There Is No Perfect Home

"Nationally, house-buying power continues to exceed the median sales price and that implies housing is not overvalued today."  -- Mark Fleming, Chief Economist at First American

The housing market began the year at a frenetic pace and has not let up. Homes appreciated an average of 10.4 percent in 2020, marking eight straight years of nationwide appreciation, while housing inventory has become increasingly scarce. As a point of reference, in 2019, we began the year with 814,000 homes for sale across the United States. In 2020, there were 722,000 homes. That number was sliced by more than half in 2021, with just 325,000 homes on the market in January. 

There is no question, low inventory remains our most significant market challenge. This is especially true for the upper end of the market where there was a 77 percent increase over year prior in sales activity for homes above $1 million. 

What's In Store 

Market experts are expecting a slight cooling, or normalizing, of sales as the year progresses. (With the exception of the next few months when 2020 volume was temporarily derailed by the effects of COV lD.) Analysts anticipate Home Appreciation Increases averaging 5.9 percent in 2021. Some of the most notable reasons for these projections include: 

? Moderation of [unsustainable] sales volume experienced in Q4 of 2020 and Ql of 2021

? Mortgage rates that are expected to stay at or slightly above 3 percent ( which may increase further as more federal stimulus dollars flood market)

? An increase in inventory and options for buyers as more homeowners realize their gains in home values and elect to sell

This is welcome news for buyers, particularly of Single-Family Homes where multiple-offer situations and waiving of contingencies have become commonplace. Chicago's activity mirrors the nation's in buyers' appetites for Single-Family Homes. Three-month data through March 20 provide a clearer picture: 

? Few Listings of Single Families is down 24 percent while condo New Listings are up 20 percent

? Under Contract volume is up in both segments; 18 percent for homes and 46 percent for condos

? Available Inventory is down 45 percent for Single Families and up 26 percent for condos

? Median Prices are up 12 percent YTD for homes at $280,000 and up 6 percent for condos at $350,000

There ls No Perfect Home 

The good news for buyers and caution to sellers: The market still rewards move-in-ready, turnkey homes with the latest features and finishes. At every price point. Even in this fast-paced market, older homes and condos with less desirable floor plans and dated finishes arc sitting on the market longer and often require price reductions to sell. That may not be true in other cities, but it is certainly true in Chicago. Buyers who are willing and able to take on some modest to moderate improvement projects have greater leverage in negotiations and far less competition, if any, among other buyers. 

Which brings me back to my initial message: There is no perfect home. Even homeowners who spent millions of dollars in designing and building a custom home would make changes to it. My advice to buyers is to clearly define your top needs and determine what you cannot tolerate. Sharpen that list and compare it against what is in the market and what you are touring. If a home meets 85 to 90 percent of your criteria, it should be a strong contender for purchase. 

The market holds great opportunities for buyers and sellers. I am always pleased to discuss opportunities or your real estate plans. 

Wishing you a happy and healthy Spring, 

Cadey