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Chicago area home sales fall as Fed hikes interest rates

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It’s no big surprise to McCrett, or anyone who understands that low interest rates were a major driver of the housing boom. “When we started raising rates, we knocked out a lot of buyers[who expected]they could afford to move,” Machlet says.

That was the intent of the Federal Reserve. A year ago, the White House Economic Advisory Board reported that housing is playing an increasing role in inflation Measured by the Consumer Price Index. For the Fed, which acts independently of the council, keeping house prices in check is a deterrent to inflation, and throwing a wet blanket at the intense demand for housing was part of keeping house prices down.

one clear result more than double the interest rate So far this year, Chicago-area home sales have fallen for the third consecutive month by more than 20% from the corresponding month in 2021.

Chicago-area home sales fell about 23% in September, according to data released today by Midwest Real Estate Data, the Chicago Association of Realtors, and Showing Time.

Elk Grove Village and several other locations saw declines more than double that of the region as a whole.

Among Chicago neighborhoods and suburbs, Elk Grove Village had the biggest decline in home sales in September, according to Crain’s survey of today’s data. Elk Grove Village is one of four suburbs where home sales have halved from his September to the next September. The other is Grace Lake (sales down 51%). Highland Park (50%); Romeoville (49%).

In the city, the report separates data for neighborhood single-family home sales and condo and townhouse sales. The biggest decline in the city in September was in the Lincoln Park condo and townhouse market, where sales fell from 151 in September 2021 to 89 last month to 41. % decreased. This was followed by Logan Square condos and townhouses (down 33%) and West Ridge condos and townhouses (down 32%).

Crain’s only looked at urban and suburban locations that had at least 25 homes sold in both September 2021 and September 2022. A small number skews the percentages used for comparison.

This is not to say that these markets have fallen off a cliff, just that the home sales market and the economic vitality it generates, especially in the form of spending on new curtains and rugs, has declined sharply. in these areas. And it’s important to remember that this decline is being measured against last year’s monster-like surge in sales.

“Demand is still high,” says Diane Couffus, Keller Williams North Shore West’s agent in charge of Grayslake. Today, at her Crain’s, she talks for a few minutes between showing a buyer her one property in Grayslake and presenting another buyer’s offer to a seller’s agent, also in Grayslake. She said she had time.

In September, Kuhfuss represented a buyer who paid $472,000 for a three-bedroom home on Shooting Star Road. Other buyers may have strayed away from the market as interest rates have risen, but her client sold her previous home “at top price” and was willing to spend on the new one, Kufufus said. say.

Highland Park Compass agent Janet Borden said higher interest rates may have caused some buyers to temporarily exit the market and readjust their expectations.Mortgage interest rates rise by 1 percentage point Reducing the amount borrowers can afford to pay for housing by about 11%, Mortgages have risen about 4% this year.

“If someone was looking in the $1.9 million range last year and now has about $1.06 million to spare, the home they see doesn’t look so good,” says Borden.

Caroline Moellering of @properties Christie’s International Real Estate said the shortage of homes on the market has been slowing down home sales. “I work with some buyers who can’t find what they want,” she says Moellering. “If they can find what they want and the price is right, they will buy it.” I don’t feel rushed.

New listings at Lincoln Park dropped 42% in September from a year earlier, roughly the same size as the decline in sales.

Stocks are down for many reasons. Among them, the high volume of homes traded during the boom meant fewer homes could be put up for sale again soon, and some homeowners said the recent They don’t like to trade up from sweet interest rates in pandemic years to today’s rates.

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