No mass exodus here!
Updated: Nov 19, 2020
The election is over; Covid is unfortunately not. What does this mean for the real estate market as we enter 2021?
Home and housing has thrived during the pandemic; never has home meant more to us. It is our office, school, playground, restaurant, and sanctuary. With the election behind us, no matter who you support, I think we all hope for clarity in the face of the uncertain as we move forward.
We must focus on what is certain to us – our families, our homes – what we can do to control that which we have power over. Here is something I am certain of: no one will work harder in your real estate transaction and in a more personal way than our team.
As the effort for a COVID-19 vaccine continues to progress and the calendar turns to 2021, we expect the economy and downtown housing market to come roaring back. HERE are national home prices; seller profits continue to grow despite other sectors of the economy struggling. This is national housing data, but illustrates the incredible activity in the housing market.
Here in Chicago, we expect all those young people who were renting in the city that moved back to their parents’ house in 2020 to come back downtown once things open back up. Yes, many of them will continue to rent but imagine all the money they’ve been saving not having to pay rent! HERE is a bit on Americans’ savings rates from the St. Louis Fed.
Sure some people will use that to pay down debt but sounds like down payment funds to me! That plus interest rates remaining incredibly low will further incentivize folks to dip their toe into the real estate market.
It’s easy to repeat the headlines so let’s take a look at the local data. I’m going to look at Chicagoland broadly, then the city, and for comparison, the “Near North” market which is a good representation of the downtown high rise condominium market. We'll start with Median Price, then take a look at Inventory, and finish with Sales Volume. Bulleted are my notes, and the detailed charts can be found below!
In Chicagoland, prices have increased, inventory has decreased, and sales volume has skyrocketed. Pretty much the story across the nation. The suburban markets are nuts.
In the city overall, we are seeing a similar case just not so dramatic: prices up, inventory lower, sales volume up.
In River North, while sales volume has fallen and inventory has increased we have not seen a decrease in pricing. That is not to say that there are not desperate sellers here and there, but as a whole, we are not seeing drastic sell-offs of inventory resulting in massive price drops. I think this is a result of less interest in the amenities a high rise offers and the proximity to nightlife, theater, etc. More desire for square footage and outdoor space. If you've ever wanted a place downtown, we may never see a better opportunity to find that diamond in the rough and lock in a low interest rate!
Bear in mind, every neighborhood is different. Areas with more single family homes and fewer high rises (e.g. Logan Square, Bucktown) will look much more like the "city overall" charts where inventory is low and sales activity is high. Now more than ever is it critical to get hyper local with data to ensure you have a full understanding of your market!
Here is a full market report Compass put together that will give more data for your particular neighborhood or suburb.
Ask any questions and drop a line if you'd like me to pull data for your location!
Don’t be a stranger!
Quick note: "single family" includes both single family homes and single family condominiums, as opposed to multi-units.
Chicagoland MLS area
City of Chicago
Near North (aka River North, Gold Coast, Streeterville):
This data won’t be as smooth since it is a smaller dataset and it shows the cyclicity of the market. You can clearly see the dip in summer 2019 from the uncertainty around Brexit, international trade war, etc. but prices have only grown from there including all through Covid! No slowdown on price growth as of today!
Month’s supply inventory is the measure we use: if no new listings hit the market, how many months would it take to sell off all the existing inventory?
City of Chicago
Sales Under Contract
I like this measure as it is the most up to date figure for sales activity (versus waiting for closed data).
City of Chicago