In a positive development for existing homeowners in suburban Chicagoland, low inventory for midpriced homes is driving up home prices.
According to the Chicago Association of Realtors, ten Chicago suburbs this March have less than two months of inventory available on the market.
A rule of thumb in real estate is that five to seven months of housing inventory is considered a balanced market, but less than five months of available inventory means a housing shortage that shifts the advantage to sellers.
“Illinois continues to see sustained growth in sales and median prices, indicating the market is poised for a strong rollout for the spring selling season,” said Mike Drews, president of Illinois Realtors.
Suburban Chicago Cities with Lowest Inventory
Cicero
Carol Stream
Buffalo Grove
Romeoville
Hanover Park
Berwyn
Morton Grove
Prospect Heights
Schaumburg
Mount Prospect
At this same time last year, each of these suburbs had four or more months of inventory.
Unfortunately for homeowners in the most expensive markets, they are seeing the opposite problem. There is too much inventory in Hinsdale, Highland Park, Barrington and Lake Forest, with 8-12 months of inventory.
What is driving the shortage
On the buying side, younger and first time home owners are snatching up midpriced homes quickly because of the inventory shortage, and also because interest rates are expected to continue rising.
On the selling side, there are still homeowners in these markets that hesitate to list their homes because in many cases prices have still not returned to pre-recession prices they paid.
The mild winter also had home buyers out earlier than usual this year. According to Catherine Terpstra, president of Mainstreet Organization of Realtors, “People were out buying homes earlier than they would have in a more difficult winter.”
The low inventory is definitely helping sellers in cities with low inventory. The market has still not returned to the pre-housing bubble buying frenzy, though, and seems unlikely to anytime soon.
Related Stories:
Chicago-area home prices jump 7 percent; buyers struggle with low inventory – Chicago Tribune
Midpriced suburbs’ market tightens – Crain’s Chicago Business
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