Mar 2, 2024 - News

What mortgage rates mean for Chicago home buyers this spring

Illustration of a percent sign with a house and upside-down house within the zeroes, forming upward and downward pointing arrows.

Illustration: Shoshana Gordon/Axios

Lower mortgage rates won't make buying a home much easier or cheaper, Axios' Emily Peck reports.

  • They could actually drive up home prices in Chicago and nationwide if demand surges and inventory remains tight.

Why it matters: Steep borrowing costs are just one piece of the housing affordability crisis.

State of play: 30-year mortgage rates are down from 20-year highs, but have crossed 7% again.

Zoom in: Hawk-eyed buyers jumped into the market when rates dipped, says Chicago broker Matt Silver, who's president of Illinois Realtors.

  • "January 2nd, my phone was already ringing," Silver tells Axios.
  • He's seeing houses sell quickly, though they're not flying off the shelves like during the pandemic.

What's next: More inventory is expected to hit the market this year, as rates inch down further and the weather warms up, according to Tim Ryan, president of the Mainstreet board of directors.

  • Historically, home prices are higher in spring and summer, when more buyers are out bidding.

Flashback: In 2021, when rates hovered below 3.5%, bidding wars were rampant and home prices surged by double-digit percentages.

Median home sales price in the Chicago metro area
Data: Redfin; Chart: Alice Feng and Jared Whalen/Visuals

Chicagoland home prices jumped when mortgage rates dropped below 3%.

Yes, but: Home prices here didn't swing as far as they did on the coasts.

By the numbers: The typical Chicago-area sales price — around $307,000 in December — is still much higher than pre-pandemic, per Redfin.

  • That's below the national median of roughly $404,000.

Reality check: Mortgage rates aren't guaranteed to fall. But if they do, and curbing inflation is the primary motivation, home values and competition likely won't cool, Matt Graham of Mortgage News Daily says.

The bottom line: Many potential homebuyers still can't catch a break.

Go deeper: U.S. home prices hit record high in December

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