Chicago's first-time homebuyers win making "as-is" offers
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Illustration: Maura Losch/Axios
It's getting harder to buy your first home in Chicago.
By the numbers: The share of first-time buyers in the U.S. has shrunk to a record low — dropping from 34% to 26% from 2021 to 2022 — as inventory and affordability issues persist, according to the National Association of Realtors (NAR).
- First-timers are also waiting longer to buy; the median first-time buyer age jumped from 33 to 36 during that time, the latest data shows.
- Of note: The majority of Americans believe it's the worst time ever to buy a house.
What's happening: Expect competition in Chicago's tight market, says buyers specialist Willem Nong-Lambert at local brokerage Weinberg Choi Residential, who primarily works with first-timers.
- Close to 47% of Chicago metro area homes sold above asking price in May, per Redfin.
Zoom in: In high-end neighborhoods like Lakeview, Lincoln Park, Bucktown and Wicker Park, "it's pretty much inevitable that we're going to run into multiple-offer situations, no matter the price point," Nong-Lambert tells Axios.
- Conditions are calmer in River North, Streeterville, Gold Coast and the Loop.
State of play: These days, the key to winning transactions is covering an appraisal gap and making an "as-is" offer, Nong-Lambert says.
- Nearly all of his clients' offers in the past year have been "as-is," meaning they agree not to nit-pick cosmetic features like paint or doorknobs during inspection.
- A buyer's willingness to eat the difference between the sale price and a home's appraised value can also sweeten the deal.
The big picture: Saving enough for a down payment is the biggest barrier to entry, says Brandi Snowden, a NAR director.
- Many would-be buyers are saddled with debt, including student loans, car loans and credit card debt.
- Be smart: Homebuyers aren't putting as much money down as they were at the height of the housing frenzy, Axios' Emily Peck reports.
Between the lines: Nong-Lambert rarely has buyers who put 20% down, citing higher interest rates and the variety of financing avenues available, such as buydowns and adjustable-rate mortgages.
The median down payment in Chicago was 10% in April, per Redfin.
- It'll take Illinoisans nearly six years to save for that, according to Zillow data. In the Chicago metro area, the length of time grows to seven years.
Meanwhile, earnest money, the good-faith deposit that gained importance during the pandemic boom, is back to the market minimum of $2,000 to $4,000, according to Nong-Lambert.
The bottom line: Chicago price growth has lagged other metros as more people leave town, making it "a little bit more of an approachable market to enter," Nong-Lambert says.