North Side Luxury Home Prices Rise as Listings Fall
Chicago’s North Side home market continues to slide sideways this autumn as home buyers and sellers hold on for dear life. While October of 2023 marked the 20th consecutive month of year-over-year home sales declines in Lincoln Park, the Near North Side, Lakeview, and North Center, there are some positive signs in the market.
Positive Trends in the Market
According to Freddie Mac’s Primary Mortgage Market Survey, benchmark home loan interest rates nationwide declined to 7.5 percent last week from 7.76 percent a week earlier. The November Baird & Warner market analysis also noted the following positive trends:
Homes Under Contract
While the number of homes that went under contract in October 2023 dropped 1.6 percent compared to the same month in 2022, this is a vast improvement over recent months where double-digit decreases were seen. The Near North Side and Lakeview neighborhoods experienced increases of 9.7 and 4 percent respectively for homes under contract over October of last year. However, contracts in Lincoln Park and North Center declined.
Home Price Increases
Median home prices on the North Side rose a dramatic 13 percent in October. However, most of that increase was fueled by a whopping 39.9 percent price increase in Lincoln Park. Home prices in Lakeview and North Center also rose, as did North Side homes priced from $500,000 to $2 million.
Homes for Sale
Inventory levels continue to drop. In October of 2023, the market experienced a 16.2 percent decline in listings compared with the same month in 2022. Lincoln Park, Lakeview, and North Center all experienced double-digit decreases in listings ranging from 20 to 31.9 percent.
Lack of inventory continues to be the main obstacle to a North Side real estate rebound. There is a healthy pool of buyers, however many are sitting on the sidelines until inventory levels rise and interest rates stabilize. Many sellers have built equity in their existing homes, but inventory levels and interest rates will have to be more favorable for them to sell and become buyers.
Interest Rate Shock and Stabilization
After the shock of interest rates doubling to 6 percent from 3 percent in a relatively short period, many buyers were beginning to settle into the reality of higher rates. However, interest rates have now moved past the 7 percent range and could be headed to 8 percent on benchmark 30-year fixed mortgages.
On November 9, Freddie Mac’s Primary Mortgage Market Survey reported some good news. Charges on benchmark 30-year fixed-rate home loans fell 0.26 percent to an average of 7.5 percent nationwide from 7.76 percent a week earlier. A year ago, 30-year fixed loans averaged 7.08 percent.
Fifteen-year fixed mortgages also declined on November 9 to an average of 6.81 percent from 7.03 percent a week earlier. A year ago, 15-year fixed loans averaged 6.38 percent.
However, Freddie Mac data shows that household debt continues to rise, primarily due to mortgage, credit card, and student loan balances. Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.
In conclusion, the North Side luxury home market in Chicago is experiencing both positive and negative trends. While home prices are increasing and interest rates are stabilizing, inventory levels remain low, and household debt continues to rise. Buyers and sellers in this market will need to keep a close eye on these factors to navigate the market successfully.
Orginal article: Link To Article – provided by Kansas City Realtors