This year is off to an insane start for sales activity both in many of the city’s neighborhoods and Chicago’s suburbs. Quality listings in popular areas are going under contract nearly as fast as they can hit the market. Buyer demand is as strong as ever, and in those markets the supply of inventory just cannot seem to keep up. Being completely ready to hit the market as both a buyer and a seller is as important as ever. Read on for more on the current market conditions, and for our recommendations for both buyers and sellers.
Supply is not keeping up with buyer demand
We’ve been feeling it, our buyers have been feeling it, and the data doesn’t lie. Many of Chicago’s markets are experiencing a notable lack of inventory.
Below are two data sets from markets that we work in extensively: Chicago’s West Town Neighborhood zip codes, and several of the city’s suburbs. Both show a significant decline in their Months Supply of Inventory. “Months Supply of Inventory” is described by the National Association of Realtors (NAR) as: the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.
As you can see:
- In West Town, Months Supply of Inventory has been underneath the six months of supply level all year and is currently at its lowest in the last 12 months. Lower even than March/April, the height of fear and uncertainty with the pandemic.
- In Highland Park, Deerfield, and Northbrook there was far more supply 6 months ago, but it has steadily been on the decline since, and is also at its lowest point in the last 12 months.
- Months Supply of Inventory in Highland Park’s Single Family Homes $650k and above (a “sweet spot” for a lot of suburban buyers) has had a very steep decline. Way lower January 2021 vs. January 2020.
So, what do we recommend of our buyers? Get yourself prepared to buy in advance. Go over your finances, talk with your mortgage broker to get pre-approved, and have your consultation with your real estate broker before beginning your tours so that once you find the right one you will be fully prepared to write an offer on the spot.
Sellers are receiving more for their listings today than last year
Not only are quality listings going under contract FAST (one of our Lakeview condo listings this week went under contract in 1 day on the market), sellers are getting strong prices for their properties. Below is a data set for the West Town Neighborhood zip codes Average % of Last List Price received. The percentage tells you how much of their listed price they actually received in closing.
As you can see, while there has been some volatility throughout the last year between 98-99.5%, the percentage of list received in West Town remains high. In fact, sellers are receiving nearly a point higher in % of list received in January 2021 compared with January 2020. Typically, that percentage will drop in the winter, but this winter sellers continued to receive strong offers on their listings. The strong buyer demand and limited supply are factors holding up the continued price appreciation.
So, what do we recommend for our sellers? If you are thinking of selling, now is the time. We can help you get your property valued, and in show ready condition asap.