If you've been reading the national news you've probably read that the real estate market is hot and that the persisting shortage of housing inventory is driving strong price increases. But anyone who has their home for sale on the North Shore of Chicago is probably saying, "That's not MY real estate market." And they're right, the markets the national news is referring to are in California, Colorado, Seattle, Boston, not the North Shore of Chicago.
Here the market is healthy enough overall, with modest gains in both sales and prices. June saw a 4% increase in closed sales over last year and a 12% gain in median price. But the picture is very different across individual villages and price points. Not every village enjoyed that growth and some who experienced an increase in sales saw a decrease in median price (Winnetka, Glencoe), and vice versa (Evanston, Lake Forest).
North Shore Market Update - June 2017 vs. 2016
And, although the market tends to slow down beginning in June, this year activity continued to be brisk, with accepted offers up 13% over last June, and down only 5% from May. Glenview, Evanston and Wilmette continued to chug along, while the big gains came in Highland Park and Lake Forest, both of which have been languishing over the past couple of years.
Open house traffic continued to be strong for new listings indicating that buyers are still out there. However, these buyers are cautious and waiting to get the best possible value. They have seen everything available and are well-educated about relative values, so only those homes that are priced right are getting offers.
Accepted Offers - June 2017 vs. 2016
One month does not a trend make, so now that we have six months of data under our belts let's take a look at the year-to-date numbers to get a better feel for the underlying strength of the North Shore market. Overall, closed sales are up a robust 8% over last year, while the median price increased a modest 3%.
At lower price points (<$800,000) homes are selling quickly and supply is limited. Between $800,000-$1,500,000 sales are robust but prices are not increasing from last year. In the upper brackets there is abundant inventory and few buyers. There are currently 96 homes on the market over $3,000,000, which amounts to a 19 month supply. This means that it would take 19 months for all of these houses to sell at the current rate of sale, if no additional homes came on the market. 42 of these are over $4,000,000, which represents a three and a half year supply!
1st Half Market Update - 2017 vs. 2016
Megatrends affecting North Shore real estate
We're seeing a fundamental change in consumer attitudes following the recession. People are leery about over-spending on housing and taking on too much debt. They are buying more based on "need" than "want," and much of the housing inventory on the North Shore falls into the "want" category. Even in the lower price ranges buyers are very cautious and they are doing careful research to find the best home at the best value.
Another trend affecting the market is that many city dwellers don't want to move to the suburbs. And, if they do, they want to stay close in to the city, and so are more likely to choose Evanston over Lake Forest.
These buyers also want "new." They are accustomed to their shiny new city condos with granite and stainless, and are not interested in older homes that need work. If they do buy an older home it has to be one that has been updated or remodeled. Many are choosing the western suburbs where there is more new construction and where taxes are lower.
The upshot of all of this for North Shore homeowners who want to sell is they need to price realistically from the get-go. Buyers will only pay top dollar for the best homes. They have a keen sense of relative value and will not overpay. There is no "wiggle" room for negotiating. Many sellers say, "Why don't they just make an offer?" But we have found that, in general, people will not offer much under 90% of the list price, so if a home is listed at more than a 10% premium over its true market value, it will not get offers.
And if your home has not been recently updated you will need to adjust your expectations about your sale price. Buyers will calculate the cost of desired updates and determine if there is a good return on that investment.
If you have any questions about the market or would like to schedule a buyer or seller consultation with the Come Home North Shore Team, please give us a call at 847.881.6657 or email us at ComeHome@cbexchange.com.
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