(The Center Square) – A new analysis of listings on Zillow has found that the housing market in Illinois is cooling off.
RubyHome, the luxury California brokerage firm that examined 12 months worth of Zillow sales, put Illinois at number 9 on their top 10 list of states where sellers are walking away with less than their asking prices.
Daniel P. McMillen, professor of finance at the University of Illinois-Chicago, said home sales always slow down a little bit in the fall. Prices are still high and inventory is tight. Sales are still brisk in just about every region of the state, McMillen said.
“For people who want to sell, it’s actually a fairly good time,” McMillen told The Center Square. “There is still not a big inventory of homes on the market. And it is relatively easy to sell.”
In 2021, sellers all over the country were getting multiple offers for their homes. Homes were selling as soon as they hit the market. Fifty-six percent of sellers wound up walking away with more than their asking prices. In 2022, the RubyHome report found that net prices for home sales have fallen below asking prices in a lot of states – including Illinois. Illinois sellers are settling for 97.57% of the sticker price they put on their homes when they first listed them for sale.
“That’s actually still pretty high by historical standards,” McMillen said. “Historically, Illinois sellers wind up accepting 95% of their original asking prices. The report makes it sound like 97.57% is a big negative, but I don’t think it is.”
If a seller lists a home today for $200,000, and nets 97.57% of the asking price, that means they wind up with $195,140 before they pay settlement costs.
“That is not much of a discount relative to list price,” McMillen said.
Mortgage interest rates have now risen to 6%, high enough to push a lot of buyers back down to earth.
“People may have been asking very unrealistic prices,” McMillen said. “So when they walk away with 97.57% of their original list price, they are still getting a lot more money than they expected to get a few years ago.”
The cost of buying has gone up and that has got to affect the rate of growth of house prices, McMillen said.
“Ultimately, prices can’t go up a lot more than income is going up,” he said. “For a couple years, prices were going up at a crazy rate and that can’t continue. That is what we are seeing all over the country right now.”
As far as regions within Illinois, McMillen and his colleagues are not seeing a lot of variation when it comes to sales rates.
“Illinois is seeing pretty good growth but not what we see in really hot markets in some other states,” McMillan said.
When it comes to slower sales, two regions stand out, McMillen has found.
“The Rockford region is not enjoying the same rate of appreciation as some of the other areas. And neither has downtown Chicago,” he said.
Rents downtown are really high, but people who work downtown are not stepping up to buy the $500,000 to $800,000 condos in the Loop and in a little part of the near North, McMillan said.
“Buyers are snapping up the multi-million dollar condos but the $600,000 condos are not selling very rapidly,” he said.