In this summer’s hot real estate market, average home prices have risen in the north suburbs, with a longtime Park Ridge real estate agent saying this is the first time he has seen the average asking price of a home in the suburb top $1 million.
The phenomenon arrived because few homeowners are putting their homes on the market, knowing that if they bought a new home, they’d have to finance it at high interest rates, real estate professionals say. As a result, the few mid-priced homes going on the market are fetching high prices, often over asking price, and selling quickly, leaving many buyers frustrated.
Sales are slower with homes priced at or over $1.5 million, said Ralph Milito, a broker with @ Properties, Christie’s International Real Estate, who has sold homes in Park Ridge and elsewhere since 1989. Those high-end homes are driving up the average asking price as they linger on the market.
“For Park Ridge, the average asking price at the moment eclipsed $1 million for the first time… It’s been really mind-blowing, but it did happen,” Milito said. “It’s been a rough year for buyers. I’ve had buyers write over asking price offers numerous times and still not land a house,” he said.
Milito said the average asking price comes from the multiple listing service, which also includes private listings not found on websites like Zillow, Realtor or Redfin.
On June 18, he said that Park Ridge had 47 single-family homes for sale that were publicly visible, plus an additional 22 that were private listings, for a total of 69 homes on the market, and the average asking price was $1,027,000.
“That’s a pretty low number (of homes for sale) compared to previous years,” he said.
Feeling the squeeze even more is Niles, where only 24 homes were listed for sale, at an average asking price of $572,442, he said.
Skokie had 45 homes listed for sale at an average asking price of $617,068. Those figures were as of June 18.
Kathleen O’Sullivan, a Berkshire Hathaway real estate agent who also specializes in the area, said she has been able to sell homes in Skokie and Niles in the $350,000 to $500,000 range and close a deal in about a month. She said she has been able to sell homes in Park Ridge in the $600,000 to $700,000 range.
However, according to O’Sullivan, the increase in home prices isn’t necessarily spelling out ideal conditions for sellers. If sellers need to buy and finance a home once they sell theirs, higher interest rates would practically double their mortgage payment cost over what it would have been just four years ago, she said.
The two said that interest rates for a conventional 30-year fixed-rate mortgage are around 7% to 7.5%. Home buyers in 2020 saw much lower rates, in the 3% to 4% range.
O’Sullivan said she saw in interesting trend with properties in the area, in that about half of the homes on the market are under contract and that the other half are available. She said usually homes are usually not under contract as much or as long, but homes are still going through inspections and receiving add-ons while they are under contract.
Carol Harczak, managing broker and owner of Re/Max AllStars in Niles, said the owners interested in selling their homes are people with few alternatives, including estates of an owner who has died or retirees looking to sell their homes and head to a warmer climate.
O’Sullivan said families who wish to upgrade to a bigger house are the ones who are holding off from buying and selling a home until interest rates lower.
O’Sullivan said the lack of inventory has also increased rental prices in Park Ridge, raising the average rent to the range of $2,300 to $3,200 a month.
O’Sullivan and Harczak both said that sellers should do everything they can to improve their homes’ appearance, both internally and externally, before buyers visit their property.
All three agents said buyers should still buy a home as soon as possible and not wait for interest rates to lower, because they can refinance when interest rates decrease.
“Typically, a first-time home buyer loses three deals,” O’Sullivan said, adding that it can be very difficult for first-time home buyers to get their heads around the fact that they have to make quick decisions to purchase, but that in this market, they must. She recalled a client that submitted eight offers, and couldn’t close a deal until the ninth try.
Harczak said buyers should still buy a home even if it’s not their dream home, and that they can still gain equity if they buy a condo or a townhome. Even though there aren’t as many listings as compared to years prior, Harczak said she remains busy, having multiple offers for a single property. “As they say, it’s the best investment,” she said.
Recently, Federal Reserve officials said they would target cutting down interest rates to the 5.25% to 5% range. “I think that dropping the interest rate is going to increase demand more than it will increase inventory levels,” Milito said. He anticipates that while more people will want to buy a home with a lower interest rate, not as many people will want to sell their home because they will still have a lower interest rate from a mortgage that they got in 2020.
