By Don DeBat

7-Nov-24 – With the winds of winter soon to be blowing in Chicago, rising mortgage interest rates may soon push the city’s housing market into a deep freeze.

Freddie Mac reported in its October 31 Primary Mortgage Market Survey that benchmark 30-year fixed home loan rates have risen nationwide five weeks in a row to 6.72 percent, up from 6.09 percent on September 26. A year ago, the 30-year fixed-loan average stood at a lofty 7.76 percent.

At its mid-September meeting, Federal Reserve policymakers cut the federal funds rate by a hefty 50 basis points to a range of 4.75 to 5 percent, down from a two-decade high of 5.25 to 5.5 percent. Then, experts falsely predicted interest rates likely will continue to move lower this autumn and early winter. The Fed raised rates 11 times starting in early 2022 in an effort to curb sky-high inflation, pushing its targeted rate from near zero to 5.5 percent.

Mortgage rates reached their highest level since the beginning of August, increasing for the fifth consecutive week, according to Sam Khater, Freddie Mac’s Chief Economist.

He said on October 31, “With several potential inflection points happening over the next week – including the jobs report, the 2024 election, and the Federal Reserve interest rate decision – we can expect mortgage rates to remain volatile.”

“Although uncertainty will remain, it does appear mortgage rates are cresting, and we do not expect them to reach the highs that we saw earlier this year,” said Khater (left).

On October 31, 15-year fixed loans averaged 5.99 percent, up from 5.71 percent a week earlier. A year ago, 15-year fixed loans averaged 7.03 percent.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing 30-year home purchase loans for borrowers who put a 20 percent down payment and have excellent credit.

Home prices up in third quarter

Despite mortgage rate creep, Chicago’s North Side housing market again posted price gains during the most recent calendar quarter.

Third-quarter volume sales activity was up 2.5 percent compared to the same period last year, and the median sales price rose a solid 7.8 percent, according to Baird & Warner’s Chicago North Side Market Report.

Prepared quarterly by Mary Jo Nathan of Baird & Warner’s North Center office, the report tracks sales of single-family and attached homes in the key neighborhoods of Edgewater, Lakeview, Lincoln Park, Lincoln Square, Near North Side, North Center, Rogers Park, Uptown, and West Ridge.

Listing inventory at the end of the third quarter slipped 6.8 percent lower than 12 months earlier but was 3.5 percent higher than it had been at the end of June 2024.

Combined sales of single-family homes, condominiums, and townhomes on the North Side totaled 2,347 units for the third quarter of 2024. There were 6,775 sales during the first nine months of the year, up 1.1 percent from the comparable 2023 figure.

The third-quarter median sales price for the North Side was $415,000, a figure heavily shaped by the fact that attached condos and townhomes, compared with single-family homes, represented 88.7 percent of all dwellings sold.

The average time needed for a home sold in the third quarter to find a buyer held at 52 days, unchanged from one year earlier.

Hot condos and townhomes

Attached homes, which are primarily condos and townhomes, accounted for 2,082 sales during the third quarter, a 0.2 percent increase from a year earlier.

The median price on the North Side was $380,750 during the third quarter, up a solid 6.7 percent from the same quarter in 2023, while average market time was 51 days, one day less than a year earlier.

“Demand for attached homes, especially condo apartments, remains strong across the North Side,” said Nathan (right). “With construction of new condo units quite limited at this time, and a majority of detached single-family homes commanding prices north of $1 million, the market for resale condos has the wind at its back in several ways.”

Sales volume of attached condos and townhomes rose in six of the nine neighborhoods that make up the North Side. When compared with the same period in 2023, third-quarter 2024 sales gains were:

Uptown. Sales volume was up 15.5 percent to 184 units. Median prices rose 4.1 percent to $333,000.

Lincoln Park. Sales volume was up 13.2 percent to 301 units. Median prices rose 3.5 percent to $565,000.

West Ridge. Volume was up 12 percent to 93 units. Median prices rose 9.5 percent to $185,000.

Lincoln Square. Volume was up 2.1 percent to 80 units. Median prices rose 2.9 percent to $376,500.

Near North Side/Gold Coast. Volume was up 0.6 percent to 673 units. Median prices rose 5.1 percent to $410,000.

Edgewater. Volume was down 4.1 percent to 165 units. Median prices rose 7.9 percent to $260,000.

North Center. Volume was down 4.7 percent to 81 units. Median prices rose 7.3 percent to $558,000.

Lakeview. Volume was down 10.7 percent to 402 units. Median prices rose 2.6 percent to $400,000.

Rogers Park. Volume was down 11.2 percent to 103 units. However, median prices rose a hefty 15.5 percent to $220,000.

Single-family home sales up but prices down

Single-family home sales activity on the North Side delivered especially strong third-quarter results, rising 25.6 percent to 265 units. However, the median sales price of $1.26 million was down 8.4 percent from the same quarter last year. It marked the 16th consecutive quarter in which the median sales price exceeded $1 million.

The median sales price of a single-family home rose in just four of the nine North Side neighborhoods surveyed. The top gains were 12.5 percent in West Ridge to $557,000 and 19.5 percent in North Center to $1,678,500. The median also rose 4.9 percent in Rogers Park to $603,000 and 4.8 percent in Lakeview to $1,650,000.

The average time it took to find a buyer for homes sold during the quarter was 63 days, up from 48 days a year earlier.

“The decline in median price in the third quarter was a product of very strong sales gains in areas where homes don’t typically command the highest prices,” noted Nathan.

“In this case, Edgewater and Lincoln Square saw big jumps in third-quarter sales activity, but in both areas the median sales price declined from its 2023 third-quarter level,” she said.

Single-family home sales volume rose an explosive 320 percent in Edgewater to 21 units. Sales gains jumped 115.8 percent in Lincoln Square to 41 units. Other sales activity increases were in the Near North, up 60 percent to eight homes, and West Ridge, up 21.9 percent to 39 homes. Lakeview posted a gain of 15.4 percent to 45 homes; and Lincoln Park rose 9.1 percent to 48 homes.

Sales volume in Rogers Park was unchanged at nine units, while North Center sales fell 6.4 percent to 44 units. Uptown posted a decline of 9.1 percent to 10 units.

Median price declines were 20.6 percent in Uptown to $1,032,500, and a 13.8 percent drop in Edgewater to $1,069,000. The median price decline was 7.1 percent in Lincoln Park to $1,951,250. There was an easing of 3 percent in Lincoln Square to $951,000, and a 2.5 percent slippage on the Near North/Gold Coast to $1,754,250.