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Each day the media reports more news about inflation, interest rates and a housing downturn. What is really happening in the Chicago North Shore real estate market? We are carefully tracking data for our North Shore towns so that we can immediately know how the local market may be shifting. Read on for our findings. If you would like to receive bi-weekly updates to track the North Shore market too, click here.

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Our take on the Chicago North Shore real estate market. . . 

For the first half of 2022, the Chicago North Shore real estate market moved fast and furious.  We've all heard tales of buyers facing multiple offers, bidding over list, and facing pressure cooker decisions.  The market back then was none we'd ever seen. With low inventory, high demand, low interest rates and a relatively stable global economy, the great real estate surge was on!

But, in the latter half of 2022 and moving into 2023, the winds are shifting and we find ourselves with rising interest rates, rampant inflation and an uncertain economic outlook - both domestically and globally. What is going on and how can you best prepare as a homebuyer or seller?

To provide our clients with every advantage in the market, we spend considerable time analyzing data and have created detailed summary charts (see below).  Our emphasis is on the North Shore, but should you need analysis for other areas, please reach out and we would be happy to accommodate.

Forecasting Ahead. . . 

Despite the rise in interest rates and economic uncertainty, we believe prices will remain relatively stable with only modest decreases (on average). This conclusion stems from the fact that inventory is projected to remain low on the North Shore, and demand, although it will lessen, will still exceed the number of available homes. Instead of  10-12 multiple offers on the most popular homes, we may see just 1-3 offers instead, Market time is expected to creep up.

North Shore demand still strong:

While the interest rates and economy will cause many struggles and create real downward pressure on some buyers who will be forced out of the marketplace nationally, the relative affluence of North Shore buyers (and sellers) should provide better protection against layoffs, job cuts and tumbling portfolios, and help maintain Chicago North Shore real estate market demand.

Historically, about 20% of North Shore buyers pay cash; and many buyers still have robust portfolios (despite the topsy-turvy stock market). Chicago has a healthy tech industry, and buyers desire our amenities: top notch schools, incredible recreation, relative safety, and easy commutes, making the North Shore a popular destination. In short, we expect enough buyers will remain in the North Shore marketplace to create adequate demand and prevent prices from tumbling in a significant manner.

Low Inventory Forecast Ahead. . . 

The low mortgage rates over the past several years will cause many homeowners to stay put, reducing available homes for purchase. In April 2022, Fortune Magazine and Redfin each proclaimed that about 50% of  US mortgage-holders have rates below 4% on their current home. Given those stats, we expect that many homeowners will choose NOT to sell. With current rates at about 6.5%-7% and trending up - making a move may cost more than staying put. This pressure on inventory is expected to endure for quite some time - and will result in fewer overall transactions, both locally and nationally.

2022 transactions in New Trier Township were down from 2021, and are expected to remain at a lower rate for the foreseeable future due to low inventory. The number of closed transactions per calendar year for the last 4 years in New Trier Township follows:

2019 - 982 homes sold

2020 - 1,220 homes sold (includes Covid quarantine period)

2021 - 1,366 homes sold

2022 - 1,016 homes sold

Here are stats for the month of January for each year:

2019 - 40

2020 - 51

2021 - 70

2022 - 68

2023 - 31

The media is reporting on a housing downturn. It's important to note that the North Shore behaves differently than the national market - it even differs from Chicago's market. We do agree, generally, that buyers under the $1M pricepoint (especially) will find themselves with less buying power on account of the interest rate hikes, recent property tax reassessments, and general inflation - and this will take some buyers out of the market and make others more selective and cautious.  That being said, we expect many North Shore buyers will, nevertheless, proceed with their purchase plans. We also anticipate that rates will level off by late spring - early summer and hover in the 5% range - which will be helpful to buyers.

As in any market (strong or weak), move-in ready homes are always most coveted, and when buyers become more selective, this is especially true. With continuing supply chain and labor shortages, many young buyers prefer a move-in ready home, because they don't have the bandwidth to coordinate renovation work on top of their demanding careers and young ones at home. The message for sellers: clean-up, repair and stage (simply) to ensure you get top dollar and a shorter market time!!

See Below for Data from all North Shore Towns

One of the best indicators of market activity is the number of buyers writing contracts. Of course, the number of homes available affects that number and should also be considered. Showing activity is also important to track as it provides insight into the number of interested parties by season and reflects how competitive the marketplace is at any given time, as well as how selective buyers may be getting as they have time to tour more homes.

Below, we have plotted on a graph for each North Shore town:

• number of "under contract" homes per month (red);
• number of showings per month (blue line); and
• number of homes available for sale as of the last day of each month (green).

These graphs encompass 2019-2023 so that you can see the dramatic differences from pre-Covid through to the present. If you follow the blue line (showing activity), you will see in 2019, there were many more homes than showings. The opposite occurred once the real estate surge was upon us - with many more showings than available homes for sale!

You'll also see contract activity (red bars) very close to the number of available homes (green bars) and sometimes even exceeding - this is due to off-market listings and the fact that total homes on market is counted on the last day of the month. Homes were trading so fast that they were going under contract before ever showing up as available given the months' end statistic. Note, however, that in 2019, under contract activity was always well below the number of available homes.

We have included data through January 31, 2023. We are carefully tracking these stats in order to better predict where the market is heading. If you would like us to update you on our analysis (every month), please fill out this form.

• average number of contracts per day in a given month
• average number of showings per day in a given month

Data for detached single family homes only

Infosparks by MRED, as of 1/31/23