Dillon Rudy and his wife are in the classic pickle of many homeowners in the Chicago area and across the country.They live in their first home, which they bought in 2021, a three-bedroom in Lincoln Park, when mortgage rates were at record lows. Their goal is to move to the North Shore to find a bigger place for their expanding family. But with a 3.7% mortgage rate and inventory of for-sale homes at extremely low levels, they aren’t jumping back into the market quite yet.“I am the cliche: married to the rate and don’t really want to do anything,” Rudy said. “The money is so cheap.”Rudy, 29, is just one of many homeowners and would-be homeowners who are sitting on the sidelines or stuck there because of a persistent lack of inventory and higher mortgage rates and home prices in the real estate market.While Rudy weighs whether he should “make some serious dough” by selling soon given the favorable seller’s market in Chicago or keep it as a rental property as he had originally planned, he worries about his chance of finding his ideal next home and is biding his time, hoping mortgage rates drop below 5%. And as Rudy stays in his home, another family is out there searching for a starter home such as Rudy’s in Lincoln Park.This cycle is one that has been going onfor yearssince the booming COVID-19 pandemic real estate market came to a halt as mortgage rates rose and was not substantially different in the first quarter of this year in the Chicago and Illinois housing markets. While home sales for the year were up marginally compared to this time last year, affordability challenges are not easing for buyers in the Chicago area. The lack of inventory continues to create a highly competitive market, keeping prices elevated as buyers’ purchase power is already more limited due to higher mortgage rates.“A lot of people out there have buyers ready to go for them on a … sale and a price that is crazy strong and … want to sell it at that number,” said Dan Spitz, founder and CEO of Captivate Real Estate Group, who is working with Rudy. “But (they say,) ‘I have nowhere to go.’ Financially, it doesn’t make sense, even if they receive $50,000 to $100,000 more” on their current home’s sale price. Captivate is brokered byeXp Realty.The real estate market in Chicago is hyperlocal, with some neighborhoods such asLincoln Park and West Townsuper hot. Inventory is flying off the shelves in those neighborhoods, Spitz said, well above the asking price. And those that are selling are still doing so because of changes in life circumstances such as new kids, divorce orreturn to officemandates, real estate agents say.In March, the median sales price of a home in the city limits was $380,000, up from $360,000 in February, according to data from Illinois Realtors, a trade association for real estate agents. The median sales price in March was $360,000 for the Chicago metro area, up from $344,000 in February. Statewide, the numbers were $295,000 and $283,000 in March and February, respectively. So far this year, median sales prices are up 9% within city limits and 6.1% statewide.The national median existing home sales price — which excludes new construction homes — was $403,700 in March, the 21st consecutive month of year-over-over price increases, according to data from the National Association of Realtors. While monthly home sales in Chicago and Illinois went up between February and March, national sales fell 5.9% over the same period. NAR confirmed to the Tribune that the slide was the biggest month-to-month decline since November 2022 and that it was the slowest March in terms of sales since 2009.Freddie Mac data shows the 30-year, fixed-rate mortgage average hit its peak this year in January, eclipsing 7% before trending downward. Rates remained in the 6% range in March, with the last week of the month closing out with an average of 6.65%.“Even with inventory constraints and affordability headwinds, serious buyers are stepping in decisively when properties are priced and positioned well,” said Illinois Realtors President Tommy Choi in a March news release. “This market isn’t slowing; it’s evolving. And those who adapt are winning.”Within city limits and statewide, Illinois Realtors data shows closed sales are up 5% and 1.2%, respectively, compared to the first quarter of last year, a modest sign that more buyers and sellers are jumping into the market this year.Chicago home sales declined again in 2024. Will 2025 see more movement?As the busier homebuying and selling season kicked off after the Super Bowl, the unofficial start date of the season according to the real estate community, so did President Donald Trump’strade wars. The tariff battles have created uncertainty for businesses and consumers, including homebuyers and sellers.“General consumer and homebuyer sentiment declined in March, driven by uncertainty surrounding the potential effects of tariffs and other federal policies on the broader economy, inflation, and interest rates,” said Geoff Smith, executive director of DePaul University’s Institute for Housing Studies, in a March news release.In 2024, national data from NARshowedthat existing home sales fell to the lowest levels in nearly 30 years for the second consecutive year. The Chicago-area market for home saleswas even tightercompared to the national market.
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