In case you haven’t been paying attention, the local real estate market is hot, very hot. And, it’s not limited to the suburbs. According to the National Association of Realtors, in May 2021, nationwide the median price for existing homes topped $350,000 for the first time, marking a 24-percent increase over 2020.
This was the biggest annual increase in median pricing in more than two decades. Combine lower interest rates with lower inventory, and the market has been a seller’s market for the summer.
We asked local agents weigh in on what they’ve seen in their busy real estate practices this spring and summer and what they see on the horizon.
Hottest spring in memory
In Oak Park and River Forest, agents agree that the spring market was one of the hottest in recent memory and say that, as is typical, summer sales lag spring.
Leigh Ann Hughes of Baird and Warner’s Hughes Home Team reports that her group’s sales in 2021 have the potential to nearly double those of 2020.
“For most of the spring and early summer, homes were selling within a week, with many receiving multiple offers at or above listing price,” Hughes said.
While she thinks that the hot market is a combination of factors, including historically low interest rates, she said the pandemic changed the way people live in their homes.
“Working and learning from home was the norm for almost a year, and people realized they needed more space, or different kinds of space to make that functional for their families,” Hughes said.
Jane McClelland of ReMax in the Village agrees.
“Many young families were coming from the city, living and working from home in their 1.200 square-foot condos, and they were just dying for more space and a yard,” McClelland said. “Once they realized their jobs were secure, they started looking for homes. However, there was not adequate inventory to absorb all of these buyers, hence the multiple offers.”
McClelland says that February through May of this year saw markedly increased sales activity.
“Many homes were selling with multiple offers at over list price,” McClelland said. “Sellers were able to ask for things that normally buyers would not consider, like extended post-closing possession. And buyers, in order to have their offers stand out over competing offers, were waiving inspections and appraisals.”
McClelland says she and many of her peers have seen a bit of a slowdown since June.
“Things have calmed down a bit now,” she said. “There are still some multiple offer situations, and instead of eight or nine offers, there may be two or three.”
While comparing 2021 to the same period of 2020 might show remarkable increases in sales and prices, John Lawrence, vice president and designated managing broker with Berkshire Hathaway HomeServices Chicago cautions making such comparisons with hindsight.
Overall prices are up, he June 2020 closings were impacted by the pandemic shutdown in the spring, and very few homes went under contract during April in May in 2020. A more accurate comparison is looking at 2019 and 2021. That said, Lawrence noted that the four months from February to June of this year were the hottest he’s ever experienced.
Advice for buyers and sellers
For those looking to buy, McClelland’s advice is to be prepared. Financially, buyers should get pre-approved for a mortgage. Working with a local realtor can provide a better glimpse into the current market and insight into homes that might be hitting the market soon.
Emotionally, she cautions that homes that are move-in ready sell fast- — within a day or two of hitting the market — so buyers should be ready to act quickly. In the case of multiple offers, she says that it’s common to lose the home, so be prepared with a best offer and don’t get too attached.
Hughes says it can be easy for buyers to get discouraged. She encourages buyers to look at the bright side — those same historically low interest rates that are making the market hot are also creating an opportunity to buy and build wealth for the long term.
She says that different loan products such as small down payment, rehab loans and bridge loans broaden the options even more for buyers.
On the selling side, McClelland says it pays to put in the time before listing a house.
“It seems homes either sell in the first 10 days, or they sit on the market for a while. Often this is the case due to price or condition or both,” McClelland said. “Buyers will pay for a move-in ready home. Do your cleanout up front, consider a professional stager, prepare you home with paint, repairs and cleanout and make it as spotless as possible.”
Hughes says that this is still the best seller’s market she’s seen in years, so she advises that it’s a good time to sell. Beyond preparing a home with staging and cleaning, she emphasizes the need for good pricing.
McClelland agrees, noting that pricing is a tool.
“If it doesn’t sell in the first two weeks, be prepared to reduce the price,” she said. “Market time is not your friend. Buyers know how brisk this market is. If they see a home with 45 days market time, they will ask themselves, ‘Why didn’t anyone else want this home? There must be something wrong with it.’ You can never regain the momentum of the first 10 days.”
Looking ahead to fall
McClelland won’t hazard a guess to how long the hot market will last, but says historically the fall market is not as active as the spring market.
Hughes saw a slight dip in activity in July, and she attributes that to people taking postponed vacations. She expects buyer demand to remain robust this fall and says that the first weekend in August saw noticeable uptick in open house traffic.
Lawrence said the market is still very strong, but that the pace of spring was never going to last forever.
“It’s more important to price properties correctly,” Lawrence said. “There isn’t the unencumbered enthusiasm, but homes that are well-priced for what they are will still sell very fast and frequently with competition.”