For any questions of our 2023 Market 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 2023 MARKET OUTLOOK AND 312 ESTATES MARKETING PLAN FOR SUCCESS FOR OUR CLIENTS IN THE COMING YEAR:
Our goal in posting this webpage is to:
- Inform you of our 2023 Market Outlook of the current Chicago real estate trends and
- Encourage 2023 Buyers to immediately set up a Zenlist account to search properties on the off-market database: click here: Zenlist Account Please read our Off Market/MLS Listings page to learn more.
- Alert potential 2023 Sellers to call us sooner rather than later. 1 main reason: January and February supply of homes is really low. Demand throughout the year is expected to be flat. Traditional supply of homes hitting the market in the spring may hurt prices if the traditional spring market demand does not keep up with the expected new supply based on simple supply / demand economics.
CHICAGO 2023 REAL ESTATE MARKET OUTLOOK:
For 2023, we are seeing a distinct difference between the Chicago city market and the Suburban market. Let’s analyze these separately.
Chicago 2023 Market Outlook:
The Chicago 2023 Market Outlook for the city, specifically the northside neighborhoods from River West to Wicker Park to the lake shore north to Andersonville, one needs to create two separate groups. Group 1: Single Family homes and large condos (3 bedrooms +) with unique and spacious outdoor space. Group 2: Multi-unit buildings, condos less than 3 bedrooms, and little to no-outdoor space.
Group 1: Single Family homes and large condos with outdoor space
If you are thinking of selling in the 2023 Market, please contact us sooner than later. Supply of this group of homes is low. Post Covid, the demand for more rooms and outdoor space has exploded and buyers are willing to pay for such. The reason for the need for more bedrooms is simple, people need to have a home office. Single family homes typically have both of these benefits plus the added privacy. The limited supply of Group 1 homes in a high demanding school districts we project are in the best shape to maintain the prices seen in 2022.
Our outlook for Demand in the city for 2023 is flat. Currently we see what looks to be strong demand, but we believe it is because supply is so low. However, we believe supply should increase. Whereas we believe demand will mostly be flat with your constant stream of people needing property due to life changes or other strong reasons to buy. Buyers with lesser needs to buy or upgrade in the 2023 market we will see less of than we did in 2022. We may also see buyers with lesser needs choose elsewhere or wait to see if interest rates come down in 2024.
The big question for Group 1 is the following:
- What will happen if there is a flood of new supply? Expectations for 2023 is demand will not increase much. Thus, the big question is… will prices fall if there is an increase in supply with flat demand? Yes… The question is how much… and what will your strategy be…
- Reasons for Demand not increasing
- Raise in Interest Rates: Increased interest rates makes homes more expensive. When a potential buyer analyzes the factors to move or not, 1 factor is taking on an interest rate in a purchase that is double what they are currently paying. The current sentiment has not adjusted to the new higher rates.
- National Economy: We believe 2023 will be a very sensitive year for national economic stories. The national economy has many different effects on Chicago real estate. The most prominent we see in our 312 Estate brokerage world is that sentiment can change week by week based on what the media is saying. Real estate is highly affected by what people think and the media plays a part in this. Thus, if the media is discussing how prices are dropping in Florida, a seller may believe they have to drop their price too here in Chicago. The same is true for buyers. Buyers may hear this and think the Chicago market is dropping too, thus their initial thoughts in what they are willing to pay may change. Justifiably or not, over the years, we have seen substantial percentage changes in pricing based on what the media is saying. This however can also sling shot back if the narrative changes or new information comes out to the positive. Why, does it come back so fast? Because every real estate broker and mortgage broker will send you such positive information.
- Over the years at 312 Estates, we have developed a very statistical approach to negotiating, pricing, and arguing our position. We also have proprietary technology no one else has giving us additional insights. The information helps us provide better positioning for our clients and the analytical evidence to support.
- As stated above, the Real Estate environment is very fickle and social for many. Pricing is inefficient and can be all across the board. As a Group 1 participant, a buyer or seller can take advantage of this whimsical approach some take. Many transactions are not accomplished in an expert manner, but many times transactions are begun, and contract is agreed to in a whimsical manner. We have chronicled a few of these where people looked up their homes on a search engine database to find a value. Click here to see our page 312 Estates versus Search Engines. There can be opportunities here. The idea of selling may begin with a simple conversation. They may see their friends sell or a neighbor sell. These sellers may like the price it sold for, so they decide to sell their home expecting such a price. Once committed, they start looking for a new home actively or passively. Here is where the demand problem in 2023 can create a major issue. We believe that demand will remain somewhat flat lined in 2023. Supply for Group 1 is low. Transactions at the beginning of 2023 should yield excellent prices for sellers. The real estate nature of it be extremely social shall prompt others to sell. If this occurs, we should see an increase in inventory. If demand does not systematically increase with the supply of inventory, simple economics tells us that prices will fall. For people committed to sell, by mid-summer, we may see a curtailment in prices of what the seller originally believed they would receive for their sale.
- City Flight: This element effects both Group 1 and Group 2. We find in speaking to clients, crime is still a real issue when deciding their homestead. This is true with renters as well. We see more younger individuals and couples searching for rentals in the suburbs because of city fears. All of these reasons feeds into less demand for the city including owner occupiers, renters, to investors.
- If the number of transactions in Group 2 falls behind 2019 levels, the demand coming from the trickle up effect will be lost. Therefore, the trickle up buyer will not create its traditional demand in Group 1. See last paragraph from the Group 2 section for details.
- Reasons for Demand not increasing
Group 2: Multi-unit buildings, condos less than 3 bedrooms, and condos with little to no-outdoor space.
Again, we are looking from the West Loop to Andersonville. We expect this group of listings to have a tough go in 2023 versus 2022. Especially if an increase in supply hits the market. Demand for properties from the Lake Front to Multi-units in West town have slowed. As with group one, people are not seeing the value to move into a more expensive home with double the interest rate without having some reason or need to move. Most of the desires to sell and move to another condo is larger outdoor space and more rooms. Such condos have limited supply, so the prices are staying stronger than your typical middle floor 2-bedroom 2-bath or less condo.
City Flight is another problem we are seeing especially in the younger generation. More than usual, we are seeing many younger people deciding to rent or to purchase in the burbs. We are projecting this spring the demand will be less than in 2019. Thus, the ever-plentiful supply of 2-bedroom 2-bath or less condos will probably increase. Because the number of renters projected to leave the city as well compared to 2019, rents may fall which will decrease what the investor will pay for in investment property. This is true with multi-units as well.
If the above is true and demand does not meet the spring market supply, prices will respond and may be enhanced by the media which can cause panics in the above mentioned whimsical real estate transactor. Because of Redfin and Zillow as well as other databases that provide market times, initial pricing and the statistic to justify such pricing to showcase to buyers is extremely important for sellers during a slower market stretch of properties within Group 2.
One more note; if the number of transactions decrease in Group 2, this will affect Group 1. The typical large population of renters entering the market as first-time home buyers helps the market under $500,000. The trickle up effect benefits the $500,000+ market. Sellers of homes typical move up in price which affects the next price range. 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.
Suburban Market 2023
For sellers in the suburban market, single family homes and condos have greater demand in 2023 then the city as the year begins. Supply is minimal and demand is strong, and it should increase in your traditional Spring and Summer markets which is tied to the school year. The Chicago suburban market timing is traditionally April – August. It will be interesting to see if the increase demand and the lack of supply sustains the pricing that was gained last spring during the buying boom.
The suburban market supply issue is similar to the questions single-family homeowners have in the city… why move and take on a mortgage with double the interest rate? Many people selling in the burbs are moving for a specific need or reason.
Depending on the national economic sentiment in the real estate market, demand will either dramatically increase in a status quo environment, or the suburbs will lose little demand compared to the larger loss the city will suffer with a negative economic sentiment.
What to do?
After reading the above, the next question is what to do. Our expectation is the market will be stronger in January, February, and March versus later in the year. This uncertainty is leading others to promote a potential for an aggressive spring market because of the uncertainty of the economy for the back half of 2023. With this expected sentiment here at the end of 2022 moving into 2023, buyers need to identify an expert to work with who has access to the off-market database and sellers need to get ready now, so when the time comes, they can immediately hit the market versus waiting 2-3 weeks to have marketing ready and missing a potential buyer earlier in the market. Maybe even take advantage of testing the waters on the off-market.
If you are a buyer, education of the market is the most helpful. Give us a call or send us a note and we can help shape your search criteria and area. Once you have an idea of what you are looking for and where to find a property that meets your needs in size, school district, ease of transportation etc., a buyer should gain access and actively use Zenlist. Zenlist incorporates all the listings on the mls and many of the off-market mls. This is about 3,500 homes in the Chicago land area. Zillow, Redfin, Realtor, etc., only have the on market mls homes thus one is missing about 3,500 homes to search. Zenlist is a very similar search database with search capabilities similar to Zillow, Redfin, Realtor, etc.
To gain access to Zenlist click here: Zenlist Account
Once you log on to Zenlist, you will have to provide your information to allow us to provide you with access. You will be registered under the managing broker Steve Jurgens but can easily be shifted to another 312 Estates Broker.
Please read our Off Market/MLS Listings page to learn more about the off-market world.
One key note, buyers looking in the suburbs have to recognize the suburban market cycle. 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.
We believe the faster we can identify homeowners 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 January of 2022, we had a major buyer surge that lasted until Mother’s Day 2022. The market in the city was up 12.5%. This is one of the longest market surges we have seen in the last 20 years. Most market surges last a few weeks and are due to inventory issues. Sellers who are ready with our marketing package can respond quickly when a surge begins and will financially benefit. Over the years, having clients ready to go has earned dramatic financial benefits for our clients.
To be a little redundant, when a little buyer surge hits, a few homes will go off the market. Buyers many times will grab what is remaining and the next similarly priced home hitting the market. Potential new sellers will get excited and call their agent. Many real estate agents use the basic brokerage backed photography service for their listings. When a surge of sellers decide they want to sell, these services will be backed up for more than 3+ weeks to take photos, plus editing, and final product. Mother’s Day 2022, supply really started hitting the market, demand did not keep up with this new supply. Sellers lost the supply shortage benefit and sellers were no longer in the advantage. Contract prices after Mother’s Day 2022 fell. By August 2022 the 12.5% spring surge in the market was gone.
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 not create any market time. Thus, when you go on the market, your market time is zero.
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 marketed 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 many times 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 2023 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.
At the end of the day, TAN does provide a few extra listings to send to clients than does Zenlist. Most importantly, TAN is the best message board between the top agents and their teams. Every day, TAN agents will post what their needs are for buyers and what is coming from future sellers who have not had marketing done. This is a great networking source across all brokerages, as you are not limited to brokers within a single brokerage but a brokerage of the top 10% agents.
IMPLEMENTING A SELLING STRATEGY FOR THE 2023 MARKET:
If you are aware of an individual who is considering selling now or in 2023, we would be honored if you passed along this webpage and our information. In short, because of the low inventory of homes in the beginning of 2023 and the expectation that the number of homes for sale will increase and the projected flat line of buyers looking for properties in 2023, below is a strategy we have been successfully implementing:
- Determine client’s needs (exit price, desired closing date, time needed for house preparation (bring in our designer to provide a list of essential things to do, determine if flare is needed, or bring our stager), property availability for showing, etc.). As I am writing this, I am sitting in a home while one of our designers is putting together a selling plan and proposal of potential one-off staging for a Single-Family home in Roscoe Village.
- Put together Marketing (Photos, floor plan, website, video, brochure, SEO key words, axillary site marketing links, individual website ISP tracking, realtor code tracking, etc.) ASAP even if considering a middle of the year sale.
Here are some examples of our marketing end product:
www.2250Roscoe.com: Roscoe Village Penthouse $1.25
www.3750Greenview.com: Southport Corridor Single Family $3.3
www.747Clark.com: River North Boutique Condo $1.375
www.18Winfield.com: Winnetka Single Family Winnetka for $1.85
www.3900Seeley.com: North Center Single Family $1.9
www.5407Glenwood.com: Andersonville 2-flat: $875,000
www.1718Wood.com : Bucktown Single Family $1.9
www.1346Addison.com: Southport Corridor Penthouse $1.15
www.5411Glenwood.com: Andersonville Single Family $1.15
www.3234Clifton.com: Southport Corridor Penthouse $825,000
www.1360Middlefork.com: Lake Forest Single Family $1.695
www.3252Seminary.com: Lakeview Duplex Down $998,500
- Depending on how fast the client needs to sell, market the property on Zenlist and TAN and other private listing tools that we have which will maximize our advantage of finding a current buyer in the marketplace without losing any market time.
- 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 opening week (open house, bulk marketing with ISP tracking, etc.).
For any questions of our 2023 Market 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.