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North Side Chicago Real Estate Analysis | 3rd Qrt 2024

Katie Sullivan  |  October 15, 2024

North Side Chicago Real Estate Analysis | Q3 2024

North Side Chicago Real Estate Analysis | 3rd Qrt 2024

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 Chicago's North Side Market Analysis | Q3 2024

 

How slow is the current real estate market? We're actually experiencing the slowest market in over a decade, and current inventory data suggests we will most likely slow further from here. Unless for a life-changing event, people simply don't want to move. Buyers are hesitant to purchase with current mortgage rates hovering around 6%, and sellers are equally unwilling to give up their historically low 2-3% mortgages. The result is a stalemate, with an extremely slow but appreciating real estate market. Total real estate transactions on the North Side of Chicago are down another 2.4% year-to-date, down again from 2023's 35% decline. Inventory levels (homes & condos listed for sale) are at historic lows, indicating that outside of an unexpected catalyst, the market's slow pace should continue into the 2025 selling season. While each neighborhood's data is unique, the general slow-market trend is consistent throughout Chicago. 

In this newsletter we will dissect the current state of the North Side of Chicago real estate market (defined as North Ave - Lawrence, and Lake Michigan west to California Ave. Chicago neighborhoods of Lincoln Park, Lakeview, Bucktown, Lakeview, Roscoe Village, North Center & Lincoln Square / Ravenswood), including what's causing the slowdown, current inventory levels, valuations, and our prediction for the remainder of 2024 and into 2025. Let's get started and dive into the numbers...

Who doesn't love data? We certainly do, which is why we pay such close attention to Chicago's housing trends and the analysis that will be discussed below. It's impossible for us to truly work in your best interest without a deep understanding of the data that leads to real-world housing supply and demand fluctuations. While the data below supports a macro or high-level look at the current state of the North Side of Chicago real estate market, it's even more critical to analyze similar data in the specific neighborhood and property type you hope to buy or sell. We're happy to share our knowledge, experience, and analytical skills. Contact us today if you have specific questions on Chicago or suburban real estate. Our team is here to assist.

Closed Sales | North Side 

As of September 30th, closed real estate transactions on Chicago's North Side declined 2.4% when compared to the same period in 2023. Take a look at the graph below of monthly sales and note that we're using a 12-month rolling average (month-to-month data is too volatile and may not accurately represent current market trends). You can see the outlier effects of the easing of COVID restrictions in 2021 and 2022, where transactions hit all-time highs. The headline 2.4% year-over-year decline in sales is a further decrease from 2023's 35% decline. We are trending at decade lows in sales volume and as you will see in the data and commentary below, contracted properties and inventory levels point to a market with the potential to slow even further from here. 

The good news is that valuations continue to rise (covered below). The reduced demand - due to higher interest rates and market uncertainty - is more than offset by historically low inventory levels. Buyers are hesitant to take on a new 6% mortgage rate, but even more sellers refuse to part with their rock-bottom 2-3% rates. The result is a slow market with steadily increasing valuations.

Closed transactions are down 2.4% for the rolling 12 months ended Sept 30th, 2024
 
Inventory Levels | North Side 

The inventory of homes for sale (SFHs & condos) is currently so low that it's literally almost off the charts (see below). The current inventory of listed homes is down 17.5% from last year - and this is after 2023's inventory levels were off 34% from 2022. To put this in perspective, there were nearly 3,200 properties for sale on the North Side of Chicago in 2011. Today we have a total of 572 properties, or a decline of 80% from the peak year of our data series. Low inventory levels are actually good for supporting property valuations as we will discuss below. As discussed, we anticipate inventory levels to remain low for the foreseeable future.  

Current inventory off SFH & condo is down 17.5% for 12 rolling months ended Sept 30th, 2024
 
Contract Activity | North Side 

Home contract activity, when combined with current inventory levels, is easily the most important data to analyze if you hope to fully understand the current state of the real estate market. Q3's headline number shows year-over-year contracts written for SFHs and condos to be flat when compared to 2023. While this number alone suggests stability in buyer behavior, it also points to continued valuation increases when we consider just how low inventory levels have fallen. Higher interest rates and lower inventory levels are the catalysts for the steep reduction in real estate transactions Chicago's market is experiencing. 

Contracts accepted are down 0.4% for 12 rolling months ended Sept 30, 2024
 
Median Sales Price | North Side 

Real estate valuations on the North Side of the city have increased by 8.1% over the 12-month period ending September 30, 2023. This is actually very good news for us considering many areas of the country are experiencing declines of more than 10%. Many Chicago neighborhoods, and many of our suburbs, are seeing a steady increase in value, where demand is outpacing the very limited available supply. I expect this trend to continue as interest rates continue to fall and demand for urban type living returns as a nationwide trend.   

Valuations remain stable with a 8.1% increase for the 12 rolling months ended Sept 30th, 2024
 
Market Insights & Outlook | North Side 

Persistently high mortgage rates and home valuations continue to sideline many prospective homebuyers as fears of ongoing inflation, bank sector volatility, weakening economic growth and an impending recession hang in the air. Chicago also has the ongoing issues of increased crime, a lingering remote working environment, and the recent trend of suburban flight that may directly impact demand for Chicago housing. How Chicago fares going forward is difficult for anyone to predict. With so many of us with historically low 2-3% mortgage rates, I anticipate many owners will choose to stay put and not sell unless they absolutely must. Others may decide to rent their homes and cash flow their low mortgage rates. All the variables above point to continued low inventory levels going forward (lack of sellers). This same lack of inventory may ultimately be the catalyst for increased valuations should demand continue to outpace supply. 

We are here to assist... If you are in the market to buy or sell a home please contact us. Our goal is to educate, communicate, and execute to the best of our abilities. We will work tirelessly to ensure your next real estate transaction is a complete success. 

 

Contact Us Today:

📞  773-330-5356 (call or text)

✉️  [email protected]

 

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