Chicago’s housing market frenzy isn’t slowing down this year, meaning it won’t get any easier to buy a home in the city.
Pent-up demand will outweigh new supply, driving competition and price growth that will continue to give sellers an advantage, according to Compass’ 2022 housing survey of 102 agents in the Chicago metropolitan area between Nov. 16 and Dec. 7.
After steep declines in the inventory of homes available in 2020 and 2021, 44 percent of the agents expect supply to improve. Of the total, 39 percent said it will stay the same while 18 percent responded that inventory will decrease.
“We will still be feeling the pinch of inventory at many price levels,” Amy Foote, Compass’ agent, said. “Entry-level homes will still be hot with a ton of competition, which will likely result in multiple offers, especially if the home is in tip-top condition.”
Demand for homes seen during the pandemic, however, will spill over to 2022, preventing a substantial increase of homes from accumulating on the market, the agents said. This led 66 percent of respondents to predict that 2022 will continue to favor sellers.
The median home price for the metropolitan Chicago area rose 11.9 percent to $300,000 in the first 11 months of 2021 from the prior year, according to Illinois Association of Realtors’ latest report.
More than 60 percent of Compass’ Chicagoland agents forecast an increase in home sale prices. Bidding wars for houses in the Fulton Market area, a bright spot in the pandemic-battered office market, are expected especially when offices welcome back employees.
“I expect the majority of folks to head back to the office in 2022 and I think we’ll see an increase in demand and therefore prices in markets like West Loop, based on the proximity to the downtown office markets,” said Nathan Binkley, Compass’ real estate agent.
Adding to first-time home buyers’ woes are not only high housing prices but also mortgage rates that are expected to rise.
According to the survey, 81 percent of agents believe the days of 3 percent mortgage rates are over. On average, agents said mortgage rates will end the year around 3.74 percent.
Mortgage rates hit a 20-month high of 3.22 percent last week, rising from 2.65 percent recorded in early 2021 and the highest rate since May 2020.
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