Labor Day is over, the kids are back in school and summer is officially over in all but the meteorological sense. For the real estate world, September is the end of a summer buying and selling season that has been marked by changes following an unprecedented spring. A few local real estate experts recap the summer and weigh in on what might be ahead for fall.
After a spring market that was decidedly tilted in favor of the seller with homes often receiving multiple offers and selling above asking price, the summer market took a turn. Linda Rooney of Oak Park’s RE/MAX In the Village says that the spring market carried over to closings in June and July but that selling activity then slowed.
Her clients selling in the summer had fewer showings and fewer offers than her spring clients.
“Those who closed in late June and July did fine, but they were not receiving much over ask price as we were in the spring months,” Rooney said.
Tabitha Murphy of Berkshire Hathaway HomeServices Chicago says the slowdown was significant. Her Oak Park-based team works in Chicago as well as in the suburbs west of Oak Park, and she says that their large territory clues them in when there is a market shift.
“We noticed at first with our condos in the city,” Murphy said of the summer market. “Our condo listings started to see days on market increasing, and then a couple of weeks later, our suburb listings started to see fewer offers coming in. This was a big shift from even a month or two earlier where we were seeing, in some cases, seven to 12 offers on new listings. We started to see that number decrease significantly. Throughout the summer, we still were experiencing multiple offers in most cases, but we were maybe seeing two to three buyers making offers versus the demand we were seeing previously.”
Swati Saxena, a broker at Baird and Warner’s Oak Park office, attributes the summer slowdown after the hectic spring to a bit of normalization. She calls this this first “normal” summer of the past two years, and says people were out enjoying summer with vacations and camp, which led to the seasonal slowdown that typically comes in summer.
“Interestingly enough, during the early to mid-part of the summer, the properties that were on the market, if in good condition and well-priced, still had multiple offers,” Saxena said. “The number of offers or percentage of the final sale price might not have been as high in the past, but they still existed. Sellers and buyers both still had to put their best foot forward.”
At the end of the summer, Saxena reported seeing “slightly longer market times, and lower final sales price, but not as long market time as in past, and higher sales price than in the past.”
Stephanie Eiger, a real estate agent with Coldwell Banker Realty in Oak Park saw similar activity.
From her perspective, early summer was still a seller’s market.
“Summer was more about pricing than our spring was,” Eiger said. “It was also more variable and not always clear why one property was favored over another. Houses that were well-priced sold pretty quickly, some with multiple offers.”
She adds that in later summer, a few of her listings have languished.
“We’ve done price reductions — almost unheard of in April,” Eiger said.
While the sellers didn’t have quite as strong a hand in summer as they did in spring, all agree that buyers didn’t have it easy either.
“Once July rolled around, there was a noticeable dip in activity — from buyers — but that coincided with fewer listings,” Eiger said. “I’m not sure why we have a decrease in listings — if it’s a reaction from two years of hyperactivity, if it’s the interest rates on the mortgages sellers have, if it’s something else. I only had a few buyers this summer.”
According to Murphy, many buyers exited the market this summer.
“While many buyers were finally able to get under contract because of less competition, we saw quite a few buyers stepping out of the marketplace,” Murphy said. “They were exhausted from trying to purchase homes and losing out earlier in the year, they were hearing so many differing opinions and interest rates were on the rise. That, along with the typical summer slowdown, created one of the slowest summers our team has seen in quite a few years.”
Rooney saw something similar with her clients.
“I had a couple of buyer clients who had been looking all spring just drop out in June,” Rooney said. “Both had very definite top numbers that they could spend and had each been in a bidding war in the spring. Once interest rates were almost double for them, it made the market so much less affordable.”
Rooney points out that both clients planned to then sell their homes after buying, so their circumstances also had a negative impact on the supply of inventory available for future buyers.
When buyers can’t find something they are interested in, it causes ripple effects according to Eiger.
“I still have buyers who haven’t seen anything they want, and therefore are not ready to list their houses,” Eiger said. “Inventory may be increasing, but at a very slow rate. It’s hard to be in a buyer’s market when you have a two-month inventory supply. The mortgage rates have caused some buyers to drop out, and others to drop their price points, or to become pickier, but the pickings are pretty slim.”
Headed into fall, these local brokers say there are still signs of life in the market.
“Buyers seem to be adjusting to the new normal interest rates after the fantastically discounted rates of the past two years,” Saxena said. “Experts still expect this to be a strong fall market, with more sellers and buyers on the market — all again back to the traditional seasonality we see in normal years.”
Rooney has seen a slight pickup in activity.
“I have still been dealing with some bidding wars and fast selling properties late this summer,” Rooney said. “As inventory continues to be an issue overall, I have noticed well-put-together homes and condos in the Oak Park and Forest Park area still going quickly. Serious buyers are still out there. I am also having some people who had dropped out testing the water again, perhaps getting more acclimated to new rates.”
Rooney said that this fall, she expects to see longer market times and sellers making more concessions to get their properties sold due to increased interest rates.
“Sellers aren’t in the driver’s seat so much anymore,” she said.
Murphy says some buyers are headed back into the marketplace this fall, but she says expectations have shifted.
“We are seeing more offers coming in under list price, and more opportunity for negotiation,” Murphy said.
In her practice, she says, “We are not seeing prices dramatically decrease, but we are definitely noticing the market stabilizing, and we are getting into more of an even seller/buyer market.”
For early fall, Murphy believes prices have maxed out, particularly given interest rates and market uncertainty.
“It will definitely be interesting to see how this next spring market plays out,” she said. “I think the higher interest rates and the uncertainty of the market and economy in the media, have played the biggest role.”