Chicago housing market update – Fall 2016

The residential real estate market was off to a late start this year. This may have been a result of many positive distractions, including nice weather and the Cubs’ amazing season, and not-so-positive occasions, like a highly polarizing election cycle.

truepad-fall-market-report-buyer-demand-macro-graph2-v2While this is not the best Chicago housing market we have ever seen, it is solid. The Truepad seasonally-adjusted Home Buyer Demand Index since Labor Day has averaged 317. This index measures the average showing demand on available homes for sale in Chicago and the outlying areas. Compared to last year’s (2015) value of 354 and the prior year’s (2014) value of 307, buyer demand is off this year by just over 10 percent, but is still solid. That said, following the end of 2016’s Spring Market, there was a particularly steep drop-off in demand that hasn’t been seen since 2010. Could this be the foreshadowing of a softer market to come?

Chicago home buyer demand index fall only 2014-2016

Housing inventory is still low but has risen from 2 to 4 months’ of supply since the 2016 Spring Market. Average days-on-market continue to be low. The general environment for buying and selling housing remains good. The US stock market is relatively strong, and overall, Chicago housing prices are in line with historical growth plus inflation. Interest rates continue to be very low, inflation is low and Chicago wage growth has increased since Spring.

Persistent headwinds for the Chicago real estate market are property taxes, Illinois budgetary health and the perception of high crime. Potential shocks that could bring storms to the housing market include the upcoming election or a downturn in the US stock market.

Summary of housing conditions in Chicago

Housing Health Factor Metric Current State Trend
Housing inventory (months) 4 Low/Neutral Rising
Average days-on-market 74 Low Rising
Housing prices (Case-Shiller) versus inflation 138 Neutral Rising
Interest rates (30-year fixed, conforming) 3.54% Low Declining
Inflation 1.06% Low Rising
Wage growth 2.40% Neutral Rising
Healthy conditions that have historically been credited with contributing to long-term growth of housing transactions are underlined

Pre-election slump

Since we are nearing the 2016 election, we looked at the Buyer Demand Index in 2012, should history repeat itself. In 2012, with Barack Obama running against Mitt Romney, fall demand was relatively strong prior to election day. As the election neared, demand started slipping. By Thanksgiving, demand dropped farther and faster than any time since we have had statistically significant buyer demand data, in 2008. Following Thanksgiving, demand had the steepest, quickest rise recorded and led the way into increased home buyer demand over the next 4 years. We can only speculate what were the actual causes.

Chicago home buyer demand index for 2012 election


Tips for current real estate market conditions

Home sellers:

•   Typically, in Chicago the best time to list is in late January because this coincides with the highest buyer demand. This will allow you to find as many buyers as possible willing to pay top dollar.

•   Start staging your home early for sale. Photos with the leaves on trees and the absence of snow make for better marketing.

•   The high-end market ($1MM and greater) is softer. You may want to reevaluate your home’s price if you need to sell quickly.

Home buyers:

•   Late in the year is a great time to buy. As long as there is enough inventory to choose from, you aren’t competing with as many other buyers.

•   With interest rates so low, your money will go farther. The average 30-year fixed rate is currently 3.75%.

Email with any questions.

Emily Johnson

Emily Johnson is a writer, researcher, editor, and publishing consultant with a decade of learning in the field. For Truepad she covers real estate trends and develops knowledge base articles that help people learn about the process of buying as they’re looking for a home. She went through the process herself two years ago and is a proud homeowner in Logan Square.

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