Buyers in the Chicago area remain on the sidelines

Across Chicago and its nine-county metro area, sales of single family homes and condos are still declining, though when homes sell they’re generally at a higher price point.

In Chicago, 1,659 homes sold in November, a 10.4 percent decrease compared to the 1,852 homes sold last November, according to state industry group Illinois Realtors. The nine-county metro area saw a 7.6 percent decrease. This November, 7,578 homes sold, compared to 8,200 homes in November 2018.

Politics, property taxes and price point could be driving the trend, said residential broker Lance Kirshner, whose team recently moved to Compass from @properties. Higher property taxes and the loss of the state and local property tax deductions (better known as SALT) are contributing to the sales slump, according to Kirshner.

“So, as you move up the price points, those are the properties that are going to be more affected by what people can deduct in terms of real estate tax deductions,” he said. “So some of these people may choose to not get into these higher-end properties and/or maybe they’re more comfortable paying higher rents, because now they’re not getting the deductions that they qualified for previously.”

The decline of home sales in the Chicago metro area bucks the national trend. Throughout the U.S., home sales increased by 2.7 percent in November from a year ago, according to the National Association of Realtors.

In light of Chicago’s new mayor and Illinois’ new governor, homebuyers might be waiting on the sidelines to see what happens.

“I do see people saying, ‘Well, let’s wait and see things shake out,’ because people really don’t understand what those effects are until we get through complete fiscal cycles, so there is a lag time in some of these changes,” Kirshner said.

Though home sales decreased, home prices increased in the city the nine-county metro area. Chicago’s median home price went up 3.2 percent in the past year to $270,000, while the median home price in the greater Chicago area rose by 3.4 percent to $240,000.

In 2020, Kirshner predicts the market will continue with the “Midwest mentality of slow and steady pace.”

“I don’t suspect any drastic change,” he said. “I do think that it will not be a super strong market, but I don’t think that we’re going to see sales take a nosedive.”