Buyers Feel Squeeze Across all Chicagoland Home Price Tiers

Chicago buyers can’t seem to catch a break, be they entry-level shoppers, mid-tier movers or even the deep-pocketed crowd.

Home prices across all three slices of the metro’s for-sale market rose faster in October than in most of the nation’s major metros, tightening affordability even as many warm weather markets saw relief, according to data by First American Data & Analytics, Crain’s reported.

Prices at the bottom and top of Chicago’s market — what First American tags as starter homes and luxury properties — were each up 6.5 percent, year-over-year. Mid-tier homes weren’t far behind at 5.5 percent. That level of across-the-board escalation outpaced more than 10 other major metros, and contrasted sharply with places where prices have slipped in all tiers.

Chicago trailed only New York at the high end, where upper-tier prices spiked nearly 15 percent.

Odeta Kushi, First American’s deputy chief economist, pointed to the Chicago region’s long-running relative affordability as a key reason Chicago is still seeing price strength, despite stiff headwinds. Elevated mortgage rates, revived return-to-office policies and general economic anxiety have cooled activity nationally. Yet Chicago, which held onto its affordability edge better than any major city over the past 50 years, still gives buyers room to stretch — even after the pandemic boom pushed local prices sharply higher.

The buoyancy is good news for sellers, but not for households trying to break into the market. The fastest pace of growth in Chicago’s entry-level tier suggests that demand hasn’t eased for homes at about $275,000 and below, based on Midwest Real Estate Data figures. Inflation has already strained budgets for moderate-income buyers, and another mid-single-digit jump in prices only tightens the vise.

Chicago’s upper tier is also having a banner year. While New York’s surge is driven by a jump in $5 million-plus condo and co-op deals — 90 contracts in October, according to Corcoran — Chicago is charting its own luxury rally. Three homes sold for $9 million or more in October, and sales at $4 million and up set a full year record before Thanksgiving, now on track to hit roughly 150 deals. Plus, Jena Radnay of @properties Christie’s International Real Estate has brokered lakefront home sales at record prices twice this year, each of them coming in Winnetka in quick succession at well over $30 million apiece.

Kushi said several big metros, including Chicago, Washington, D.C. and Atlanta, are showing “top-led” markets this year. But Chicago stands out for seeing price pressure from both ends.

— Eric Weilbacher