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Western Chicago Suburbs Market Conditions (July 2022)

Western Chicago Suburbs Market Conditions (July 2022)

It's widely known that the last two years or so have been characterized by demand exceeding supply creating "seller's market" conditions.  In a seller's market, homes sell quickly and buyers are often competing in multiple bid scenarios, which drives up prices on the limited number of available homes.  It has been incredibly tough for buyers during this time -- so much so that they have needed to be aggressive on terms, including buying "as is" and waiving common contingencies (e.g., home sale, appraisal, inspection, etc.), to differentiate beyond price.  While this environment is beginning to move to more balance, the Western Chicago suburbs remain a seller's market going into the late summer / early fall.

Determining whether a market favors sellers or buyers is typically measured by a statistic called months inventory (or supply of homes).  This data point is commonly defined as inventory of homes for sale, divided by the average monthly pending sales for a given period of time (generally the last 12 months).  As such, the months inventory indicates how long the current for-sale inventory would last given the current sales rate if no additional new houses were built.  Numerically, a value below four months typically favors sellers and a value above six months typically favors buyers.  A value in the range of four to six months is generally viewed as balanced.  There is some discussion in the real estate community as to what these exact breakpoints are, but our suggested ranges can serve as a guidepost.

The spring and early summer of 2022 were an exceptionally strong seller's market across the western Chicago suburbs with many areas reporting supply of inventory below two months (all but Oak Brook in our subset).  With buyer demand beginning to moderate, months inventory started to move higher in our primarily tracked areas.  That trend continued in July in each of the represented suburbs other than La Grange which slipped lower but not back to March levels.  In July, Oak Brook gained relative balance with the other nine western Chicago suburbs on the early path to normalization.  We believe that track will continue in August and September as buyers are impacted by higher mortgage interest rates and potential economic concerns in the current inflationary environment.  Buyers will see more negotiability, typical terms and less competition if they [re]enter the real estate market during the remainder of the year. 

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