It has been one year since the COVID-19 pandemic took hold of the world and turned everything upside down. This time last year, the real estate market was put on hold due to stay at home orders but luckily, that was short lived. Although the pandemic has affected many industries, there is one thing for certain: the residential real estate market has been resilient and 2020 ended up being a record breaking year for many real estate agents.
But how are things looking for 2021?
As we enter the Spring Real Estate Market, we enlisted two experts — Millie Rosenbloom, a top realtor with Baird & Warner and top producing broker, Janet Owen of Berkshire Hathaway HomeServices Chicago — to share their thoughts and predictions on what’s to come with the Chicago Real Estate Market this year.
A 2021 Real Estate Forecast from Millie Rosenbloom
A look back
As you may have heard, 2020 was a record-breaking year for the real estate industry. Baird & Warner, as well as my Lincoln Park office, broke several sales records, which was unfathomable in April of last year when the market came to a halt and sales activity dropped 50% below 2019’s YTD numbers. However, by May, the market had quickly reactivated and continued to build momentum due to low interest rates, remote working, and social unrest. The market not only exceeded our expectations, but it remained strong for the duration of 2020.
A look ahead
Heading into 2021, the market should be more predictable because we better understand the dynamics of COVID and how they impact our local real estate market. Like any marketplace, Chicago’s housing market is driven by two primary forces — supply and demand. Let’s take a look at where we expect those factors to be as we head into 2021:
- Despite lenders imposing initial loan limitations on some loan products due to the fear of the pandemic (unemployment, forbearances and loan default) access to money is now more readily available.
- Conventional loan limits increased at the end of 2020 to $548,250, which increases the purchasing power of borrowers for a conventional loan. Interest rates remain at record lows with a 30 year fixed rate loan below 3%.
- Consumer confidence is increasing thanks to distribution of the vaccine, the presidential election behind us, and optimism in the general economy.
- People spent more time in 2020 evaluating their home than ever before, placing a greater importance on the functionality and location of their home, as well as home-ownership in general.
- Chicago will be the tale of two geographic markets where supply will be impacted differently: downtown Chicago vs. the periphery neighborhoods and beyond.
- I expect to continue to see low supply (2-3 months of inventory) in the surrounding Chicago neighborhoods outside of the downtown area, including single family homes, as individuals and families continue to seek more space (including outdoor space) at an affordable price. The low supply coupled with a very high level of demand from buyers results in a situation where we expect prices to appreciate, and for homes to spend less time on the market.
- The challenged markets experiencing high supply (10+ months of inventory) include high rise living and luxury buildings in the Gold Coast, River North, the Loop and the South Loop. This high supply/low demand condition generally means lower sales prices and more time on the market. I expect that to continue into 2021, though as consumer confidence rises and more people begin to go back to work every day in these areas, I believe we could start to see improvement and more activity as a whole.
Overall, I’m extremely optimistic about Chicagoland real estate, and I think 2021 will bring a very productive and healthy real estate market. The turbulence of 2020 is a reminder that, now more than ever, we all need to have a savvy real estate broker on our side to help develop an agile and realistic real estate strategy. As always, I am here to support your real estate goals and am happy to discuss your specific strategy. I encourage you to reach out to me with your questions and share with your friends and co-workers who may be interested in this information as well. I truly look forward to connecting with you!
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Chicago Spring Real Estate Predictions from Janet Owen
Chicago’s Spring Market. Those three words make a real estate broker’s heart beat faster. Especially this brand new year!
After an unprecedented year dealing with the COVID-19 virus, mandatory shut downs, quarantines, social distancing, masks, dining in tents, zooming everything from visiting a museum to family and friends and watching every series imaginable on TV… a new and very welcome attitude seems to be emerging.
There now appears to be a very welcome optimistic light at the end of the tunnel! The vaccines are rolling out and becoming more and more accessible, the snow from our latest Arctic Blast in Chicago is melting, we are soon going back on Daylight Savings Time (March 14th) and Spring is just a few weeks away followed by Chicago’s glorious summer!
Along with all of that, there’s more good news: the real estate market has most definitely picked up. Smart Sellers are pricing their properties correctly, Buyers are coming out of deep hibernation and they are not only seriously looking at properties, they are making offers and purchasing! It feels like the “good old days” prior to 2020 and the optimistic attitude is contagious (with no vaccine needed!)
In my segment of the upper end luxury market in Lincoln Park, the Gold Coast and the Michigan Avenue neighborhoods, we are seeing record breaking sales and inventory shrinking as Buyers take advantage of well priced properties and low interest rates.
Chicago is still and always will be a wonderful place to live, work and play!
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Please contact Janet Owen if you have friends, family or clients who might be interested!