What's Ahead for Winnetka & North Shore Real Estate?
There are so many differing opinions about where the real estate market is headed. This is what I know and what I've gleaned from the real estate sources I follow.
After having a super hot market for almost two years, change is definitely in the air. We see it locally with three markers:
- price reductions
- contracts falling apart
- longer days on market
Inventory is still historically low but slowly, very slowly, creeping up. Conversely, mortgage rates have risen since June, and fallen again. It's a concern for some buyers who have decided to wait it out on the sidelines.
This slowdown does not mean that we're in a depreciation phase - but rather a deceleration phase. Some real estate insiders think the market will pick up later this year and into 2023.
A deceleration is not a bad thing. The market was spinning at 100 miles an hour and the brakes have been applied. The car doesn't stop - it slows down. This will, hopefully, lead to a more balanced market. A market where sellers can still achieve a great price and buyers are able to enter the market and be successful.
At this moment, in August 2022, many homes are still closing for at- or over- list price. This is a lagging indicator since most of those homes went under contract several months ago. The fall season when many homes are actively for sale will reflect the changes in the market.
The biggest problem facing buyers has been the persistent lack of inventory. This chart shows the glut of homes from 2006 to 2010 when inventory dropped to normal levels, then to the current status.
In this chart, a seller's market is considered a time when there are less than 6 months of inventory to sell. The North Shore experienced an extreme oversupply of homes from 2006 to 2010. Some villages saws highs of 19 months and lows of 9 months. A solid buyer's market.
The month's supply of inventory right now is:
Winnetka: 1.4 (11 months in 2015)
Kenilworth: 2.1 (19 months in 2015)
Glencoe: 1.7 (9 months in 2015)
The stubborn under-supply of homes has not unexpectedly caused homes prices to rise. The median sold price year-to-date for several years past is astonishing:
As we head toward 2023, most real estate insiders predict a slowing of the market that will bring balance back. The ideal market is one that doesn't favor buyers or sellers but it's rarely achievable.
Low inventory might continue to vex buyers, particularly as some sellers feel they've missed the market. On the North Shore, potential sellers have told me that they are worried about where they would buy if low inventory continues.
From the Wall Street Journal (Aug. 8, 2022):
"Overall, the housing market remains solid. While there have been price reductions, the amount is still far less than was typical from 2017-2019. . . But amid higher mortgage rates there have been signs of a softening market. Homes that have been on the market for three months or longer are reducing prices by around 11% from the list price . . ."
Right now, the changes to our local market are minimal and I believe there is still pent-up buyer demand. But it's been tempered and multiple offers plus sale prices hundreds of thousands of dollars over the list price are probably over.
Know your market or hire an agent that does. Pricing like it's 2021 is not the strategy for the changes that are coming.
While you're here, please see All North Shore Homes for Sale:
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