Chicago Homebuyers Stare Down Tight Seller’s Market

“Should we list this home in the fall or wait and sell in the spring?”

That’s a question top Chicago Compass agent Jeff Lowe of The Lowe Group has been fielding from sellers lately.

Lowe told his clients the same thing he told The Real Deal: “I don’t see a reason why the market’s gonna change come next spring, other than continue to go up.”

The median home sale price in the city of Chicago breached the $400,000 mark in March and it remained above that threshold over the last three months, according to the latest data from Illinois Realtors. In May, that number reached $420,000.

Compared with the national trend, Chicago proved to be the strongest market in terms of the rate of home price growth among 20 major cities nationally, according to an S&P report which measures the U.S. national home price.

Brokers point to a seller’s market that isn’t changing any time soon. But every ZIP code tells a slightly different story.

The buyer pool peters out further north from the heart of the city to neighborhoods like Roscoe Village, North Center, Ravenswood and Lincoln Square, Lowe said. “These neighborhoods are doing really well but are not as frenzied as Lincoln Park, Lakeview or Bucktown,” he said.

He illustrated the point with the example of a 5-bedroom 3.5-bathroom home on 1025 West Altgeld Street in Lincoln Park. It entered the private market, drew a surge of showings in the first two days, garnered 22 offers and sold almost $500,000 over its listing price in June.

And when a bidding war heats up, a better price isn’t the only negotiating tactic.

Both buyers and sellers are showing more flexibility to stay competitive, Dawn McKenna of the Dawn McKenna Group told The Real Deal.

“We are encouraging sellers to conduct pre-inspections to help buyers to feel more confident about waiving inspections,” McKenna said.

Some buyers are considering waiving appraisals and other contingencies on mortgages, and others are eyeing other neighborhoods like Old Town, Gold Coast, and River North, she added.

The case of the discerning buyer

Further away in Chicago’s North Shore suburbs, the competitive market has gotten more selective, according to Connie Dornan of @properties Christie’s International Real Estate.

Buyers continue to compete aggressively, but for the right listing. “It’s no longer enough to simply list a luxury home: pricing, presentation and marketing are more important than ever,” Dornan said.

Luxurious finishes and locations often tip the scales.

Dornan shared the sale of a 5-bedroom, 5-bathroom single-family home at 1443 Hawthorne Lane in Glenview, which was snapped up even before it was finished.

“I’ve sold several other homes on that same street, and they’ve all sold within a week of listing, even in times when it was a buyer’s market,” she said.

It’s not only about the price

Among other cities nationally, Chicago was by far the strongest market for increase in home prices with a 6.5 percent annual gain, followed by New York at 3.8 percent and Cleveland at 3.2 percent, the S&P report said.

This difference doesn’t reflect true market strength, according to Scott Ottenheimer, a broker with Compass who felt the upward trend will continue for another two to three years, current economic conditions withstanding.

“The question that we have to ask ourselves is: Are our prices high or did they just shoot up really quickly to align with some of the other major metropolitan areas?” Ottenheimer said.

Chicago has always been undervalued compared to other major metro cities, McKenna said.

“Neighborhoods like Lincoln Park have stayed strong over the past few years. Downtown took a bit longer to recover after COVID, but now we’re finally starting to see that shift.”