WITH DEMAND EXCEEDING INVENTORY, SPRING 2017 IS GOOD TIME TO SELL
By Barbara Laken and Annie Alexander
Lately, many Chicago homeowners have been inundated with a variety of solicitations like this one:
“Inventory of existing homes for sale has dropped to the lowest level since 2000. That means greater demand! Economists are expecting that more people will be ready to buy in 2017, due to steady job and income growth on a national level. Housing prices rose in Chicago rose by 6% in 2016, and are expected to continue to increase in 2017.”
Yes, it’s that time of year again, when rosy forecasts encouraging people to put their homes up for sale can be found in almost every mailbox. But the devil, as they say, is in the details. So as you decide whether or not to place your property on the market this season, here are a few things to keep in mind:
- Prices in Chicago are expected to increase 1.95%, compared to 3.9% nationally in 2017, according to Realtor.com, a website for the National Association of Realtors. This is due, in part, to Chicago’s stagnant population growth, which is only expected to increase by 1% this year. But while home appreciation might be slow here in Chicago — and countrywide — it hasn’t stopped, with modest gains in home value predicted for most neighborhoods.
- Millennials (adults under the age of 35) currently represent approximately 42% of the city’s homebuyers. As interest rates start rising, people in this age group will find it increasingly difficult to keep monthly payments affordable, and may find themselves priced out of the market.
- Rising interest rates in the future will also make it more difficult to sell homes at higher prices, according to Jonathan Smoke, economist with Realtor.com, who notes that, “presently buying is often cheaper than renting…but that’s likely to change when rents are cut,” due to the glut of new rental properties coming online.
So why is this Spring still a good time to sell?
- Tight housing stocks have created “pent up [buyer] demand,” according to Doug Carpenter, president of Illinois Realtors, who forecasts a growth in sales during the first quarter of 2017. “The buyers are there, but the inventory is not,” he says, predicting that more options on the market will draw out more buyers – and, as a result, potentially increase prices for desirable properties.
- First time homebuyers will want to lock in present rates ahead of anticipated increases. Because financing and affordability are one of the strongest barriers to home ownership for this group, they’re likely to become very active this Spring as the inventory of available homes expands, according to experts.
- Repeat home buyers realize mortgage rates – while moving higher overall – are still at historical lows. Before rates jump more, these buyers are likely to be in a rush to close before rates increase further, according to Realtor.com®.
If you’re contemplating a move, Spring will always be the best season to sell. This is especially true for Spring 2017, with its potent mix of economic recovery, high demand, inventory constraints, continued low interest rates — and their projected increase. How long these favorable conditions for buying and borrowing will last is anyone’s guess – but they are sure to be with us this Spring, making it the best of all seasons to be a seller in Chicago.
If you, or someone you know, are thinking of selling a property this Spring and would like a free home evaluation, please contact Annie and Barbara at 312-282-1087 or click the button below.