Chicago’s Fall 2015 Market has been slow. Ask any Realtor or home seller and I bet they’d agree. While traffic is there in many weeks, buyers’ motivation isn’t following suit. Throughout the fall I’ve been discussing this topic with Realtors here and in other parts of the country. By and large, that nice fall bump and energy we got used to seeing over the past several years, which carried us from Labor Day to Thanksgiving, disappeared with last year’s fall market (2014) and hasn’t returned this year. Is this the new normal? A lot of my colleagues who have been in the real estate business for 20+ years say yes.
With that, where are we going this fall? No doubt, it’s harder to sell a home now. I see this each and every day with my sellers. We may get traffic, but not a lot of motivation in the buyers coming through and we are fighting tooth & nail, each and every day, to generate an offer on each property. In many cases we are looking towards spring now for new energy in the market driven by first time buyers.
But it’s also frustrating if you are a buyer. There isn’t a ton of inventory that is really special to choose from and as a result, many buyers are – in my experience – biding their time until the right property comes along. Some may look for months and months until they find the right property.
The National Association of Realtors just released it’s Realtor Confidence Survey, and there were some interesting results on our July through September, 2015, activity:
- 13% of the market is Investors
- 24% of the market purchases homes in cash (71% of the international buyers; 6% of 1st time buyers)
- For financed transactions, 36% of buyers had at least a 20% down payment.
- 29% of the market is first time buyers.
- Of those 1st time buyers, 69% had a down payment between 0-6%.
Think about that last statistic – more than 2/3 of first time home buyers purchased with 6% or less down payment. Time and again I hear clients – when we first discuss a home purchase – being unsure if they can get a mortgage because they don’t have 20% down payment. It illustrates the point that lower down payment programs continue to be very popular and a low down payment does not preclude buyers from owning a home.
The Survey also displayed some important (though not stellar) facts about home sales in Illinois:
- Single Family Homes will perform at moderate levels in the next year; condos & townhomes will perform at weak levels.
- Buyer Traffic is Weak in Illinois (1 of 9 states reporting as such)
- Seller Traffic (measured by the number of showings on listings) is Weak in Illinois (1 of 47 states reporting as such). Yes, 47 of 50 states report seller traffic is weak!
- Realtors predict price increases of 2-3% in the next year (27 total states projected the same)
- The hottest markets (those with homes selling, on average, in less than 30 days) are Alaska, California, Colorado, Nebraska, South Dakota, Texas and Utah
Pending Home Sales Down
NAR also reported that September’s pending home sales were slow for the 2nd straight month, down 2.3% (though the figures are still 3% higher than September 2014).
City of Chicago Property Tax Increase
A key factor in our market right now is the City of Chicago property tax hike which was approved this week by the City Council. For many homeowners that is going to cause a substantial raise in property taxes that will most certainly be felt, and I’ve been hearing buyers talk about it for the past few months. Is that the reason so many are nervous to jump into the market?
For my own house, we’ll likely see an increase of $960 this next full tax year in our bill, based on the reports. What was uncertainty has now become reality, and that looming increase has and will likely stunt our growth.
The last 2 months of the year will continue to be slow, and that will extend into January. The only constant we have seen just about every year is the bump after Super Bowl that carries us through spring and early summer. I’m hoping that will remain the same in 2016 so we have something to look forward to. But if you’re selling your home right now, don’t start packing just quite yet. It could be a while.