More of the same. That’s what real estate brokers from across the North Shore are saying about the residential market as summer fades into fall. Strong buyer demand along with limited inventory will keep prices steady, although interest rates will impact the lower end of the market, especially for first-time homebuyers.
“I do not currently see a slowdown, nor do I see a slowdown in the near future,” says Laurie Field, a broker with Engel & Völkers in Winnetka. “Buyers who have been in the market long enough are savvy, and they know when something is priced right.”
Field says she is currently working with several buyers that can’t find what they are looking for. The buyers are happy enough where they are currently living and they’re willing to wait for the house, condo, or townhouse that checks the most important boxes to come on the market. She’s worked with them to get ready to list their homes as soon as they find what they are looking for.
“There was a time that sellers could ask and get a lot more for their house than they ever expected, and I think those days are in the past,” she says. “Houses that are priced right continue to move quickly, and anything overpriced will sit on the market and accumulate market time.”
While interest rates have risen, Field says she doesn’t see an immediate impact on the market. Even with the recent moves by the Federal Reserve Bank, rates remain attractively low.
“I initially thought rising interest rates would prompt a slowdown in market activity, but I am not seeing that. The buyers I am working with know that while rates have increased, they are still significantly better than they had been in, say, 2008 to 2009,” Field says. “Buyers know they can refinance when rates go down. They’re better off building equity in a home as opposed to paying rent and giving someone else that equity.”
Susan Maman is with @properties in Winnetka and she believes the current conditions indicate the 2022 housing market on the North Shore won’t be seeing any dip before the end of the year.
“As long as our demand is still considerably higher than our inventory, we will finish strong. At the end of the day, it’s still about price, product, and perception of value,” Maman says. “There was a time—first quarter of 2022—when there was definitely more of a buyer ‘frenzy’ than we have today. That being said, I am finding that those homes that are priced attractively and realistically will continue to put sellers in the driver seat.”
Maman says during the past two weeks, two homes at two ends of the spectrum—a luxury home that showed like new with a swimming pool, and a 2,180 square foot condo that needed updating—both sold for above asking price. Both had strong multiple offers within 72 hours.
“We have seen a slowdown in the number of homes going under contract which may partially be the fact that July to August months are family vacation months, going to camp, and getting ready for school,” she says. “Our prices continue to appreciate, and buyers more than ever seem to be leaning towards homes that are new/newer or have had a renovation.”
Young families who aren’t tied to the school calendar, transferees, and baby boomers retiring or moving to warmer locations to work remotely will keep the market strong, says Chris Veech, a broker with @properties in Winnetka. She agrees higher interest rates are having the most impact on the first-time buyers who can afford a little less home now, so some are pausing to save up a bigger down payment.
“Many of them would rather wait and buy the type of home they want rather than buy a smaller home.” Veech says. “The high end of the market is less interest-rate sensitive, with more cash buyers, and more cash to put down to minimize mortgage payments.”
Joanna Koperski, a broker with @properties in Lake Forest, says even with uncertainty in the economy due to rising inflation and interest rates dampening buyer enthusiasm, the buy side of the market will stay robust.
“Buyers balance books and consequently their buying power remains strong, as shown by the consumer spending index,” she says. “Adding to this the recent increase in inventory and a buyers’ choice is reliant on budget and motivation.”
Koperski says certain buyers in the affordable housing market will definitely feel the constraints of rising interest rates along with rising home prices. However, she says with the high rate of consumer spending, most buyers are unaffected.
“Though the rate increases are sweeping, compared to the MLS in general, these constraints have shown only a slight reduction in interest in areas with more expensive properties such as the North Shore,” Koperski says.
One broker we spoke with, Carly Jones of Engel & Völkers North Shore, says she sees a bit of a pause in the market due to economic conditions, but it won’t be significant.
“I do believe there will be a slowdown in the market in the fall. With rising interest rates and inflation, buyers are more hesitant to spend what they consider top dollar with homes still priced higher than previous years,” Jones says. “However, I do not see the market taking a drastic turn.”
Jones says interest rates rising will make it so buyers cannot afford the same prices they could have six months ago, as interest rates force them to readjust their budgets and expectations.
“This will all cause the market to keep moving because buyers will want to buy before interest rates go up even higher,” she says.
“The market has already shown us it is slowing down a bit, but it is still a busy, active market. If homes are priced well, they are still selling quickly and for list price or often over list price,” says Donna Mancuso, a broker with Berkshire Hathaway HomeServices in Lake Forest. “The rising interest rates will impact some but not all buyers and that will contribute to the market slowing down as well.”
Mancuso says while 2020 and 2021 were record setting years in home sales, 2022 will probably not finish as strong as those two years but it will most likely be close behind.
Vicki Nelson, a broker with Coldwell Banker in Glencoe, says while the August market slows down most years due to vacations, she expects in the end 2022 will turn out to be similar to last year’s, and recent interest rate hikes haven’t yet had much of an impact.
“We expect a similar market as we did last year, and interest rates have not been affecting the market as much as we thought they would be,” Nelson says. “No one ever really knows, but it certainly doesn’t seem to have affected the market at least on the North Shore. A lot of people are still paying cash.”
Sarah Valliath, Nelson’s business partner, says what remains important in the current hot market is that both buyers and sellers retain a local real estate agent if they want to achieve their goals.
“For people who are looking to either sell or buy, go with a local realtor who knows the village, knows the schools, or who knows all the ins and outs of the community,” she says. “Rely on the local experts who know the local market.”
For Colleen McGinnis, a broker with @properties in Winnetka, it’s not really a question of whether a market is cold or hot, it’s about creating your opportunities.
“You can either follow, or you can create the market. You could move now and get results,” she says. “Do not wait at all. Be bold. Be brave. Be proactive. Just do it.”