River North Condo Market Analysis 2023 | Hudson Parker

River North | 2023 In Review

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River North Condo Market Analysis | Summary

Is trouble brewing for the River North condo market? The summary of data we follow continues to show that River North, like most of Chicago and the rest of the country, is experiencing a dramatic decrease in overall real estate transactions. The slowdown in River North, as well as the rest of the nation, is directly attributed to inflation and the Federal Reserve's decision to raise interest rates to the highest levels we have experienced in a decade. Over the past year, these higher rates have both decreased the supply of homes for sale, and the demand from buyers looking to purchase. The end result was a stable market with valuations slightly declining in most of River North area.

So what has changed? While not overly alarming, the latest data shows a 20.5% increase in River North's Month's Supply of condos available for sale. A month's supply indicates how long a listed property takes to find a buyer. It also is an early indicator that properties listed (inventory) outpaced the number of limited buyers in the market. If this trend were to continue (I don't know that it will), we would expect to see continued price reductions to help attract buyer demand. We'll be watching closely to see if the recent decline in interest rates increases demand and stabilizes River North pricing.

Here's the latest data on River North Real Estate.

2023 Year-end | The Data

Units Listed: 319
Closed Sales: -18.4%
Avg Sales Price: -16.2%
Under Contract: -10.9%
Month's Supply: +20.5% (5.3 Months)
Inventory Level: -9.6%

Who doesn't love data? We certainly do, which is why we pay such close attention to the River North condo trends and the analysis that will be discussed below. It's impossible to truly work in your best interest without a deep understanding of the data that leads to real-world fluctuations in supply and demand. While the data below supports a macro or high-level look at the current state of River North's real estate market, it's even more critical to analyze similar data in the specific building you hope to buy or sell in. While collecting individual building data is far too time-consuming for a monthly real estate blog, it is an essential part of the valuation process for anyone hoping to successfully buy or sell a condo unit in River North. We're happy to share our knowledge, experience, and analytical skills with you. Contact us today if you have specific questions on River North real estate. Our team is here to assist.

River North Condo | Sales Activity

River North's 2023 condo sales were down 18.4% from 2022 levels. Check out the graph below of monthly condo 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 COVID between 2020 - 2022, where sales crashed in late 2020 only to hit new highs when COVID eased in 2022. The headline 18.4% decrease in condo sales is less dramatic when you consider 2022 as an outlier year. As you will see in the data and commentary below, reduced demand, due to continued higher interest rates, is substantially offset by historically low inventory levels (no one wants to sell and give up their 2% interest rates), resulting in relatively stable pricing across much of the River North condo market.

River North sales are down 18.4% in 2023, and trending back to the lows of the COVID years

River North Condo | Median Sales Price

River North condo pricing declined in 2023 after a brief post-COVID bounce in 2022. Where we go from here is difficult to predict. Will we see corporations again require employees to be back in the office full-time? Or is the hybrid remote trend here to stay? I think the answer to this question will determine the direction of pricing for River North condos going forward - as it will for other areas that directly border the loop. With so many homeowners locked in with historically low mortgage rates, we anticipate many will hold their condo units and decide to rent rather than sell. This will contribute to continued low inventory levels going forward, and will ultimately contribute to increases in valuations should demand once again return to more normalized levels.

River North valuations decreased by 16.2% in 2023

River North Condo | Contract Activity & Month's Supply

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 market. In addition, building-level analysis of this same data is essential in determining what price to list a property, or at what price, and how aggressively to make an offer. June's headline number for River North shows a 10.9% decline in year-over-year contracts written for condos. It's a substantial drop but less concerning, from a valuation perspective, when you consider inventory levels are also down 96% over the same period. Higher interest rates combined with lower inventory levels are the catalysts for reduced real estate transactions in River North. The decrease in contracts written is not an indication of direction with valuation, but it does indicate that early 2024 closings will once again be well below historic norms.

Home contract activity was down 10.9% in 2023

Month's Supply was up 20.5% in 2023 as higher mortgage rates have caused a reduction in demand

River North Condo | Inventory Levels

One of the best things we can say about the River North real estate market is that the inventory of homes for sale remains low relative to overall demand. Inventory levels were down 9.6% in 2023 and approaching lows not since 2016. As discussed above, low inventory levels have helped offset the decrease in buyer demand for River North condos. The graph below shows that the inventory of River North condos is at the lower end of the historic range. As discussed above, we anticipate inventory levels to remain low for years to come.

Inventory levels were down 9.6% in 2023

Are you in the market to buy, sell, or rent a River North condo? Are you interested to see current data on a specific River North building? Contact us today and we will be happy to help make your next real estate transaction a complete success.