Despite uncertainty, residential real estate sales activity on the North Side is healthy. Buyers and sellers just need to know how to navigate the market.
5-Oct-21 Chicagos North Side resale home market is on a roller coaster headed into autumn with median sale prices falling and mortgage rates creeping higher.
Thats the big picture outlined in Baird & Warners September 2021 Market Analysis that focused on four key neighborhoods: Lake View, Lincoln Park, Near North Side, and North Center.
Variables such as the second outbreak of COVID-19, rising crime, state and city financial problems, and the outlook for 2022 real estate tax increases are all having an effect on the residential real estate market, noted John Irwin (left), a broker with Baird & Warner. Unfortunately, these variables have not been brought under control, so it is impossible to predict their continued impact on the Fall 2021 market.
Interest rates creep up
A mortgage rate increase above the magic 3 percent affordability threshold is the latest cloud over the autumn market.
Freddie Macs Primary Mortgage Market Survey reported on September 30 that benchmark 30-year fixed home loan rates rose nationwide to an average of 3.01 percent, up from 2.88 percent a week earlier. Last year at this time, the 30-year fixed loans averaged 2.88 percent.
Fifteen-year fixed-rate loans rose to an average of 2.28 percent, up from 2.15 percent a week earlier. A year ago, the average 15-year fixed mortgage averaged 2.36 percent.
Mortgage rates rose across all loan types last week as the 10-year U.S. Treasury yield reached 1.54 percent, its highest point since June, said Sam Khater (right), Freddie Macs Chief Economist. Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation, and emerging energy supply shortages which compound other labor and materials shortages.
Khater gloomily predicts mortgage rates will continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.
Home prices descend
Home prices on the North Side already appear to be impacted by higher interest rates.
While median sale prices in the four surveyed North Side neighborhoods are up four percent year-to-date, in August there was some slippage in three of the four neighborhoods, according to Baird & Warner.
Lake View. Median prices eased 4.7 percent. However, prices on luxury homes rose 2.6 percent in the $1-2 million bracket. Unit sales were about the same as last August, but homes in the $1-2 million bracket rose 13.6 percent.
Lincoln Park. Overall median prices in the neighborhood plummeted 14.7 percent in August. However, homes in the upscale price range of $500,000 to $1 million only slipped 5.1 percent. Total unit sales fell 7 percent in Lincoln Park.
Near North. Median home prices slipped 5.4 percent, while units priced under $500,000 fell 5.5 percent. On the sales side, the Near North area was hot in August, with 43.1 percent more transactions than the same month in 2020. Units priced under $500,000 posted 20.6 percent more sales than a year ago.
North Center. Bucking the trend, median prices in this neighborhood, which includes the hot St. Bens area, skyrocketed 38.8 percent in August.
However, the median price of homes priced at more than $2 million in North Center slipped 3.8 percent. While overall home sales slipped 4.1 percent, units priced at more than $2 million zoomed 52.9 percent in sales volume during August.
Despite the uncertainty, the North Side residential real estate sales activity is healthy, Irwin said. Buyers and sellers just need to know how to navigate the market.
Many buyers are looking for homes in turnkey condition, Irwin noted. This not only includes a fresh coat of paint, but a more contemporary look. For sellers, updating can be less costly than a future price change.
Pricing is the most critical element for sellers, he said. Testing an inflated price can lead to higher market times and potential costly price changes.