For anyone who follows Chicago real estate trends, this year has upended all expectations. Even following the declaration of the national pandemic emergency, the course of activity continued to follow an unpredictable path. Last Thursday, the National Association of Realtors® Newsroom revealed new details about the unforeseen shifts in the housing market. Normally, when the national economy sputters as profoundly as it has since to onset of the pandemic, it constitutes “a condition usually associated with slower home sales and lower home prices.” The opposite has come to pass on both counts.
The NAR’s key findings detail a market that has tilted toward more expensive—and more spacious—properties:
- Buyers have been seeking housing with more rooms, greater square footage, and additional yard space.
- Nationally, buyers who closed after March were willing to pay considerably more: an average 25% increase ($339,400 vs. $270,000) over the previous nine months.
- Eighty-seven percent of buyers financed their purchases. The median down payment was 12% (6%-7% for first-time buyers; 16% for repeat buyers).
The NAR statistics were in line with press accounts citing examples of bidding wars and all-cash buyers. Last Wednesday, readers of The Wall Street Journal’s print edition learned that although in the nine months preceding the pandemic, 14% of buyers had paid $500,000 or more, by June, that percentage had risen to 25%. Among leading reasons buyers expressed was a desire for extra space to accommodate “older adult relatives or young adults now living within the residence.” Not surprisingly, the post-March buyers were more likely to relocate to the suburbs.
It’s well-documented that Chicago real estate activity usually slows after the spring-summer selling season peaks—but like just about everything else in turbulent 2020, the remainder of the year seems destined to defy the norm. At any rate, the evidence for what the Journal labels “surging demand that is pushing up home prices” should encourage area homeowners looking to sell. For buyers, it could also provide added motivation. WSJ quotes one recent Idaho buyer’s opinion: “every day you sit on the sideline you could be losing” as prices rise.
For a readout on the latest local Chicago real estate activity, give me a call!