The past 18 months brought ups and downs to the housing market throughout Chicago and the city’s suburbs. With pandemic restrictions lifted and COVID-19 cases at lows not seen since last spring, agents and clients are still dealing with a lengthy inventory shortage and high demand that pushed prices up in many markets.
Connie Antoniou, vice president of sales at Jameson Sotheby’s International Realty in Barrington, says the shifting market brought renewed interest in homes along the Northwest corridor. The area never fully recovered from the market crash of 2008, but the pandemic has led to potential buyers’ reassessing their needs.
“I learned many years ago that when one door closes, another door opens,” Antoniou notes. “That’s what we’ve seen here with this pandemic. People have a reawakening of values, and they decided, maybe, to reconsider moving out to the suburban areas where they can get more for their money and they have more open space.”
The general feeling at the onset of the pandemic was that the market would slow down, according to Mike Opyd, co-owner and managing broker at RE/MAX NEXT. The slowdown did occur in some parts of the city, but neighborhoods on the outskirts saw a tremendous boom in interest and demand fueled in part by work-from-home trends. People began reconsidering living in the city, since they didn’t need to be near the Loop or near their businesses.
“We just started seeing a decent amount of people start wanting to move almost to the outskirts of the city, where they still want to be close enough where they can enjoy what the city has to offer,” Opyd explains. “They have the restaurants, the bars and nightlife, the beaches and things of that nature. But they also want more space if they’re going to work from home. They don’t want to be cooped up in a one-bedroom, one-bath condo in River North. They want to be able to spread out a little bit.”
Opyd says that homes in areas such as Elmwood Park became very hot, while the heart of the Loop was devastated. “I think there’s, like, eight months’ worth of inventory currently on the market,” according to Opyd. “It’s tough to sell in a high-rise because when you get a whole group of people in there with COVID, no one wanted to move into that. They were trying to get out of that, so we saw the high-rises really take a beating. Unfortunately, people were trying to get out of the high-rises to move to the outskirts. But they couldn’t sell, and they were struggling. That created just this massive amount of inventory.”
Judy Bruce, an agent with Compass who works in the northwestern suburbs, hears from other agents that the market may be slowing, but that has not been her experience. The buyers are still out there, inventory remains tight and interest rates are low. 2020 was a strong year for Bruce: her team’s volume is up 48% over this time last year.
“The majority of people that I’m seeing coming in are people from the city,” she reports. “We’re still getting a lot of people moving from the city into the suburbs. Many of them are making that transition because they may have had children. They’ve been in the condo or town home situation, and now they’re having kids and they want more space.”
She’s also serving clients who are returning to the suburbs after living away. “In our area, we tend to see a lot of people moving back to the area where they grew up, which is kind of fun,” she says. “I have a good number of people transferring back into the area. For a while, it felt like people were leaving Chicago and Illinois. I think there’s some job growth that’s taking place and there’s a good number of transfers coming back into the area.”
Antoniou has clients from all over who are looking at her luxury listings, including out-of-state transferees from places such as California and Pittsburgh.
“We are getting people from the North Shore that want more for their money than Highland Park offers,” Antoniou says. “I have two clients that I’m working with right now looking to get something in the Barrington area. And then we do have people from the city. We are still getting the runoff of people from the city who are rethinking having a city place. I don’t want to trash the city, because I do know that the city is coming back, but we’re just seeing an influx of people from all over.”
In Opyd’s experience, a lot of potential city buyers who would be considering a move up to a bigger place or to a different neighborhood have instead turned to renovating their homes and making upgrades. Homes on the market became even more scarce because those homeowners are reluctant to take a financial hit after spending on upgrades.
“They know if they tried to sell, they’re not going to get that money back, especially with the cost of construction going up and through the roof,” he says. “I think a lot of people did these home renovations with the pricing in mind of a couple years ago, when it wasn’t so expensive. Then they got into it and were committed to it. They’re not going to sell, they’ll wait it out because they know if they did [sell], they’re not going to get a return on what they put in.”
Searching for space
Homebuyers are looking for space more than anything else, according to Antoniou. She has buyers who want locations with water views or who want a swimming pool, but extra room to spread out and enjoy is high on the list for her clients.
“A lot of people are looking for a nice home office situation,” she says. “And I think they’re looking for something that’s fun. After what we went through in the last year and a half, I think people are like, ‘If I’m going to go down again, I want some fun. I want some place to put my toys.’ You know, they want a big garage, they want space, they want an outdoor kitchen. And they want to feel safe.”
Bruce has also seen the market swing back to larger homes that had fallen out of fashion in recent years.
“The bigger houses were not necessarily the hot sellers a year and a half or two years ago,” she says. “Now, these bigger homes in the Barrington area are very popular. I’ve sold a handful of homes that two years ago would have probably been stagnant on the market because they were excessive square footage.”
Opyd’s still seeing a lot of traditional buyers who are looking for more living space. In some instances, those buyers are finding favorable prices depending on what they want. Single-family homes and smaller, multiunit buildings are going as soon as they hit the market, but there is a lot of new construction in western neighborhoods to attract new buyers, he says.
“We’re still seeing the upgrade buyers, the people that live in the city and don’t want to leave,” he says. “They’re just buying their next big place, and they’re actually excited because a lot of what they’re buying is probably cheaper now than it would have been two years ago, if the market stayed the same and appreciation kept happening. They’re going to get better deals on places because sellers are more willing to unload because of the amount of inventory.”
Opyd also sees clients coming in from other areas, as well as renters who want to take advantage of low interest rates.
“With Chicago being such a transient city, with our hospitals and schools, we’re still seeing an influx of the normal amount of people coming in from other areas from other states or countries,” he says. “They’re also seeing the benefits of buying in Chicago now because pricing has leveled off or even gone down a little bit. It’s actually advantageous for them to buy instead of rent, because at the same time rents have actually gone up.”
Realities of high demand
Demand is so strong and inventory so tight that some sellers are accepting backup offers that are better than the original, Opyd says. In those cases, the seller and the seller’s attorney end up trying to kill the original deal in the attorney review phase.
“So now they have to get their attorney to come up with some kind of BS excuse and kill the deal and go with the other offer,” Opyd says. “I’ve seen that scenario a number of times, and I’m actually telling my clients now that if it’s a place they really love, let’s put in a good backup offer.”
Bruce has seen clients waive the appraisals process when negotiating a purchase.
“If there’s an issue with the appraisal on the lender, they’re going to take care of the difference,” she says. “I’ve seen more situations where people are saying, ‘Don’t worry about it, we’re going to do inspections and if there’s anything wrong, we’re good.’ And I’ve also had a couple of situations this year, which I’ve never had the past, where people have actually negotiated nonrefundable earnest money.”
Because the market is so hot, buyers are in more of a hurry to complete the transaction. There’s more potential for a sale to fall through.
“People feel like they have to move really quickly into something where they’re going to miss out on it,” Bruce says. “I always try to make sure that everybody understands what it is they’re purchasing and what it is that they’re accepting.”
Antoniou offers her clients two pieces of advice.
“We are hearing about properties that are being sold in as-is condition,” she says. “That doesn’t mean you can’t have inspections. You can still have as many inspections as you want, but the seller is not going to be interested in doing any work to the house. That’s the first thing that these buyers need to understand. The second thing is that they need to know that they’re up against other offers and it’s important to come in with cash if you can and noncontingent if you can.”