Chicago Region Now Has Two Housing Markets
Affordable homes are selling faster than ever, but luxury homes go unsold for months.
CHICAGO—The Chicago-area housing market has split into two, according to a new analysis by RE/MAX Northern Illinois Region. The sales of modestly-priced homes slowed down considerably in August, while the purchasing of luxury homes accelerated.
Sales totaled 11,421 homes, a decline of 0.7% when compared to August 2017, but the number of homes selling for less than $500,000 totaled just 9,953, a 2.6% decline from the prior August. At the same time, the number of homes selling for $500,000 or more rose by 4.4% to 1,468 units.
On the surface, those statistics seem to suggest demand is stronger for luxury homes. A deeper dive into the numbers, however, shows something different.
“We believe the reverse is true,” says Jeff LaGrange, vice president of the RE/MAX Northern Illinois Region. “Demand for entry-level and moderately priced homes is strong, and sales are being inhibited primarily by a lack of inventory. In the upper brackets, there is ample inventory, and many homes struggle to find buyers.”
At the end of August, the inventory of homes priced under $500,000 was 26,405 units, just a 2.6-month supply based on the pace of August sales. Average market time in August for homes selling in that range was 57 days. According to LaGrange, demand is especially strong for homes priced from $150,000 to $300,000.
In contrast, at $500,000 and above there was a 6.9-month supply of homes available, and the average August market time was 102 days.
Home prices, on the other hand, rose moderately in all categories across the seven-county metropolitan area. The median sales price for all homes sold in August was $245,000, an increase of 2.1% over the same month last year.
Sales data used by RE/MAX is collected by MRED, the regional multiple listing service. It covers detached and attached homes in the IL counties of Cook, DuPage, Kane, Kendall, Lake, McHenry and Will.