Chicago realtors say the local housing market is still strong despite the uptick in interest rates

Home sales across the nation slowed in recent months as interest rates started to creep up, but Chicago real estate agents say the local market is still hot enough that buyers need to move fast.

In 2020 and 2021, record-low interest rates for 30-year mortgages, combined with soaring demand as Americans looked for more space during the pandemic, resulted in rapid growth nationwide in home prices and home-buying activity.

But interest rates have been climbing, and this week U.S. mortgage rates rose by more than a quarter-point to 6.29%, the highest the housing market has seen since August of 2007, according to Freddie Mac. The rising rates are making monthly mortgage payments more expensive, and some potential homebuyers are bowing out of the market.

In August, the number of homes sold in the Chicago metro area was down 21.6% from a year earlier, according to data from Illinois Realtors. The median home sale price in the metro area stood at $311,000 last month, up 3.7% from a year earlier.

Chicago real estate agents say that since the beginning of the pandemic, area residents have been willing to invest more money when buying a home, which makes for a “solid” housing market despite the dip in home sales and bump in interest rates.

Mike Golden, co-founder and co-CEO of @properties, said he believes the pandemic caused residents to value their homes more.

“There was a trend in the past where there were more people renting and going to smaller spaces,” Golden said. “People are now looking at their homes differently and they understand the space they need, (which) was incredible for our market.”

Golden explained that the housing market has had some “incredible years” by market volume.

“2020 was a great year, 2021 was an all-time record,” Golden said. “And 2022 will still be down from 2021, (but) we’re still seeing a solid market (and) we expect to have a good spring market going into next year.”

The average home in Chicago sells for about 1% below the list price and goes pending, meaning the seller has accepted an offer, in roughly 56 days, according to Redfin, a real estate data national brokerage company. A “hot home,” which is a home for sale that is expected to be among the most competitive homes on the market, can sell for about 2% above the list price and go pending in roughly 37 days, according to the company.

Darrell Scott, who is president of The Scott Group, affiliated with Compass Chicago Real Estate, said that although interest rates are a little bit higher now, buyers are still pursuing homes.

“Buyers have more leverage now than they did a few months ago with less competition and fewer buyers looking to purchase,” Scott said. “From a seller’s perspective, they may not be able to sell as quickly as April, for example, but it’s still a great time to sell.”

Eric Tammes and his partner, Maurie Richie, placed their Albany Park condo on the market in early July.

The couple sold another Albany Park home in 2017, but Tammes said this time around was more adventurous.

“We weren’t sure what to expect, but the condo did sell much faster than I would have guessed,” Tammes said.

Their three-bedroom, two-bathroom condo was placed on the market on a Friday and had five offers by the following Monday, according to Tammes. They sold above their asking price.

Tammes and Richie had purchased a new home in Edgebrook in early June.

It was “a relief to not have two mortgages for any longer than necessary,” Thames said.

Carmen Rodriguez, a Coldwell Banker broker and one of the two real estate agents who helped Tammes and Richie sell their home, considers summer to be one of the tougher cycles in the city to buy or sell a home.

Rodriguez explained that lulls take place over the summertime, typically after the Fourth of July, because that’s when people typically go on vacation.

“Interestingly enough in Chicago, there is a big rush during the wintertime,” Rodriguez said. “People set it as a goal that they want to be in their new place by Christmas or the New Year but then it slows down again and those are the typical ebbs and flows of a Chicago housing market.”

Tammes warns anyone who is looking to either buy or sell in Chicago to “buckle up” regardless of the current state of the housing market.

“The process might be frustrating, emotional and tiring, but keep working through the challenges,” Tames said. “We ended up buying in a neighborhood that we hadn’t considered, and we love our new home and neighbors.”

tatturner@chicagotribune.com