Let’s cut to the chase – 2018 was not a great year for the Chicago real estate market when compared to the last five years or so. In 2017, Chicago home sales grew 1.8 percent. Sales prices also rose 4.8 percent during that year. Not only did sales tumble in 2018, but prices also failed to climb at the pace we are accustomed to seeing. This is good news for buyers.
For 2018 as a whole, Chicago overall home sales fell 4.1 percent and condo sales specifically fell 6.1 percent compared to the year prior. In slightly better news, Chicago home prices and condo prices grew 1.8 percent and 1.6 percent, respectively.
The time it takes to sell a home in Chicago decelerated in 2018 with days on the market rising 6.1 percent. There was a steeper 14.8 percent increase in the days it took to sell a Chicago condo. Comparatively, days on the market dropped 8.9 percent in 2017. It hasn’t taken this long to sell a home in Chicago (median 35 days) since January 2017. For condos, we’re up to 31 days – same as we were in October 2016.
Inventory, coupled with demand, often dictates market strength. Interestingly, the number of homes for sale in Chicago fell 1.5 percent in 2018. However, the number of Chicago condos for sale rose 8.5 percent last year.
What happened to home buyer demand?
This slowdown, adjusted for seasonality, could be due to a number of events that occurred in 2018.
First, uncertainty over the economy, illustrated in a highly volatile stock market over the year, likely had an impact on buyers’ willingness to invest in real estate. Mid-term elections and political changes could have also influenced buyers’ decisions to hold off as compared to 2017.
Finally, and perhaps the most important in relation to Chicago’s real estate market, the US Federal Reserve raised interest rates a total of four times in 2018 and summed an almost full percentage point hike. But since the holidays, 30-year fixed interest rates are back down to around 4.75 percent and are no longer expected to surpass 5 percent by the end of 2019. This week, mortgage applications were 13 percent higher than they were a year ago, so it does appear that buyers are taking advantage of the dip.
Which Chicago Neighborhood Had the Best Year in Real Estate?
Note: check out the December monthly market report to see the most current numerical data, such as median price and number of closed sales, for each neighborhood.
West Loop homes for sale had the biggest jump in sales prices for 2018, followed by Logan Square/Bucktown.
All but one neighborhood saw a decrease in closed sales – the West Loop also wins in this category.
Homes Under Contract
All neighborhoods saw a dip in the number of homes under contract in 2018. However, Old Town real estate had the lease severe decline in homes under contract for 2018.
South Loop saw the largest increase in the number of homes for sale in 2018. The only neighborhood with dwindling inventory in 2018 was the West Loop.
Homes in every central Chicago neighborhood took longer to sell in 2018. Logan Square and Bucktown homes for sale had the most severe increase in days on the market (DOM). North Center homes saw the softest increase in market time.
New listings rose in every neighborhood except the Loop and West Loop. West Loop had the biggest drop in new listings. The largest increase in new listings over the course of the year was in Old Town.
The West Loop came out on top in price growth and closed sales. Plus, declining inventory and fewer new listings worked in sellers’ favor. Thus, the West Loop is the no. 1 Chicago neighborhood in real estate sales for 2018.