Home Prices Dropping Earlier Than Usual in Chicago

Winter in the Chicago area has brought an unexpected wave of price cuts, with home sellers slashing their asking prices earlier than usual.

The shift in pricing strategy comes as sellers, initially optimistic about market conditions, adjust to a slowdown in buyer demand, Crain’s reported. High interest rates, cold weather and buyer hesitation are factors, pointing to a housing market shift typically seen during peak seasons like spring and summer.

Price cuts affected 3.7 percent of active listings in the Chicago area between the start of the year and Feb. 9, according to Redfin. In 2023, the percentage of listings with price cuts never surpassed 3.1 percent, and it wasn’t until this past fall that reductions hit the 3.2 percent mark.

Nationwide, the trend is also evident, with price cuts to 5.7 percent of listings by Feb. 9.

The median asking price for homes in the Chicago metro area surpassed $410,000 in early February, a peak not seen since 2022. While the asking prices are higher than in previous years, buyers have become more cautious, unwilling to pay inflated prices.

Many would-be buyers have chosen to pause their home search rather than risk overpaying, said Sheila Gentile, a Coldwell Banker agent in Riverside.

The Chicago housing market has not fallen into decline. In fact, prices are still 4 to 5 percent above those from a year ago.

Higher-end properties have been selling well, with $4 million-plus homes having a strong start to the year, said Kyle Harvey of Baird & Warner. However, there have been drastic price cuts in areas like the Gold Coast, as sellers adjust to slower demand.

Examples include a two-bedroom condo on North State Parkway. Its asking price dropped from $649,000 to $625,000 after just two weeks. Similarly, a four-bedroom house in Oak Park had its asking price reduced from $799,000 to $785,000 in early February.

Although price cuts are becoming more common, some sellers, particularly in areas like Riverside, are still managing to sell quickly after adjusting their prices. A three-bedroom Tudor on Byrd Road, listed initially at $485,000, saw a reduction to $465,000 before going under a contingent contract a week later.

The quick turnaround suggests that well-priced properties attract buyers, even amid broader market hesitancy.

— Andrew Terrell