1-Mar-21 – Strong buyer demand during the pandemic kicked Chicago’s home and condominium resale market off to a fast start in January, analysts say.

Residential resales climbed 16.9 percent to 1,678 units, while the median price rose 15.8 percent to $310,000, and the average market time dipped 17 days to 85 days, reported Midwest Real Estate Data, the regional multiple listing service. The total inventory of homes for sale increased 7.9 percent to 7,143 units.

“However, when we look at the detached and attached markets separately, we see some important distinctions,” noted housing analyst Mary Jo Nathan (left) of the Charese Team at Compass Roscoe Village.

In the detached single-family home segment, inventory fell 46.1 percent to 1,345 existing-home listings. Despite strong demand for homes, the lack of supply held sales to 714 units, a 7.9 percent increase over January 2020. The median home sales price spiked 21 percent to $275,000, and average market time decreased by 19 days to 75 days.

“Despite the inventory headwinds, January’s results were exceptional from a historical perspective,” noted Nathan, a North Side residential real estate broker since 2000. “The median sales price was the highest ever recorded for Chicago in January, while the sales total was the largest – and average market time the lowest – since 2006, the peak of the housing boom that preceded the Great Recession.”

In the attached housing market – which primarily consists of condominiums and townhomes – there were 964 sales in Chicago in January, up 24.5 percent from the same month in 2020. The median sales price gained ten percent to $345,000 – a January record – and average market time shortened by 17 days to 91 days. Attached housing inventory skyrocketed 40.6 percent to 5,798 units, compared with January 2020.

“Many condo buyers are also sellers because they are looking for more space now that they are working from home during the pandemic,” Nathan explained. “A significant number of buyers want to move to a single-family home, which helps explain why demand is so strong in that segment.”

As robust as home sales were in the city in January, the suburbs were even hotter. Sales across the seven-county Chicago metro area were up 22.5 percent to 7,000 homes, and the median sales price rose 15.8 percent to $272,000. Average market time was 72 days.

The increases were comparable in both housing segments. Detached home sales were up 21.4 percent and the median price gained 17.9 percent to $299,900, while attached sales rose 24.7 percent. The median price increased 10.3 percent to $215,000.

Mortgage rates creep

On February 25, benchmark 30-year fixed-rate mortgages averaged 2.97 percent nationwide, up from 2.81 percent a week earlier, reported Freddie Mac’s Primary Mortgage Market Survey. A year ago, 30-year fixed loans averaged 3.45 percent. Fifteen-year fixed mortgages averaged 2.34 percent, up from 2.21 percent a week earlier. A year ago, the 15-year fixed loans averaged 2.95 percent.

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

On February 25, Gateway Capital Mortgage in Chicago was quoting 2.877 percent on 30-year loans and 2.5 percent on 15-year mortgages, reported RateSeeker.

“Optimism continues as the economy slowly regains its footing, thus affecting mortgage rates,” said Sam Khater (left), Freddie Mac’s chief economist. “Though rates continue to rise, they remain near historic lows.”

However, when combined with demand-fueled rising home prices and low inventory, “these rising rates limit how competitive a potential home buyer can be and how much house they are able to purchase,” Khater said.