CHICAGO—January is always one of the slowest months for home buying, and the harsh weather during the past few weeks did stop many potential buyers from making the rounds. But prices in the state increased by a healthy amount, and that most likely means IL will have a very active spring season.
“The housing market has been operating at a very high level for several years now, and I don't see anything that will change that,” Stephen Baird, president and chief executive officer at Baird & Warner, tells GlobeSt.com.
In January, buyers purchased 8,156 homes statewide, down 6.1% from the 8,683 sold in January 2017, according to data just published by Illinois REALTORS. But the median price hit $185,000, up 8.2% from $171,000 in January 2017.
Warmer weather should get buyers back on the street, and Baird likes the look of the economy. Interest rates are still favorable, he says, and Chicago's metro area continues to create a healthy amount of jobs. Furthermore, consumer confidence is quite high, and big-ticket items such as cars are selling well.
The only real concern is that we are in the midst of one of the longest expansions on record, and at some point, the economy will hit a rough patch, Baird adds. Still, “we are also coming out of a very deep-down cycle,” which may explain the recovery's extended length.
One relatively recent feature of this market is a persistently low inventory. In January, 45,726 homes were for sale statewide, a 12% decline from the 51,978 up for sale one year ago, according to the REALTORS. Successful buyers had to move quickly. On average, homes sold in January had been on the market for just 65 days, down from 69 for last January.
And it may take a while for this situation to get resolved. Many potential sellers, Baird says, have been dissuaded from selling because “they're concerned about finding another home if their current home is bought, so they don't put it on the market.”
But he is also not very concerned. “That's not a huge issue,” he says. For one thing, “when inventory gets tight, prices go up.”
Furthermore, things are a little more complicated than the straight inventory numbers indicate. In fact, at the higher end of the price scale, “the market is actually soft; there is too much inventory.” Part of the problem is that older homes have to compete for attention with the new high-end units under construction. If someone puts an older, high-end home on the market, they could be waiting for some time. “That's a tough sell.”
Baird's long-term outlook is quite sunny. He says fears that millennials would stay renters for the rest of their lives now seem outdated. “That's just not the case. Millennials are forming households, having kids, and buying houses just like baby boomers.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
