At the start of 2020, the local real estate market experienced an uptick, with strong sales for the early spring season. Then COVID-19 hit, followed by shelter-in-place orders.
The sales and showings came to an abrupt halt in the Chicago area when Gov. J.B. Pritzker issued a statewide stay at home order on March 20. Real estate agents saw the spring market grind to a halt and wondered if the typical summer sales boom would fail to materialize.
However, headed into the fall season, local real estate experts say that the summer season was better than expected.
Baird and Warner’s Swati Saxena says spring saw a flurry of closings from properties that were under contract prior to the state’s stay-at-home order, followed by a long lull. Once the order was lifted in late May, according to Saxena, “Things started to get busy. August was probably one of the busiest months I’ve had in a long time.”
Coldwell Banker’s Stephanie Eiger concurred.
“June just exploded, Eiger said. “Mostly with buyers.”
Eiger says that summer activity has been brisk, with a lot of properties selling at or over asking price. She has also seen a lot of properties receiving multiple offers. While entry-level single-family homes sales are brisk, Eiger also sees movement at higher price points that might not have sold quickly last year.
“I’m seeing things that have been on the market for ages moving,” Eiger said. “Some of the prices are going down. The higher price points are selling to people with children who want to move.”
John Lawrence, vice president and designated managing broker of Berkshire Hathaway HomeServices local offices, says that the market roared back to life in mid-May.
He says there was a “whoa moment” of day in which the number of signed contracts in his office was significant, and it hasn’t slowed down much since then.
In Oak Park, River Forest and Forest Park, Lawrence says that the number of contracts signed on attached and detached homes was up 27 percent in June and July over the previous year and up 67 percent in August.
“The contract activity in August was the best we’ve seen in 16 months,” Lawrence said.
He also says that it’s not unusual to see homes that are priced right receive multiple offers, and he points to one of his office’s listings that recently received five offers before going under contract for more than the list price.
Saxena sees the pandemic atmosphere having a distinct effect on who is buying and what they are looking for. As in most markets, she says that properties sell quickly when they are priced well and move-in ready, but she is seeing some distinct shifts.
For instance, she points out that there was a period when millennials favored smaller houses. Whether they wanted to tread more lightly on the planet, had lived through the foreclosure crisis or didn’t want to be house poor, many of that generation weren’t looking to move up from smaller units or starter homes.
This summer, she noted that millennials were looking for more space, often because they are now working from home. Saxena thinks this change might have staying power.
“Now, the horizon is different,” Saxena said. “The commercial real estate office dynamic is changing.”
Buyers are seeking more space to work or learn from home, and Saxena says the pandemic has also affected sellers. She has multiple clients selling homes because they are no longer tied to a specific city for work, and the pandemic has prompted them to re-think where they live.
She thinks the work-from-home shift will continue to have people reconsidering where they live.
“This is not a temporary glitch,” Saxena said. “People can decide where they really want to live. The world can be your oyster.”
According to Eiger, the busy summer has had an effect on the supply side of local single-family homes. At the start of 2020 in Oak Park, there was about a 4.5-month supply in the $201,000- $350,999 range. Currently, that has fallen to a roughly 3.75-month supply.
In the $351,000-$599,999 range, the supply fell from roughly 5.75 months to 3.5 months. Saxena says that is reflected in her experience as well.
“Generally, we’re seeing fewer listings,” she said.
Lawrence notes that Oak Park, River Forest, and Forest Park have all seen decreased market times and increased sales activity and says Forest Park has been particularly busy.
The month’s supply in Forest Park has been at or below two months since mid-May.
“That market’s kind of a dogfight right now,” Lawrence said.
Saxena is not seeing any signs of the pace slowing now that summer is in the rearview mirror, but she is not sure what this fall holds. She thinks that guidelines regarding COVID-19 are making people more comfortable, allowing them to look at and purchase homes, but she says weather and the pandemic could swing buyers’ sentiment this fall.
Lawrence said low interest rates continue to bring buyers to the table and he expects a robust September and October. Beyond that, given the uncertainties ahead, he cannot make any predictions about the long-term outlook for the real estate market.
Headed into the fall, Eiger says the market remains strong, which is more evidence to her that this is an unusual year.
“I’ve been a realtor for eight years, and usually the four months before an election are just dead,” Eiger said. “Not this year.”
She says that there is still some risk in the market due to pandemic’s possible effect on employment, but she says that interest rates are so low that people continue to buy.
Still, she calls the combination of the pandemic and the election too unprecedented to make any long-term predictions for the market.