The real estate market has had a busy year, and we’re only halfway through! While 2012 saw an increase in buyer confidence, 2013 has seen strong sales numbers and historically low interest rates. There have been many changes and more are on the way, so it’s important to stay up-to-date on the most current market conditions.
Home Prices & Activity
Spring and early summer numbers have been very encouraging, signaling a welcome increase in demand. According to the National Association of REALTORS®, the Chicagoland area saw an 8.1 percent increase in home prices since April 2012. Baird & Warner has seen its total sales volume and number of transactions in 2013 increase more than 27 percent since the same period last year. While local market experts still maintain that the Chicago area won’t see double digit price increases this year, prices are still showing a modest upward tick.
One of the biggest challenges facing the market today is a decline in inventory. Homeowners are becoming more comfortable with selling, and currently the demand is far greater than the supply. The Months Supply of Inventory (MSI), the number of months it would take to sell every home currently on the market, from January to May 2013 was at an average of 3.5 months. By contrast, the average number of months during the same period last year was 7.5 months — more than double.
Multiple offer situations are becoming more and more common, something the market hasn’t seen for several years. This decrease in competition has become a boon for sellers but a potential roadblock for buyers. While this indicates a seller’s market, it’s still a good time to buy. Why? Interest rates.
Homebuyers have enjoyed record low interest rates, but most economists don’t expect it to last. According to Freddie Mac’s Weekly Primary Mortgage Market Survey, 30-year mortgage rates have increased half a percentage point in the last six months. While an increase in rates may alarm and even detour certain buyers, this is actually a good sign. Economic conditions have improved considerably since the recession, and the market appears to be getting stronger. This is a good thing!
This information reflects the general temperature of the Chicagoland real estate market, but remember that all real estate is local. If you or someone you know is considering buying or selling a home, please let us know. We’d love to help.