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An estimated Illinois home sales rose 34.9 percent compared to its numbers a year prior, according to the latest data from Illinois Realtors. The heightened demand is currently outstripping the available supply by a wide margin, and prices are rising accordingly. Now, prospective buyers may be wondering if ‘now’ is the right time to spend their energy browsing homes in the State of Illinois. So, is now the right time to buy? Here’s what you should know.
REALTORS President Claims High Demand Shows Housing Market’s Strength
Since 2020, Illinois home sales broke 17,000 units. This drop-in supply caused prices to rise 16.5 percent, topping off at $233,000 per home. Illinois REALTORS president Sue Miller says that this is only a sign that the Illinois housing market stands strong amid the economic turmoil wracking the world right now. According to Miller, the issue of inventory can easily be fixed by homeowners who have been on the fence about selling their properties. Miller went on to say that now is a better time than any to put a for-sale sign on the front yard.
Property Supplies Remain Low
Despite the words of the REALTOR president, the supply situation remains unsatisfactory. Less than two months into the new year, fewer than 17,000 single-family housing units were publicly listed for sale in the Greater Chicago Area. This is around half the number listed at the same time in 2020. Such supply figures are at an all-time low since the market crash of 2008, according to Midwest Real Estate Data.
Although supply is low, homes are still being put up for sale. However, they spend much less time on the market. Recent data from 1Q2021 shows that most properties in Chicagoland and other high-demand areas stay for sale for only 46 days on average, compared to 58 days last year. Those looking to buy will have to make quick decisions, as properties may be snatched up within short notice, thus causing them to go back to browsing.
Mortgage Deferrals Incentivizing Homeowners To Sit On Their Properties
Amid the supply issues, buyers are left to wonder what might be causing their difficulty in finding homes for sale. One of the primary reasons, according to some experts, is the set of pandemic mortgage protections currently in effect. Federally backed mortgages have allowed payment deferrals since mid-2020. Some private mortgage lenders have followed suit to foster customer goodwill. Thanks to these measures, the best course of action for homeowners is to hold on to their properties. As for buyers, it is recommended that they consult a reputable mortgage company to find out if people in their area have been deferring their payments to the maximum allotment. This will determine whether or not homeowners in the said area will be likely to put their property up on the market.
Mortgage Factor Suggests Buyers Are Better Off Browsing In Higher-Income Neighborhoods
Nykea McGriff, president of REALTORS Chicago, reassures both buyers and sellers that the demand can only indicate a stronger market in the coming months. He went on to say that come winter, supply will return to appropriate levels. He also mentioned that different neighborhoods react differently to current economic circumstances. This means that, given the mortgage deferrals, higher-income neighborhoods would likely be the ones to contribute the most to supply. They would be the most likely to be punctual on their mortgage payments or actually own their homes.
Economic Uncertainty Preventing Even Eager Homeowners From Selling Their Homes
The mortgage isn’t the only factor discouraging homeowners from putting their homes up for sale. The uncertain state of the economy means that selling one’s home requires one to take on a significant amount of risk. For one thing, they will have to look for another home, or more likely, an apartment or condo, to move into themselves. For another, many are anxious about whether or not they will even have a job in the next few months. Even if they do have the means to simply buy up another property or rent long-term, the low supply makes them feel like the market does not have enough options. The lack of variety only tells them that there probably isn’t a property out there that would suit their needs better than their current home. As they may not see anything worth moving into, they are simply holding on to their properties and biding their time.
Housing Supply Ultimately Hinges On Prospective Sellers’ Decisions
This creates an impasse in which homeowners interested in selling cannot do so as there is little supply. Stephanie LoVerde, an agent from Baird & Warner real estate, suggested that those eager enough to sell should consider moving in with family to increase the overall amount of market options.
This would hopefully create a domino effect, encouraging more and more prospective sellers to put up their homes for sale and thus solving the supply crisis. In general, it is not a great time to be browsing the housing market in the state of Illinois at this point in time. This goes most especially for the Greater Chicago Area and other concentrations of in-demand real estate. As the experts said, the situation may improve come winter.
But that depends on whether or not people are willing enough to sell to find temporary lodging or move out of state altogether. Mass migrations to states like Florida indicate that the latter option is a legitimate possibility. People are seeking lower living costs and more living space. Once enough Illinois residents see the allure of such a move, we can probably see the housing supply situation improve by a substantial amount.
With prices up and supply down, prospective buyers are put in a very disadvantageous position. The most advisable move, for now, is to simply keep looking out for the best deals possible, with the help of information provided by real estate and mortgage advisors.