Luxury and Affordable Home Markets Diverge

CHICAGO—As reported in GlobeSt.com, the region’s housing market has settled into two very different patterns. The sales of modestly-priced homes slowed down considerably this summer, while higher-income buyers are purchasing more luxury homes.

Bryan Kasprisin, a RE/MAX real estate professional with RE/MAX Ultimate Professionals in suburban Shorewood, tells GlobeSt.com that there is a severe shortage of the more affordable homes. “Inventory is definitely down, and what comes up for sale sells very quickly.”

He recently listed four such homes for sale, and felt good about finally having a solid amount of inventory available. However, “all sold within the first 10 days.”

That’s much faster than the regional average, but the amount of time modestly-priced homes sit on the Chicago-area market has sunk toward historic lows. According to RE/MAX statistics, the average market time in August of homes selling for less than $500,000 was just 57 days. And the inventory of homes at those prices in August was 26,405 units, just a 2.6-month supply.

“That makes it tough for buyers,” Kasprisin adds. “Some seem to be pulling back because they don’t want to get into a scrap.”

Overall sales in the region 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.

And it may take time for this sluggishness to dissipate. “Many people are just now getting back to the equity level where they can sell,” he points out. “As we get a little more appreciation, we will see more inventory.”

Home prices did rise 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.

Unlike the more affordable segment, Kasprisin sees ample inventory on the luxury side, a factor which moderates prices and allows buyers to stretch out their dollars. He was recently told by one new buyer, who just purchased his dream home, that he ‘always wanted a million-dollar home, but could never afford it.’”

The number of homes selling for $500,000 or more in August rose to 1,468 units, a 4.4% increase over August 2017, according to RE/MAX. But with a 6.9-month supply of these houses available, the average August market time was 102 days.

Many of these homes were built during the housing boom, which means they are at least ten years old, and with so many homes available, buyers can get picky. “When you’re spending that amount of money, you are going to get what you want,” Kasprisin says. He has seen homes in Shorewood priced between $700,000 and $900,000 sit on the market unsold for long periods. But after the owners decided to get in and do some renovations, some spending tens of thousands, the same houses got snapped up quickly, but for roughly the same prices. That’s a tough call for some homeowners, but with the present glut, it might be necessary.

“The people who do that, their homes are the ones that sell.”