Chicago Compass broker Robin Allotta expected plenty of attention when she listed a four-bedroom, two-bath Arlington Heights home on Feb. 17. Just not this much.
The home had more than 70 showings in a single weekend. Two agents helped her stage 15-minute tours with multiple groups – and it was appointment-only, not an open house. The sellers got 13 offers and sold it for the asking price of $485,000 in four days. The same house sat on the market for 213 days in 2018.
“In the suburbs we’re getting a lot of this kind of reaction,” Allota said.
Tightening inventory is challenging buyers and brokers across Chicago as the region staggers through the spring selling season, the hottest period for home sales. Just 5,824 homes were available in February, a 28 percent drop from the previous year, according to data from the Chicago Realtors association. That’s a tad better than January, when inventory had slumped by more than a third.
The spring season typically starts in January or February, and the homes that go under contract then close in the next few months, triggering more sales as the early-year buyers sell their previous homes.
Spring has long been strong for sales because families need to buy a house, relocate and get their children enrolled in a new school district. Those lines blurred with online learning during the pandemic, contributing to this year’s frenzy. The decision by Chicago Public Schools to return to remote learning during the spring semester prompted many families to start looking in the suburbs, Allotta said.
The inventory shortage can be a vicious cycle. Sellers are reluctant to put homes on the market for fear they won’t be able to find a new home, said Antje Gehrken, president and managing broker of ARE Partners and president of the Chicago Association of Realtors. Still, most buyers will eventually find a home, she said.
“Buyers are having a little bit more of a challenge, especially first-time home buyers,” she said. “If you’re working with a good agent and you’re pre-approved you can still find the home of your dreams. It just takes a little time and patience.”
Rising interest rates aren’t helping. While they’ve slowly been climbing for months, the average rate on a 30-year fixed-rate mortgage hit 4.42 percent last week, according to Freddie Mac. That’s up from 3.76 percent just three weeks earlier and marked the fastest increase in that period since 1987.
Inventory shortages won’t be resolved anytime soon. A new report from Zillow found that it will take at least two years for the national housing inventory to return to pre-pandemic levels. That may not completely erase issues in the market, however, given sky-high demand.
“The hope is of course that new inventory will come on the market as well as increased new home production,” Gehrken. “But buyer demand is still high (so) the new inventory will help ease that strain but may not solve the issue.”
Allotta expects the market to cool the fall, in part because of home-shopper fatigue. Some potential buyers will end up taking a pause after consistently getting outbid on multiple offers. Many are making offers of 10 percent or more over asking price or waiving appraisals. As interest rates rise, buyers will have less buying power for the house itself and also less budgeted to fix up a home that needs work.
For agents representing sellers, making sure the house has a realistic list price is the most important part, Gehrken said. For agents representing buyers, it’s setting realistic expectations of what they’re looking for, connecting them with a reputable lender and getting preapproved for a mortgage.
“The goal is to get them into a home that they would love, not that they would settle for,” she said.