Justin Gwizdala, 33, recently purchased his third home. He and his wife had been waiting for mortgage rates to come down and for the right house to come on the market so that they could move closer to family and friends in the northeast suburb Lake Forest.
The last time the father of three bought a home — in 2021 — he snagged a 3% mortgage rate for a five-bedroom home in Hawthorn Woods.
Mortgage rates have since shot up, but Gwizdala said he was pleasantly “shocked” to secure a mortgage rate under 6% for his most recent home purchase. The mortgage rate is 5.625% for his new five-bedroom home in Lake Forest, with his monthly payment coming out around $4,900 including taxes and insurance. His monthly payment for his previous home was around $4,000.
“When I look at the drop in interest rates from six months ago … that is a monumental difference in dollars per month,” said Gwizdala, who is saving hundreds a month.
While Gwizdala jumped into the market as rates started to decline, many buyers and sellers are still staying put as uncertainties remain around mortgage rates, the upcoming election, and the new written agreements between homebuyers and real estate agents that are required in the wake of a National Association of Realtors settlement, according to local real estate agents and market experts. And as long as the stubborn lack of homes for sale remains — one that has plagued local and national real estate markets for well over a year — affordability challenges will remain for Chicago’s potential buyers.
Gwizdala closed on the Lake Forest home about 48 hours after it came on the market, pushing the deal forward with speed because he knew the sellers had other interested buyers.
For the home he sold, Gwizdala had more than 15 families tour the property and had three offers after the house had been on the market for about six days. Gwizdala listed the property for $875,000 and received two offers above the listing price, but chose the offer that was at the asking price. The buyers offered greater flexibility on when they could close on the house and how long Gwizdala’s family could stay in the home, providing Gwizdala more cash on hand and more time to move, he said.
All in all, Gwizdala said he is pleased with the way both the buying and selling process went for his family, a process that took only two and a half weeks.
“I feel like it worked out perfectly for us,” Gwizdala said. “There is not a lot of inventory … and there is no doubt there is demand for good houses.”
The home buying and selling process is changing. Here’s what you need to know in Illinois.
A limited inventory of homes for sale in the Chicago area is pushing home prices above the national level, according to Daryl Fairweather, chief economist at Redfin. In September, Redfin data shows home prices in the Chicago area were up 9.4% over the same time last year, versus a 3.9% increase nationwide. Chicago-area home sales were down 9.2% year-over-year in September, compared with a 4.8% decline nationwide. New home listings were down 7% in Chicago versus up 2% nationwide year-over-year in August, Fairweather said, with Redfin data showing Chicago had a slight uptick in listings for September year-over-year whereas listings were down minimally nationwide.
“The way I interpret that is people who own homes in the Chicago area are not keen to sell them,” Fairweather said. “And there are more people looking to buy homes than are people willing to sell them, which is putting additional pressure on prices. … whereas for the rest of the country there is a bit more slack in the market and not as much demand.”
In September, the median sales price of a home in both the city limits and the Chicago metro area was $350,000, down slightly from $355,000 in August, according to data from Illinois Realtors, a trade association for real estate agents. The median sales price statewide in September was $290,000, a marginal decrease from $295,000 in August. Illinois Realtors data showed median sales prices were up more than 7% year-over-year within the city, metro area and statewide in September.
The national median existing-home sales price — which excludes new construction homes — was $404,500, the 15th consecutive month of year-over-over price increases, according to data from the National Association of Realtors. Inventory of for-sale homes was up in September from August both locally and nationally, according to Illinois Realtors and NAR data.
Freddie Mac data shows the 30-year, fixed-rate mortgage average starting its downward trend in May, with a steeper decline taking place between July and September. Average rates reached their lowest point in two years at 6.08% in the last week of September.
While she did see some buyers reengage toward the end of September as mortgage rates continued to drop, Erika Villegas, president of the Chicago Association of Realtors, said she has prospective buyers who are still struggling with the persistent inventory and affordability challenges. Many families are also typically inclined to stay put as children head back to school, she said.
Adam Stempel, 43, is one example of a prospective buyer who decided to step back from his home search this summer.
Stempel and his wife purchased their four-bedroom home in western suburb Villa Park in 2009 and are looking to move to a community with higher-rated schools for their two kids and that better reflects their age group. Their current mortgage rate is around 3%.
Early this year, they were looking at homes in a variety of suburban neighborhoods including Oak Brook, Clarendon Hills and Hinsdale. But a combination of factors — including high home prices and mortgage rates, dissatisfaction with the inventory of homes on the market and their decision to send one of their kids to private school — led them to put their home search on the backburner until next year, Stempel said. Stempel’s budget caps out at $1.2 million, which he called a stretch, and he said he wants a home that matches what he has in his current space, with amenities like an outdoor living area and a finished basement.
“It’s very hard for us in the sense of you do make a place your home and then when you go to find the next one, you kind of expect it to be a little bit better,” said Stempel, who works in tech. “And I just don’t think there was that inventory out there at our price point that would make it better.”
As for the remainder of the year’s market, some in the industry remain optimistic, while others don’t.
“I think that right after the election, it’s going to really be booming again,” Tran said. “With the push of rates going down, and if they continue to go down, people we made contact with last year or two years ago that wanted to buy but couldn’t find a house or couldn’t really afford the kind of house that they wanted could maybe make that jump to affording that house now that rates have gone down a little.”
But Fairweather of Redfin is less certain. With the recent changes around real estate agent commissions, climate change-induced hurricanes and fluctuating mortgage rates, there is a lot to be uncertain about for buyers and sellers, she said.
“I think that it is never good for markets when there is uncertainty,” Fairweather said. “(After the election), I think some uncertainty will go away but not all of it.”
