which means it extends into the summer of 2020.
The chart below, generated by Zillow, shows their “home value index” for Chicago, Illinois over the past ten years or so.
You can see where house values dropped following the Great Depression, and how they turned north again in 2012. Prices within this housing market continued to climb steadily for several years, before stalling in 2019. Zillow’s home-price forecast for Chicago is shown in the green shaded area on the right.
Granted, that’s just one forecast. These kinds of predictions are the equivalent of an educated guess. So let’s not dwell on those numbers too much. The bigger picture here is that home prices have pretty much stalled across much of the Chicago-area housing market. And that’s something that buyers need to be aware of.
Home Sales Have Slowed in 2019
Slowing home sales are another sign that the Chicago real estate market is undergoing a shift in 2019. The Realtor.com study mentioned above showed a -7% decline in sales over the past 12 months (as of June 2019).
According to the national real estate brokerage Redfin, properties listed for sale in Chicago spend a median of 57 days on the market before going under contract. That was for June 2019, the most recent data available when this article was published.
The nation as a whole had a median “days on market” of 35 days in June. So clearly the Chicago housing market is a big more sluggish, in terms of home sales. This is partly why prices have stalled.
Will 2020 Be a Good Time to Buy?
All of this leads to the question: Is 2019 a good time buy a home in Chicago? And what about 2020?
These are hard questions to answer to across the board, because there are so many variables involved. But with the recent dip in home prices in this housing market, would-be buyers might want to take a “wait-and-see” approach for now.
Of course, there’s a flip side to this argument as well.
With sales slowing and prices leveling, home buyers in Chicago have more negotiating leverage today than they did a few years ago. So in that regard, late 2019 or early 2020 could be a good time to buy in this area.
Mortgage rates, meanwhile, are still hovering near historic lows. So that puts another check in the “buy now” column. Last week, Freddie Mac reported that the average rate for a 30-year fixed mortgage was 3.81%. That’s down from 4.51% at the beginning of 2019.
We encourage home buyers in Chicago (and elsewhere) to research the local housing market and consider their long-term plans. That’s the key to making an informed purchasing decision.
Disclaimer: This story contains housing market forecasts provided by third parties not associated with the Home Buying Institute. The publishers of this website make no claims or assertions about future real estate conditions or home prices.
Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author