The housing market in Chicago is experiencing a positive shift as mortgage rates trend down, providing optimism for experts in the industry. According to Mortgage News Daily, the average rate on a 30-year fixed mortgage dropped to 6.4%, the lowest rate since April 2023. While this may not seem as exciting compared to the artificially low rates during COVID, real estate broker Danny O’Donoghue from Compass believes that the market is heading in the right direction and returning to a more normal range.
Despite the drop in mortgage rates, home sales have been declining due to record high prices and interest rates. In June, existing home sales fell by 5.4%, with the median sales price reaching an all-time high. Erika Villegas, the president of the Chicago Association of Realtors, anticipates that lower interest rates will help alleviate some of the pressure in the market. She notes that homes are taking an average of 37 days to sell in Chicagoland, prompting agents to update clients on the current market conditions.
The recent decrease in mortgage rates followed a weaker-than-expected monthly jobs report, leading to an increase in lender inquiries. Todd Williams, a senior vice president at American Community Bank, highlights the significance of the drop in rates and its potential impact on reenergizing the market. While mortgage applications are down from previous years, Williams remains optimistic as long as delinquencies stay low and rates continue to move in a favorable direction.
Lower rates are expected to improve affordability for buyers; however, the supply of homes remains a significant issue in Chicago. O’Donoghue notes that there are two distinct markets in the city, with downtown condos having more supply compared to neighborhoods and suburban areas, which continue to be seller’s markets. Despite the summer months typically being slower for real estate activity, multiple offers are still prevalent, indicating high demand.
As rates decrease, industry experts hope that current homeowners, who are locked into low rates, will be more inclined to sell, thereby increasing inventory to meet demand. Williams echoes this sentiment, stating that a significant drop in rates could lead to a surplus of properties for sale. Experts advise those in the market for a new home to prepare now by consulting with a trusted lender or broker to develop a plan ahead of what is expected to be a busy spring season.
In conclusion, the downward trend in mortgage rates in Chicago’s housing market is generating optimism among experts. While challenges such as high prices and limited supply persist, the decrease in rates is seen as a positive development that could stimulate activity and benefit both buyers and sellers in the market.