26-Dec-19 – Looking back on 2019, analysts say it was a year of lost opportunities for many home buyers, who sat on the fence and watched prices rise while some of the lowest mortgage rates in years went to waste.

“Although interest rates are near historically low levels and financing guidelines have loosened, the buyer pool has not come pouring back into the market,” noted Mike Opyd (left), broker/owner of RE/MAX Next in Chicago. “The result has been an increase in inventory and a slowdown in sales. Buyers continue to take their time making decisions, knowing they have options and a better chance of getting what they want at a price they want. I expect this trend to continue into the new year.”

Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed home loan rates averaged 3.74 percent nationwide on December 26, little changed from the prior week. Last year at this time, 30-year fixed loans averaged 4.55 percent.

On December 26, Chicago-area lenders were charging a range of 3.75 to 3.857 percent on 30-year loans, reported RateSeeker.com.

Thirty-year fixed-rate mortgages averaged just 3.9 percent during 2019, the fourth-lowest annual average since 1971, when Freddie Mac started its weekly survey, according to Sam Khater, Freddie Mac’s Chief Economist.

“Heading into 2020, low mortgage rates and the improving economy will be the major drivers of the housing market with steady increases in home sales, construction, and home prices,” said Khater (right). “While the outlook for the housing market in 2020 is bright, worsening housing affordability is no longer a coastal phenomenon and is spreading to many interior markets and it is a threat to the continued recovery in housing and the economy.”

Home sales are down, prices are up

In November, Chicago saw year-over-year home sales decrease a whopping 10.4 percent with 1,659 sales, compared with 1,852 in the same month a year ago, according to Illinois REALTORS. The median price of a home in Chicago in November was $270,000, up 3.2 percent compared with $261,745 in November 2018.

“When you see an inventory decrease like we did in November, you’ll likely also see a decline in closed sales, as well,” observed Maurice Hampton (left), president of Chicago Association of Realtors. “Both are accompanied by a decline in days-on-market and uptick in median sales price. Clearly, the demand is there, but inventory isn’t.”

In the nine-county Chicago Metro Area, single-family home and condominium sales in November totaled 7,578 units, down 7.6 percent from 8,200 units in November 2018. The median price in November was $240,000 in the Chicago Metro Area, an increase of 3.4 percent from $232,000 in November 2018.

Statewide, single-family home and condo sales in November totaled 11,026 units, down 7.1 percent from 11,866 in November 2018.

The statewide median price in November was $200,000, up 5.3 percent from November 2018, when the median price was $190,000. The median is a typical market price where half the homes sold for more and half sold for less.

“Home buyers were confronted with the dual challenges of diminished inventory and slightly higher prices in many portions of the state,” said Ed Neaves (right), president of Illinois REALTORS. “This is a continuation of trends we have seen throughout 2019, where home sellers reap modest rewards and home buyers who move quickly and are willing to pay more are rewarded with a new home in time for the holidays.”

The time it took to sell a home in November averaged 53 days, a decrease of 1.9 percent from the year before. Available inventory totaled 52,709 homes for sale, a 6.7 percent decline from 56,510 homes in November 2018.

“Increases in new-home starts in November provide some optimism that continued national employment growth and low interest rates will contribute to addressing the low inventory problem,” said University of Illinois economist Geoffrey J.D. Hewings (left). “There is some cautious optimism about an increase in first-time buyers in 2020 as well as the strong increase in contract signings in recent months in both Illinois and Chicago.”

Sales and price information are generated by Multiple Listing Service closed sales reported by 26 participating Illinois Realtor local boards and associations, including Midwest Real Estate Data LLC.