Spending $1 million or more on a home in the Chicago area sounded a lot less appealing to buyers last quarter than it did a year before.
Sales of Chicago-area homes priced $1 million or more dropped by more than 35 percent in the last quarter of 2022 as compared to the same period the year prior, Crain’s reported, citing Redfin. Within the city proper, home sales above the $1 million benchmark dropped by about 34 percent. The Redfin report examined home sales in the top 5 percent of the price range, which was just less than $1.1 million and up.
Rapidly rising interest rates were the culprits, and had already slowed down lower portions of the housing market in a big way, with deals having dropped 22 percent year-over-year as of September in the Chicago metro area. Now, the crunch on borrowing costs seems to be catching up to pricier segments of market, as well.
“Everybody [buying] below about $2 million is interest-rate sensitive,” Compass agent Deborah Hirt told the outlet. “At some point interest rates put the brakes on everybody.”
The highest end of the luxury market didn’t have as hard of a time, mostly due to the richest buyers’ ability to pay all cash and leave interest rates out of the equation. By the end of the year, 134 Chicago-area homes sold for $4 million or more in 2022, up from the 101 sold in 2021.
While a drop by more than a third in deal volume in any segment of the market might sound alarming, agents have said the nationwide housing boom that began in 2020 amid the pandemic made a lot of people forget some of the typical ebbs and flows the housing market experiences.
While luxury home sales were down in Chicagoland, the drop wasn’t as significant as it was nationwide. Upper-tier home sales fell 38 percent, while total home sales dropped 31 percent. The county that experienced the steepest drop in luxury home sales was Nassau in New York, where sales dropped by almost 66 percent.
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Residential
Chicago
Chicago's ultra-luxury market withstands broader slowdown
— Victoria Pruitt