The days are getting shorter and the leaves are starting to fall. Autumn is coming to Chicagoland, and that means another frosty winter is just around the bend. So, as the spring and summer give way, what do fall and winter have in store for our area’s real estate market? 

The changing of the seasons makes for a great opportunity to check in on the ever-changing state of our area’s housing market. As we get ready for the fall and winter months here in Chicagoland, there are some local and national trends and stories worth keeping an eye on, which could play a big role in shaping our region’s market well into the new year. 

What are some of the major real estate factors that brokers, agents, marketers, and consumers are watching right about now? Here are three key questions to keep an eye on as head into the back half of 2019: 

Overall Economic Strength: Are We Heading for Recession?

One of the biggest factors that influences the housing market, locally and nationally, is the overall health of the American economy. As of the time of this writing (early fall, 2019) many market watchers are taking a bit of a cautious “wait-and-see” approach, as there are several key indicators that a recession may be imminent in the coming months or years

Chiefly? The stock market has been turbulent for some time now, frequently seeing dramatic dips in recent weeks (often in connection with out country’s unpredictable, ongoing international trade war). More importantly, in August of 2019, the bond yield curve inverted, which occurs “when the interest rates on short-term bonds are higher than the interest rates paid by long-term bonds,” as the Washington Post explains succinctly. This inversion is a warning sign that people are nervous about the near-term future, and is a reliable yellow flag for a coming recession, occurring before every U.S. recession since 1955. 

While Fed Chair Jerome Powell has attempted to downplay fears of a recession, he has also noted that “there are significant risks,” including “slowing global growth, uncertainty around trade policy, and also persistently low inflation.” 

There are two big questions to monitor in the coming months. First and foremost is the obvious headliner: Is a recession coming? Time will tell. Just as importantly, it’s worth asking what impact a recession may have on the housing market. 

While many people are still skittish following the shock of the Great Recession, it’s worth noting that, historically, recessions aren’t always unfavorable to the housing market. In fact, as Curbed explains: 

“…recessions don’t always impact housing with the same force as the job market or other sectors of the economy. According to ATTOM Data Solutions, a leading real estate data provider, only twice in the last five recessions—in 1990 and 2008—did home prices come down. In 1990, prices decreased by less than a percent. During the other three, prices actually went up.”

Inventory, Home Pricing, and Sales Volume in Chicagoland: What Are the Trends to Watch?

Looking locally, the Chicagoland market is a rich mine to explore – and it’s sending mixed signals to real estate experts as of mid-2019. Largely, prognosticators are expecting the Chicagoland market to move to a balanced state as we head for 2020, with some benefits for both home buyers and sellers. 

Chicago Magazine recently explored a few local trends to keep an eye on moving forward. When it comes to inventory, market conditions are currently favoring buyers. Inventory has been rising in our local market – and is up nearly 5 percent year-over-year in Chicago’s downtown and North Side markets, by one metric. Higher inventory levels can “[provide] more options to shoppers while also creating competition for sellers,” as writer AJ Latrace notes. 

As inventory rises, it can impact both home prices and total home sales – two metrics that are a bit of a mixed bag in our area, according to Chicago Magazine. 

When it comes to prices, Latrace notes, median sale values are up year-to-year in Cook, DuPage, and Kane counties, though they experienced a notable slide within the city for six long months. Meanwhile, overall sales have seen a year-to-year slump in Cook, Kane, Lake, McHenry, and DeKalb counties. Similarly, research from Realtor.com suggests that the Chicago market saw a 7 percent decline in sales from June 2018-June 2019. Meanwhile, as of June 2019, properties in Chicago spent a median of 57 days on the market – significantly higher than the national median of 35 days, according to reporting from Home Buying Institute. 

Low Interest Rates: Are They Stimulating the Market?

Mortgage rates have fallen to recent lows in the last several weeks, which may motivate more buyers to enter the market with greater confidence and increased purchasing power. As of September 5, the average rate for a 30-year fixed rate mortgage was about 3.49%, according to data from Freddie Mac. Per Yahoo! Finance, the 30-year mortgage rate “has fallen more than 100 basis points” since 2018. 

At the same time, builder and consumer sentiment have increased, indicating confidence that mortgage rates will remain favorable for the foreseeable future, which could spur buyers to action. 

As Lawrence Yun, chief economist for the National Association of REALTORS (NAR) put it in a statement to Yahoo!: 

“We expect the second half of the year will be notably better than the first half in terms of home sales, mainly because of lower mortgage rates.”

Time will tell if buyers will take advantage of these low interest rates, or hold off, perhaps in the hopes of even better market conditions in the near-term. 

About the Gunderson Law Firm

At the Gunderson Law Firm, we place significant focus on the field of real estate law, with a full range of real estate legal services that includes: 

  • Residential Real Estate
  • Commercial Real Estate
  • Purchases and Sales
  • Mortgage Conveyancing & Advice
  • Real Estate Litigation
  • Title Insurance
  • Title Examinations & Disputes
  • Asset Protection/Trusts
  • Estate Planning/Wills
  • Property Development
  • Condominium Law
  • Foreclosures

The attorneys and staff of the Gunderson Law Firm are here to be your real estate resource. We offer expertise and insight that is reinforced by years of experience and long-term connections throughout Chicago’s real estate, finance, and insurance industries. 

Whether you are a couple wanting to buy or build a house, a corporation converting commercial properties to residential, or a commercial developer looking to change the Chicago skyline, the Gunderson Law Firm can help you get through the zoning boards, historical commissions, licensing boards, easement granters, and more. Drop us a line with any questions or to set up your free initial consultation.