Whether you’re looking to buy or sell a house in Chicago, there’s an overwhelming amount of information to consider. Depending on who you listen to, you might be wondering whether the market is about to meltdown — or whether inflation will put real estate prices on the moon.
So if you’re confused don’t worry -– we’ve got your back! We believe the best decisions are made using data. Everyone has an opinion and although some may be right, it’s really all speculation. In this article, we break down the Chicagoland Real Estate data to help you decide whether to buy or sell in 2022. We’ll help you separate normal seasonal fluctuations from the more significant market indicators. We will also give you our opinion on where we expect the Chicago real estate market to go in 2022.
Alright, let’s get started!
Median List Price
The median list price has dropped from its $397k peak in September 2020 to $315k in November 2021. Although the median list price is declining, it is still well above the 2018-2019 pre-pandemic levels – and so the depreciation is likely an early sign that the market is getting back to normal. 2020 created such a high level of pent-up demand that it threw home sales off their usual seasonal trend. The move down in median list price is twofold; a return to normal levels and the normal seasonal slowdown.
This is a great sign for Chicago real estate. The rapid price appreciation we saw in 2020 creates high risk. A slower appreciation of 2-5% is best for everyone. The return to normal levels will make a stable market and both buyers and sellers will have confidence in the purchase price and list price.
Properties With Price Decreases
Price decreases are the early indicator of a correction in median sales price. For example, an overpriced home may stay on the market and eventually need to decrease the list price to sell.
In a normal market, we can expect about 30%-40% of all homes to be overpriced and eventually decrease their list price to close. Although we are currently at 45%, it’s still closer to the 2019 trend.
At the same time, we are seeing much higher showings per listing compared to 2018-2019. With record low levels of inventory, it seems it’s taking buyers longer to find the right home.
Total Inventory- What About Supply?
The total amount of homes for sale in the Chicago area is still at a historic low. We have a growing population and very little inventory of homes to choose from.
Some analysts believe the inventory will increase again when the forbearance period is over. The increase in inventory won’t be enough to ‘crash the market’ but will likely be absorbed by high demand from investors and home buyers alike. Keep in mind that homeowners have benefited from the higher than normal appreciation and will likely sell before short selling or foreclosing on their home.
Taking a look at the 7 and 90 day moving averages, we can see a move up from our lowest inventory in March 2021. But, inventory levels are still well below both 2018-2019 levels.
New listings in our entire MLS area are also slightly declining in the last month, which is also a great sign that inventory is on its normal seasonal trend. New listings and seasonal inventory have peaked but are still lower than normal years.
Relisted: A Signal To Watch
The relist percent can signal panicky or uncertain buyers. Homes that have gone under contract will be relisted if the contract has fallen through. This happens either when inspection reports significant repairs or when consumers get cold feet and believe they have overbid for the property.
Notice a record low relisted percentage in summer 2021 and an increase sharply since then. Relisting also has a seasonal trend and the increase in listings is also a sign of a return to the normal seasonal trend.
2022 Outlook
What is the Segment of The Chicago Real Estate Market With The Most Demand?
The market segment that will continue to see high demand is the median price range of $264k, which is currently taking an average of 42 days on the market to sell. Because of the exceptionally low supply of affordable housing, demand continues to be high. If you are searching in the $250-$350 price range, you can expect higher competition than other price segments throughout 2022.
Higher than average inflation and higher labor costs will likely continue to keep home prices high, although we expect demand to eventually return to normal levels. Well-priced homes in great condition will continue to receive multiple offers, though these are unlikely to match the white-hot demand of 2020.
If we see an increase in interest rates, sales prices may dip slightly – but the monthly payment will likely stay the same. Home prices follow affordability and total monthly payment.
Should I Buy or Sell in 2022?
We predict the price and demand to change very little in 2022 – but our philosophy is that it’s always a good time to buy or sell. We recommend buying a home when you are financially stable and selling when your lifestyle changes. It is impossible to predict what will happen in the next 5 years so your personal circumstances should drive your decision – not the market.
As always, we recommend speaking with a real estate professional regarding your specific situation. Location and price points vary and understanding your market is what’s most important when buying or selling.
If you are in the Chicagoland area and would like to speak with us about selling your home and or buying. We would love to hear from you, whether by call, text, or email.
Have Questions? Ask The Velasco Reynolds Team!
Give us a call to learn more about local areas, discuss selling a house, or tour available homes for sale.
