How The Chicago Real Estate Market Is Dealing With Covid-19: Week 7
today at 11:27 am
The Chicago real estate market seems to be settling into a routine with Covid-19. Realtors are using Zoom to conduct open houses and showings, everyone is wearing masks and gloves and keeping their distance from each other, and some home buyers and sellers are just holding off for the time being.
I’ve been trying to figure out how much holding off is going on over the last few weeks and it’s recently been looking like a 60 – 70% decline in contracts and new listings. However, this week is going to be a bit tougher to interpret because Easter came a week earlier this year and some home sellers won’t list the week before Easter – they prefer to wait a week. This means that listings are depressed the week before Easter and then bunched up the week after. When Easter in two different years falls in two different weeks it makes it much harder to compare the data. But let’s give it a try.
For the week ending April 18 (week after Easter in 2020 but week before Easter in 2019):
- New listings were down 37% from last year to 246 homes
- Contract activity was down 38% to 181
- Inventory in absolute terms was down 15% to 2771 homes
- However, in relative terms inventory was actually up from 11.1 weeks of supply to 15.3 weeks
- New listings were down 47% to 351 homes
- Contract activity was down 68% to 154
- Inventory in absolute terms was down 10% to 4943 homes
- Inventory in relative terms was up from 11.4 weeks of supply to 32.1 weeks – a bit higher than last week
So the question is whether or not the smaller decline in detached home activity signals an improvement or is it just an Easter effect? If it’s an Easter effect then why didn’t we see it in attached home contract activity? We won’t know until next week but there’s another possibility that we need to be on the lookout for. Is it possible that the coronavirus has just made condos less appealing – i.e. do you want to share a building with possibly infected people?
According to a recent survey from the National Association of Realtors 73% of realtors report that home buyers have either delayed or cancelled their home search and 63% report that home sellers have either delayed or cancelled their home sale as a result of the coronavirus. So the data above are not surprising in light of these survey results.
The Mortgage Market
I was about to say that mortgage rates have stabilized in the last few weeks but they just jumped up again. Check out nerdwallet’s mortgage rate trend graph below:
However, another, possibly more significant, change is underway in the mortgage market in response to the rapidly rising risk of lending in the current environment. Several large mortgage lenders are tightening their credit standards, reducing the availability of loans to all but the most qualified borrowers. For instance, JP Morgan Chase now has a minimum 700 credit score and 20% down payment requirement. They are also temporarily pausing providing home equity lines of credit. US Bank and Wells Fargo have made similar restrictive moves. There are still plenty of other alternatives available to home buyers but if those also start to evaporate it will have a negative impact on the Chicago real estate market.
#RealEstate #ChicagoRealEstate #Coronavirus
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.