Chicago prices declined at only 60% of the national rate M/M
It was interesting to read the case schiller housing data released on Nov 29th which re-affirmed my belief that Chicago is unlikely to see significant price declines. Chicago month over month decrease was only .6% vs a national average of 1% this all with interest rates in the 6-7% range. While tech heavy areas which saw a stronger run up the last 2 years such as Denver fell 2% month over month and San Francisco a whopping 2.9% decline month over month.
There are deals out there to be had right now with sellers often more willing to negotiate and I expect if rates do drop prices will quickly spike upwards as more capital starts chasing deals. Closed for a client today a cashflow 4 unit in Brighton Park for $370,000 which once cosmetic rehab done should rent in the $4800 range.
That's what I've been seeing too. The biggest price declines have occurred in areas that had the most rapid/highest price increases and the most expensive markets.
Brighton Park is underrated. 4 units consistently selling for less than $400k and taxes usually below $5k.
Definitely appreciate the incite @Henry Lazerow. I am a little more optimistic that at least in the commercial multifamily space that sellers will start lowering their prices here in Chicago. Is there a reason that you expect to see interest rates will drop?
I definitely like those Southeast areas around Brighton Park as well such as Mckinley park, back of yards, and little village.
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Contractor IL (#TGC116360)
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Interest rates already have dropped over a half a percent since last CPI showed inflation falling and the fed confirmed a pivot this week. The market is frwd looking, I expect fixed 30 mortgages in the 5s and investment mortgages in low 6s for 2023. Investment mortgages went from 7.8 to 7 already. I had no clients actively looking for a short amount of time right when rates went up and now have 4 clients looking again so seems people already jumping back in.
Agree 5+ deals will either take a hit or be mainly cash only for a few years, they are much more interest rate sensitive then 2-4 units and cannot be financed at 75 ltv right now on many deals. Majority of north side 5+ has been selling at extremely low cap rates but they are still selling just way less transactions and often cash.
Interesting article from Redfin this morning…
Homebuyer demand is rising as mortgage rates continue to decline, according to a new Redfin report.
On Dec. 1, daily rates fell to 6.29% according to the report, a full percentage point lower than the 7.29% peak last month. With that drop, Redfin found mortgage-purchase applications grew 4% from the previous week. Meanwhile, Redfin’s Home Buyer Demand Index, which measures requests for tours and other services, rose 1.5% from last month.
Those changes in rates and demand are keeping some sellers from dropping prices as they had been recently. In the four weeks ended Nov. 27, just over 6% of homes listed had a price drop — down 7.2% from the previous week.