Inventory and opportunity. Where are buyers, sellers, renters, and investors getting the best deals?
We are in very dynamic times. Depending on where you look, and whether you are looking at single family or condos, the inventory of those homes seems to be either way up or way down right now compared to previous years. Right now, we see an opportunity for single family home sellers, depending on their market, to start getting more aggressive on their pricing. Meanwhile condo sellers, especially closer to downtown, the inventory is starting to surge, and we are expecting that prices will begin to fall. Read on to learn more!
Let’s take a look at how inventory is affecting various real estate markets; Single family homes, condos, and rentals / multi-family investment properties.
Single family homes
As the demand for more personal space, outdoor space, square footage, etc. has grown the inventory of detached single-family homes has dropped, while condo inventory has increased across Chicago. The combination of low inventory and high demand seems to be driving up prices, which means it is a great time to sell single family homes. This is especially true in the city’s popular suburbs where there is a lack of “good” inventory (homes that are nicer/ more updated/ more modern). We believe sellers can get aggressive here.
In the last month we’ve had several single-family home closings in the suburbs:
Northern Suburbs – Beautiful home. Received multiple offers within one day on the market. We were able to help out buyers secure a contract by utilizing an escalation clause (escalation clauses are a major “cheat code” you can use as a buyer in a multiple offer situation). We were able to help our clients get the house they wanted in a very competitive situation, a couple thousand above list price, with a quick closing.
Western Suburbs – Nice house, that didn’t need too much work. The sellers had originally overpriced the home and were not in a rush to sell. Then they bought property elsewhere and suddenly they were in a rush to sell. They dropped their price, but since it had been on the market for so long, not many buyers were running to see it. Our clients saw it two days after the price drop and we helped them write a somewhat aggressive offer. There was one counteroffer, and then we got it under contract with a huge closing cost credit. So, in the end, our buyers got the house for a great price, and had all their closing costs paid for!
Northwest Suburbs – The sellers of this home clearly had tried to take advantage of the hot suburban market, but this house needed some serious work. It was on the market for over 60 days. Eventually we were able to help out clients come to an agreement with the sellers, and were able to get 10% off the list price of the home!
Attached unit (condo) new listings, August 2019 vs. August 2020 is up 63.8%. Attached unit new listings in the Near North neighborhood, August 2019 vs. August 2020 is up 94.3%!
The above two metrics are incredibly telling. Condo inventory in the city is significantly up, and in the downtown market it is literally sky high. We believe that this is an indication that prices will fall, and its most likely time for buyers to start getting some deals.
We’ve been discussing amongst ourselves and with our industry partners about the current market conditions and the pandemic, and how it will affect the city long term. In the short-term, it appears that high-rise living will suffer. Long term it will bounce back at some point, depending on how long the pandemic itself lasts. We’ve heard comparisons to 9/11, when for a period of time people were afraid to live in high rises, take elevators, etc. That lasted for a relatively short period of time, but with this we will have to wait and see what exactly those long-term effects might be.
Bottom line for condos, inventory is up in most neighborhoods (especially the more densely populated neighborhoods). Inventory is up the most significantly in the densest neighborhoods. So, while we believe deals will really start to be out there, they will start closer to downtown, and overall prices may not drop as much in the neighborhoods. The fact is, every neighborhood its own market, and every client has their own plans. This, plus the condition of the property will dictate how fast or slow something sells.
Renters and investors
The Chicago rental market is now fairly flooded with inventory. There is more vacancy now than what is typical at any point in any year. Nearly across the board within our inventory, and from what we are learning from our industry partners, overall traffic seems to be down at least 50% compared with the lead velocity that is typical for this time of year. Renters are able to shop with more flexible move in dates, and many deals and concessions are out there to entice them. As an owner it is important now more than ever to be nimble, it may even require negotiating with prospects on an individual level as leads are tough to come by right now.
As an owner if you are rented up, and have been contemplating refinancing, now is absolutely the time as rates are as low as ever.
If you are a seller, you want to have a good broker because you will want to make sure you are priced correctly for your market, or your property may linger on the market and lose value. If you are a buyer and you have a good broker, they will be able to keep a pulse on things and track prices, and also help you prepare yourself to move quickly on the right home, once you find it. Talk to one of our brokers today.