For any questions of our 2022 Outlook or Marketing Plan, please call 312 599-1300 or click the “About” tab at the top left of the page and select one of our agents for their contact information. Or, for ease, please fill out the “Questions about Chicago Real Estate” immediately to your right or at the bottom of the page if reading this on a phone and we will get back to you. Thank You!
THIS WEBPAGE IS A SUMMARY OF OUR 2022 OUTLOOK AND 312 ESTATES MARKETING PLAN FOR SUCCESS OF OUR CLIENTS:
Our goal in posting this webpage is to:
- Inform you of our 2022 Outlook of the current Chicago real estate trends and
- Alert potential 2022 sellers to call us sooner rather than later. 2 reasons: traditional market cycles returning pushing buyers into the marketplace and Economic / Chicago uncertainty.
- Our 2022 outlook is a move back to more traditional real estate cycles as they were pre-COVID. Supply demand curves currently and expected for the first few months of 2022 are in the sellers’ favor, especially for single family homes, large condos, and condos with outdoor space.
- There are a lot of questions for the back half of the year: 1. Interest Rates expected to rise causing buyers to look now, 2. City flight unknowns due to crime and school unpredictability and 3. Economy uncertainty for the back half of the year.
CHICAGO 2022 REAL ESTATE MARKET OUTLOOK:
Post COVID, traditional real estate market cycles have changed. This is primarily due to the rental market. Landlords were forced to adjust leases to keep tenants so the traditional flood of renters entering the purchase market in the Spring and Fall when leases end had change. We are expecting somewhat of a traditional market cycle coming back in 2022 as landlords in 2021 started to adjust their leases to end in your traditional lease end dates of May 31, June 30 and September 30 and October 31.
Thus, this typical large population of renters entering the market as first-time home buyers will help the return to traditional market cycles. This will benefit the market under $500,000. The trickle up effect benefits the $500,000+ market. Sellers of homes typical move up in price. Thus, when sellers can sell their $500,000 home, typically the seller is now a home buyer at $750,000+. Then these $750,000+ sellers can buy their $1,250,000+ homes, etc.
A big question for 2022 is what is going to happen to interest rates and how will this affect the market. Currently, interest rates are still low, but the expectation is interest rates will rise. We are seeing buyers starting to look earlier than expected because of fear homes will cost more with increased interest rates. With interest rates more than likely raising this year, we do not know how that is going to affect buyers. Our 2022 outlook is the number of buyers will wane with the interest rate increase.
To give a brief explanation of the effect of interest rates increase, a 1% increase to the interest rate of a $500,000 dollar loan would yield an additional $100,000 of interest due to the bank. Fall 2021, clients of ours were consistently receiving loans at or below 3%. Our expectation is that rates will climb to 4% by June 2022 and will further climb with rate increases. A rule of thumb is when rates hit 5.3% or more, you will pay back more in interest than in principle. Thus, 30-year loan at 5.3% interest rate, every dollar you pay back to principle you will pay more than 1 dollar to the bank in interest. So, if you have a million-dollar loan, you will pay $1M back in principle and more than $1M back in interest.
City flight is another big question. We see it with fear of the increased violent crime and with CPS. We have several clients who were city people who sold their city homes for the burbs in 2021 and we expect to see it again this year. There is a direct correlation media reported crime in the neighborhoods such as Lincoln Park, Lakeview, Andersonville, Lincoln Square, and Bucktown and drops in offers in that specific neighborhood. We have experienced this and have had several buyers during one of these crimes waives change from looking in the city to looking in the burbs.
We see the same direct correlation with buyers who have school aged kids. When CPS was not open in January 2022, we instantly saw an increase of buyers searching in the suburbs where schools were in session. During the school year 2020-2021, Suburbs who were in session became popular real estate markets. Prior to 2020, many suburban markets were slow but that has now changed especially for the North Shore and Hinsdale area.
One last question we are hearing from buyers that is promoting an aggressive spring market is the uncertainty of the economy for the back half of 2022. Some buyers are believing now is a better time to jump in the market because they may lose value in their 401ks come the back half of 2022 if the stock market falls. Because of this uncertainty, we are seeing a strong buyer surge coming in early 2022.
In 2020 and 2021 we have seen surges in the market that last for short periods of time. As stated above, January is expected to have a buyer surge. We believe the faster we can identify people looking to sell either in the short term or this summer, developing a marketing platform now will allow us to market when we have the next buyer surge to maximize value for our sellers. In July of 2021, we had a major buyer surge. Sellers who were on the market when the surge began benefited financially. Simple supply and demand economics took over because there was little supply in the market to meet the demand.
Many real estate agents who use the basic photography service for their listings were waiting 3+ weeks to take photos because of the back log of people wanting to get on the market. When the supply hit the market in September 2021, sellers lost the supply shortage benefit and sellers were no longer in the advantage. Our goal in giving you this information now is to encourage you to discuss with us a marketing plan now so we can have our marketing in place when the next buyer surge occurs. We can also advertise on TAN (Top Agent Network ~ off-market database) and the other off-market database as to not miss the current batch of buyers if so desired. The beauty about the off-market databases is that the seller does create any market time. Thus, when you go on the market, your market time is zero.
The suburbs in 2021 had one of its best years. Prices are rising quickly. Our 2022 oulook is for the same. One key note buyers have to recognize in the suburbs is the market cycle. For example, the North Shore and Hinsdale, your market cycle is based on the school year. Supply hits the market from April 1st and properties that do not sell tend to come off the market in September. Outside of this market cycle a buyer really needs to be able to search the off-market database and know the realtor network. 312 Estates is under contract with 1 home in Hinsdale and 1 home in Winnetka that was neither on the mls or off-market databases so please call us to discuss your needs.
OFF-MARKET DATABASES AND 2022 OUTLOOK FOR INTEREST RATE:
With these current low interest rates, we are seeing a great number of both residential home buyers and investors entering the market. This is true as we enter 2022. As stated above, home sellers are seeing a benefit as much of the supply has been removed from the market due to homes going under contract or sellers deciding to list on the off-market for the holidays and waiting for spring. Thus, for sellers trying to sell, they currently have a favorable economic Supply / Demand curve dynamic.
However, Buyers are not totally out of luck. Buyers with access to the off-market databases are finding a new supply of homes. Properties going under contract from the off-market databases are becoming increasingly popular. Currently, there are more than 3,500 listings on the off-market database. If you would like to search and see some of these off-market listings of the off-market database for the mls, Click Here. You will have to provide your information to allow us to provide you with access. 312 Estates has had multiple buyers purchase from the off-market this fall. Our sellers have benefit too. Here are a few of 312 Esates’ homes under contract from the off-market databases.
www.1718wood.com Pending: Bucktown Single Family for $1.9
www.1346addison.com: Southport Corridor Penthouse for $1.15
www.5411glenwood.com: Andersonville Single Family for $1.15
www.3234clifton.com: Southport Corridor Penthouse for $825,000
Please read our Off Market/MLS Listings page to learn more.
TAN OFF-MARKET DATABASE:
The TAN database was originally designed to give top agents a place to market not yet listed homes and investment properties. The original hope was this off-market database would be a “paid for” exclusive listing site so top agents could exclusively market this to buyers. Today TAN is still an expensive exclusive database for top agents but has also become an effective tool used to post details, photos, and prices of listings to come of which sellers are willing to show now.
TAN has been a competitive advantage for us over non-TAN agents. Public sites such as Zillow, Redfin, and Realtor.com only display homes market on the active market of the mls. Many sellers like using TAN and the off-market database noted above because it eliminates buyers coming from these public sites. Why you may ask; scheduling showings off Zillow and Redfin is so easy that many people forget they even made the showing and then never show up. Nothing makes sellers more upset than when they clean their home for 2 hours for a showing and then the buyer does not show up. Buyers coming from the off-market databases have a buyer’s agent. Thus, the likelihood of a no-show or a let’s see this home for fun buyer does not occur. Buyers coming with agents from the off-market database are simply higher quality buyers for sellers to prepare their home for a showing. Plus, when using TAN, it does not build up market time.
For buyers in the current market, it is not uncommon to show 4 to 5 homes all being on the off-market databases. Buyers always like seeing properties not on the public market. For sellers deciding to market in the 2022 spring market, the off-market databases maximize market availability now, without using mls and therefore Redfin and Zillow market time. Thus, if the home does not sell on the off-market database, the seller starts with a market time of zero when the home is first posted on the mls in the coveted spring market selling time.
IMPLEMENTING A SELLING STRATEGY FOR THE 2022 MARKET:
If you are aware of an individual who is considering selling now or in 2022, We would be honored if you passed along this webpage and our information. In short, because of the low interest rates and the projected increase in total number of buyers looking for properties, below is a strategy we have been successfully implementing:
1. Determine client’s needs (exit price, desired closing date, time needed for house preparation (bring in our designer to provide a list of essential this to do, determine if flare is needed, or bring our stager), property availability for showing, etc.).
2. Put together Marketing (Photos, floor plan, website, video, brochure, SEO key words, axillary site marketing links, individual website isp tracking, realtor code tracking, etc.).
Here are some examples of our marketing end product:
www.2250Roscoe.com Penthouse $1.25
www.3750Greenview.com Single Family $3.3
www.747Clark.com Boutique Condo $1.375
www.3900Seeley.com Single Family $1.9
www.5407glenwood.com 2-flat: $875,000
3. Depending on how fast client needs to sell, market the property on TAN and other private listing sites to take advantage of the current buyers in the marketplace without losing market time.
4. Develop a target date for publicly listing the property on the mls and other sites such as Zillow, Redfin, etc., and develop a marketing strategy for the open week (open house, bulk marketing with isp tracking, etc.).
For any questions of our 2022 Outlook or Marketing Plan, please call. Or, for ease, you can also fill out the “Questions about Chicago Real Estate” form at the top right of this page or at the bottom of the page if reading on a phone. We are very interested in connecting with you to discuss the personal interaction we bring to the buying and selling process. We are honored for the opportunity to work with you.