1-Feb-18 – Chicago’s resale home and condominium market continued a slow rebound in 2017 as unit sales and median prices posted gains. However, the Windy City and national housing market still have not totally recovered from the Great Recession, experts say.

National Association of Realtors reported that 5.51 million existing homes were sold nationwide in 2017, up from 5.45 million units in 2016. However, the nation’s resale-home market still hasn’t rebounded to the level of 6.48 million units sold in pre-crash 2006 – more than a decade ago.

New-home sales nationwide in 2017 totaled 608,000 units, up 8.3 percent from 2016, reported National Association of Home Builders. However, new home inventory remains low at 295,000 units, a 5.7-month supply. The median new-home price was $335,400 in 2017.

Illinois Realtors reported that 28,621 existing single-family homes and condos were sold in Chicago in 2017, a 1.8 percent gain over 28,104 units marketed in 2016. The year-end 2017 median price rose 4.8 percent to $285,000 from $272,000 in 2016.

Some 2,008 existing homes and condos were sold in December 2017 in Chicago, up 1.7 percent from 1,974 units in December 2016. The median price of a home in Chicago in December 2017 was $267,500, up 2.9 percent from $260,000 in December 2016. (Left) Living room in the University Village neighborhood of Chicago’s West Side.

Single-family home and condominium sales in the nine-county Chicago area totaled 118,131 units in 2017, up 1.2 percent from 116,686 units sold in the region in 2016. In December 2017, a total of 8,067 homes and condos were sold, down 2.1 percent from 8,244 units in December 2016.

The year-end 2017 median price reached $235,000 in the nine-county Chicago area, up 5.6 percent from $222,500 in 2016. The median price in December 2017 was $225,000 in the nine-county area, an increase of 5.1 percent from $214,000 in December 2016.

Sales and price information were generated by Multiple Listing Service closed sales reported by 27 participating Illinois Realtor local boards and associations, and data from Midwest Real Estate Data LLC.

Home listings in short supply

A shortage of existing home inventory continued to plague the marketplace, in Chicago and suburban collar counties, Illinois Realtors reported.

“Overall, we saw an active and healthy market in 2017, and are positioned well for the forthcoming spring market,” said Rebecca Thomson (right), president of Chicago Association of Realtors. “Buyers should expect to see expanded options on the market in the months ahead, but competition will also remain strong as demand outpaces supply and rates remain low.”

The Illinois housing market posted a solid performance in 2017, according to Matt Difanis, president of Illinois Realtors. “We finished the year with sales and median prices in positive territory,” said Difanis (left).

Home-loan rates rising

Unfortunately for home and condo buyers, mortgage rates are moving higher. On January 25, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed loans averaged 4.15 percent, up from 4.04 percent a week earlier. A year ago at this time, the 30-year fixed loans averaged 4.19 percent.

Chicago lenders were quoting a range of 4.106 percent to 4.234 percent on 30-year fixed loans on January 25, reported rateSeekers.com.

“Rates keep climbing,” noted Len Kiefer (right), Deputy Chief Economist for Freddie Mac. “The 10-year Treasury yield reached its highest point since 2014, reflecting expectations of broad-based economic growth.”

Mortgage rates, in turn, followed the surge in Treasury yields, said Kiefer. The 30-year fixed-rate mortgage jumped 11 basis points to its highest level since March of last year.

“The forecasts for prices and sales for the first quarter of 2018 remain positive,” said University of Illinois economist Geoffrey J.D. Hewings (left). “After adjusting for inflation, prices are now seven percent higher than pre-recession levels statewide and nine percent higher in the Chicago area.”

Higher rents forecast

With Chicago property owners scheduled to be hit with hefty real estate tax-assessment increases this spring, city apartment renters likely will face higher rents on expiring leases, apartment managers say.

Nationwide, modest two percent rent increases are forecast for 2018, according to a U.S. apartment market outlook. However, rent hikes in Chicago’s attractive lakefront neighborhoods likely will be higher.