Chicago - Apr 2024 Market Update

Written By Tracy Lai

Welcome to the April edition of this real estate newsletter! As the spring season blooms, so does our excitement (and confusion?) around all the news in the housing market. Let’s get right into some of the updates and other insights you need to know in the real estate scene.

Sweet Gnome Flower Show at the Lincoln Park Conservatory

Mortgage News At a Glance

  • As of April 18 (CNN), the average mortgage interest rates are:

    • 30-year fixed: 7.66%

    • 20-year fixed: 7.53%

    • 15-year fixed: 6.93%

  • There is more volatility to come for borrowers in 2024 - housing market experts predict rates to move towards 6-6.5% by the end of 2024, but we do not expect mortgage rates to go down in the short term (CNET)

  • The Fed will meet next from April 30-May 1, and experts predict three different scenarios regarding mortgage rates (CBS News)

    1. Mortgage rates will decrease slightly after the Fed’s April meeting

    2. Mortgage rates won’t decrease until at least June

    3. Mortgage rates will hardly budge in 2024

    While predictions vary, the general consensus is that there will be no dramatic decreases in the near future.

 

Will Home Prices Be Affordable Again?

With mortgage interest rates persisting at high levels, many potential buyers and sellers are wondering whether it makes sense to “wait” and act when interest rates go down. Here is what experts are saying.

Despite “dual affordability constraints of high home prices and elevated interest rates in 2024,” Fannie Mae forecasts an increase in home sales transactions compared to last year. Experts also anticipate a slower rise in home prices as we continue to see home prices decline for the third consecutive month in January due to high borrowing costs.

  • In order for a housing recovery to occur, several conditions must unfold:

    • (1) inventories of homes for sale must be higher to ease the upward pressure on home prices

      • With many homeowners “locked in” at low interest rates or unwilling to sell due to high home prices, demand will continue to outpace housing supply. Inventory remains near historic lows, which has propped up demand and sustained high home prices.

      • Existing inventory is showing signs of loosening as impatient buyers and sellers have begun to accept the reality of high mortgage rates (6-7%)

    • (2) Mortgage rates would need to cool (we continue seeing rates increasing back to ~7%) to a more “normal” 4-5% range ← this may take a while, at the moment we are realistically looking at interest rates to settle closer to 6%

  • NAR’s $418M settlement announced March 15 will greatly impact the costs associated with buying and selling a home. This case will have the National Association of Realtors to enact new rules by July 2024 to prohibit offers of broker compensation on the MLS; in short, it will get rid of the standard 6% commission that is split between a seller’s broker and a buyer’s agent.

    • Sellers will no longer be required to pay buyer broker commission; Buyer’s agents must now establish written representation agreements with their buyer clients in order to receive compensation

    • These changes will impact home buyers most: many buyers who can’t otherwise afford to pay a broker will choose to go unrepresented

 

Chicago April Market Stats

March 2024 closed with increased number of closed sales of listings in a shorter amount of time on the market, a higher median sales price, and with more inventory of homes for sale.

Year to Year numbers (YoY%)

Number of home sales increased to 1,790 total closed sales in March (-18.9% YoY), with a median sales price of $358,520, and increase of +7.0% compared to March 2023. The average market time for a home decreased by -14.4% YoY at 77 days on the market, and the inventory of homes for sale decreased to 4,637 homes, a decrease of 15.2% from the inventory in March 2023. The increase in home sales is likely driven by an increased amount of inventory due sellers not willing to wait any longer and being more realistic about current interest rates staying for a while.

Month to month numbers (MoM%)

Compared to February 2024: Total home sales of 1,790 in March increased +34.4%; median price of $358,250 increased for the second consecutive month since January; Average market time of 77 days dropped by -11.5%; Inventory of homes for sale totalling 4,637 homes increased for the fourth consecutive month since December 2023.

 

Local News and Events

Thanks for reading! See you next month :)

-Tracy

Tracy Lai
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