Chicagoland home sellers are finding ways to keep prices elevated while still aiding buyers, even as prices across the nation have fallen from pandemic-era peaks.
The average price of new homes sold in Chicago was a little more $439,500 in the first quarter, a figure that has stayed roughly the same since jumping 11 percent to $439,100 from $395,400 in the first quarter of 2021, Crain’s reported, citing data from consultant firm Tracy Cross & Associates.
Developers using interest rate buy-downs is a big reason the prices have stayed elevated, according to Tracy Cross CEO Erik Doersching. It spares buyers from the higher costs of financing a home purchase today with the costs of debt on the rise. The maneuver allows builders to pay a portion of a home’s cost upfront to lower the interest rate, essentially discounting the property without changing the official asking price.
“We’ve seen a lot of buy-downs,” Doersching told the outlet, adding that mortgage rates have topped 6 percent since September. Builders, though, have found that “if they can buy it down to 5.5 percent, that’s the sweet spot” that attracts buyers, he said.
Real estate research firm John Burns revealed in a December study that 75 percent of builders nationwide were offering buy-downs, even as prices have fallen in many major markets, showing their pricing corrections haven’t yet made up for the higher cost of debt due to interest rate hikes.
Minimal inventory is another reason why Chicago has avoided a price drop. As of late March, the city’s median asking price of $333,500 was the highest ever on record, largely because only 5,160 homes were on the market. That’s down 17 percent from 6,220 homes one year prior
In the first quarter this year, 1,169 new homes sold in the Chicago area, the outlet reported. That marks a 30 percent dip from the same time in 2022. Yet, the 2,272 single-family homes that sold in Cook County in March amounted to $944 million, compared to 1,399 deals worth $549 million in the month prior, illustrating the increased sales volume tied to the start of spring.
— Quinn Donoghue
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