By Peter Ricci
Chicago is the top buyer’s market in the nation, according to a new study of buyer and seller markets by real estate website Zillow.
According to Zillow’s research, listings times in Chicago are longer than the median average, and when properties do sell, buyers receive average discounts of 5 percent off the asking price.
For the study, Zillow analyzed for the nation’s 50 largest metro markets the following data: sale-to-list price ratio, number of days listings spent on Zillow and the percent of homes on the market with a price cut; then, it determined whether buyers or sellers had more negotiation power in those markets. Buyer’s markets, according to Zillow, were markets where longer listing times allowed buyers more bargaining power, and thus, lower sale prices.
“Many markets are still firmly in favor of buyers, and we expect that to continue until the recovery takes more of a hold nationwide,” said Zillow Chief Economist Stan Humphries.
Beyond listing times and negotiations, though, the price depreciation in Chicago’s market, said Geoff Smith of the Institute of Housing Studies at DePaul University, has produced a market where buyers are at a definite advantage.
Since 2006, prices in Chicagoland have fallen by more than 30 percent, Smith said, and are currently at 2001 levels; therefore, with prices lower across the board, buyers are obviously in a good position to save money on their home purchases!
Interestingly, Smith also pointed out that a broad overview of Chicago’s market could “mask some variation” in the data. Though Zillow’s conclusion on Chicago’s market not necessarily wrong, Smith said the Second City’s housing market is broad and varied, and because of that, housing data will differ between DuPage County and Kane County, Elgin and Lakeview, Bridgeport and Libertyville. For instance, as John Irwin noted in his latest “Chicago Real Estate Notes,” many of Chicago’s more affluent areas saw some spectacular demand in June (unit sales in Lincoln Park were up 54.4 percent), and because of that, the market has changed substantially.
“Low inventory levels are having a dramatic affect on the market,” Irwin noted. “A strong buyers market is turning in favor of sellers with multiple offers becoming quite common.”
And the inventory levels do show that; for the combined Lakeview, Lincoln Park, Near North and Loop areas, homes priced under $500,000 have just 3.9 months of supply, and homes between $500,000 and $1 million have 4.8 months.
It just goes to show – real estate is, if anything, hyper-local!